Bill Text: MI SB1023 | 2015-2016 | 98th Legislature | Introduced

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Bill Title: Human services; fraud; Medicaid false claim act; modify to comply with federal law. Amends secs. 2, 7, 10a, 10c & 12 of 1977 PA 72 (MCL 400.602 et seq.).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2016-06-08 - Referred To Committee On Health Policy [SB1023 Detail]

Download: Michigan-2015-SB1023-Introduced.html

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SENATE BILL No. 1023

 

 

June 8, 2016, Introduced by Senators HERTEL and SCHUITMAKER and referred to the Committee on Health Policy.

 

 

 

     A bill to amend 1977 PA 72, entitled

 

"The medicaid false claim act,"

 

by amending sections 2, 7, 10a, 10c, and 12 (MCL 400.602, 400.607,

 

400.610a, 400.610c, and 400.612), as amended by 2008 PA 421.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Benefit" means the receipt of money, goods, or anything

 

of pecuniary value.

 

     (b) "Claim" means any attempt to cause the department of

 

community health to pay out sums of money under the social welfare

 

act.request or demand made for a Medicaid payment, whether under

 

contract or otherwise, for money or property that is either of the

 

following:

 

     (i) Presented to an officer, employee, or agent of the state.

 

     (ii) Made to a contractor, grantee, or other recipient if the

 

money or property requested or demanded is used on the state's

 

behalf or to advance a state program or interest and the state

 

provides or has provided any portion of the money or property

 

requested or demanded or will reimburse the contractor, grantee, or

 

other recipient for any portion of the money or property.

 

     (c) "Department" means the department of health and human

 

services.

 

     (d) (c) "Deceptive" means making a claim or causing a claim to

 

be made under the social welfare act that contains a statement of

 

fact or that fails to reveal a fact, which statement or failure

 

leads the department to believe the represented or suggested state

 

of affair to be other than it actually is.

 

     (e) (d) "False" means wholly or partially untrue or deceptive.

 

     (f) (e) "Health facility or agency" means a health facility or

 

agency, that term as defined in section 20106 of the public health

 

code, 1978 PA 368, MCL 333.20106.

 

     (g) (f) "Knowing" and "knowingly" means mean that a person is

 

in possession of facts under which he or she is aware or should be

 

aware of the nature of his or her conduct and that his or her

 

conduct is substantially certain to cause the payment of a medicaid

 

Medicaid benefit. Knowing or knowingly includes acting in

 

deliberate ignorance of the truth or falsity of facts or acting in

 

reckless disregard of the truth or falsity of facts. Proof of

 

specific intent to defraud is not required.

 

     (h) "Material" means to have a natural tendency to influence,

or be capable of influencing, the payment or receipt of money or

 

property.

 

     (i) (g) "Medicaid benefit" means a benefit paid or payable

 

under a program for medical assistance for the medically indigent

 

in accordance with the social welfare act.

 

     (j) "Obligation" means an established duty, whether or not

 

fixed, arising from an express or implied contractual, grantor-

 

grantee, or licensor-licensee relationship, from a fee-based or

 

similar relationship, from statute or regulation, or from the

 

retention of any overpayment.

 

     (k) "Original source" means either of the following:

 

     (i) An individual who, before public disclosure, voluntarily

 

disclosed to the state or the department the information on which

 

the allegation or transaction in a claim is based.

 

     (ii) An individual who has knowledge that is independent of

 

and materially adds to the publicly disclosed allegation or

 

transaction, and who has voluntarily provided the information to

 

the state or the department before filing an action.

 

     (l) (h) "Person" means an individual, corporation,

 

association, partnership, or other legal entity.

 

     (m) (i) "Social welfare act" means the social welfare act,

 

1939 PA 280, MCL 400.1 to 400.119b.

 

     Sec. 7. (1) A person shall not make or present or cause to be

 

made or presented to an employee or officer of this state a claim

 

under the social welfare act, 1939 PA 280, MCL 400.1 to 400.119b,

 

upon or against the state, knowing the claim to be false.

