On March 15, HHS OIG issued updated guidelines regarding how it will evaluate State false claims acts. Under the Deficit Reduction Act of 2005, States became eligible for financial incentives (i.e., retaining a larger share of false claims act recoveries) if they put in place legislation establishing liability to the State for an individual's or entity's submission of false or fraudulent claims to the State’s Medicaid program. To qualify for the incentive, a State’s law needed to satisfy certain requirements, as determined by OIG. OIG first published a set of State false claims act requirements in 2006. Since that time, OIG says it reviewed more than twenty-eight State false claims acts to determine whether the requesting States’ laws met the requirements.
The 2006 guidelines generally tracked the language in the then-current Federal False Claims Act (FCA). The previously published guidelines, however, pre-dated a number of significant changes to the FCA. For instance, Congress amended the FCA in 2009, in the Fraud Enforcement and Recovery Act (FERA), and again in 2010, in the Affordable Care Act (ACA). OIG’s new guidelines state that it will incorporate the FERA and ACA changes, among other FCA amendments, when assessing whether a State qualifies for the financial incentive. The guidelines specifically set out requirements addressing State false claims act provisions for (i) establishing liability for false or fraudulent claims; (ii) rewarding and facilitating whistleblower actions; (iii) filing a false claim act action under seal; and (iv) establishing the amount of civil penalties applicable to violations of the act.
According to the guidelines, States that received OIG’s approval prior to the FCA amendments were given a two-year grace period to bring their laws into compliance. Once the grace period expires, the State will no longer qualify for incentive payments unless its false claims act is amended and re-submitted to OIG for review and the law is approved by OIG or is pending review. OIG also notes that, to the extent the FCA is amended in the future, it will grant States similar two-year grace periods.
You can view OIG’s guidelines here.