Why The Ohio AG Wants A False Claims Statute
5 CommentsBy Ed Silverman // February 23rd, 2011 // 11:28 am
Earlier this month, a Medicaid managed care provider in Ohio agreed to pay $26 million to settle a whistleblower lawsuit brought by former employees, who alleged that assessments of adults and children with special needs were never conducted, but data was submitted anyway to the state Medicaid program for reimbursement. What has this episode to do with drugmakers?
Well, the state of Ohio collected $10 million of the total $26 million paid by CareSource, the managed care provider. And Ohio attorney general Mike DeWine then bemoaned publicly that the state would have received more money if there was a False Claims Act statute on its books (look here). In general, such a law would allow Ohio to collect a bigger payday each time it participates in a whistleblower settlement.
And in an era of incredibly shrinking budgets, such extra dollars may go a long way. For instance, under the federal Deficit Reduction Act, the federal government will give up to 10 percentage points of its share of a Medicaid False Claims Act fraud recovery if the state has a FCA law that is as strong as the federal law. This means that in a state where Medicaid costs are split 50-50, the feds would take 40 percent of a settlement, and a state would get 60 percent, a 20 percent increase.
Pursuing Medicaid fraud, as you know, is a growing exercise (see this). A large number of drugmakers, of course, have been paying large fines to settle charges of involving kickbacks as well as off-label marketing. And so DeWine is hoping to see the Ohio legislature join 27 other states and pass a law. A spokesman for the AG says discussions are being held with a couple of legislators but nothing has been introduced as of yet.
“Our civil Medicaid fraud statute only allows us to go after fraud committed by Medicaid providers. So if you have a pharma company doing busines in Ohio or causing false claims, we can’t go after them because they’re not a Medicaid provider,” says Keesha Mitchell, section chief of healthcare fraud in the Ohio AG office.
“The way the federal FCA reads is that any person submitting a false claim can be liable. So that’s one big problem that we have…And we don’t have a whistleblower provision in Ohio. Many cases brought nationally were brought by sales reps who were aware of marketing practices or best prices violations or kickbacks involving prescribers…So there’s no real incentive for Ohio citizens with knowledge (of fraud) to come forward.”
Here’s another way to look at the situation. Ohio collected $92.3 million by participating in 20 settlements in recent years, most of which involved drugmakers, such as Novartis, Pfizer, Eli Lilly, AstraZeneca, GlaxoSmithKline and Merck. But the state would have received almost $98 million had there been a False Claims Act on its books, according to Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits. The upshot: look for more states to consider enacting a statute.
“Ohio is cheating itself out of millions of new Medicaid dollars it could get from the federal government for simply having a piece of paper. No no new enforcement action at all is needed to get that new money,” says Patrick Burns of TAF. “Of course, if Ohio had a state False Claims Act and used it, as the Attorney General DeWine suggests he would, the state could recover hundreds of millions of stolen dollars. Without the right tools, however, Ohio is out of the money.”
outcomes guru®
cue “insider”/”vet” claiming that hot drug reps still do dash and dines, give out lavish gifts and pay bribes directly to MDs…faster than the speed of light…
Insider
Ohio is behing the times. THere is all kinds of fraud going on in the state and weak follow-up on getting it stopped. Of course law abiding corporations have nothing to worry about because they will not be involved in htese cases. THe review by the lawyers taking the case and by the prosecutors is intense. NOthing much is going to happen unless there is a really good case. However, if you have a really good case and the government does not go along with it, your lawyers can still push to get it prosecuted. However, without the False claim act, the cases are often just lost between all the other major cases going on and the government loses out. So having the False claims act in Ohio would bring in additional revenue and help stop fraud which is costing the state millions each year. Dewine is on the right track though the Democrats were trying to get is passed but always blocked by a republican who did not see the benefits. It is about time the states funds were used legally and wisely, otherwise we will soon be out of business.
Former Big Pharma
Given the present state of affairs in the Big Pharma and Medical Device worlds, if the bankrupt states had False Claims Acts, they would be well on their way to becoming cash-rich.
Andrew Prough, CFE
@Ed - “But the state would have received almost $98 million had there been a False Claims Act on its books, according to Taxpayers Against Fraud, a non-profit that supports whistleblower lawsuits.”
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Hi Ed,
I can see that the Ohio AG is rightfully concerned about the state getting their fair share of the recovery. However, from a fraud examination perspective, I can tell you the #1 reason Ohio should have a false claims act statute on the books is not for the state to get more money - it’s to get more whistleblowers to come forward. We constantly talk about the tremendous value of whistleblowers in complex fraud cases at fraud examiner meetings - there simply is no more effective way to get inside info on fraud schemes.
GovtFraudLawyer
First, federal law requires that the states have a False Claims Act. Second, Medicaid is quickly becoming the largest line item in states’ budgets. Even my state, Texas, with its relatively strong economy, is in a fiscal crisis. The Medicaid budget will only make the fiscal crisis worse over time. Third, all large recoveries under the state and federal False Claims Acts where started by a whistleblower using the qui tam mechanism. The DoJ and the states’ Attorneys General are not equipped to prosecute affirmative claims (while they do, their cases are small change compared to the BMS, GSK, Eli Lilly, Pfzier, Forest Labs, Allergan . . . ). So Ohio is behind the curve and we be well served if it unleashed those with first-hand information to bring suit against those who commit fraud against its Medicaid program.
I’ve done historical research and have written about the origins of the False Claims Act. It’s a bit ironic that I am posting on a UK blog given that the U.S. adopted the qui tam concept from the British. The qui tam concept is actually one of the few tools that is keeping the Medicaid and Medicare programs somewhat fiscally sound.
The GovtFraudLawyer