The Office of Inspector General Recently Approved the Amended Illinois State False Claims Act

Recently, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) responded to the Illinois Attorney General’s request to review the amended Illinois False Claims Act, Pub. Act. 097-0978, (amending 740 ILCS 175/5), under the requirements of Section 1909 of the Social Security Act.  A copy of the May 22, 2013 response is available at

Section 1909 of the Social Security Act was added by Section 6031 of the Deficit Reduction Act of 2005.  Its purpose is to create a financial incentive for states to enact legislation that creates liability to the State for the submission of false claims under the State Medicaid Programs.  See the Updated OIG Guidelines for Evaluating State False Claims Act, at p. 2 (March 15, 2013), available at:  States that participate in the Medicaid program administer their own programs, within Federal guideline limits, and receive funds from the Federal Government termed “the Federal medical assistance percentage.”  Id. 

Under the Federal False Claims Act, “any person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment or approval under the State Medicaid program is liable to the Federal Government for three times the amount of the Federal Government’s damages plus penalties of $5,500 to $11,000 for each false or fraudulent claim.”  Id. at 2.  State False Claims Acts also establish liability, and include similar “qui tam” provisions authorizing individuals known as relators to file lawsuits against entities and individuals that defraud the government by submitting false or fraudulent claims under the State Medicaid Program.  Id. at 2-3. 

States are required to share their recovery under their State False Claims Acts with the Federal Government in the same proportion as the Federal medical assistance percentage.  Section 1909 of the Social Security Act incentivized states to implement state False Claims Acts meeting certain requirements by reducing the amount the Federal Government receives by 10 percentage points of the amount recovered under a State False Claims Act action.  Id. at 3.   

Since the enactment of Section 1909, there have been several amendments to the False Claims Act, (in legislation such as the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act).  The OIG gave certain states, including Illinois, a 2-year “grace period” for their state False Claims Acts to come into compliance with the revised Section 1909 requirements while still continuing to qualify for the incentive.  These requirements are outlined in the Updated OIG Guidelines for Evaluating State False Claims Acts, at pp. 6-11.  If Illinois had not amended and resubmitted its False Claims Act for review by the OIG, Illinois would have lost the 10% bonus incentive for recoveries under the Act, which would be a substantial loss to the State.    

If you have any questions, or require additional information on the Illinois False Claims Act, or other False Claims Act issues, contact Randall Fearnow, or Jaya White