David Haron Testifies on Michigan Medicaid False Claims Act Revisions
The Michigan Medicaid False Claims Act was amended effective January 1, 2006 through the efforts of Attorney General Mike Cox and Representative David Law (R., Commerce). I worked actively for passage of the amendment and testified before the Michigan House of Representative Judiciary committee, then chaired by Rep. Law.
The Amendment brought Michigan into line with 22 other progressive states by adding a Qui Tam provision to the existing Medicaid False Claims Act. According to Wallace Hart, an Assistant Attorney General, actively involved in fraud control, the amendments--giving private citizens the right to bring Qui Tam suits to recover fraudulent monies stolen from the taxpayers by providers treating the Medicaid program as their own private ATM machine--the amendment helped him reduce his in-box.
The Michigan Medicaid False Claims Act prohibits the presentment of any false or fraudulent claim for payment under the Social Welfare Act – namely, for Medicaid benefits. The law currently provides for the State to recover the full amount received by a Medicaid provider due to fraudulent conduct, plus triple the amount of damages suffered by the State as a result of the conduct.
HB 5757, a bill pending before the Michigan Senate after having passed the House in near unanimous fashion, would allow the State of Michigan to recoup extra funds from combined state/federal recoveries because of the provisions of the federal Deficit Reduction Act of 2005 ('DRA"). To explain, shortly after the the Michigan Medicaid False Claims Act amendment passed the Michigan Legislature and Governor Granholm signed the Act, the U.S. Congress passed the DRA providing for a 10% incentive to States which enacted a "compliant" Qui Tam statute addressing Medicaid fraud. Specifically, the Medicaid program is a joint federal/state program. Thus, in Michigan, the federal government pays about 56% and the state 44% of the costs of the Medicaid program and fraud recoveries are divided on the same percentage.
If the state has a "compliant" Qui Tam statute, the state receives an extra 10% of the recovery--that is, 54% in Michigan--of the recovery.
However, on December 21, 2006, The U.S, Department of Health and Human Services/Office of Inspector General ("HHS/OIG") advised the state, by letter, that its Medicaid False Claims Act was NOT "DRA compliant" (that is, a mirror image of the federal False Claims Act).
The amended FCA, as presented in HB 5757, would allow the Michigan FCA to become DRA compliant. The small changes made by HB 5757, as required by the federal HHS/OIG., would cost the state nothing a in administrative or other costs and would bring millions of dollars in the future back from Washington.
As I stated during my March 12, 2008 testimony in the House, the State of Michigan has already forfeited $2.1 million in recovery funds to the federal government since December, 2006 (when HHS/OIG notified the state that the Act was out of compliance due to the Michigan FCA’s lack of certain DRA compliant provision.
The amended Michigan FCA would also introduce (as required by Congress) a civil penalties provision to further deter and punish individuals seeking to defraud the State of Michigan. The Michigan FCA ,as it stands now, only allows state recoveries based on the amount of monetary damages that the state actually incurs. A civil penalties provision allows the state to recover from individuals who attempt to defraud the government, but are not always successful. An example of this would be a health care entity that submits fraudulent claims for payment to the Medicaid program, but due to payment “caps” imposed by the program, only half of the claims were paid. The amended FCA would allow the state to recover between $5,000 and $10,000 for the claims that were submitted to the Medicaid program with the intent to defraud the state, but were not actually paid by the government. This civil penalties provision further helps to deter wrongdoers from submitting fraudulent claims for payment.
As a False Claims Act/Qui Tam attorney specializing in health claim fraud, I have personally observed instances where a civil penalties provision would have allowed the state to obtain extra recoveries. My firm is currently involved in a Michigan FCA case where the state’s actual monetary damages were low due to payment “caps” by the Medicaid program; however, the defendant health care entity submitted numerous false claims to the state for payment. A civil penalties provision, such as the one contained in the amended FCA, would have potentially permitted an increased recovery against the defendant.
The HHS/OIG notified the state of the deficiencies in the Act in December, 2006. For political reasons, I believe, tied to the 2007 budget stalemate in the Legislature, Rep. Law, a Republican, was prevented from obtaining Democratic support for the DRA compliant provisions, Rep. Marc Courveau, a Democrat, finally introduced an appropriate bill, HB 5757, in the House, and with my testimony, and support, the bill passed the House without any significant opposition. Unfortunately, it now languishes in the Senate Judiciary Committee, where ,I believe, the Republicans are holding it up for purely partisan reasons.
The partisan activities that have stymied passage of this simple, clarification bill, that is costing the state millions of dollars on, virtually, a daily basis is unconscionable--but, unfortuantely, a fact of life in Michigan and the Michigan Legislature. Both parties are to blame in this fiasco--to go from one of the more progressive states in this area--to one of the most backward; to allow millions of dollars to fritter away from a state in the midst of an economic crisis is unbelievable.
Hopefully, someone will wake up and take the appropriate action in the Senate in short order!!