 

     (2) A person shall not make or present or cause to be made or

presented a claim under the social welfare act , 1939 PA 280, MCL

 

400.1 to 400.119b, that he or she knows falsely represents that the

 

goods or services for which the claim is made were medically

 

necessary in accordance with professionally accepted standards.

 

Each claim violating this subsection is a separate offense. A

 

health facility or agency is not liable under this subsection

 

unless the health facility or agency, pursuant according to a

 

conspiracy, combination, or collusion with a physician or other

 

provider, falsely represents the medical necessity of the

 

particular goods or services for which the claim was made.

 

     (3) A person shall not knowingly make, use, or cause to be

 

made or used a false record or statement material to conceal,

 

avoid, or decrease an obligation to pay or transmit money or

 

property to the state pertaining to a claim presented under the

 

social welfare act or knowingly conceal or knowingly and improperly

 

avoid or decrease an obligation to pay or transmit money or

 

property to the state pertaining to a claim presented under the

 

social welfare act.

 

     (4) A person who that violates this section is guilty of a

 

felony punishable by imprisonment for not more than 4 years or a

 

fine of not more than $50,000.00, or both.

 

     Sec. 10a. (1) Any person may bring a civil action in the name

 

of this state under this section to recover losses that this state

 

suffers from a violation of this act. A suit filed under this

 

section shall not be dismissed unless the attorney general has been

 

notified and had an opportunity to appear and oppose the dismissal.

 

The attorney general waives the opportunity to oppose the dismissal

if it is not exercised within 28 days of receiving notice.

 

     (2) If a person other than the attorney general initiates an

 

action under this section, the complaint shall remain under seal

 

and the clerk shall not issue the summons for service on the

 

defendant until after the time for the attorney general's election

 

under subsection (3) expires. At the time of filing the complaint,

 

the person shall serve a copy of the complaint on the attorney

 

general and shall disclose, in writing, substantially all material

 

evidence and information in the person's possession supporting the

 

complaint to the attorney general.

 

     (3) The attorney general may elect to intervene in an action

 

under this section. Before the expiration of the later of 90 days

 

after service of the complaint and related materials or any

 

extension of the 90 days that is requested by the attorney general

 

and granted by the court, the attorney general shall notify the

 

court and the person initiating the action of 1 of the following:

 

     (a) That the attorney general will proceed with the action for

 

this state and have primary responsibility for proceeding with the

 

action.

 

     (b) That the attorney general declines to take over the action

 

and the person initiating the action has the right to proceed with

 

the action.

 

     (4) If an action is filed under this section, a person other

 

than the attorney general shall not intervene in the action or

 

bring another action on behalf of this state based on the facts

 

underlying the action.

 

     (5) If the attorney general elects to proceed with the action

under subsection (3) or (6), the attorney general has primary

 

responsibility for prosecuting the action and may do all of the

 

following:

 

     (a) Agree to dismiss the action, notwithstanding the objection

 

of the person initiating the action, but only if that person has

 

been notified of and offered the opportunity to participate in a

 

hearing on the motion to dismiss.

 

     (b) Settle the action, notwithstanding the objection of the

 

person initiating the action, but only if that person has been

 

notified of and offered the opportunity to participate in a hearing

 

on the settlement and if the court determines that the settlement

 

is fair, adequate, and reasonable under the circumstances. Upon a

 

showing of good cause, the settlement hearing may be held in

 

camera.

 

     (c) Request the court to limit the participation of the person

 

initiating the action. If the attorney general demonstrates that

 

unrestricted participation by the person initiating the action

 

during the litigation would interfere with or unduly delay the

 

attorney general's prosecution of the case or would be repetitious,

 

irrelevant, or unduly harassing, the court may do any of the

 

following:

 

     (i) Limit the number of the person's witnesses.

 

     (ii) Limit the length of the testimony of the person's

 

witnesses.

 

     (iii) Limit the person's cross-examination of witnesses.

 

     (iv) Otherwise limit the person's participation in the

 

litigation.

