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HB-4577, As Passed Senate, December 6, 2005

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4577

A bill to amend 1977 PA 72, entitled

"The medicaid false claim act,"

by amending the title and section 11 (MCL 400.611), the title as

amended by 1982 PA 518, and by adding sections 10a, 10b, and 10c.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to prohibit fraud in the obtaining of benefits or

payments in connection with the medical assistance program; to

prohibit kickbacks or bribes in connection with the program; to

prohibit conspiracies in obtaining benefits or payments; to

authorize the attorney general to investigate alleged violations of

this act; to provide for the appointment of investigators by the

attorney general; to ratify prior appointments of attorney general

investigators; to provide for civil actions to recover money

received by reason of fraudulent conduct; to provide for

receiverships of residential health care facilities; to prohibit

retaliation; to provide for certain civil fines; and to prescribe

remedies and penalties.

Sec. 10a. (1) Any person may bring a civil action in the name

of this state under this section to recover losses that this state

suffers from a violation of this act. A suit filed under this

section shall not be dismissed unless the attorney general has been

notified and had an opportunity to appear and oppose the dismissal.

The attorney general waives the opportunity to oppose the dismissal

if it is not exercised within 28 days of receiving notice.

(2) If a person other than the attorney general initiates an

action under this section, the complaint shall remain under seal

and the clerk shall not issue the summons for service on the

defendant until after the time for the attorney general's election

under subsection (3) expires. At the time of filing the complaint,

the person shall serve a copy of the complaint on the attorney

general and shall disclose, in writing, substantially all material

evidence and information in the person's possession supporting the

complaint to the attorney general.

(3) The attorney general may elect to intervene in an action

under this section. Before the expiration of the later of 90 days

after service of the complaint and related materials or any

extension of the 90 days that is requested by the attorney general

and granted by the court, the attorney general shall notify the

court and the person initiating the action of 1 of the following:

(a) That the attorney general will proceed with the action for

this state and have primary responsibility for proceeding with the

action.

(b) That the attorney general declines to take over the action

and the person initiating the action has the right to proceed with

the action.

(4) If an action is filed under this section, a person other

than the attorney general shall not intervene in the action or

bring another action on behalf of this state based on the facts

underlying the action.

(5) If the attorney general elects to proceed with the action

under subsection (3) or (6), the attorney general has primary

responsibility for prosecuting the action and may do all of the

following:

(a) Agree to dismiss the action, notwithstanding the objection

of the person initiating the action, but only if that person has

been notified of and offered the opportunity to participate in a

hearing on the motion to dismiss.

(b) Settle the action, notwithstanding the objection of the

person initiating the action, but only if that person has been

notified of and offered the opportunity to participate in a hearing

on the settlement and if the court determines that the settlement

is fair, adequate, and reasonable under the circumstances. Upon a

showing of good cause, the settlement hearing may be held in

camera.

initiating the action. If the attorney general demonstrates that

unrestricted participation by the person initiating the action

during the litigation would interfere with or unduly delay the

attorney general's prosecution of the case or would be repetitious,

irrelevant, or unduly harassing, the court may do any of the

following:

(i) Limit the number of the person's witnesses.

(ii) Limit the length of the testimony of the person's

witnesses.

(iii) Limit the person's cross-examination of witnesses.

(iv) Otherwise limit the person's participation in the

litigation.

(6) If the attorney general notifies the court that he or she

declines to take over the action under subsection (3), the person

who initiated the action may proceed with the action. At the

attorney general's request and expense, the attorney general shall

be provided with copies of all pleadings filed in the action and

copies of all deposition transcripts. Notwithstanding the attorney

general's election not to take over the action, the court may

permit the attorney general to intervene in the action at any time

upon a showing of good cause and, subject to subsection (7),

without affecting the rights or status of the person initiating the

action.

(7) Upon a showing, conducted in camera, that actions of the

person initiating the action during discovery would interfere with

the attorney general's investigation or prosecution of a criminal

or civil matter, the court may stay the discovery for not more than

90 days. The court may extend the stay upon a further showing that

the attorney general is pursuing the investigation or proceeding

with reasonable diligence and the discovery would interfere with

the ongoing investigation or proceeding.

(8) As an alternative to an action permitted under this

section, the attorney general may pursue a violation of this act

through any alternate remedy available to this state, including an

administrative proceeding. If the attorney general pursues an

alternate remedy, a person who initiated an action under this

section shall have equivalent rights in that proceeding to the

rights that the person would have had if the action had continued

under this section to the extent consistent with the law governing

that proceeding. Findings of fact and conclusions of law that

become final in an alternative proceeding shall be conclusive on

the parties to an action under this section. For purposes of this

subsection, a finding or conclusion is final if it has been finally

determined on appeal to the appropriate court, if the time for

filing an appeal with respect to the finding or conclusion has

expired, or if the finding or conclusion is not subject to judicial

review.

