The State of Texas passed a False Claims Act known as the Medicaid Fraud Prevention Act (“TMFPA”) in 1995 that only applies to the state’s medical assistance programs, in this case Medicaid. See Tex. Hum. Res. Code §§ 36.001 to 36.132. The state’s Act enables private citizens to file suit on Texas’s behalf to recovery monetary damages from businesses or individuals who defraud the Texas Medicaid program by making false statements or misrepresentations to receive benefits or payments from Medicaid. The TMFPA does not require proof of specific intent to defraud and it also imposes liability when a person “should know” or “should have known” information to be false, or when that person deliberately ignores or acts in reckless disregard of the truth or falsity of information.
Aside from only covering Medicaid fraud, the TMFPA also differs from the federal FCA in a number of other respects. The civil penalty is greater under the TMFPA for unlawful acts that injure an elderly person, a disabled person, or someone younger than eighteen. In these cases, each violation can result in a civil penalty of between $5,000 and $15,000. Moreover, the State recovers both its own and the relators’ attorneys’ fees and costs out of the proceeds of a recovery.
The Texas legislature added a qui tam provision to the TMFPA in 1997 to empower whistleblowers to bring fraud actions on behalf of Texas and share in a recovery. Currently, a whistleblower can receive up to 25% of the state’s recovery or up to 30% in declined cases. Also, the state Act contains protections for whistleblower employees similar to those found in the federal FCA.
In order to maintain original source status, any person with information about a potential fraud committed against Texas should consult counsel and file a disclosure with the Texas state government as authorized under Tex. Hum. Res. Code § 36.113.
According to the Department of Health and Human Services (“HHS”), Texas does not currently qualify for a 10% bonus recovery from federal Medicaid FCA cases.State Cases
In February 2013, Texas Attorney General Greg Abbott announced that the state had recovered nearly $1.01 billion for the state and local governments under the TMFPA since 2002. Since the total budget for the Texas Attorney General’s anti-fraud staff is about $8.45 million per year, the state’s FCA has proven to be very successful. Provisions in the TMPFA which require defendants to pay for Texas’s attorneys’ fees and costs have returned $75 million to the State between 2006 and 2012.
In January 2011, Texas obtained a unanimous jury verdict in Travis County against Icelandic pharmaceutical company, Actavis. This was the first and only case tried under the TMFPA which resulted in a judgment, and the State was awarded over $181 million after factoring in interest and attorneys’ fees. After the company appealed the judgment and demonstrated an inability to pay, the Attorney General settled the case for $84 million.
In 2010, Texas secured $28 million from the generic drug firm Teva. In 2012, Texas settled with Sandoz, a leading global supplier of generic pharmaceuticals, for $19.4 million.