MIDLAND MEMORIAL HOSPITAL
Federal & State Claims Acts
PRIVACY PRACTICES

Summary of the Federal and State False Claims Acts:
Collectively, the Federal and State False Claims Acts make it unlawful to deal fraudulently with a Federal or State representative in relation to a benefit or payment received under a Federal program (e.g., Medicare) or Medicaid. Allegations of such fraudulent behavior may be brought by the Attorney General (at the Federal or State level) or by a relator, that is, a person with knowledge of the behavior who qualifies under the Federal or State statute on false claims to bring such a case before the courts. As these relators become whistleblowers in bringing these cases, both the Federal and State False Claims Acts provide whistleblower protection, which include remedies for unlawful dismissal.

This overview provides the highpoints of each Act. While the Federal and State Acts are quite similar, one fundamental difference is that the State Act allows the State to dismiss the case at the State level altogether, thereby ending the case for the relator as well. At the Federal level, while the Federal government may choose not to move forward with its case, the relator has the option to independently move forward with an individual case against the accused party. Because what constitutes fraudulent behavior, under both the Federal and State statutes is quite detailed, the exact wording of the main Federal and State False Claim Acts is provided below.

Highpoints of Federal False Claims Act:

• Fraudulent behavior Under the Federal False Claims Act, a false claim includes presenting or causing to be presented a false claim in order to receive funds from a federal program. A false claim may also include withholding property to be used by the federal government, delivering a false receipt of property, or buying or receiving property from an officer or employee of the government who may not sell or pledge the property, etc. (For a list of all violations under the Act, see the exact wording of the Act below).

• Penalties under the Act
  • Civil penalties:
    • No less than $5,000 and no more than $10,000, plus three times the amount the government suffers in damages due to the violator's actions.
    • Fraudulent behavior in submitting a claim incurs penalties under the Program Fraud Civil Remedies Act as well, such penalties not to exceed $5000 for each claim and two times the amount of the claim made for which the government suffered damages or, for a false written statement, not to exceed $5000 for each written statement.
  • Criminal Penalties:
    • A person who makes false statements, submits false documents, or otherwise deals fraudulently in connection with the delivery of or payment for health care benefits or services commits a federal crime and may be fined, imprisoned, or both.

• Who may bring the case. The Attorney General, or a relator (also known as a qui tam plaintiff), on behalf of the relator and the U.S. Government, may bring an action against the person or corporation alleged to have committed the fraudulent act. Whether the action is brought by the Attorney General or a relator, the Government has the discretion to either conduct or decline the case. If the Government conducts the case, the relator, subject to limitations, may continue as a party. If the Government declines the case, the relator who brought the action may conduct the case independently. (Note: under Texas statute, the State Attorney General may bring an action as a relator under the Federal False Claims Act with respect to a Medicaid claim for which a person or corporation may be held liable under the Federal Act.)
  • In order for a court to have jurisdiction over the case brought by a relator, the relator must be an original source of the allegation, which means the relator has direct and independent knowledge of the information upon which the allegations are based and has voluntarily provided said information to the Government before filing the action.

• The relator's share of the proceeds from a judgment
  • If the Government conducts the case, the relator is entitled to 15 - 25% of the proceeds or settlement, depending upon the relator's level of contribution to the prosecution of the case. However, if the case is built primarily upon specific information other than that provided by the relator, the court may award the relator no more than 10%.
  • If the Government does not conduct the case, the relator is entitled to 25 - 30% of the proceeds or settlement, depending upon what the court finds reasonable.
  • If successful, the relator also receives necessary expenses, attorney fees and costs from the defendant.
  • The court may reduce the relator's share to the extent it finds appropriate if the relator planned or initiated the fraudulent act. If the relator is convicted of criminal conduct for violating the Act, no share of the proceeds are rewarded and the relator is dismissed from the civil action.
  • If the Government does not proceed with the case, thereby allowing the relator to bring it, the court may award the defendant reasonable attorney fees and expenses if the court finds the claim frivolous, clearly vexatious, or brought primarily to harass.

• Protection the Act provides to whistleblowers. Relators are protected as whistleblowers under the statute. If the relator is discriminated against by the relator's employer for bringing the qui tam action, relief may be rewarded to make the relator whole including:
  • Reinstatement to the same position held prior to dismissal,
  • Two times the amount of back pay plus interest on the back pay, and
  • Compensation for any special damages, including attorney costs and litigation fees.

Highpoints of State False Claims Act:

• Fraudulent behavior. Under the Texas False Claims Act, fraudulent behavior includes making a false statement or misrepresentation; concealing or failing to disclose information in relation to a claim; converting a benefit received for someone else to a benefit different from the reason it was received; making, causing to be made, or inducing the making of a false statement or misrepresentation, etc. (For a list of all violations under the Act, see the exact wording of the Act below.)

• Penalties under the Act
  • Civil Penalties:
    • The amount provided under Medicaid due to the unlawful act;
    • Interest on the amount, fixed at the rate the day the amount was received;
    • Not less than $5,000 nor more than $15,000 for each unlawful act that results in an injury to an elderly or disabled person or a minor or not less than $1,000 nor more than $10,000 for an unlawful act that does not result in an injury to one of these groups; and
    • 2 times the amount of the value provided under Medicaid.
  • Administrative Penalties:
    • The Act authorizes a health and human services agency to suspend or revoke the provider agreement, permit, license, or certification granted to a person found liable under the Act. A provider found liable may not provide or arrange to provide health care services under the Medicaid program for a period of 10 years (though the executive commissioner of the Health and Human Services Commission may grant a partial exemption).

• Who may bring the case. If a relator brings an action for violation of the statute, it must be brought on behalf of the relator and the State, the relator serving a copy of the claim and a written disclosure of all material evidence on the State Attorney General. The State may then intervene and proceed with the action, no later than the 180th day after the Attorney General receives the claim from the relator (or no later than an extension period deadline as provided for by statute).
  • In order for a court to have jurisdiction over the case brought by a relator, the relator must be an original source of the allegation, which means the relator has direct and independent knowledge of the information upon which the allegations are based and has voluntarily provided said information to the State before filing the action.
  • If the State declines the action, the court shall dismiss it altogether.
  • If the State proceeds, it has primary responsibility for the case, and the relator may continue as a party to the action.
  • The State may also:
    • Pursue the case through an alternate remedy, including an administrative proceeding,
    • Dismiss the action (after providing the relator a hearing on the motion to dismiss),
    • Settle the action if the court determines the settlement is fair, adequate and reasonable,
    • Move the court to restrict relator's participation if such participation would compromise the State's case.

• Relator's share of proceeds from a judgment. If the Government conducts the case, the relator is entitled to 10 - 25% of the proceeds or settlement, depending upon the relator's level of contribution to the prosecution of the case. However, if the case is built primarily upon specific information other than that provided by the relator, the court may award the relator no more than 7%. If successful, the relator may also receive from the defendant reasonable expenses, attorney's fees, and costs. The court may reduce the relator's share to the extent it finds appropriate if the relator planned or initiated the fraudulent act. If the relator is convicted of criminal conduct for violating the Act, no share of the proceeds are rewarded and the relator is dismissed from the civil action.

• Protection the Act provides to whistleblowers. Relators are protected as whistleblowers under the statute. If the relator is discriminated against by the relator's employer for bringing the qui tam action, relief may be rewarded to make the relator whole including:
  • Reinstatement to the same position held prior to dismissal,
  • Two times the amount of back pay plus interest on the back pay, and
  • Compensation for any special damages, including attorney costs and litigation fees.