BILL ANALYSIS �
AB 2492
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ASSEMBLY THIRD READING
AB 2492 (Blumenfield)
As Amended April 16, 2012
Majority vote
JUDICIARY 7-3 APPROPRIATIONS 12-4
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|Ayes:|Feuer, Atkins, Dickinson, |Ayes:|Fuentes, Blumenfield, |
| |Huber, Monning, | |Bradford, Charles |
| |Wieckowski, | |Calderon, Campos, Davis, |
| |Bonnie Lowenthal | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Gorell, Jones |Nays:|Donnelly, Nielsen, Norby, |
| | | |Wagner |
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SUMMARY : Amends various provisions of California's False Claim
Act (CFCA) to conform to the Federal False Claim Act.
Specifically, this bill , among other things:
1)Expands the ability of the Attorney General (AG) and other
government prosecutors to contest dismissal of false claims
actions on the basis of public disclosure, consistent with
federal law.
2)Allows current and former government employees to file a false
claims action for Medi-Cal fraud without exhausting internal
procedures, consistent with federal law.
3)Authorizes the court to reduce the share of proceeds that a
qui tam plaintiff would otherwise receive if the court finds
that the action was brought by the person who planned and
initiated the underlying violation, in conformity with federal
law.
4)Authorizes the court to award attorneys' fees to a prevailing
defendant in an action brought by a qui tam plaintiff or by
the state or political subdivision, consistent with federal
law.
5)Increases anti-retaliation protections for employees,
contractors or agents who pursue false claims actions in a
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manner consistent with federal law, including reinstatement
with the same seniority status, two times the amount of back
pay plus interest, and compensation for special damages.
6)Amends the statute of limitations for filing a false claims
complaint to conform to the federal statute of limitations,
and establishes a "relation-back" clause consistent with
federal law.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1) Making the conforming changes described above preserves
the state's ability to continue receiving federal incentive
awards in Medicaid-related false claims recoveries. These
awards have been in the range of $20 million to $30 million
annually since 2008.
2) Any additional costs to the AG would be absorbable, and
the courts may experience a minor increase in costs due to
additional filings under the CFCA.
COMMENTS : The federal Social Security Act (SSA) provides a
financial incentive for states to enact laws that establish
liability to the state for individuals that submit false or
fraudulent claims to the state Medicaid program. For a state to
qualify for this incentive, the state false claims law must meet
certain requirements enumerated under the SSA, as determined by
the Office of Inspector General (OIG) of the U.S. Department of
Health and Human Services (DHHS) in consultation with the
Department of Justice.
Earlier this year, OIG notified the California Attorney General
that the state is no longer in compliance with federal law that
allows California to potentially recover tens of millions of
taxpayer dollars in federal incentive awards on Medicaid-related
false claims recoveries. In its letter, the OIG methodically
listed a number of specific provisions of the California False
Claims Act that, in its determination, should be changed "were
not at least as effective in rewarding and facilitating qui tam
actions as the Federal False Claims Act." According to the
author, this bill is intended to make the changes "deemed
necessary by DHHS to maintain California's eligibility for the
10% Medicaid recovery awards, as well as conform to other
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amendments to the federal law made by Congress in 2010."
This bill therefore seeks to implement a number of changes to
the state False Claims Act, as identified by the OIG, that are
needed to conform CFCA to its federal counterpart and preserve
the state's eligibility for the federal funds. Among other
things, this bill modifies the definition of some key terms,
increases civil penalties, increases anti-retaliation
protections for employees and others who pursue false claims
actions, and clarifies application of the statute of
limitations, all consistent with federal law.
Opponents of the bill express concern with two major
provisions-the public disclosure bar and the award of attorneys'
fees to a prevailing defendant. With respect to the former,
they assert that the bill "eviscerates the public disclosure bar
- a limitation that prohibits private lawsuits by qui tam
plaintiffs who sue based on information already public, which
could expose employers to numerous frivolous lawsuits all based
on the same public facts. Instead, this bill would allow the
Attorney General or prosecutor for any reason to permit the
private plaintiff's lawsuit to go forward, even when it is based
on public information." Supporters of the bill note that the
public disclosure rule in this bill simply reflects existing
federal law, namely 31 United States Code Section 3730(e)(4),
that the Inspector General has indicated state law must conform
to in order to preserve California's eligibility for federal
incentive awards. In other words, opponents' objection to the
public disclosure rule in this bill appears to be an objection
to existing federal law that, if not conformed to in California,
could jeopardize access to significant federal incentive awards.
Opponents also contended that the bill's provision on prevailing
defendant's attorneys' fees is not in fact conforming to the
federal False Claims Act with respect to the award of attorneys'
fees to a prevailing defendant. The April 16 amendments seek to
reflect better conformity between the bill and federal law, and
were successful in removing the opposition of at least one other
opponent, the Southern California Contractors' Association. It
is unknown at the time of this analysis whether these remaining
opponents have changed their view of the bill in light of this
recent amendment to the attorneys' fees provision.
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Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
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