We write frequently about the federal False Claims Act (FCA), which is the federal government’s most powerful civil fraud fighting tool. Healthcare providers, government contractors, and any other business that submits claims for reimbursement to the federal government are subject to the FCA, which carries with it the threat of treble (3x) damages and penalties of over $28,000 per claim. In the ten years from 2015 through 2024, the Department of Justice (DOJ) has obtained settlements and judgments (mostly settlements) totaling over $33.5 billion.
State FCA Survey
The success of the federal FCA – as well as some financial incentives from the federal government – has led the majority of states to implement their own version(s) of the FCA. According to the Anti-Fraud Coalition (TAF) – the industry group made up of whistleblower lawyers – 34 states plus the District of Columbia have at least one FCA:
Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington.
A handful of these state statutes (Arkansas, Connecticut, Louisiana, Michigan, New Hampshire, Texas, and Washington) have an FCA that covers only claims submitted to the state Medicaid program. The remainder have more general FCA statutes that cover fraud affecting a variety of state programs, similar to the federal FCA. Two states – California and Illinois – have whistleblower statutes that cover false claims submitted to private insurers as well.
The states that do not currently have an FCA are: Alabama, Arizona, Idaho, Kansas, Kentucky, Maine, Missouri, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Utah, West Virginia, and Wyoming. Some of these states have proposed FCA legislation currently pending, including Pennsylvania.
A “Dual Threat” for Businesses
In states that have their own version of the FCA, business that submit claims to both federal and state entities – particularly healthcare providers that bill to federal and state healthcare programs – face liability under both the federal and state versions of the FCA if they submit claims that do not comply with federal and/or state rules. In these states, when a qui tam whistleblower files a lawsuit alleging an FCA violation, the complaint often contains claims under both the federal and state versions of the FCA.
Even if states without their own version of the FCA, businesses that submit claims for reimbursement to a state agency could, under certain circumstances, face liability under the federal FCA. For example, if a healthcare provider in South Carolina (where there is no state FCA) submits a false or fraudulent claim to the state Medicaid program, that provider could face liability under the federal FCA since state Medicaid programs are jointly funded by the federal and state governments. And all 50 states, plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, have Medicaid Fraud Control Units (MFCUs), which investigate and prosecute Medicaid fraud. The state MFCUs often work with their federal counterparts at the DOJ in fraud investigations that involve both federal and state healthcare program funds.
For these reasons, healthcare providers in particular must ensure that they are in compliance with both federal and state rules and regulations in order to avoid the threat of substantial FCA liability, whether on the state or federal level, or both. And it’s important to note that those rules sometimes conflict. For example, Medicare permits a physician to submit a claim for a service provided by a mid-level under that physician’s supervision so long as certain “incident to” requirements are met. Many state Medicaid programs follow this same rule. Some, however, do not. Georgia Medicaid, for example, does not recognize or permit “incident to” billing and mid-levels must instead enroll and bill directly. So, a healthcare provider in Georgia must be careful to follow CMS’ incident to rules when seeing a Medicare patient, but to avoid incident to billing when the patient is covered by Medicaid.
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The attorneys at Chilivis Grubman represent businesses and individuals in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, contact us today.