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: http://oig.hhs.gov/fraud/docs/falseclaimsact/guidelines-sfca.pdf. 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, rfearnow@kdlegal.com
or Jaya White jwhite@kdlegal.com.