Medicaid-fraud law needs extending

A law giving Washington’s attorney general and whistle blowers the right to file lawsuits in order to recover taxpayer money in Medicaid fraud cases is a good idea. Washington’s Medicaid False Claims Act has returned more than $5 million to taxpayers since it went on the books in July 2012.

That is a small but still important share of the more than $76 million recovered in Medicaid fraud cases during the period. Results show the law is working modestly well, and it deserves to be extended for at least a few more years beyond its scheduled sunset in July 2016.

There had been fears before its passage that the law, which lets whistle blowers share up to 10 percent of recovered money, might lead to excesses. Critics warned of reckless lawsuits by third parties, but none of that has happened.

The whistle blower provision – known to lawyers as qui tam – is based on a federal law signed by former President Reagan in 1986 to assist or encourage recoveries of federal dollars. State Attorney General Bob Ferguson says it acts as an incentive for whistle blowers to come forward in cases where they might be putting their careers at risk by exposing fraudulent billings.

The law’s 2016 sunset was a necessary price for getting the law passed over critics’ objections in 2012. Unless the law is extended, the power of the Attorney General’s Office and whistle blowers to file civil court cases against those filing false claims for Medicaid reimbursement will expire.

Without the law, Ferguson says the only option is criminal prosecution, which requires a much higher standard of proof and is therefore harder to win. The state also would be hampered in sharing proceeds from national settlements of fraud cases that cross state lines and include Washington.

Ferguson cited two cases with local ties that the law helped his fraud unit to prosecute. One was the state’s leading role in a national settlement with Delaware-based Extendicare, which operates 15 skilled-nursing facilities in Washington including in Olympia, Shelton and Centralia. The state received about $541,871 for its share of Medicaid services in a case about understaffing in those facilities.

Another pending case involves JT Educational Consultants which helped school districts including Centralia to claim Medicaid reimbursements for school staff time devoted to helping link eligible students with Medicaid services. The company collected $12.6 million in consulting fees during 1998-2011, and the AG contends a portion of reimbursements in recent years were illegally diverted.

Centralia School District had generated the highest such fees in the state, but the AG reached a $372,000 out-of-court settlement last year over Centralia padding its bills.

Add it all up and we think the Legislature should pass House Bill 1067 in the special session that begins Wednesday.

Those testifying with concerns about the bill included national pharmaceutical industry interests, insurers and legal groups that want to limit potential industry liability. Some also have argued in favor of waiting until a legislative audit is concluded on the program.

An audit is not completely unreasonable, but that should not be a prerequisite for extending the sunset date on this law to 2020.

In the meantime, the AG’s authority should be extended to ensure his fraud fighters have tools and that new investigations can be launched in 2016 without uncertainty.