     (6) If the attorney general notifies the court that he or she

 

declines to take over the action under subsection (3), the person

 

who initiated the action may proceed with the action. At the

 

attorney general's request and expense, the attorney general shall

 

be provided with copies of all pleadings filed in the action and

 

copies of all deposition transcripts. Notwithstanding the attorney

 

general's election not to take over the action, the court may

 

permit the attorney general to intervene in the action at any time

 

upon a showing of good cause and, subject to subsection (7),

 

without affecting the rights or status of the person initiating the

 

action.

 

     (7) Upon a showing, conducted in camera, that actions of the

 

person initiating the action during discovery would interfere with

 

the attorney general's investigation or prosecution of a criminal

 

or civil matter, the court may stay the discovery for not more than

 

90 days. The court may extend the stay upon a further showing that

 

the attorney general is pursuing the investigation or proceeding

 

with reasonable diligence and the discovery would interfere with

 

the ongoing investigation or proceeding.

 

     (8) As an alternative to an action permitted under this

 

section, the attorney general may pursue a violation of this act

 

through any alternate remedy available to this state, including an

 

administrative proceeding. If the attorney general pursues an

 

alternate remedy, a person who initiated an action under this

 

section shall have equivalent rights in that proceeding to the

 

rights that the person would have had if the action had continued

 

under this section to the extent consistent with the law governing

that proceeding. Findings of fact and conclusions of law that

 

become final in an alternative proceeding shall be conclusive on

 

the parties to an action under this section. For purposes of this

 

subsection, a finding or conclusion is final if it has been finally

 

determined on appeal to the appropriate court, if the time for

 

filing an appeal with respect to the finding or conclusion has

 

expired, or if the finding or conclusion is not subject to judicial

 

review.

 

     (9) Subject to subsections (10) and (11), if a person other

 

than the attorney general or the attorney general prevails in an

 

action that the person initiates under this section, separate from

 

any monetary proceeds awarded under this act, the court shall award

 

the person necessary expenses, costs, reasonable attorney fees,

 

and, based on the amount of effort involved, the following

 

percentage of the monetary proceeds resulting from the action or

 

any settlement of the claim:

 

     (a) If the attorney general intervenes, not less than 15% to

 

25%.

 

     (b) If the attorney general does not intervene, not less than

 

25% to 30%.

 

     (10) If Unless opposed by the attorney general, if the court

 

finds an action under this section to be is not based primarily on

 

information disclosure of specific information that was not

 

provided by the person bringing the action, such as but is based

 

primarily on disclosure of specific information from relating to an

 

allegation or transaction in a state criminal, civil, or

 

administrative hearing in a which the state or federal department

or agency, its agent is a party, a state legislative or other state

 

report, hearing, audit, or investigation, or the news media, and

 

the attorney general proceeds with the action, the court may award

 

the person bringing the action no more than 10% of the monetary

 

recovery in addition to reasonable attorney fees, necessary

 

expenses, and costs.

 

     (11) If the court finds that the person bringing an action

 

under this section planned and initiated the conduct upon which the

 

action is brought, then the court may reduce or eliminate, as it

 

considers appropriate, the share of the proceeds of the action that

 

the person would otherwise be entitled to receive. A person who is

 

convicted of criminal conduct arising from a violation of this act

 

shall not initiate or remain a party to an action under this

 

section and is not entitled to share in the monetary proceeds

 

resulting from the action or any settlement under this section.

 

     (12) A In no event may a person other than the attorney

 

general shall not bring an action under this section that is based

 

on allegations or transactions that are the subject of a civil suit

 

or an administrative civil money penalty proceeding to which this

 

state or the federal government is already a party. The court shall

 

dismiss an action brought in violation of this section.

 

     (13) Unless the person is the original source of the

 

information, a person, other than the attorney general, shall not

 

initiate an action under this section based upon the public

 

disclosure of allegations or transactions in a criminal, civil, or

 

administrative hearing, in a state or federal legislative,

 

investigative, or administrative report, hearing, audit, or

investigation, or from the news media. The person is the original

 

source if he or she had direct and independent knowledge of the

 

information on which the allegations are based and voluntarily

 

provided the information to the attorney general before filing an

 

action based on that information under this section.