(9) Subject to subsections (10) and (11), if a person other

than the attorney general prevails in an action that the person

initiates under this section, the court shall award the person

necessary expenses, costs, reasonable attorney fees, and, based on

the amount of effort involved, the following percentage of the

monetary proceeds resulting from the action or any settlement of

the claim:

(a) If the attorney general intervenes, 15% to 25%.

(b) If the attorney general does not intervene, 25% to 30%.

(10) If the court finds an action under this section to be

based primarily on disclosure of specific information that was not

provided by the person bringing the action, such as information

from a criminal, civil, or administrative hearing in a state or

federal department or agency, a legislative report, hearing, audit,

or investigation, or the news media, and the attorney general

proceeds with the action, the court shall award the person bringing

the action no more than 10% of the monetary recovery in addition to

reasonable attorney fees, necessary expenses, and costs.

(11) If the court finds that the person bringing an action

under this section planned, initiated, or participated in the

conduct upon which the action is brought, then the court may reduce

or eliminate, as it considers appropriate, the share of the

proceeds of the action that the person would otherwise be entitled

to receive. A person who is convicted of criminal conduct arising

from a violation of this act shall not initiate or remain a party

to an action under this section and is not entitled to share in the

monetary proceeds resulting from the action or any settlement under

this section.

(12) A person other than the attorney general shall not bring

an action under this section that is based on allegations or

transactions that are already the subject of a civil suit, a

criminal investigation or prosecution, or an administrative

investigation or proceeding to which this state or the federal

government is already a party. The court shall dismiss an action

brought in violation of this section.

(13) Unless the person is the original source of the

information, a person, other than the attorney general, shall not

initiate an action under this section based upon the public

disclosure of allegations or transactions in a criminal, civil, or

administrative hearing, in a state or federal legislative,

investigative, or administrative report, hearing, audit, or

investigation, or from the news media. The person is the original

source if he or she had direct and independent knowledge of the

information on which the allegations are based and voluntarily

provided the information to the attorney general before filing an

action based on that information under this section.

(14) This state and the attorney general are not liable for

any expenses, costs, or attorney fees that a person incurs in

bringing an action under this section. Any amount awarded to a

person initiating an action to enforce this act is payable solely

from the proceeds of the action or settlement.

(15) If a person proceeds with an action under this section

after being notified that the attorney general has declined to

intervene and the court finds that the claim was frivolous, as

defined in section 2591 of the revised judicature act of 1961, 1961

PA 236, MCL 600.2591, the court shall award the prevailing

defendant actual and reasonable attorney fees and expenses and, in

addition, shall impose a civil fine of not more than $10,000.00.

The civil fine shall be deposited into the Michigan medicaid

benefits trust fund established in section 5 of the Michigan trust

fund act, 2000 PA 489, MCL 12.255.

Sec. 10b. (1) The attorney general may recover all costs this

House Bill No. 4577 as amended December 1, 2005

state incurs in the litigation and recovery of medicaid restitution

under this act, including the cost of investigation and attorney

fees. The attorney general shall retain the amount received for

activities under this act, excluding amounts for restitution, court

costs, and fines, not to exceed the amount of this state's funding

match for the medicaid fraud control unit.

(2) The attorney general shall not retain amounts under this

section until all the restitution awarded in the proceeding has

been paid.

(3) Costs that the attorney general recovers in excess of the

state's funding match for the medicaid fraud control unit shall be

deposited in the Michigan medicaid benefits trust fund established

in section 5 of the Michigan trust fund act, 2000 PA 489, MCL

12.255.

Sec. 10c. (1) An employer shall not discharge, demote,

suspend, threaten, harass, or otherwise discriminate against an

employee in the terms and conditions of employment because the

employee initiates, assists in, or participates in a proceeding or

court action under this act or because the employee cooperates with

or assists in an investigation under this act. This prohibition

does not apply to an employment action against an employee who <<THE

COURT FINDS BROUGHT A FRIVOLOUS CLAIM, AS DEFINED IN SECTION 2591 OF THE REVISED JUDICATURE ACT OF 1961, 1961 PA 236, MCL 600.2591; THE COURT FINDS TO HAVE PLANNED, INITIATED, OR PARTICIPATED IN THE CONDUCT UPON WHICH THE ACTION IS BROUGHT; OR>> is

convicted of criminal conduct arising from a violation of this act.

(2) An employer who violates this section is liable to the

employee for all of the following:

(a) Reinstatement to the employee's position without loss of

seniority.

(b) Two times the amount of lost back pay.

(d) Compensation for any special damages.

(e) Any other relief necessary to make the employee whole.

Sec. 11. (1) An Except as provided in subsection (2), an

action brought in connection with a medicaid matter under this act

~~may~~ shall be filed in ~~the courts of~~ Ingham county and may be

prosecuted to final judgment in satisfaction there.

(2) A person may bring a civil action under section 10a in any

county in which venue is proper. If the attorney general elects to

intervene under section 10a(3) or (6) and the court grants the

request, upon motion by the attorney general, the court shall

transfer the action to the circuit court in Ingham county.

(3) ~~(2)~~ Process issued by a court in which an action is

filed may be served anywhere in the state.