Michigan Medicaid False Claim Act

HB-4577, As Passed Senate, December 6, 2005
SENATE SUBSTITUTE FOR HOUSE BILL NO. 4577

A bill to amend 1977 PA 72, entitled
"The medicaid false claim act,"
by amending the title and section 11 (MCL 400.611), the title as
amended by 1982 PA 518, and by adding sections 10a, 10b, and 10c.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to prohibit fraud in the obtaining of benefits or
payments in connection with the medical assistance program; to
prohibit kickbacks or bribes in connection with the program; to
prohibit conspiracies in obtaining benefits or payments; to
authorize the attorney general to investigate alleged violations of
this act; to provide for the appointment of investigators by the
attorney general; to ratify prior appointments of attorney general
investigators; to provide for civil actions to recover money
received by reason of fraudulent conduct; to provide for
receiverships of residential health care facilities; to prohibit
retaliation; to provide for certain civil fines; and to prescribe
remedies and penalties.
Sec. 10a. (1) Any person may bring a civil action in the name
of this state under this section to recover losses that this state
suffers from a violation of this act. A suit filed under this
section shall not be dismissed unless the attorney general has been
notified and had an opportunity to appear and oppose the dismissal.
The attorney general waives the opportunity to oppose the dismissal
if it is not exercised within 28 days of receiving notice.
(2) If a person other than the attorney general initiates an
action under this section, the complaint shall remain under seal
and the clerk shall not issue the summons for service on the
defendant until after the time for the attorney general's election
under subsection (3) expires. At the time of filing the complaint,
the person shall serve a copy of the complaint on the attorney
general and shall disclose, in writing, substantially all material
evidence and information in the person's possession supporting the
complaint to the attorney general.
(3) The attorney general may elect to intervene in an action
under this section. Before the expiration of the later of 90 days
after service of the complaint and related materials or any
extension of the 90 days that is requested by the attorney general
and granted by the court, the attorney general shall notify the
court and the person initiating the action of 1 of the following:
(a) That the attorney general will proceed with the action for
this state and have primary responsibility for proceeding with the
action.
(b) That the attorney general declines to take over the action
and the person initiating the action has the right to proceed with
the action.
(4) If an action is filed under this section, a person other
than the attorney general shall not intervene in the action or
bring another action on behalf of this state based on the facts
underlying the action.
(5) If the attorney general elects to proceed with the action
under subsection (3) or (6), the attorney general has primary
responsibility for prosecuting the action and may do all of the
following:
(a) Agree to dismiss the action, notwithstanding the objection
of the person initiating the action, but only if that person has
been notified of and offered the opportunity to participate in a
hearing on the motion to dismiss.
(b) Settle the action, notwithstanding the objection of the
person initiating the action, but only if that person has been
notified of and offered the opportunity to participate in a hearing
on the settlement and if the court determines that the settlement
is fair, adequate, and reasonable under the circumstances. Upon a
showing of good cause, the settlement hearing may be held in
camera.
(c) Request the court to limit the participation of the person
initiating the action. If the attorney general demonstrates that
unrestricted participation by the person initiating the action
during the litigation would interfere with or unduly delay the
attorney general's prosecution of the case or would be repetitious,
irrelevant, or unduly harassing, the court may do any of the
following:
(i) Limit the number of the person's witnesses.
(ii) Limit the length of the testimony of the person's
witnesses.
(iii) Limit the person's cross-examination of witnesses.
(iv) Otherwise limit the person's participation in the
litigation.
(6) If the attorney general notifies the court that he or she
declines to take over the action under subsection (3), the person
who initiated the action may proceed with the action. At the
attorney general's request and expense, the attorney general shall
be provided with copies of all pleadings filed in the action and
copies of all deposition transcripts. Notwithstanding the attorney
general's election not to take over the action, the court may
permit the attorney general to intervene in the action at any time
upon a showing of good cause and, subject to subsection (7),
without affecting the rights or status of the person initiating the
action.
(7) Upon a showing, conducted in camera, that actions of the
person initiating the action during discovery would interfere with
the attorney general's investigation or prosecution of a criminal
or civil matter, the court may stay the discovery for not more than
90 days. The court may extend the stay upon a further showing that
the attorney general is pursuing the investigation or proceeding
with reasonable diligence and the discovery would interfere with
the ongoing investigation or proceeding.
(8) As an alternative to an action permitted under this
section, the attorney general may pursue a violation of this act
through any alternate remedy available to this state, including an
administrative proceeding. If the attorney general pursues an
alternate remedy, a person who initiated an action under this
section shall have equivalent rights in that proceeding to the
rights that the person would have had if the action had continued
under this section to the extent consistent with the law governing
that proceeding. Findings of fact and conclusions of law that
become final in an alternative proceeding shall be conclusive on
the parties to an action under this section. For purposes of this
subsection, a finding or conclusion is final if it has been finally
determined on appeal to the appropriate court, if the time for
filing an appeal with respect to the finding or conclusion has
