In his proposed 2019-21 state budget, Gov. Tony Evers seeks to reinstate a law repealed in 2015, known as “qui tam,” which allows private individuals to bring lawsuits on the government’s behalf. Evers’s proposal goes even further than Wisconsin’s previous qui tam law by applying the law not only to Medicaid fraud and but to all state agencies. The Wisconsin Civil Justice Council helped repeal the law in 2015 and will work hard to ensure that it is not enacted back into law.
Background of Qui Tam in Wisconsin
Qui tam is a Latin term describing a legal action to collect a penalty through supplied information from the public. Under this legal doctrine, a private party called a “relator” may bring a whistleblower lawsuit against a party on the government’s behalf. The relator must first present the information to the government, which can decide to either pursue the case, or deny involvement and allow the plaintiff to bring the case on behalf of the state using a private plaintiff attorney.
In 2007, the Wisconsin Legislature enacted the previous qui tam law, which applied only to Medicaid fraud cases. In 2015, the law was repealed by the Legislature during the budget bill process.
Qui Tam Law Reintroduced by Gov. Evers
On February 28, Gov. Tony Evers introduced the 2019-21 budget bill which not only reintroduces the previous qui tam law for Medicaid fraud, but also would expand to the law to all state agencies. This means that if any private party contracting with the state is alleged to have committed a “false claim” with the state of Wisconsin, a relator can bring a claim on behalf of the state against the business.
The problem with the qui tam law is that it provides incentives for private parties to sue. Under the proposed budget bill language, the relator can receive up to 30 percent of the total alleged damages to the state, as well as the ability to recoup his or her attorney’s fees and costs.
Moreover, the business providing the service to the state can be liable for up to three times the damages the state sustained, “or could have sustained,” whichever is higher.
State Qui Tam Laws Profit Plaintiff Attorneys and Do Little to Prevent Fraud
Not surprisingly, the main proponents of qui tam laws are plaintiff attorneys who profit off of suing businesses and medical providers on behalf of the state.
The U.S. Chamber Institute for Legal Reform in 2018 published a paper, “The Great Myths of State False Claims Acts,” which explains that there is little evidence that these statutes accomplish the ostensible goal of detecting and recovering damages for Medicaid fraud. Instead, in many instances the states with qui tam statutes may actually recover less from the average Medicaid fraud settlement than those states without, due to the state’s obligation to pay out a share of the settlement to the private party.
At the federal level, the U.S. Department of Justice (U.S. DOJ) is seeking to curb meritless qui tam law suits encouraged by the Federal False Claims Act. Noting record increases in qui tam actions, in 2018 the U.S. DOJ issued a memo providing a general framework for its attorneys on when to dismiss qui tam actions in which the government chooses not to intervene. With the federal trend away from supporting qui tam actions, Wisconsin should not resurrect these ineffective and often meritless actions at the state level.
It’s also important to note that Wisconsin already has a law – Wis. Stat. § 49.49 – that grants the Attorney General the authority to prosecute Medicaid fraud and recover damages on behalf of the state. All damages recovered under this law go to the State of Wisconsin and need not be paid out to a private party or plaintiff attorneys.
Conclusion
The Wisconsin Civil Justice Council was instrumental in getting the previous qui tam law repealed in 2015, and will work hard to make sure the law is not enacted back into law.