Virginia Qui Tam Law

Update from Washington State on the Washington State False Claims Act

zkitts@cookkitts.com (Zachary Kitts) — Thu, 26 Jan 2012 19:40:41 GMT

Things seem remarkably silent on the state legislative front this year -- until yesterday, that is, when fellow qui tam/FCA lawyer in Jeff Sprung was kind of enough to send me an update from Seattle (or rather from Spokane).

Jeff has been fighting the good fight out in Washington State for at least the past three years, but it seems like the legislation might have legs this year. The State Senate passed a Medicaid-only FCA bill out of committee this week, and the State House committee appears to be poised to do so soon.

Sources in WA also indicate that the legislators are interested in a Medicaid only FCA law -- and only in a Medicaid only law.

Regular readers have heard this before -- I am not sure why a state would want to pass a Medicaid- only statute. Washington state of all places should understand the need for a full false claims act -- after all, in 2009, they settled a foreign exchange case for pocket change because they didn't have a state false claims act....

But I'll leave it to the legislators in WA to explain to the school teachers, police officers, fire fighters, and other public servants whose pension funds were defrauded why they have no recourse....

At any rate, all taxpayers of the great State of Washington owe Jeff for his hard work on this project over the past couple of years -- and Jeff my hat is off to you. Keep up the good work.

Copyright 2011 Zachary A. Kitts

The Taxpayers Against Fraud Education Fund Publishes a New Model State False Claims Act for 2012

zkitts@cookkitts.com (Zachary Kitts) — Wed, 25 Jan 2012 15:05:54 GMT

The Taxpayers Against Fraud Education Fund Publishes a New Model State False Claims Act for 2012.

As state legislatures across the country begin their 2012 sessions they will without exception will be looking to stretch their tight budgets. This usually spurs a great amount of interest in the topic of state false claims act legislation, and with good reason.

First, the federal government created strong incentives for states to pass state false claims acts. This happened back in 2006 with passage of the Deficit Reduction Act of 2005 ("DRA").  Specifically, section 6031 of the DRA (Pub. L. 109–171), creates a financial incentive for States to enact legislation that establishes liability to the State for individuals or entities that submit false or fraudulent claims to the State Medicaid program.

The financial incentives are considerable. States with a false claims act that meets the OIG's requirements have their health care funding from the feds increased by 10%.

Second, states considering false claims act legislation (like Arizona and hopefully now Kentucky) are starting to get word from those states who have passed false claims act legislation that qualifies under the DRA -- and the news is good to say the least.

For example, Virginia’s Fraud Against Taxpayers Act (“VFATA”) has been an unparalleled success. No one can argue with Virginia’s results. In the three-year period from FY 2006-FY 2009, Virginia recovered on average more than $228 million per year. Virginia recovers more than $5 million per employee of the MFCU.

For those state legislators considering a state false claims act, TAFEF published a new model state FCA last week. This model legislation should pass the OIG litmus test and qualify the state to an increase in its Medicaid money from the feds.

I could say much more in support of state false claims acts of course.  I think it says much that all of the most business friendly states have state false claims acts....



Copyright 2011 Zachary A. Kitts

Qui Tam Litigation and the Federal False Claims Act Become an Issue in the Presidential Primary

zkitts@cookkitts.com (Zachary Kitts) — Sat, 14 Jan 2012 18:00:23 GMT

Interesting to note that qui tam litigation and the federal False Claims Act became an issue in the Republican presidential primary recently.

Newt Gingrich's mention of FCA enforcement is actually just one of several recent mentions by office-seekers and office-holders in both political parties of their bona fides on the false claims act.

Please note, friends, that I am all for politicians standing up to take a bow when they dedicate additional resources to fighting fraud -- as President Obama has -- and I am also all for politicians campaigning on the promise to increase resources to fight fraud -- as Newt Gingrich apparently did.

Too bad he won't be on the ballot in Virginia....

