The State of Alabama is hoping to accomplish with the Alabama Medicaid False Claims Act (SB-367) something akin to what the federal government has done with the Medicare Secondary Payor Act. Presently, Alabama does not have a specific remedy in civil court to pursue damages sustained when someone makes a false or fraudulent Medicaid claim. The Alabama Medicaid False Claims Act would provide that someone who makes a false claim or commits fraud against the Alabama Medicaid program would be liable to the state for (a) triple the amount of damages sustained, (b) a civil penalty, and (c) associated costs, including attorneys’ fees.

Categories of Violators

Under the proposed Alabama Medicaid False Claims Act, there are two categories of violators:

1. Persons Who Knowingly Defraud

A person who knowingly presents a fraudulent claim for approval or payment to Alabama Medicaid; a person who knowingly makes or uses a false or fraudulent document material to a false or fraudulent claim to Alabama Medicaid; and/or a person who knowingly makes or uses a false record or statement material to an obligation to pay or transmit money or property to Alabama Medicaid (or knowingly conceals or avoids/decreases an obligation to pay Alabama Medicaid. Any person who conspires with a violator in any of these areas is likewise liable for the violation. There is no requirement to prove specific intent to defraud.

Violators in this first category would be subject to the following penalties: a civil penalty between $5,500-$11,000 for each claim, three times the amount of damages the state sustains because of the false or fraudulent act of that person, and the costs of any lawsuit brought to recover any penalty or damages.

2. Violators Who Cooperate

The following persons will face reduced damages: (a) a person who commits a violation but furnishes the investigating state official with all the information they know of within 30 days after obtaining the information; (b) a person a fully cooperates with any investigation; and (c) at the time of the cooperation, the person is not facing civil or criminal actions related to the violation.

For persons who fit the second category and are found liable, a court will assess “not less than two times the amount of damages” sustained by the state.

Oversight by the Attorney General

The Alabama Medicaid False Claims Act directs the Attorney General to bring civil actions in the name of the State of Alabama for false or fraudulent actions against the Alabama Medicaid program. The Attorney General will have the burden of clearly showing the state’s rights are being violated by the accused person, and the state will suffer immediate and irreparable injury, loss, or damage.

There are also provisions whereby a private person may bring a civil action under the Alabama Medicaid False Claims Act on behalf of himself and the State of Alabama, in the name of the state.

Statute of Limitations

The Attorney General must bring a civil action under the act (a) within 6 years after the date on which the violation occurred, or (b) within three years after the date on which the facts material to the violation became known or should reasonably have been known of the state official charged with responsibility to act, but in no event more than 10 years after the date on which the violation is committed (whichever occurs last).

You can additional reading and analysis on this topic from the folks at Maynard Cooper.