The NYS False Claims Act: A Brave New World for Health Care Fraud Litigation

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Marking what may well prove to be the onset of unprecedented scrutiny of Medicaid claims in this state, Governor Eliot Spitzer recently signed into law New York’s first False Claims Act. The cornerstone of the new legislation is its qui tam provision, which allows those with knowledge of alleged fraud in state funded programs to bring a lawsuit and do so in the name of the State of New York. Qui tam actions under the new legislation may be brought by state governments, local authorities and even individuals.

Although some allege that as much as ten percent of the State's $45 million Medicaid budget consists of fraudulent claims, attempts to pass similar legislation failed on numerous other occasions. Apparently, the federal Deficit Reduction Act (DRA), provided New York with an offer it could not refuse – a strong financial incentive to finally get the job done. The DRA permits states that enact their own false claims acts to keep: (1) a portion of any verdict or settlement brought under the new law in an amount equal to the percentage it contributes to the Medicaid program and (2) an additional ten percent of any amount recovered. Qui tam plaintiffs reap the benefits too. Based upon a sliding scale set by statute, the new law permits them to keep between fifteen to thirty percent of the recovery.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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