Three years ago, a federal law was enacted that provided incentives to states to pass their own versions of the False Claims Act, which allows people who are not affiliated with the government to file lawsuits against federal contractors claiming fraud against the government. There have been a spate of these whistleblower, orqui tam, lawsuits in the pharma world lately (see here, here and here).
The Department of Health and Human Services and the Department of Justice were chartered with overseeing whether the states are meeting the qualifications that would allow them to receive a share of any proceeds recovered. And so last week, Senator Chuck Grassley, the ranking Republican on the Senate Finance Committee, who regularly probes drugmakers, wrote the agencies because only 14 states are up to speed (see the letter). However, hee's also miffed that recent changes to the federal FCA may "undermine the original intent" of the law, and he cites proposed state laws that include a so-called first-to-file hurdle.
This would preclude a whistleblower from bringing a lawsuit if a similar lawsuit has already been filed in another state, which would have the effect of reducing the number of such lawsuits that would be brought against government contractors. "These provisions will severely limit qui tam actions brought by relators in states where the language is adopted," writes Grassley, who wants the HHS Office of Inspector General and the Justice Deparment to review these proposals to determine whether passage would remove the incentives provided under the 2006 Deficit Reduction Act. [UPDATE: To read state FCA texts, click here and follow instructions]
One wag says that pharma is behind the state proposals. "Pharma lobbyists have been running around trying to be 'helpful' by suggesting amendments that would cripple state False Claims Acts. It's a bit like the fox suggesting the chicken farmer might want to swap out his shotgun for a BB gun," says Patrick Burns of Taxpayers Against Fraud, a non-profit that supports whistleblower suits.
"If they follow that advice, not only will the states find less fraud, they will also lose a large increase in the federal share of Medicaid False Claims Act settlements, due to language in the Deficit Reduction Act that says an increased share is contingent on a state having a law as strong as the federal statute," he continues. "For some states, that can work out to be a loss of as much as one-third of the total they might otherwise collect."
UPDATE: The Illinois General Assembly approved changes to state whistleblower protections. The amendments to the Illinois' Whistleblower Reward and Protection Act in House Bill 5951 cleared last week and was sent to Governor Pat Quinn (here's the bill).
pic thx to katerha on flickr
26 Comments
Correction. The False Claims Act does not preclude a government employee from filing a claim.
However my understanding is that the Justice Department has never supported a claim brought by a government employee. The presumption being that it's the employee's job to stop such corruption and if they don't then there's a perverse incentive for an employee to look the other way and then file a claim later.
Senator Grassley has come out publicly against this indicating that he believes government employees should be able to file claims if they can show they tried to correct it but it was supressed.
I agree with Sen. Grassley's position, although I don't believe that it will ever happen. There's too much you wash my back and I'll wash yours even at the highest levels of government for politicians to allow it.
Hi Anon,
Thanks for the note. Actually, I didn't write that the FCA precludes a government employee from filing a claim. I wrote that the FCA allows folks who aren't government employees to do so. I hope the distinction is clear, but apologies if it wasn't.
Regards ed
States attempting to restrict whistleblower suits is a manifestation of the "tort deform" {bogus tort reform] movement in this country first described by Ralph Nader. Sadly, white collar corporate crime by pharma is largely government-endorsed.
Ed,
While I see your point. I still think that what you wrote is misleading, since it implies that only nongovernment employees may file claims. My understanding is that the FCA is silent on the issue
Some pertinent info from the FCA:
"Any information obtained by the Attorney General or a designee of the Attorney General under this section may be shared with any qui tam relator if the Attorney General or designee determine it is necessary as part of any false claims act investigation."
"(d) Award to qui tam plaintiff.
(1) If the Government proceeds with an action brought by a person under subsection (b), such person shall,"
The FCA refers to the relator, qui tam plaintiff, and person. Not government or nongovernment employee.
Can anyone provide a link to the 14 states considered by Senator G. "up to speed" on this issue or, conversely, those that have already instituted or are considering a "first-to-file" provision?
I only see Oklahoma mentioned in Grassley's letter, but perhaps I'm missing something.
Big Pharma absolutely is behind the "helpful" amendments to weaken state false claims laws. In 2007 their lobbyist testified before a Texas legislative committee but couldn't get a member to introduce his proposals. Texas has used its Medicaid whistleblower law to recover more than $350 million for itself and the US, most of it from drug manufacturers, since 2001. No wonder Big Pharma wants to weaken it.
A lot of states are now shamelessly prostituting themselves to gain the favor of pharma...providing a safe haven, as it were. Mandating "jabs" and chemically "dumbing-down" our kids is just the latest in a VERY troubling trend. And for what, personal financial and political gain?
I can't get that specific, JiM, but TAF has a handy lil map with links to state FCAs.
Harpy--Thanks so much. Very useful. I did not find anything under Oklahoma that coincides with Ed's report, but perhaps I missed it or it is too recent.
