Legislature(2015 - 2016)GRUENBERG 120
04/07/2016 01:00 PM House JUDICIARY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB347 | |
| HB205 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 347 | TELECONFERENCED | |
| += | HB 205 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 347-RECOVERY OF FALSE CLAIMS FOR STATE FUNDS
1:34:29 PM
CHAIR LEDOUX announced that the first order of business would be
HOUSE BILL NO. 347, "An Act relating to the limitation period to
commence a false claims action; relating to recovery for false
claims for state or municipal funds; and amending Rules 4, 24,
and 46, Alaska Rules of Civil Procedure."
1:35:03 PM
REPRESENTATIVE KREISS-TOMKINS explained that the qui tam bill or
the Alaska False Claims Act is an anti-waste, fraud, and abuse
piece of legislation that has been adopted on the federal level
by approximately 29 states around the nation. He advised that
it is fairly well vetted and modeled after other states,
specifically the State of New York, and is substantially similar
to language in the Medicaid Reform bill, currently in the other
body. While there are a few cosmetic differentiations, he
offered, it is effectively the same idea except this is
inclusive to all subject matter, whereas the Medicaid Reform
bill is specific to only Medicaid. He deferred to his staff for
a greater analysis.
1:36:27 PM
REID MAGDANZ, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, reiterated that the False Claims Act
is based off of false claims acts enforced at the federal level
and approximately 29 other states in the union. The central
components include: defining false claims (Sec. 2 of HB 347);
the attorney general is charged with investigating false claims
cases; and the portion of the bill that is perhaps most
noteworthy relates to the ability of a private plaintiff, the
qui tam plaintiff, to bring a case alleging false claims in
situations where the attorney general does not bring a case due
to limited resources or because the attorney general is unaware.
House Bill 347 spells out the process for the private plaintiff
to bring a case, wherein they would file a [complaint] with the
court under seal and at the same time serve the attorney
general, whereby the attorney general has 60-days to review that
case and investigate the claims made. At the end of the 60-day
period or an extension, the attorney general can either pursue
the case or allow a municipality to pursue the case if the claim
is against a municipality. Although, he explained, if the
attorney general declines to pursue the case, the private party
who originally identified the fraud can pursue the action to
conclusion. He offered that no matter which course is chosen,
the private plaintiff is entitled to receive a portion of the
money recovered if the case is won, and the exact percentage
varies based upon how much information and how large of a role
the private plaintiff played. The federal law has resulted in
over $30 billion worth of recovery to the federal government in
cases originally brought by a private plaintiff. He noted that
this [bill] provides a powerful tool against fraud by allowing
individual people the ability to bring cases when they identify
fraud, and it provides a financial incentive to do so.
1:40:01 PM
CHAIR LEDOUX opined there is a federal qui tam statute but that
statute specifically excludes tax matters. She asked whether
this bill includes tax division issues, and further asked him to
explain what this bill does where the federal statute decided
not to, and whether the qui tam statutes in other states include
taxes.
MR. MAGDANZ referred to Sec. 2(b) [page 2, line 25], which read:
(b) This section applies to claims, records, or
statements made under AS 43 if
MR. MAGDANZ advised that HB 347 does apply to tax cases, and it
only applies to claims, records, or statements made under AS 43,
Alaska's tax title, if the net income or sales of the person
against whom the action is brought is equal to or exceeds $1
million or the damages sought exceed $350,000. He continued
that the bill includes tax matters because the state law the
sponsor modeled it after also includes tax matter.
1:41:27 PM
CHAIR LEDOUX questioned whether Mr. Magdanz said that there must
be a claim in excess of $1 million.
MR. MAGDANZ opined that it is not a claim in excess of $1
million, the net income or sales of the person against whom the
false claims action is being brought must exceed $1 million a
year. Therefore, it cannot be used to bring a claim against
small businesses or individuals with small tax burdens.
1:42:05 PM
REPRESENTATIVE CLAMAN asked, in addition to the tax question,
whether there are other ways wherein the Alaska False Claims Act
would differ from the federal False Claims Act in terms of the
kinds of claims that can be brought.
