In an expedited fashion the Pennsylvania House of Representatives handed a big win to the plaintiffs’ bar by approving legislation that would implement a state False Claims Act (FCA) – a proposal that will negatively impact employers, healthcare providers, and taxpayers. The big winners are plaintiffs’ attorneys who will not only get a percentage of their client’s proceeds but will have their fees reimbursed through the False Claims Act as well. Not to mention the fact that the headhunter party bringing the claim will get a double recovery!
Proponents of the FCA tout it as a tool to reduce fraud in the Medicaid program. In reality it is a policy that will encourage more frivolous and profit-driven lawsuits, increasing caseloads and creating additional burdens on our civil justice system in the process, not to mention the fact that fraud does not have to be proven in order to recover! At the heart of the proposed legislation is the qui tam/relator or “bounty hunter”—provision, which allows private plaintiffs (head hunters) and their attorneys to file lawsuits on behalf of the state.
A state FCA is not necessary as there is already a federal FCA in place. The federal FCA provides a robust mechanism to recover improperly spent Medicaid funds and Pennsylvania already receives its proportional share of those recoveries.
Under the federal FCA, plaintiffs receive up to 30 percent of the federal recovery, including from Medicaid-related cases that involve both state and federal dollars.
By adopting a state FCA, Pennsylvania would enable double recovery (up to 30 percent) for these plaintiffs and their lawyers—one share from the federal portion of the Medicaid recovery and now another from the state’s share. This would drain funds away from the state treasury and into the hands of private parties.
Additionally concerning is the fact that a state FCA exposes unsuspecting parties to excessive and unjust liability through triple damages and massive penalties which also encouraging frivolous litigation and abuse of the legal system. It expands the scope of liability for businesses and healthcare providers – further sending a red flag to potential investors and economic opportunities.
The legislation, HB 1697 passed the House by a vote of 136 to 67. It now goes to the Senate where PCCJR will continue to advocate against this misguided proposal throughout the legislative session.