expired, or if the finding or conclusion is not subject to judicial
review.
(9) Subject to subsections (10) and (11), if a person other
than the attorney general prevails in an action that the person
initiates under this section, the court shall award the person
necessary expenses, costs, reasonable attorney fees, and, based on
the amount of effort involved, the following percentage of the
monetary proceeds resulting from the action or any settlement of
the claim:
(a) If the attorney general intervenes, 15% to 25%.
(b) If the attorney general does not intervene, 25% to 30%.
(10) If the court finds an action under this section to be
based primarily on disclosure of specific information that was not
provided by the person bringing the action, such as information
from a criminal, civil, or administrative hearing in a state or
federal department or agency, a legislative report, hearing, audit,
or investigation, or the news media, and the attorney general
proceeds with the action, the court shall award the person bringing
the action no more than 10% of the monetary recovery in addition to
reasonable attorney fees, necessary expenses, and costs.
(11) If the court finds that the person bringing an action
under this section planned, initiated, or participated in the
conduct upon which the action is brought, then the court may reduce
or eliminate, as it considers appropriate, the share of the
proceeds of the action that the person would otherwise be entitled
to receive. A person who is convicted of criminal conduct arising
from a violation of this act shall not initiate or remain a party
to an action under this section and is not entitled to share in the
monetary proceeds resulting from the action or any settlement under
this section.
(12) A person other than the attorney general shall not bring
an action under this section that is based on allegations or
transactions that are already the subject of a civil suit, a
criminal investigation or prosecution, or an administrative
investigation or proceeding to which this state or the federal
government is already a party. The court shall dismiss an action
brought in violation of this section.
(13) Unless the person is the original source of the
information, a person, other than the attorney general, shall not
initiate an action under this section based upon the public
disclosure of allegations or transactions in a criminal, civil, or
administrative hearing, in a state or federal legislative,
investigative, or administrative report, hearing, audit, or
investigation, or from the news media. The person is the original
source if he or she had direct and independent knowledge of the
information on which the allegations are based and voluntarily
provided the information to the attorney general before filing an
action based on that information under this section.
(14) This state and the attorney general are not liable for
any expenses, costs, or attorney fees that a person incurs in
bringing an action under this section. Any amount awarded to a
person initiating an action to enforce this act is payable solely
from the proceeds of the action or settlement.
(15) If a person proceeds with an action under this section
after being notified that the attorney general has declined to
intervene and the court finds that the claim was frivolous, as
defined in section 2591 of the revised judicature act of 1961, 1961
PA 236, MCL 600.2591, the court shall award the prevailing
defendant actual and reasonable attorney fees and expenses and, in
addition, shall impose a civil fine of not more than $10,000.00.
The civil fine shall be deposited into the Michigan medicaid
benefits trust fund established in section 5 of the Michigan trust
fund act, 2000 PA 489, MCL 12.255.
Sec. 10b. (1) The attorney general may recover all costs this
House Bill No. 4577 as amended December 1, 2005
state incurs in the litigation and recovery of medicaid restitution
under this act, including the cost of investigation and attorney
fees. The attorney general shall retain the amount received for
activities under this act, excluding amounts for restitution, court
costs, and fines, not to exceed the amount of this state's funding
match for the medicaid fraud control unit.
(2) The attorney general shall not retain amounts under this
section until all the restitution awarded in the proceeding has
been paid.
(3) Costs that the attorney general recovers in excess of the
state's funding match for the medicaid fraud control unit shall be
deposited in the Michigan medicaid benefits trust fund established
in section 5 of the Michigan trust fund act, 2000 PA 489, MCL
12.255.
Sec. 10c. (1) An employer shall not discharge, demote,
suspend, threaten, harass, or otherwise discriminate against an
employee in the terms and conditions of employment because the
employee initiates, assists in, or participates in a proceeding or
court action under this act or because the employee cooperates with
or assists in an investigation under this act. This prohibition
does not apply to an employment action against an employee who < COURT FINDS BROUGHT A FRIVOLOUS CLAIM, AS DEFINED IN SECTION 2591 OF THE REVISED JUDICATURE ACT OF 1961, 1961 PA 236, MCL 600.2591; THE COURT FINDS TO HAVE PLANNED, INITIATED, OR PARTICIPATED IN THE CONDUCT UPON WHICH THE ACTION IS BROUGHT; OR>> is
convicted of criminal conduct arising from a violation of this act.
(2) An employer who violates this section is liable to the
employee for all of the following:
(a) Reinstatement to the employee's position without loss of
seniority.
(b) Two times the amount of lost back pay.
(c) Interest on the back pay.
(d) Compensation for any special damages.
(e) Any other relief necessary to make the employee whole.
Sec. 11. (1) An Except as provided in subsection (2), an
action brought in connection with a medicaid matter under this act
may shall be filed in the courts of Ingham county and may be
prosecuted to final judgment in satisfaction there.
(2) A person may bring a civil action under section 10a in any
county in which venue is proper. If the attorney general elects to
intervene under section 10a(3) or (6) and the court grants the
request, upon motion by the attorney general, the court shall
transfer the action to the circuit court in Ingham county.
(3) (2) Process issued by a court in which an action is
filed may be served anywhere in the state.

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