The state legislature is leaving much-needed money on the table and hurting the state’s efforts to fight health care fraud by failing to stop the automatic repeal of the whistleblower provisions in Alaska’s three-year-old Medicaid fraud law.
The Alaska Medicaid False Claims Act, which the legislature passed with bipartisan support in 2016, encourages whistleblowers to sue, on behalf of the state, health care providers and other entities that are fraudulently siphoning off Medicaid funds. The law protects whistleblowers from job retaliation and provides financial rewards, if the government recovers funds as a result of their case.
One incentive for adopting the statute was that it could increase the state’s share of recoveries in Medicaid fraud cases from 50 to 55 percent, with the federal government getting the remaining share. The federal government increases the share of recovered funds, with certain conditions, to encourage states to enact whistleblower laws to fight Medicaid fraud.
That incentive is even more important as the state’s budget deficit grows.
In addition, whistleblower programs are the most effective way to stop significant healthcare fraud by incentivizing insiders with detailed information about fraud to step forward. The federal government, for instance, has recovered over $32 billion as a result of whistleblower cases exposing health care fraud that were brought under the federal False Claims Act, on which the Alaska law is modeled.
Yet the legislature has taken no action to revoke the automatic repeal of the whistleblower provisions that were part of the state statute when it was enacted. Unless the state legislature takes steps to repeal the statutory “sunset” on the whistleblower provisions before the close of the legislative session, these provisions will cease to be effective as of July 1 this year.
Like the federal False Claims Act, the Alaska Medicaid False Claims Act prohibits health care providers and others from knowingly submitting fraudulent claims for treatment of Medicaid patients. It also prohibits providers and others from creating false or fraudulent records to avoid or decrease payments owed to the government, such as excess payments that providers might have received.
So much fraud is well hidden and disguised that enforcement agencies need insider information about these fraudulent schemes that only whistleblowers can provide. But whistleblowers risk their jobs and careers when they do step forward, so job protection measures and financial incentives are needed to help balance the significant risks whistleblowers are taking to help society.
Health care providers and others who are found liable in false claims cases are required to pay three times the government’s losses plus penalties for each false claim, but most cases tend to settle for less. The whistleblower is rewarded with 15 to 30 percent of the recovery, depending on many factors, including whether the government intervenes in the case.
The reason for the automatic repeal of the whistleblower provisions, according to Sen. Pete Kelly’s sponsor statement in 2016, is to protect providers by assuring “frivolous lawsuits remain in check.”
The bogeyman of “frivolous lawsuits” was raised by the healthcare industry and other opponents to the federal False Claims Act when it was enacted 33 years ago, yet the flood of frivolous lawsuits that opponents warned would come did not happen. Instead, the law has become the federal government’s most powerful weapon to fight healthcare fraud.
In addition, there appears to be no sign that the whistleblower provisions of Alaska’s law are being used to file frivolous lawsuits. Given that cases under the law are filed “under seal” and remain confidential while the government investigates, the number of cases filed since the law was enacted less than three years ago is unknown. Therefore, it is far too soon for Alaska’s legislature to evaluate the impact of the law, whether there have been any problems and whether repeal of the whistleblower provisions are warranted.
At a time when Alaska faces a $1.6 billion budget deficit and severe funding cuts in public schools, health care and other important programs, the state legislature should be looking for additional ways to stop fraud that is costing taxpayers money.
Revoking the repeal of the whistleblower provisions of the state false claims law would be a good, no-cost way to start.
• Emily Stabile is an attorney with the law firm of Phillips & Cohen LLP in San Francisco. My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.
