Ohio needs False Claims Act for taxpayers
Bipartisanship may be scarce in Washington and Columbus alike, but both sides of the aisle know Ohio taxpayers ought not foot the bill for fraud. That’s why State Reps. Paula Hicks-Hudson and Jeffrey Crossman just introduced a commonsense bill: the Ohio False Claims Act, which would encourage and reward whistleblowers who report fraud against Ohio.
The proposal is modeled after the federal False Claims Act (FCA), a vehicle to empower and incentivize regular people to combat abuse of taxpayer funds. Under the FCA, anyone can file a whistleblower lawsuit on the government’s behalf – and be awarded a portion of the funds ultimately recovered.
The bill’s benefit to Ohioans would be immediate. For instance, the federal agency that jointly funds state Medicaid programs offers states with qualifying reward laws an additional 10% of health care recoveries. When FCA recoveries for Medicaid fraud are divvied up, Ohio currently keeps about 31%. That share would jump to roughly 41% if the Ohio FCA becomes law. Until then, Ohio is leaving millions of Ohioans’ dollars on the table when the U.S. Justice Department recovers funds in cases involving Ohio Medicaid money.
The U.S. government already leverages the federal FCA to stop scams perpetrated in Ohio. Last year, the Department of Justice recovered over $20 million in a whistleblower-initiated case alleging fraudulent self-dealing at an Akron hospital system. The U.S. reached another $10 million settlement last year over a massive kickback scheme involving hospitals in Cambridge, Middle Point, and Gahanna. A whistleblower brought that case too. Already in 2022, a Dayton home health company settled FCA allegations over fraudulently inflated therapy bills.
None of this accounts for the billions of dollars the federal government recovered in nationwide settlements with opioid manufacturers and distributors accused of fueling the opioid crisis that claimed the lives of tens of thousands of Ohio residents. Some of the largest opioid recoveries in history involved FCA claims, including a $1.4 billion recovery from Reckitt Benckiser Group, $600 million from Indivior Solutions, and billions more from Purdue Pharma.
The numbers speak for themselves. In fiscal year 2021, the United States recovered $5.6 billion in taxpayer dollars through FCA settlements and judgments, a large proportion of which came from whistleblower-initiated suits.
Following the lucrative federal blueprint, most states already have whistleblower reward laws on the books and enforce them to return funds to state taxpayers and stop harmful misconduct. New York recovered more than $100 million in a single tax cheat case last year. Massachusetts recently went after mental health centers skimping on patient care by hiring unlicensed providers. Indiana is using its law to stop a pandemic-driven fraudulent mask sale scheme. And Texas relied on whistleblower tips to go after improper marketing by big pharma.
Meanwhile, Ohio is among the largest states without any FCA – something this proposed bill seeks to rectify.
Ohio’s bill is backed by two Democrats, but bipartisan support should be noncontroversial. U.S. Sen. Chuck Grassley (R-IA) has long championed the federal FCA. He authored crucial 1986 amendments to make the law friendlier to whistleblowers, transforming it into the powerful tool it is today. Last year, when Sen. Grassley proposed new amendments to further bolster the FCA, Ohio’s own U.S. Sen. Rob Portman, a Republican, signed on as a co-sponsor.
Whistleblowers have an especially impressive track record of fighting fraud in the healthcare industry. Since the 1986 amendments, whistleblower-initiated suits accounted for over 80% of dollars recovered in healthcare FCA cases. That figure remains remarkably consistent year over year, even as the federal government has implemented various new technologies to detect and prevent fraud on its own. The power of whistleblowers goes beyond the cases they generate. Some estimates say every FCA dollar recovered deters another $10 in fraud.
Simply put, well-placed insiders offer the most direct path to rooting out sophisticated, hard to detect frauds and, in turn, make would-be fraudsters think twice before cutting corners. If Ohio enacts the bill, all Ohioans will benefit.
Hallie Noecker and Max Voldman are whistleblower attorneys at Constantine Cannon.
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