HHS OIG Releases Updated Guidelines On Evaluating State False Claims Laws

The Department of Health and Human Services Office of Inspector General (OIG) March 15 issued updated guidelines for evaluating state false claims act legislation to reflect amendments made to the federal False Claims Act (FCA) in 2009 and 2010. The updated guidelines, which are effective March 15, apply amendments to FCA made by the Fraud Enforcement and Recovery Act, the Affordable Care Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act to OIG’s evaluation process of state FCA legislation under Section 1909 of the Social Security Act. “These three acts, among other things, amended the bases for liability in the FCA, expanded the rights of qui tam relators, and added an express requirement that civil penalties include adjustments under the Federal Civil Penalties Inflation Adjustment Act of 1990,” OIG said. The original guidelines for evaluating state FCA laws were released in August 2006. Financial Incentive for States Under Section 1909, if OIG determines a state has a qualifying FCA law, the state’s share of any Medicaid recoveries made under their FCA will be increased by 10 percentage points. “For example, if the State’s Medicaid share is 50 percent, the State would be entitled to 60 percent of the amount of the recovery, while the Federal Government would be entitled to 40 percent,” OIG said. To qualify for the 10 percent incentive, OIG must determine that the state’s FCA:

• Establishes liability for false or fraudulent claims (the updated guidelines include definitions for “claim,” “obligation,” and “material”);
• Contains provisions that are at least as effective in rewarding qui tam actions as those in the federal FCA;
• Contains a requirement for filing an action under seal for 60 days with review by the state attorney general; and
• Contains a civil monetary penalty that is not smaller than the CMP authorized by the federal FCA (under the previous guidelines, the CMP had to be at least $5,000 to $10,000 per false claim, while the CMP is now $5,500 to $11,000 per false claim, due to adjustment by the Federal Civil Penalties Inflation Adjustment Act).

tates that had their FCA laws approved by OIG prior to the three amendments to the federal FCA were given a two-year grace period, with expiration dates included in individual letters sent to the affected states, OIG said. “After the expiration of its 2-year grace period, a State will no longer qualify for the incentive unless its law: (1) is amended and resubmitted to OIG for review and (2) either is approved by OIG or is pending review by OIG,” OIG said. The updated OIG guidelines are at https://oig.hhs.gov/fraud/docs/falseclaimsact/guidelines-sfca.pdf. The original OIG guidelines are at http://www.gpo.gov/fdsys/pkg/FR-2006-08-21/pdf/E6-13749.pdf.