Dear friends and neighbors,
One of the first issues I worked on when I was elected to the legislature was the Minnesota False Claims Act. This law mirrors the federal False Claims Act otherwise known as the Lincoln Law. During the Civil War, corrupt contractors sold the Union Army defective or substandard items and supplies. To combat this fraud, Congress passed the False Claims Act, which enabled ordinary citizens to bring to light these frauds (whistle-blowing) and receive a portion of the settlement recoveries as a financial incentive to report the wrongdoing.
Since 1987, more than $22 billion has been recovered from companies or entities that have knowingly and willfully defrauded the government. Many of these cases have involved the large pharmaceutical corporations who deliberately over-charged Medicare and Medicaid. For example, in 2012, GlaxoSmithKline was fined $3 billion dollars for illegal off-label promotion efforts of the drugs Avandia, Wellbutrin, and Paxil.
Often times, and specifically when dealing with Medicaid fraud, the wrongful activity is identified at the state level. The federal government has a difficult time identifying the fraud because they are not administering the program directly.
Due to the beneficial nature of having state governments bring forth these types of cases that recover monies for both the federal and state governments, federal law allows states that meet four specific criteria to receive a ten-percentage point bump in the split of a settlement. For example, if a settlement were to be split 50/50 between the state and federal government and the state met those specific criteria, the split could then be 60/40 in the state’s favor.
When the Minnesota False Claims Act was passed in 2009, it had to be “watered-down” and those four specific criteria had to be removed in order for then Governor Tim Pawlenty to sign the bill into law. Why he wanted to protect corporations and entities that are knowingly and willfully ripping off taxpayers is beyond me. Consequently, Minnesota was not eligible for any bonus money in the event of a recovery.
Knowing that we were leaving money on the table and that our state False Claims Act could be revised to further improve our ability to combat waste, fraud, and abuse, I worked with Representative Steve Simon, the bill’s original chief author, to introduce the necessary revisions that would make Minnesota eligible for the 10% bonus incentive. We passed those changes and Governor Mark Dayton signed them into law during the 2013 legislative session. From there, we submitted them for review by the federal Department of Health and Human Services Office of Inspector General.
I’m happy to report that as of November 12, 2013 our changes were deemed to be in compliance with Section 1909 of the Social Security Act and Minnesota is now eligible for up to a ten-percentage point bonus incentive on any combination state/federal False Claims Act settlements.
This is important legislation that I’m proud to have been a part of. Budgets are tight and needs are great; the last thing we can afford is the knowing and willful defrauding of our government and our taxpayers.
On these issues and the many others confronting us this legislative session, I’d appreciate your input. Please feel free to send me your comments, concerns, and suggestions. You can reach me by phone at 651-296-4228 or email at rep.andrew.falk@house.mn.
Andrew Falk
State Representative
District 17A