Overview of the State Statute. Texas enacted the Medicaid Fraud Prevention Act (TMFPA or Act) in 1995 to establish a cause of action for false claims for payment from the Medicaid program. The TMFPA provides that the Attorney General or a private citizen may prosecute cases under the Act in the name of the State of Texas, and grants the Attorney General the authority to issue civil investigation demands (CID) to investigate potential Medicaid fraud. Tex. Hum. Res. Code §§ 36.001-132
In February 2013, the Texas Attorney General reported that since 2002, it has recovered approximately $1.01 billion under the TMFPA for the state and local governments.
Comparison with FCA. Unlike the federal False Claims Act, which applies broadly to all federal claims for payment or reimbursement (other than claims under the Internal Revenue Code), the TMFPA covers only Medicaid fraud. It also differs from the federal FCA in other minor respects. For example:
- In addition to imposing penalties in the range of $5,500 to $11,000 for each violation (like the federal False Claims Act), the TMFPA also provides for penalties ranging from $5,500 to $15,000 for unlawful acts that result in injuries to elderly, disabled, or minor persons. Id. § 36.052(a)(3); compare 31 U.S.C. § 3729(a)(1)(G).
- Under the TMFPA, qui tam complaints remain sealed for 180 days, as opposed to 60 days under the federal FCA. Tex. Hum. Res. Code § 36.101; 31 U.S.C. § 3730(b)(2).
- The TMFPA has no statute of limitations whereas the federal FCA bars civil actions brought more than 6 years after the date on which a violation is committed or more than 3 years after the violation is discovered (but not more than 10 years after it occurred). 31 U.S.C. § 3731(b). There is some dispute, however, about whether Texas’s residual 4-year statute of limitations applies to actions brought by relators where the Attorney General does not intervene. See U.S. v. Bristol-Myers Squibb Co., 587 F. Supp. 2d 805, 817-18 (E.D. Tex. 2008) (holding that where the state has not intervened in a TMFPA action, the relator is not in “direct identity” with the state, the right of action belongs to the relator, and it is therefore subject to Texas’ 4-year residual limitations period).
Recent Amendments to the TMFPA
In 2007, Texas amended the TMFPA to permit private plaintiffs or relators to pursue qui tam actions when the Attorney General does not intervene so that it could qualify for financial incentives provided by the 2005 federal Deficit Reduction Act (DRA). Under the DRA, a state is eligible to receive an additional 10% recovery in Medicaid-related false claims actions if, among other things, the state’s false claims act is at least as effective in rewarding and facilitating qui tam actions as the federal FCA.
Texas currently qualifies for these financial incentives. However, the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services sent two letters to the Texas Attorney General, dated March 21, 2011 and August 31, 2011, stating that the Texas statute no longer complies with the DRA as a result of recent amendments to the federal FCA. See https://oig.hhs.gov/fraud/docs/falseclaimsact/Texas.pdf and https://oig.hhs.gov/fraud/docs/falseclaimsact/texas-supplement.pdf. The OIG has given Texas a grace period until August 31, 2013 to amend the TMFPA.
Texas enacted several amendments to the TMFPA in its 2011 legislative session in response to the OIG’s March 21, 2011 letter. S.B. 544. However, it has not proposed or enacted legislation in response to the OIG’s supplemental August 31, 2011 letter, in which the OIG asserted that the TMFPA does not provide for as long of a statute of limitations as the federal FCA, citing U.S. v. Bristol-Myers Squibb Co., 587 F. Supp. 2d 805, 817-18 (E.D. Tex. 2008). In May 2012, the Texas Attorney General responded that there is no statute of limitations applicable to the TMFPA under any circumstance and that the TMFPA complies with the DRA. See Letter from Texas Attorney General. The Texas Attorney General further requested that the OIG conduct an additional review of the TMFPA and determine that it complies with the DRA. Id.
The OIG has not yet ruled whether the TMFPA complies with the DRA, so we anticipate further developments before the August 31, 2013 compliance deadline.