 

     (14) This state and the attorney general are not liable for

 

any expenses, costs, or attorney fees that a person incurs in

 

bringing an action under this section. Any amount awarded to a

 

person initiating an action to enforce this act is payable solely

 

from the proceeds of the action or settlement.

 

     (15) If a person proceeds with an action under this section

 

after being notified that the attorney general has declined to

 

intervene and the court finds that the claim was frivolous, as

 

defined in section 2591 of the revised judicature act of 1961, 1961

 

PA 236, MCL 600.2591, clearly frivolous, clearly vexatious, or

 

brought primarily for the purpose of harassment, the court shall

 

award the prevailing defendant actual and reasonable attorney fees

 

and expenses and, in addition, shall impose a civil fine of not

 

more than $10,000.00. The civil fine shall be deposited into the

 

Michigan medicaid Medicaid benefits trust fund established in

 

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (16) For the purpose of the statute of limitations, any

 

government complaint in intervention, whether filed separately or

 

as an amendment to the relator's complaint, shall relate back to

 

the filing date of the relator's complaint, to the extent that the

 

claim of the government arises out of the conduct, transaction, or

 

occurrence set forth, or attempted to be set forth, in the

relator's complaint.

 

     (17) Any information obtained by the attorney general or his

 

or her designee under this section may be shared with any qui tam

 

realtor if the attorney general or designee determines it is

 

necessary as part of a Medicaid false claims act investigation.

 

     Sec. 10c. (1) An employer shall not discharge, demote,

 

suspend, threaten, harass, or in any other manner, discriminate

 

against an employee, contractor, or agent, in the terms and

 

conditions of employment because the employee, contractor, or

 

agent, engaged in lawful acts, including initiating, assisting in,

 

or participating in the furtherance of an action under this act or

 

because the employee, contractor, or agent, cooperates with or

 

assists in an investigation under this act. This prohibition does

 

not apply to an employment action against an employee or agent or

 

an action relating to a contract for a contractor who the court

 

finds brought a frivolous claim, as defined in section 2591 of the

 

revised judicature act of 1961, 1961 PA 236, MCL 600.2591; claim

 

that was clearly frivolous, clearly vexatious, or brought primarily

 

for the purpose of harassment; the court finds to have planned and

 

initiated the conduct upon which the action is brought; or is

 

convicted of criminal conduct arising from a violation of this act.

 

     (2) An employer who A person that violates this section is

 

liable to the employee, contractor, or agent for all of the

 

following:

 

     (a) Reinstatement to the employee's or agent's position

 

without loss of seniority or reinstatement or renewal of the

 

contract.

     (b) Two times the amount of lost back pay or in the case of a

 

contractor, 2 times the amount of the damages arising from the

 

breach of contract.

 

     (c) Interest on the back pay or in the case of a contractor,

 

interest on the damages arising from the breach of contract.

 

     (d) Compensation for any special damages, including reasonable

 

attorney fees and litigation costs.

 

     (e) Any other relief necessary to make the employee,

 

contractor, or agent, whole.

 

     (3) A civil action under this subsection may not be brought

 

more than 3 years after the date when the retaliation occurred.

 

     Sec. 12. (1) A person who receives a benefit that the person

 

is not entitled to receive by reason of fraud or making a

 

fraudulent statement or knowingly concealing a material fact, or

 

who engages in any conduct prohibited by this statute, shall

 

forfeit and pay to the state the full amount received, and for each

 

claim a civil penalty of not less than $5,000.00 $5,500.00 or more

 

than $10,000.00 $11,000.00 plus triple the amount of damages

 

suffered by the state as a result of the conduct by the person.

 

     (2) The penalties under this section may be adjusted for

 

inflation in the same manner as provided for federal penalties

 

under the federal civil penalties inflation adjustment act of 1990,

 

Public Law 101-410.

 

     (3) (2) A criminal action need not be brought against the

 

person for that person to be civilly liable under this section.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.