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