Specifically, in a debate, Newt Gingrich stated as follows:

“The duty of the president is to find a way to manage the federal government so the primary pain is on changing the bureaucracy. On theft alone, we could save $100 billion a year in Medicaid and Medicare if the federal government were competent. That’s a trillion dollars over 10 years. And the only people in pain would be crooks...”

Needless to say, I am all in favor of increased FCA enforcement (and of course this blog is totally dedicated to that). Even so, I am not quite as sanguine as Gingrich about the ability of the FCA to fix the Medicare and Medicaid budget....

But I will leave the fact checking to the folks at WaPo who have the scoop.

Additionally -- and as reported here previously -- a December 19, 2011 press release by DoJ gave detailed information on the record recent recoveries using the FCA, and in the process mentioned President Obama several times.

Now, let's hope that increased resources for the Virginia Fraud Against Taxpayers Act will become an issue in the Attorney General race here in the Commonwealth....

Pat Burns from Taxpayers Against Fraud Predicts $9 billion in 2012

zkitts@cookkitts.com (Zachary Kitts) — Thu, 12 Jan 2012 20:01:38 GMT

Pat Burns from Taxpayers Against Fraud predicts $9 billion in 2012.

Although a record $3 billion was recovered in 2011 using the false claims act, it appears that many people in-the-know are predicting an even bigger 2012...three times bigger to be exact.

Taxpayers Against Fraud Education Fund spokesman Pat Burns made this amazing prediction in the Corporate Crime Reporter recently, and while Pat is not exactly known for understating anything, there is reason to believe that he was being a little conservative.

Of course, many things will affect the total -- for example, some of them might bleed over into 2013 through no fault of anyone....

Those 2009 bi-partisan changes to the FCA sure did help out...

Copyright 2011 Zachary A. Kitts

The Year 2011 Review: A New Record False Claims Act Recoveries

zkitts@cookkitts.com (Zachary Kitts) — Sat, 24 Dec 2011 12:41:46 GMT

Earlier this week, the United States Department of Justice announced that slightly more than $3 billion was recovered in 2011 using the federal False Claims Act -- this amount represents a new record for False Claims Act recoveries in a single year. The complete text of the DoJ press release is included below the break or you can click here.

Perhaps most importantly, the DoJ acknowledged the vital role that qui tam whistleblowers play in the government's efforts to fight fraud. Of the total $3 billion recovered, more than $2.8 billion was recovered in cases filed by qui tam whistleblowers! For those of you doing the math that's a total of 94%.

I'll repeat that -- 94% of the money recovered by the government was the result of a whistleblower coming forward with first-hand information about fraud on the government.

If there is any mechanism anywhere else in the world that allows a single person to hire a lawyer and take on some of the biggest, wealthiest, most influential companies in the world in the name of the government I don't know where it is.

Now here is the take-away message -- many people think that in 2012 the record of $3 billion will not only be surpassed but will be doubled or trebled....

________________________________

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, December 19, 2011

Justice Department Recovers $3 Billion in False Claims Act Cases in Fiscal Year 2011

Department Sets Records for Recoveries in Health Care and War-Related Fraud Annual Recoveries in Whistle Blower Cases Reach All Time High

WASHINGTON – The Justice Department secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2011, Tony West, Assistant Attorney General for the Civil Division, announced today. This is the second year in a row that the department has surpassed $3 billion in recoveries under the False Claims Act, bringing the total since January 2009 to $8.7 billion – the largest three-year total in the Justice Department’s history.

The $3 billion total for fiscal year 2011 includes a record $2.8 billion in recoveries under the whistleblower provisions of the False Claims Act, which is the government’s primary civil remedy to redress false claims for federal money or property, such as Medicare benefits, payments on military contracts, and federal subsidies and loans. The department has recovered more than $30 billion under the False Claims Act since the act was substantially amended in 1986. The 1986 amendments strengthened the act and increased the incentives for whistle blowers to file lawsuits on behalf of the government. That in turn led to an unprecedented number of investigations and greater recoveries.

“Twenty-eight percent of the recoveries in the last 25 years were obtained since President Obama took office,”Assistant Attorney General West said. “These record-setting results reflect the extraordinary determination and effort that this administration, and Attorney General Eric Holder in particular, have put into rooting out fraud, recovering taxpayer money and protecting the integrity of government programs.”

