Office of Inspector General Issues Updated Guidelines for State False Claims Acts

The Office of Inspector General of the Department of Health and Human Services (OIG) has issued updated guidelines for determining whether a state false claims act satisfies the requirements of section 1909(b) of the Social Security Act. Where the Inspector General determines that a state act satisfies the requirements of section 1909(b), the state is entitled to an increased share of recovery in false claims cases brought under that state act. Effective March 15, 2013, the new guidelines replace previous guidelines issued on August 21, 2006 and reflect amendments to the Federal False Claims Act (FCA) that have gone into effect since issuance of the previous guidelines.

As part of the revisions, OIG modified the guidelines for determining whether the state act appropriately establishes liability for false or fraudulent claims with respect to state Medicaid expenditures. These revised guidelines reflect amendments to the FCA that expanded liability to include false statements “material” to a false or fraudulent claim. OIG also expanded the guidelines with respect to provisions that reward and facilitate qui tam actions. Among these revisions, OIG restricted state law limits on actions resulting from public disclosures and modified the minimum percentages of recovery that a relator must receive under the state act. With respect to the civil penalty provisions, OIG revised the guidelines to provide minimum civil penalty amounts of at least $5,500 to $11,000, which amounts reflect adjustments per the Federal Civil Penalties Inflation Adjustment Act.

To qualify for the incentive provided by section 1909 of the Social Security Act, a state false claims act must fulfill the requirements of section 1909(b) as amended at the time of OIG’s review. OIG provided a two-year grace period during which states with false claims acts that had been approved before the amendments to the FCA became effective would continue to qualify for the incentive. After expiration of the grace period, a state must amend and resubmit its false claims act to OIG for review and either have its act approved or be under OIG review in order to qualify for the incentive.