Attorney General Josh Shapiro

HARRISBURG – Attorney General Josh Shapiro joined a bipartisan group of lawmakers at the Capitol on Monday to back a plan to enact reforms intended to combat Medicaid fraud.

The reforms include legislation that would allow anyone to file a whistleblower lawsuit alleging Medicaid fraud. Hospital and business groups immediately denounced the proposal, which would create a state version of the federal False Claims Act.

Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, said the measure would allow whistleblowers and their attorneys to receive a portion of any financial settlement reached due to a False Claims Act complaint.

“This leads to the plaintiffs’ lawyers’ recovery increasing, while the commonwealth’s portion of the recovery decreases. Pennsylvania’s legal climate already creates a challenging environment for job creators,” Barr said. 

“Enacting a FCA will exacerbate this situation by further bogging down the state’s already cumbersome and overly-crowded court system.”

The Pennsylvania Health Care Association, representing nursing homes and assisted living facilities, said the legislation would “lead to a dramatic increase in frivolous lawsuits.”

Thirty-one states have state versions of the False Claims Act and of the eight states that spend the most on Medicaid, only Pennsylvania lacks a state False Claims Act, Shapiro said.

Shapiro said prosecutors file criminal charges when they can, but allowing for civil lawsuits to expose Medicaid fraud would reveal more fraud and prevent new abuses.

“The winners are going to be the taxpayers,” Shapiro said. 

“The people we’re going to go hold accountable are fraudsters.”

State Sen. Lindsey Williams, D-Allegheny, said Maryland passed its version of the False Claims Act in 2015 and New Jersey passed its False Claims Act law in 2008. Since establishing state versions of the law, Maryland has received more than $81 million and New Jersey has recovered $122 million in settlements from fraud complaints, she said.

New York has had its False Claims Act since 2007. From 2015 to 2018, New York recovered $55 million from lawsuits alleging fraud under the False Claims Act, according to information provided by House Republicans.

Williams is the prime sponsor of the legislation to create a False Claims Act in Pennsylvania.

In addition to that measure, lawmakers also announced bills that would:

• Compel providers to agree to repay the state if they receive Medicaid payments for operations involving surgical mistakes;

• Increase the penalty for knowingly submitting a fraudulent claim. Under the proposal, submitting a fraudulent claim worth more than $100,000 would be a second-degree felony; submitting a fraudulent claim worth between $2,000 and $100,000 would be a third-degree felony; and submitting a fraudulent claim worth less than $2,000 would be a misdemeanor.

• Add legislation that would create a database of providers that are barred from receiving state funds to reduce the likelihood that ineligible recipients get improper payments.

State Rep. Seth Grove, R-York, said the only piece of legislation in the package that is controversial is the proposed state False Claims Act. 

But he added that the measure does have the support of House Majority Leader Bryan Cutler, R-Lancaster. 

The state House voted unanimously in 2000 in favor of legislation that would have created a False Claims Act, but the measure didn’t make it out of the Senate.

Grove said while there certainly has been a tremendous amount of turnover in the state House since that vote two decades ago, it’s hard to believe support for the proposal has changed much.

John Finnerty is based in Harrisburg and covers state government and politics. Follow him on Twitter @CNHIPA.

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