The New Model

The way this Government investigation was coordinated is one of = the=20 more distinctive features of this case. This coordinated = federal-state=20 investigation model may signal a new era in government Medicaid = fraud=20 enforcement activity, where state prosecutors work hand in hand = with=20 federal prosecutors from the U.S. Department of Justice and U.S. = Attorney=20 Offices. In some instances state prosecutors may even take the = lead.

Historically, government enforcement of fraud has = been left=20 largely to federal prosecutors. In the past, the federal = Government has=20 had both the resources and the expertise in ferreting out the = complex=20 fraudulent schemes employed by Medicaid providers. Private = attorneys=20 representing whistleblowers with inside information employed the = qui=20 tam provisions of the False Claims Act ("FCA") to alert = federal=20 prosecutors about the ways providers have cheated the Medicaid = program. As=20 a result since 1986, the federal FCA has become the federal = Government's=20 most powerful anti-fraud enforcement tool.

However, as illustrated by this case, the states are now = showing that=20 they have both the resources =E2=80=94 and the drive =E2=80=94 to = share the enforcement=20 burden. State enforcement activity is only expected to increase in = the=20 future. Many areas of Medicaid fraud, such as the pharmaceutical = price=20 reporting abuses highlighted in this case, are of particular = interest to=20 the states. More states will pass False Claims Acts modeled after = the=20 federal FCA due to Deficit Reduction Act ("DRA") amendments = Congress passed=20 in 2005. More money will get returned to state Medicaid coffers as = a=20 result of the current crop of enforcement recoveries such as this = one.=20 States will increase enforcement budgets leading State Attorneys = General=20 Offices to dedicate greater resources to anti-fraud = enforcement.

Also, private whistleblower attorneys are bringing to light = more FCA=20 cases involving nationwide frauds, especially in the = pharmaceutical arena.=20 Qui tam attorneys recognize that the states are uniquely = equipped=20 to obtain the utilization data necessary to understand the = magnitude of=20 the impact of the frauds to government health care programs like = Medicaid.=20 As more state FCA laws are enacted providing the same incentive to = private=20 whistleblowers as the federal FCA, qui tam attorneys are = now=20 working with state prosecutors simultaneously with federal = government=20 prosecutors.

At the same time, the states are getting organized internally. = The National = Association of=20 Medicaid Fraud Control Units ("NAMFCU") is making it possible = for the=20 state Medicaid Fraud Control Units (MFCU's) to investigate these = cases in=20 a coordinated and unified way. State teams are forming early on in = an=20 investigation, sharing information, resources, strategies and = personnel.=20 Relators counsel and state teams are working together soon after = the=20 qui tam case is filed under seal.

The states' new muscle is not being lost on the federal = government.=20 Since 9/11, as resources at the federal level became more = precious, the=20 federal Government started looking more and more to the states to = help. In=20 the recent past state help generally was not utilized until the = settlement=20 stage, where the states played the important role of providing = utilization=20 and damages data. Now, as states show more interest, the federal=20 Government is welcoming and encouraging states to play an earlier = and more=20 active role in the investigation phase.

This case stands as the model for this new era of jointly = coordinated,=20 collaborative government anti-fraud enforcement. As shown in our = timeline=20 the enforcement activity in this case accelerated in late 2004, = when the=20 states became involved in the case. Led by Nevada's Chief Deputy = Attorney=20 General, Tim Terry, the states assumed the burden of litigating a=20 then-untested statutory construction legal theory through the = Nevada=20 qui tam filed by the whistleblower. The Nevada-run = litigation was a=20 perfect complement to the ongoing federal marketing practices=20 investigation being overseen by the Eastern District of = Pennsylvania=20 ("EDPA") U.S. Attorney's Office in Philadelphia. Similarly, when = the=20 Nevada-Relator "best price" litigation gained traction, EDPA = Assistant=20 U.S. Attorney ("AUSA") Viveca Parker coordinated the federal = investigation=20 with Nevada and the qui tam attorneys.

The collaborative effort also extended to the whistleblower's = private=20 attorneys. At the urging of AUSA Parker and Deputy A.G. Terry, the = qui=20 tam attorneys provided the needed "facilitation" resources. = They set=20 up communication lines, acted as the conduit for sharing = information about=20 the Nevada litigation, and developed a model for coordinating = legal=20 strategies being employed in both the Nevada litigation and the = federal=20 investigation so as to make sure they were consistent and = complementary.=20 The whistleblower lawyers worked with AUSA Parker to put together = a=20 presentation of the best price case to interested state MFCU=20 representatives in a first-of-its-kind meeting sponsored by the=20 NAMFCU.