Recent amendments to the federal False Claims Act have expanded whistleblower protections and increased penalties for violators. The amendments came in the form of the federal Deficit Reduction Act, the Fraud Enforcement and Recovery Act, the Affordable Care Act, and the Dodd-Frank Act.
California revamped its own False Claims Act earlier this year to bring it into compliance with federal law—and qualify for a 10 percent increase in its share of False Claims Act recoveries in cases relating to the submission of false or fraudulent claims to California’s State Medicaid program. If a State obtains a recovery as a result of a State false claims action relating to fraudulent claims under the State Medicaid program, it must share the recovery with the federal government in the same proportion as the matching funds provided by the federal government for the state’s Medicaid program, called the federal medical assistance percentage. However, when states, such as California, enact state False Claims laws that are in compliance with federal law, those states get to keep an additional 10% of the recovery, thus sharing 10% less of any recovery in proportion to the federal medical assistance percentage.
For example, if the federal medical assistance percentage for a state is 60%, then the state would retain 40% of the recovery and the federal government would be entitled to the remaining 60% of the recovery. But if the state has its own False Claims Act that is in compliance with federal law, that state would retain 50% of the recovery, and the federal government would receive the remaining 50%.
Under the qui tam, or whistleblower, provisions of the U.S. and California False Claims Acts, a private citizen with knowledge of fraud can sue on behalf of the government and claim a share in the recovery. Many state and federal probes into Medicare and Medicaid fraud, and government contract fraud are initiated by whistleblower complaints.