Assistant Attorney General West noted that the $3 billion recovered this year included $2.4 billion in recoveries involving fraud committed against federal health care programs. Most of these recoveries are attributable to the Medicare and Medicaid programs administered by the Department of Health and Human Services (HHS). They also include the TRICARE program administered by Department of Defense (DoD), the Federal Employees Health Benefits program administered by the Office of Personnel Management and Veterans Administration health programs.

Fighting health care fraud is a top priority for the Obama Administration. On May 20, 2009, the Attorney General and HHS Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement. Since January 2009 alone, the department has used the False Claims Act to recover more than $6.6 billion in federal health care dollars. This is more recovered under the act than in any other three-year period.

The historic $2.8 billion recovered in whistle blower cases came from suits filed under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions allow private citizens, known as relators, to file lawsuits on behalf of the government. In the 25 years since the False Claims Act was substantially amended, whistle blowers have filed more than 7,800 actions under the qui tam provisions. Qui tam suits hit a peak of 638 this past year, after hovering in the 300s and low 400s for much of the decade.

Assistant Attorney General West thanked the courageous citizens who have come forward to report fraud, often at great personal risk: “We are tremendously grateful to whistle blowers who have brought fraud allegations to the government’s attention and assisted us in this public-private partnership to fight fraud,” he said.

In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act, including enhancements to the qui tam provisions to encourage whistle blowers to come forward with allegations of fraud. In this 25^th anniversary year of the 1986 amendments, Assistant Attorney General West paid tribute to the bill’s sponsors, saying that “without their foresight, the breadth of the recoveries we announce here today would not have been possible.” He also expressed his gratitude to Senator Patrick J. Leahy, chairman of the Senate Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.

Assistant Attorney General West also applauded Congress’ passage of the Affordable Care Act (ACA) in 2010, which reenforced the government’s ability to redress fraud in the nation’s health care system. Among many other changes, the ACA amended the False Claims Act to provide additional incentives for whistle blowers to report fraud to the government and strengthened the provisions of the federal health care Anti-Kickback Statute.

Enforcement actions involving the pharmaceutical industry were the source of the largest recoveries this year. In all, the department recovered nearly $2.2 billion in civil claims against the pharmaceutical industry in fiscal year 2011, including $1.76 billion in federal recoveries and $421 million in state Medicaid recoveries. These cases included $900 million from eight drug manufacturers to resolve allegations that they had engaged in unlawful pricing to increase their profits. Additionally, GlaxoSmithKline PLC paid $750 million to resolve criminal and civil allegations that the company knowingly submitted, or caused to be submitted, false claims to government health care programs for adulterated drugs and for drugs that failed to conform with the strength, purity or quality specified by the Food and Drug Administration.

Adding to its successes under the False Claims Act, the department obtained 21 criminal convictions and $1.3 billion in criminal fines, forfeitures, restitution, and disgorgement under the Food, Drug and Cosmetic Act (FDCA). The FDCA’s criminal provisions are enforced by the Civil Division’s Consumer Protection Branch.

In addition to health care, the department continued its aggressive pursuit of fraud in government procurement and other forms of financial fraud, including grant, housing and mortgage fraud that emerged in the wake of the financial crisis. In November 2009, President Obama established the Financial Fraud Enforcement Task Force to hold accountable the individuals and corporations who contributed to the crisis as well as those who would claim illegal advantage through false claims for funds intended to stimulate economic recovery. Of the $3 billion in fiscal year 2011 recoveries, these non-war related procurement and consumer-related financial fraud cases accounted for nearly $358 million.

Overall, the department recovered $422 million in fiscal year 2011 in procurement fraud cases, including $89.3 million in recoveries in connection with the wars in Southwest Asia. This brings civil fraud recoveries in connection with the wars in Southwest Asia since January 2009 to $153.4 million, and the total amount recovered in procurement fraud cases during that time to $1.5 billion, again a greater amount than in any previous three-year period.