In any case, I so much appreciate folks like you taking the time to find and convey requested info rather than using threads mainly to honk off (he said, honking off).
@ JiM - Ouch! I'll try better to stay more focused in the future. Having been a relator in a FCA case in the past, I do have an opinion on Ed's post. I guess I've become too outspoken. Censure is probably in order.
@ Harpy - your map is VERY useful info. Thanks so much!
Can someone comment as to whether the state versions of the federal FCA include all of the new provisions found in the False Claims Act Correction Act of 2009?
99--I'm sorry if my comment leads to self-censure. I have been there myself. I was only expressing my sometime frustration about the ways threads sometimes turn. But, hey, that's why we call them threads rather than, say, stents.
Again, KUDOS to Senator Grassley. To lessen the federal case load and enable would-be whistleblowers to bring state law causes of action, every state in the union ought to have closely-modeled state law versions of the federal FCA and civil RICO Act. At least for the present, the country is a "patchwork", and some states actually do represent a "haven" for pharma.
President Obama, in his first week in office, publicized a letter saying that he will be working closely with the Attorney General's office to put into place means to prosecute fraudulent or illegal behavior in phatma.
The above article does not fit that bill.
No, whistleblower rights should not be cut back. I think that if someone is let go, and he or she is doing so frivoisly, wasting many people's time, perhaps this should be deterred by law.
So much is gotten away with in Pharma, with people's mouths zipped so that around holiday time, he or she will be able to afford their child's GI Joe with the Kung Fu Grip.
More, more, more not Less, Less, Less
MB
This is a very interesting post of Ed's. Let's keep the thread open, even with a "stent".
Two questions come to mind. First, what's with Arizona??? Does anyone know? Are they one of the 14 states that are "up to speed" in the Senator's letter?
http://www.circare.org/fdawls3/gazda_fdawl_20091124.pdf
http://www.newscientist.com/article/dn18806-pfizer-paid-censured-experts-to-educate-doctors.html
Second, since the U.S. Supreme Court repeatedly chooses not to clarify the civil RICO accrual rule, why doesn't Congress just clarify the statute, ala the False Claims Act Clarification Act of 2009, and then mandate that each state adopt a "robust" version of the federal enactment, e.g. "little RICO" Acts???
I can't answer 99's questions, but I am curious about where Michigan is on this, being the home of the world's most antediluvian preemption law.
Nevertheless, I believe Michigan has joined some FCA cases despite no lack of handlers from the MI Chamber of Commerce trying to cajole, threaten, and pimp lawmakers. In other words, business as usual.
JiM - yeah, that infomercial re: Michigan, The Upper Hand, pimping Jeff Daniels, is pretty repugnant. The word "haven" comes to mind.
Why "haven"?
I'm not sure who's pimping whom, but that's perhaps beside the point. Beyond that, I kinda like our Michigan commercials. Y'all come on over. We'll keep the light on for you, at least until the light is foreclosed.
JiM - my comment re: Michigan should have read "pimping [by] Jeff Daniels". Perhaps change may be in the wind for your state. While you do have "the world's most antediluvian preemption law", Michigan is on the TAF map as having a FCA law. Is Michigan one of the 14 states "up to speed" in the Senator's letter? If so, Michigan deserves some strong praise. Hopefully, all states will soon follow their lead as to FCA compliance. Won't some uniformity between state laws help individuals seeking legal redress for injuries by pharma? There are some significant differences between being a plaintiff and being a relator, however.
Congress probably won't make a mandate to the states over this because the states would then go to trial over their 10th amendment rights, which, given the make-up of the SC, they would probably win.
Anon:
In your opinion, what if that which is blown the whistle on is not "on your job description, mind your own business" sort of thing?
Say, in a pharma company a bench scientist comes to you specifically with horrid reports about 1) things going on that I have my hands in and 2) a coveru of an on the job injury that could have been fatal while Management tells the first responders that she does not work with chemicals nor does she work in a lab. (This is not hypothetical, but disgustingly true)
Best, MB
You do not need to be a government employee to participate in a Qui Tam suit, on the plaintiff side.
MB
@ Salient Point - Thanks for your input re: 10th Amendment. Perhaps, mandate is too strong a word. Why couldn't Congress more strongly "incentivize" states to come into compliance with adoption of robust state law versions of the federal FCA and civil RICO Act? Then the current patchwork of consumer-friendly versus pharma-friendly states would be dramatically lessened.
OK. Re: our FCA law, one can be sure that the usual suspects are active attempting to undo it. In the past, our AG has chosen not to participate in a number of FDA cases that other states pursued. The dude is running for Governor, so perhaps that will make a difference.
As for dumb and dumber, well, they pretty much already said so.
As our state motto says, "If you seek a beautiful peninsula, we will be happy to show you ours." (If you show us yours.)
JiM -
Good to see you haven't lost your sense of humor!