WASHINGTON — Sen. Chuck Grassley said again today that federal government officials need to make it clear that new state laws aimed at Medicaid fraud must allow whistleblower lawsuits in order for states to qualify for a new federal incentive that would increase their share of Medicaid recoveries by 10 percent.
Grassley authored the provision that created this incentive as part of legislation signed into law earlier this year. The measure is designed to encourage states to create fraud-fighting laws modeled after the federal False Claims Act, which Grassley updated in 1986. His changes to the federal law empowered whistleblowers and have become the federal government’s most effective tool against health care fraud.
“If states want to collect a greater share of the recoveries, then states need to let whistleblowers be part of the process as specified in the Medicaid legislation just passed by Congress,” Grassley said. “Whistleblowers have proven to be the key to the success of the federal False Claims Act over the last 20 years. They stick their necks out and put themselves in very risky situations to do the right thing on behalf of taxpayers, and their courage and sacrifice deserves to be recognized and rewarded.”
In a letter sent today to both the Attorney General and the Inspector General for the Department of Health and Human Services, Grassley emphasized that the statute requiring states to include certain whistleblower provisions must be enforced with the states. The text of this letter, along with the text of a letter Grassley sent in March on the same subject, is below.
Grassley is Chairman of the Senate Committee on Finance, which is responsible for Medicaid legislation and oversight. He also is a senior member of the Senate Judiciary Committee.
April 26, 2006
The Honorable Daniel R. Levinson The Honorable Alberto Gonzales
Inspector General Attorney General
Department of Health and Human Services Department of Justice
330 Independence Avenue, S.W. 950 Pennsylvania Avenue, N.W.
Washington
, DC 20201 Washington, DC 20535
Dear Inspector General Levinson and Attorney General Gonzales:
On March 17, 2006, I wrote to you emphasizing the importance of section 6032 of the Deficit Reduction Act of 2005 (DRA). As you are aware, section 6032 provides an incentive-a 10% increase in the states' share of Medicaid recoveries-for states to enact state False Claims Acts (state FCAs) modeled after the federal False Claims Act (FCA). The DRA requires that the Office of the Inspector General (OIG) work in consultation with the Department of Justice (DOJ) to determine if a state FCA meets the qualifications outlined in section 6032. As Chairman of the Senate Finance Committee and as the principle author of section 6032, I write today to further elaborate on the requirements in the law enacted by Congress.
Currently, a number of state legislatures are crafting legislation that would enact state FCAs that do not meet the requirements of section 6032. While these states are working in anticipation of qualifying for the increased share of Medicaid recoveries as envisioned in the DRA, some states are crafting variations that do not permit qui tam actions to proceed once state Attorney's General decline to intervene in the matter. This variation is contrary to the requirements of section 6032 and does not qualify for enhanced matching funds.
To elaborate further, section 3730(c)(3) of the FCA states, "If the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action." This provision, taken in conjunction with various cases interpreting its constitutionality, expressly allows a FCA relator to continue to prosecute a qui tam action on behalf of the federal Government even if DOJ declines to intervene. As the primary author of the 1986 amendments to the federal FCA expanding the qui tam provisions of the FCA, I am aware of the importance of allowing relators to continue qui tam actions after DOJ has declined to intervene.
DOJ often declines to intervene in qui tam actions for a number of reasons. A few examples include, but are not limited to: lack of resources at DOJ, a case that is not fully developed or matured into a winnable case, or DOJ determines that the case may lack merit. Given these various outcomes, it would be presumptuous to say that when DOJ declines to intervene it is in fact because the case lacks merit. It is for precisely this reason that the FCA allows relators to continue prosecuting a qui tam action absent government intervention. Through continued diligence on the part of the qui tam relator, many cases that were initially declined intervention continue to develop and progress and are subsequently joined by DOJ at a later date. Further, qui tam relators often proceed without the intervention of DOJ and succeed in court recovering monies for the federal government that would have been lost to fraud, waste, or abuse of programs absent the actions of a qui tam relator.
Congress expressly stated in the DRA that in order for a state FCA to qualify under section 6032, the state FCA must contain "provisions that are at least as effective in rewarding and facilitating qui tam actions for false and fraudulent claims as those described in sections 3730 through 3732 of title 31, United States Code." (emphasis added). By referencing sections 3730 through 3732 in the section 6032, Congress expressly included section 3730(c)(3), which permits qui tam actions to proceed absent participation by the Government. Accordingly, any state FCA law that does not permit qui tam actions to proceed if the state Attorney General declines to intervene is exactly the opposite of what is required under section 3730(c)(3) of the federal FCA.
As you complete your statutorily mandated review of both existing state FCAs and newly enacted state FCAs, I ask that you pay particular attention to the qui tam provisions to ensure compliance with these FCA provisions. The success of the FCA lies with the qui tam provisions, and the adjudication of any FCA case-state or federal-should not hinge solely upon intervention by a government agency, but instead should be decided by the courts. Congress enacted the DRA to ensure that state FCA laws would meet these requirements. I thank you for your continued support in fighting fraud, waste, and abuse in federal healthcare programs. As many states are in the process of drafting state false claims act legislation in order to qualify for an increased share of Medicaid recoveries, I encourage you to work together to create guidance outlining the requirements necessary for a state FCA to qualify as soon as possible.