Assistant Attorney General West expressed his deep appreciation for the dedicated public servants who contributed to the investigation and prosecution of these cases. These individuals include attorneys, investigators, auditors and other agency personnel throughout the Civil Division, the U.S. Attorneys’ Offices, HHS, DoD and the many other federal and state agencies.

There is no new thing under the Sun … especially fraud, waste and abuse in government spending (and the need for the Virginia Fraud Against Taxpayers Act and federal False Claims Act)

zkitts@cookkitts.com (Zachary Kitts) — Tue, 20 Dec 2011 17:42:25 GMT

Anyone who has ever googled the words "qui tam" or "federal False Claims Act" has certainly found the basic history of these concepts. In a nutshell, the history can be stated as follows: fraud on government coffers was rampant during the American Civil War (although Virginians do not find the name "Civil War" offensive, as a general rule we prefer the "War Between the States" which is more accurate.)

The problem was especially acute for the Union. This of course was a direct result of the great advantage in material wealth enjoyed by the North. The Union army tried to purchase horses and got mules; when they purchased gunpowder they got sawdust, and so on.

So I think that readers will find Shelby Foote's treatment of this topic in his masterpiece The Civil War: A Narrative Vol. I quite interesting. In particular, Foote discusses problems related to General John C. Fremont and Secretary of War Simon Cameron.

Take Fremont for example. Fremont served as the commanding Union General in the Western United States for a brief period during 1861. His command was brief primarily because of his megalomania and incompetence—a deadly combination if ever there was one—but there were other problems as well.

Specifically Fremont had a graft problem.

In fact more than $12 million disappeared from Fremont's department during his brief three month stint in 1861. (That is more than $287 million in 2010 dollars.) Fremont was unable to account for this money – and Lincoln suspected that much of it had lined his own pockets and the pockets of his friends in the contracting business. In any event, then as now, a failure to be able to trace enormous amounts of money speaks for itself and Fremont was sacked as the war kicked off.

Secretary of War Simon Cameron was another facet of the problem. In my estimation his problem is more typical of what we see in modern government.

Foote writes:

… for months [leading up to Cameron's termination] there had been reports of waste and graft in the war department; of contracts strangely let; of shoddy cloth, tainted pork, spavined horses and guns that would not shoot; of the Vermont wholesaler who boasted, grinning, that "You can sell anything to the government at any price you've got the guts to ask."

Unlike Fremont Cameron was not personally benefiting from fraud and false claims by contractors. In fact, Cameron had two primary flaws in Foote's analysis – Cameron was susceptible to flattery and lax in his management of the business side of the war. Not only is that is another deadly combination, it is one that we have in abundance in today's government.

Copyright 2011 Zachary A. Kitts

Review of Significant 2011 Events for the Virginia Fraud Against Taxpayers Act

zkitts@cookkitts.com (Zachary Kitts) — Wed, 14 Dec 2011 17:49:57 GMT

This was a significant year for the Virginia Fraud Against Taxpayers Act and for qui tam litigation in Virginia, so as the year winds down it only seems fitting to review some of the key developments.

But you don't have to take my word for it. Back in July Gibson Dunn published its 2011 Mid-Year False Claims Act Update 2011 Mid-Year False Claims Act Update which is well worth a read.

In addition to an exhaustive treatment of false claims act legislative activity from each state, the Gibson Dunn talks about the 2011 amendments to our Virginia state false claims act. Additional coverage is given the Attorney General Cuccinelli's intervention in the Bank of New York Mellon case earlier this year.

On a side note, I read various update-style newsletters from firms big and small across the country. The information published by Gibson Dunn is always top-notch, which is *not* something I can say for all of the law firm publications I receive....

More to follow in this year end-review.





Copyright 2011 Zachary A. Kitts

Fairfax County Circuit Court Clerk John Frey Jumps Into the Attorney General Race

zkitts@cookkitts.com (Zachary Kitts) — Sat, 10 Dec 2011 20:14:58 GMT

Important news in the Virginia Attorney General race came in late this week -- Fairfax County Circuit Court Clerk John Frey announced that he would seek the GOP nomination for Attorney General.

