BILL ANALYSIS �
AB 2492
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CONCURRENCE IN SENATE AMENDMENTS
AB 2492 (Blumenfield)
As Amended June 18, 2012
Majority vote
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|ASSEMBLY: |46-26|(May 3, 2012) |SENATE: |24-12|(August 13, |
| | | | | |2012) |
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Original Committee Reference: JUD.
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 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.
The Senate amendments correct a typographical drafting error.
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AS PASSED BY THE ASSEMBLY , this bill was substantially similar to
the version approved by the Senate.
FISCAL EFFECT : According to the Senate Appropriations Committee:
1)Enacting conforming changes to the CFCA preserves the state's
qualification for federal financial incentive awards related to
recoveries of Medicaid false claims. Since 2009, annual federal
incentive awards received have been in the range of $20 million to
$40 million, which are deposited in the Health Care Deposit Fund
and the False Claims Act Fund.
2)Minor, absorbable costs to the Department of Justice Medi-Cal
Fraud Control Unit and the Department of Health Care Services
Medical Review Branch internal claims processes and
investigations.
3)Potential ongoing costs in the range of $23,000 to $76,000
(General Fund) to the Judicial Branch to the extent there is an
increase in the number of limited and/or unlimited civil filings
under the CFCA, offset to a degree by increased civil penalty
revenues.
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 because they "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
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well as conform to other 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 contend 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.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334 FN:
0004466
AB 2492
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