Title XIX of the Social Security Act, 42 U.S.C. §§ 1396, et seq., establishes the Medicaid program, a federally-assisted grant program for the states. Medicaid enables the states to provide medical assistance and related services to needy individuals. 

The Centers for Medicare and Medicaid Services (CMS) administers Medicaid on the federal level. Within broad federal rules, however, each state decides who is eligible for Medicaid, the services covered, payment levels for services, and administrative and operational procedures. 

The Children’s Healthcare Insurance Program (CHIP) is similar to Medicaid and applies to children.

If you’ve witnessed Medicaid fraud and are considering becoming a whistleblower, experienced False Claims Act attorneys are your best source of information. Bracker & Marcus presents some basic detail here for your review before your initial case evaluation.

Does your state have its own False Claims Act?

Because Medicaid is partially funded by the federal government and partially funded by the states, the amount of the relator’s share is dependent in part on whether the state at issue has its own False Claims Act. 

If it does, then the same analysis applies as with Medicare, except that the federal government determines the relator’s share for the federal portion, and the state government (usually the state’s Medicaid Fraud Control Unit) determines the relator’s share for the state portion. This is often, but not always, the same percentage.

Most state False Claims Acts mirror the federal False Claims Act, and the relator’s share provisions are no different. In short, these cases are filed under seal while the government investigates the claims. If it intervenes in the case, and settles the claims or receives a judgment, the whistleblower is entitled to between 15% and 25% of the monetary recovery. 

If the government declines to intervene in the case, the whistleblower may be permitted to go forward with the litigation on the government’s behalf. If they achieve a settlement or judgment in this instance, they are entitled to between 25% and 30% of the recovery. 

These amounts may also be reduced if the whistleblower was the planner or initiator of the fraud, or the case was based on publicly-disclosed information. For more details as to how this process works and what factors are considered, see our page on How are Medicare whistleblower rewards paid?

If a state does not have its own False Claims Act, a relator is not entitled to any percentage of the state’s recovery. So, for example, if the settlement is for $1 million, and half of that is federal funds and half of that is state funds, then the relator’s share in a state without a False Claims Act would be based just on the federal half of $500,000. If the state has a False Claims Act, then the relator’s share would be based on the full amount.

This can get particularly confusing when multiple states are involved in a nationwide settlement. The states with False Claims Acts share their recovery with the whistleblower, but the states without False Claims Acts keep the money for themselves.

Federal Funding and State FCAs

Further confusing matters, the amount of federal funding varies by state. In many states, the burdens of Medicaid are shared fifty-fifty, but states with higher need receive more federal funding. So, a relator in one of those states may receive a relator’s share based on 70% of the recovery, for example.

So why would a state decide to have a False Claims Act? Why not freeload off the states that do have them, and keep the money for itself? To address that, states that have False Claims Acts with provisions at least as stringent as the federal version receive a 10-percentage-point increase in their share of amounts recovered.

Although that would not be enough to pay relators their share, many False Claims Act cases are brought without relators, and so overall, states would benefit from having their own FCA.

Who is the plaintiff in a Medicaid fraud case?

Lastly, all this depends on naming the states and the federal government as plaintiffs. If a whistleblower brings a state court action under just the state False Claims Act, they are likely not entitled to any amounts that are paid to the federal government. 

Similarly, if only the federal government is named, and the whistleblower fails to include relevant state False Claims Act counts, then they have no entitlement to the state share.

Thus, one might be tempted to name every state with a False Claims Act in every pleading, “just in case.” But other factors are certain to come into play if a whistleblower simply lacks information about the fraud occurring in every state. 

If you know about fraud being committed at a Georgia hospital, it is likely to involve primarily Georgia Medicaid patients, and so you may not have sufficient information to name any other, let alone every other, state with a False Claims Act. It could be inappropriate and unethical to allege in a sworn pleading that the entity is engaging in fraud on the New York Medicaid system without a factual basis for that allegation. 

Proceed Carefully, Hire Experienced Counsel

Making these essential determinations requires experienced False Claims Act counsel to walk the fine line between protecting your interests and your being sanctioned for pleading frivolous claims.

If you suspect Medicaid fraud, don’t walk into it blindly – you could be risking your reward. Book a free case evaluation with Bracker & Marcus LLC today.