Sincerely,
Charles E. Grassley
Chairman
Cc: The Honorable Michael O. Leavitt
The Honorable Mark McClellan
National Governors Association
National Conference of State Legislatures
March 17, 2006
The Honorable Daniel R. Levinson The Honorable Alberto Gonzalez
Inspector General Attorney General
Department of Health and Human Services Department of Justice
330 Independence Avenue, SW 950 Pennsylvania Avenue, NW
Washington
, D.C. 20201 Washington D.C. 20535
Dear Inspector General Levinson and Attorney General Gonzalez:
The United States Senate, Committee on Finance (Committee) has exclusive jurisdiction over, among other things, the Medicare and Medicaid programs. Accordingly, as Chairman of the Committee I have a responsibility to protect these programs, the 80 million Americans who receive healthcare under these programs, as well as the billions of American taxpayer dollars supporting these vital programs.
Recently, the President signed the Deficit Reduction Act of 2005 (DRA) into law. The DRA contains various reforms designed to slow the increasing cost of the Medicaid program and further the long-term sustainability of Medicaid. One of the most significant reforms in the DRA is section 6032, which provides incentives for states to enact state False Claims Acts (state FCAs) modeled after the federal False Claims Act (FCA). This provision was included in an effort to contain the escalation of fraud and waste and abuse in the Medicaid program, as outlined in a two-day Medicaid fraud hearing the Committee held on June 28-29, 2005.
The federal FCA has long been recognized as a valuable tool for the government in detecting and preventing fraud, waste, and abuse in government programs. Originally signed into law by President Lincoln to prevent war profiteering, the FCA has evolved over the years, including a major revision I sponsored in 1986. The passage of the DRA marks another step forward in the evolution of the FCA by offering states a greater share in any Medicaid fraud recoveries through enactment of a state FCA. Specifically, section 6032 of the DRA states, in pertinent part that, "â€Â|if a state has in effect a law relating to false or fraudulent claims that meets [certain] requirements," the state will receive a 10% increase to the state share of any recovery obtained under the state FCA.
As you are aware, the DRA requires certain provisions in the state FCAs in order for the state to qualify for a 10% increase in the state share of any Medicaid fraud recoveries. Further, the DRA requires that the Department of Health and Human Services, Office of Inspector General, work in consultation with the Department of Justice to make a determination that the state FCAs contain the provisions necessary for obtaining the increased share of recoveries. As the author of Section 6032 of the DRA and a long term proponent of the federal FCA, I write today emphasizing the importance of the requirements contained in section 6032 in determining whether a state FCA meets the qualifications for an increased share of recoveries.
Section 6032 of the DRA specifically outlines four requirements for determining if a state FCA is compliant:
(1) The law establishes liability to the State for false or fraudulent claims described in [the federal FCA] with respect to any expenditure described in [Title 19, the Medicaid Program];
(2) The law contains provisions that are at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims as those described in [the federal FCA];
(3) The law contains a requirement for filing an action under seal for 60 days with review by the State Attorney General; and,
(4) The law contains a civil penalty that is not less than the amount of the civil penalty authorized [by the federal FCA].
While each of these provisions are important to ensure that a state FCA is a powerful tool for fighting fraud, I write today specifically to emphasize the second requirement relating to qui tam provisions in state FCAs.
The qui tam provisions contained in the federal FCA relate to the effectiveness of the law and allow private individuals to bring an action in court on behalf of the government. In drafting the second requirement for state FCAs to qualify for the 10% recovery increase, it was envisioned that a state FCA would contain qui tam provisions and that the state FCA would be at least as effective as the provisions contained in the federal FCA. A further dissection of the second requirement reveals the necessary elements. Specifically, for a state FCA to meet the second requirement, at the least, it must (1) contain a qui tam mechanism for relators, (2) facilitate a system for relators to file suit on behalf of the government, and (3) reward a qui tam relator with a portion of the recoveries. The importance of meeting each element of the qui tam requirement cannot be understated; the FCA works to detect and prevent fraud and abuse because of the qui tam provisions.
It has come to my attention that many state legislatures are in the process of crafting state FCA legislation to meet the requirements set forth in section 6032. It has also come to my attention that there are some states drafting state FCAs with various modifications and deviations from the requirements outlined in section 6032. I am concerned that these modifications and deviations may ultimately undermine the ability of whistleblowers to file qui tam complaints on behalf of the government. As you complete this statutorily mandated review of state FCAs to determine if they qualify for the increased share of recoveries, I request that you ensure state FCAs contain the requirements set forth in section 6032, including the qui tam provisions, as intended by Congress.
During my time in the Senate, I have fought continually on behalf of the American taxpayer to ensure that tax dollars are spent appropriately and not lost to fraud, waste, or abuse. Unfortunately, even under the most watchful eyes, tax dollars are squandered away. The passage of the DRA ushered in a new era for the FCA and it is hoped that any new state FCAs passed as a result of this act will provide yet another tool for ensuring that taxpayer dollars are used to provide care for the most vulnerable populations and not to line the pockets of those who seek to defraud the government.
Sincerely,
Charles E. Grassley
Chairman
Cc: The Honorable Michael O. Leavitt
The Honorable Mark McClellan
National Governors Association
National Conference of State Legislatures