On July 23, 2018, Puerto Rico Governor Ricardo Rosselló, signed into law anti-fraud legislation that includes provisions modeled after the federal False Claims Act. The Puerto Rico law, called the Fraudulent Claims to Programs, Contracts, and Services of the Government of Puerto Rico Act, has features critical to effective false claims acts:
- The Puerto Rico law permits whistleblowers to file qui tam lawsuits on behalf of the government.
- The Puerto Rico law provides for financial rewards to whistleblowers. If Puerto Rico recovers funds in an action, an eligible whistleblower is entitled to receive between 15% and 30% of the government’s recovery, depending on the circumstances of the case.
- The Puerto Rico law covers fraud in all Puerto Rico government programs and services, not just Medicaid fraud.
By enacting the Fraudulent Claims to Programs Act and including qui tam and whistleblower reward provisions, Puerto Rico joins 30 other states and the District of Columbia in adopting an enforcement mechanism, modeled on the federal False Claims Act, that has proven extremely effective in fraud prevention and recovery. Such false claims laws allow those jurisdictions – and, now, Puerto Rico – to recover money from contractors and service providers who submit false bills or otherwise defraud the government. By providing a financial reward to whistleblowers, these laws also provide a critical incentive to those with knowledge of such fraud to come forward and help bring fraudsters to justice.
As Puerto Rico recovers from Hurricanes Irma and Maria and rebuilds economic stability, the Fraudulent Claims to Programs Act can help ensure that government funds are not diverted by fraud. Such fraud can be costly, imposing a substantial burden on government budgets, and anti-fraud programs including False Claims Acts provide essential protections for taxpayer funds.
For example, HHS reported in March, 2018 that state Medicaid Fraud Control Units recovered more than $1.8 billion for states in 2017. Perhaps even more impressive, for every $1 spent by these state Medicaid Fraud Control Units, states recovered $6.52. Similarly, DOJ reported that in fiscal year 2017, it recovered $3.7 billion in federal funds in False Claims Act cases, and of this amount, $3.4 billion – 92% – was recovered in lawsuits filed under the qui tam provisions of the federal False Claims Act. Plainly, whistleblowers play a critical role in anti-fraud efforts at all levels.
In signing the Fraudulent Claims to Programs Act, Governor Rosselló’s office recognized that whistleblower claims “consistently result in the recovery of millions of dollars to the treasury. In coordination with the citizenship, the local Government may recover funds that would otherwise have been lost due to fraud.” Puerto Rico, like all other U.S. jurisdictions, has seen its share of fraud against government programs. The new Fraudulent Claims to Programs Act gives the Commonwealth an effective new tool to recover government funds, combat fraud in Medicaid and other government spending, and bring fraudsters to justice.
The whistleblower provisions of the Puerto Rico act are to take effect 180 days after the act’s approval. The law also creates a Medicaid Fraud Control Unit at the Puerto Rico Department of Justice and establishes a Medicaid Management Information System. These provisions were required by Congress in the federal Bipartisan Budget Act of 2018 in order for Puerto Rico to receive an additional $1.2 billion in federal Medicaid funding. We congratulate Puerto Rico for going beyond these requirements to strengthen its fraud-prevention efforts even more by adopting the Fraudulent Claims to Programs Act.
- State False Claims Acts – we look forward to adding Puerto Rico to this list when the law becomes effective.
- State Enforcement Actions
- Healthcare Fraud
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