How to Blow the Whistle on Texas Medicaid Fraud
You are in luck! The Lone Star state is one of 29 states that allows the state to pay whistleblowers cash rewards for reporting Medicaid fraud.
Medicare and Medicaid are both taxpayer funded healthcare programs. The difference is that Medicaid serves as insurer of last resort meaning it is the safety net for low income residents.
The feds fund Medicare while both the state and federal government split the cost of Medicaid benefits. That means if you have information about Medicare fraud, you must file a sealed complaint in federal court in order to seek reward. Texas Medicaid fraud complaints can be filed with the state and the feds.
If your information pertains to Texas Medicaid fraud, you can receive rewards under both the federal and state False Claims Act. If you live in one of the 21 states without a state Medicaid reward law, you can still receive a partial reward for the federal match of the program.
Texas Medicaid Fraud Prevention Act (Texas Medicaid Fraud Whistleblower Law)
In 1995, the Texas Legislature passed the Texas Medicaid Fraud Prevention Act (“TMFPA”), a law similar to the federal False Claims Act. (For purposes of this post, we use the term TMFPA and Texas false claims law interchangeably. Different people call refer to them by different names.)
Like its big brother, the TMFPA is targets government funded healthcare fraud.
Under the Texas law, folks with inside knowledge of fraud involving the Texas Medicaid Program are eligible for cash rewards. Rewards are paid out of funds recovered from the wrongdoers. The amount of the reward is primarily determined by the amount of recovery. The higher the recovery, the higher the reward.
How Big Are Texas Whistleblower Rewards
Under the law, the state has the right to either intervene in the case and take over or allow the whistleblower’s own lawyer to prosecute the case. Rewards are paid out of whatever monies are recovered.
The law says, “If the state proceeds with an action under this subchapter, the person bringing the action is entitled… to receive at least 15 percent but not more than 25 percent of the proceeds of the action, depending on the extent to which the person substantially contributed to the prosecution of the action. If the state does not proceed with an action under this subchapter, the person bringing the action is entitled… to receive at least 25 percent but not more than 30 percent of the proceeds of the action.”
Let’s look at an example. Whistleblower files a lawsuit claim under the Texas whistleblower law. The state attorney general’s office prosecutes and recovers $1 million. The whistleblower will receive between $150,000 and $250,000. If the state lets the whistleblower’s own lawyer prosecute, the reward is between $250,000 and $300,000. Not a bad payday for doing the right thing!
Texas Medicaid Fraud Prevention Act and Federal False Claims Act
Both the federal False Claims Act and Texas whistleblower law are quite similar. There are differences, however.
The primary difference is the scope of the laws. The Texas false claims act is limited to Medicaid. The federal False Claims Act, however, is much more expansive in its coverage. It covers practically any fraud against the United States involving government funds. The sole exception is IRS debts. [A separate IRS Whistleblower Program exists.]
The Texas false claims act also has a unique penalty enhancer for unlawful acts that injure the elderly, disabled or kids. (Higher penalties mean higher rewards.)
For whistleblowers, the Texas whistleblower law has another great benefit. Under the federal program, most courts require the whistleblower to show both the illegal activity and an actual claim submitted to Medicare or Medicaid. For many healthcare workers, that is extremely difficult. If they are no longer working at the facility, it becomes impossible.
We routinely speak with nurses, doctors and other healthcare workers who see and can prove violations of state and federal healthcare rules. An example is a nurse that knows a doctor is performing unnecessary surgeries simply to increase his profits. But if that nurse isn’t in the billing department or have access to billing records, it’s hard to show that a claim was submitted to Medicare on behalf of that patient.
Great news for Texas whistleblowers! The Texas Medicaid Fraud Prevention Act does not need proof of billing. The mere evidence of unlawful activities is enough.
One final difference are the damages. Although the federal program allows for triple damages, the government or person prosecuting must prove the damages. Texas has a double damages provision that is easier to calculate. Damages under the Texas false claims act are the entire amount of what Medicaid paid.
Texas False Claims Act Recoveries
Having a whistleblower reward law on the books sound great. But is the law used? We are often asked, Do I have a chance of collecting a reward??
The answer is yes. Texas – particularly in the Houston area – is a hot bed of healthcare fraud. And thankfully, the Texas Attorney General is quite aggressive in prosecuting Medicaid fraud cases.
In 2019, Texas Attorney General Ken Paxton announced the state had recovered $236 million form Xerox.
Several years ago, the state hired Xerox to screen requests for Medicaid funded dental work. Instead of carefully examining each request, the company employed untrained workers who allegedly “rubber stamped” the requests. The result is that taxpayers paid for millions of dollars of unnecessary or not-qualifying dental work.
The case was doubly important because the feds had determined that the state was responsible for the improperly supervised program and was demanding $133 million from the state for what they had paid out in federal matching funds. Not only did the state pay tens of millions of dollars too much, so did the federal government and they wanted their money back.
Several whistleblowers stepped forward and blew the whistle on Xerox. Those whistleblowers are expected to receive $47 million for their efforts.
*Xerox settled and paid the $235 million without any admission of wrongdoing.
The Xerox case wasn’t a one-time thing although it was the largest Medicaid recovery in the state. In 2017, the Texas Medicaid Fraud Control Unit obtained 108 indictments, 137 convictions and led the nation in recovering more than $534 million.
In April 2015, Texas settled drug pricing fraud case involving Glenmark Generics Inc. USA.
Under state and federal law, Medicaid programs are entitled to a pharmaceutical company’s best prices. That law saves taxpayers billions of dollars annually. Texas said that Glenmark generics, however, was violating the law by misrepresenting their prices and giving pharmacies financial incentives to purchase their higher priced products.
The Company paid $25 million to settle the claims. These are just a few examples. The bottom line is that Texas welcomes Medicaid whistleblower cases and pays rewards.
Ready to see if you have a case? Contact us online, by email or by phone . All inquiries are protected by the attorney – client privilege and are kept strictly confidential. Our consultations are always without fee. Cases accepted nationwide.