The announcement came as a surprise to most, even those active in Republican circles in Fairfax County. As to Frey's chances, there is an interesting analysis by the Not Larry Sabato blog which raises some good points in his favor. Perhaps most importantly, Frey was re-elected county-wide in 2007 election, and was the only Republican to do so in that election cycle.

Moreover, Frey's knowledge of and success in retail politics should not be underestimated. He enjoys wide bipartisan support not only because he runs a tight ship at the Fairfax County Courthouse (which is important to every lawyer practicing in that Court) but also because more or less everyone who meets John genuinely likes him.

And on the topic of primary interest to this blog, the Virginia Fraud Against Taxpayers Act and qui tam litigation in Virginia, I can say for certain that Mr. Frey has more experience with the statute than the other candidates who have announced so far. I say that because filing a VFATA case in a Virginia Circuit Court is much more complicated than filing a normal civil action and I have personally filed several Virginia Fraud Against Taxpayers Act cases in Mr. Frey's Court. Each time, he took the time to read the statute and prepare for the filing.

Even more important, John also understands the statute, and anyone who wants to properly do the job of Virginia Attorney General will need to understand it. Attorney General Cuccinelli has broken new ground in the use of the Virginia Fraud Against Taxpayers Act, but there remains much to be done.

This is shaping up to be a very interesting primary indeed.

Copyright 2011 Zachary A. Kitts

More Candidates for Virginia Attorney General Jump Into the Fray

zkitts@cookkitts.com (Zachary Kitts) — Tue, 06 Dec 2011 16:04:57 GMT

The 2013 race for Virginia Attorney General (which started last week) is now in full swing.

The first Republican to announce his intent to seek the nomination was Mark Obenshain, and he was quickly followed by Rob Bell and Dave Foster.

On the Democratic side, there have been murmuring that recently ousted Del. Ward Armstrong will seek the Democratic nomination, but nothing definite.

As a quick caveat, this blog is dedicated to the Virginia Fraud Against Taxpayers Act and to qui tam litigation in Virginia and elsewhere. As such, I have an obvious interest in who occupies the Attorney General's office -- but this blog is strictly non-partisan, and so a candidate from either party who will dedicate resources to fighting fraud on our state coffers will get my full support.

And how, you might ask, could a candidate do that? First and foremost, a candidate could do that by pledging to dedicate resources to the fight against fraud by establishing a special litigation unit in the office just to handle affirmative civil enforcement of the VFATA.

More to come....stay tuned

Copyright 2011 Zachary A. Kitts

BREAKING NEWS: ATTORNEY GENERAL KEN CUCCINELLI TO RUN FOR GOVERNOR OF VIRGINIA IN 2013

zkitts@cookkitts.com (Zachary Kitts) — Thu, 01 Dec 2011 11:44:41 GMT

It is that time again Virginia -- the 2013 state-wide election cycle kicked off today with an "unofficial official" announcement that Virginia Attorney General Ken Cuccinelli is running for Governor of the Commonwealth in 2013.

Anita Kumar at the Washington Post (usually referred to in this blog as WaPo) has the scoop as does the Richmond Times Dispatch and others by now.

For the last year or so, Cuccinelli had said he intended to run for re-election as Attorney General. His intent in this regard was also consistent with other intelligence gleaned from the Virginia rumor mill. The theory ran that Mark Warner had decided to not run for re-election to the U.S. Senate in 2015 (with the ultimate intent of running for Governor of Virginia again).

So, Cuccinelli was rumored to be running for re-election to his current post in 2013, with an eye towards running for the open Senate seat in 2014. But not anymore.

This blog is of course non-political and is not affiliated with any political party. I support vigorous enforcement of *all* of the laws of the Commonwealth, and will support any candidate for office who makes affirmative civil enforcement of the Virginia Fraud Against Taxpayers Act a priority.

A handful of political operatives have dropped hints about a potential run for AG in 2013, and as new developments occur we will keep readers posted.

Copyright 2011 Zachary A. Kitts