State False Claims Acts without Qui Tam Provisions

Currently, seven states have false claims acts modeled after the federal FCA, but they lack a qui tam provision. This means that whistleblowers are not permitted to file FCA lawsuits; rather, only the state government may initiate a complaint. More importantly, this means that whistleblowers cannot share in any potential recovery (except in Arkansas and Missouri). In many cases, omitting this provision from the state’s False Claim Act was due to a concern that whistleblowers would file frivolous lawsuits and agitate state businesses. The false claims acts in Arkansas, Mississippi, Missouri, and Nebraska only cover fraud related to Medicaid or other state-based healthcare programs.

  • Arkansas
  • Kansas
  • Mississippi
  • Nebraska
  • Oregon
  • Utah

One consequence of failing to include a qui tam provision is that these states do not qualify for a 10% bonus recovery from the federal government for violations of the federal FCA related to the Medicaid program. In order to receive this financial incentive, a state’s FCA must meet certain criteria as determined by the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”), along with the U.S. Attorney General. Such state laws must:

  • Hold companies and individuals liable for submitting false claims or causing false claims to be submitted for reimbursement to the state's Medicaid office.
  • Include a qui tam provision that is as strong as that of the federal FCA
  • Require that all state FCA actions be filed under seal for sixty days and reviewed by the state's Attorney General.
  • Impose a civil penalty equivalent to or greater than that imposed by the federal FCA.

Even if the OIG determines that a state’s statute meets the above criteria, a state must continually update its statute to match changes to the federal FCA and changing views of the OIG or risk losing the bonus. For example, after Congress amended the federal FCA in 2009 and 2010, the OIG conducted reviews of more than twenty state false claims acts. The OIG determined that many state FCAs were deficient and removed the bonus award. As for the states that were previously compliant, the OIG gave them a two years grace period to amend their statutes accordingly. In some cases, the changes the OIG required were reflected not in amendments to the federal FCA, but to a changing interpretation of existing law by the OIG.

Aside from being disqualified from receiving an additional 10% from federal FCA Medicaid cases, states that do not include qui tam provisions in their false claims act effectively deny a whistleblower the opportunity for compensation. As such, these states lose out on an important financial incentive that motivates many whistleblowers to come forward to provide essential insider information in the first place, especially if that state’s whistleblower protection laws are not particularly strong. It should be noted that under Arkansas and Missouri state law, a whistleblower can still receive a reward for providing the state with information that leads to the recovery of funds. Both states award up to 10% to whistleblowers who provide evidence of violations of the state’s False Claims Act. Since this statutory provision is not a qui tam provision, however, that whistleblower is still not permitted to initiate a state FCA case.

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