MR. MAGDANZ offered that he has not performed an exhaustive
side-by-side analysis of the two acts, but their definitions of
false claims are relatively similar and he would provide the
information.
1:43:07 PM
STACIE KRALY, Chief Assistant Attorney General, Human Services
Section Statewide Supervisor, Department of Law, available to
answer questions.
MS. KRALY, in response to Chair LeDoux, responded that she does
not do any work with respect to taxes.
CHAIR LEDOUX asked in what situations there might be a valid
case for tax fraud that the attorney general's office would
decide not to pursue a case.
MS. KRALY requested clarification and asked whether the question
was that Chair LeDoux would like to understand under what
circumstances the attorney general may decline to pursue an
action where the monetary thresholds had been met.
CHAIR LEDOUX agreed, and she clarified where the monetary
circumstances have been met and under what circumstances the
attorney general would decline to pursue a case.
MS. KRALY responded that she can answer that question generally,
and will return with more specifics. She explained that the way
false claims acts are designed is that the attorney general will
be served with a copy of the complaint that has been filed in
court under seal, and would have 60-days to evaluate the merits
of the allegations within that complaint. At which time the
attorney general has to make a decision either to: proceed with
the case on their own accord; defer to the qui tam plaintiff, in
this instance; or move the court to dismiss the claim because
even though the monetary thresholds had been met there would be
circumstances as set forth in the statutes. She remarked that
she is not as familiar with this statute as with the statute for
Medicaid fraud cases. There are specific limitations as to
certain claims not considered to be a false claim even if it may
arise to be a false claim in general or it may appear to be a
false claim, such as information that is within the public's
sphere. For example, she said, an investigative news story
advises that "Organization X has been doing these bad acts" and
then someone files a case and states that "This is a false
claim." That scenario would not be considered a false claim
under the statute, so that claim could not be pursued even
though the monetary thresholds had been met. In the event an
ongoing investigation had taken place for some other civil or
criminal action related to that allegation, the Department of
Law would be limited from pursuing those. She related that
there are specific provisions within HB 347, and within false
claims acts in general that limit and preclude the prosecution
of a false claim under very certain circumstances in statute.
She offered a scenario where the Department of Law determined
there wasn't sufficient evidence to support the claim and meet
the burden of taking it to trial, the Department of Law could
then move to settle or dismiss the case.
1:46:39 PM
CHAIR LEDOUX surmised that in the event the Department of Law
(DOL) decides not to pursue the case they could determine
whether it is a frivolous case or not and dismiss it themselves.
MS. KRALY responded generally yes, and advised that she has
reviewed several versions of the general false claim act and all
have the provision where the Department of Law (DOL) or in this
case because municipalities were involved, the governmental
agency would be able to evaluate that claim and determine
whether or not to move to dismiss the court. She opined that it
is not an automatic dismissal because they would have to
petition the court to dismiss the claim. In those
circumstances, she advised, the qui tam plaintiff would be able
to be present in the court and make an argument or evidentiary
offer to the court to say, "No, this claim should not be
dismissed and I should be allowed to go forward." It is not an
automatic dismissal, she reiterated, it is a process of
requesting the court to consider dismissal with the plaintiff
being able to argue otherwise.
1:48:01 PM
CHAIR LEDOUX pointed out that she wants to be certain the
committee does not pass something that allows qui tam plaintiffs
to, perhaps, unjustly harass.
MS. KRALY responded that that is a very good point and it has
been raised in both bodies in dealing with the Medicaid reform
bill. Due to the 60-day investigation by the attorney general's
office and the ability of the attorney general to move for
dismissal and/or to settle a case, those protections are such
that they will limit what has been characterized as frivolous or
harassing litigation by individuals. There are built-in
protections under these statutes for the Department of Law to
come in and perform a robust evaluation of the allegations and
the evidence that supports those allegations, she remarked.
Within that 60-day period of investigation the Department of Law
has the ability to subpoena for records and conduct discovery.
There is a provision in the statute that allows the Department
of Law a continuation of 30-days to be certain of a complete
investigation to assure that the claim does have merit, or that
it should be dismissed, or settled.
1:49:32 PM
CHAIR LEDOUX asked whether the Department of Law is supportive
of this bill.
MS. KRALY responded that the Department of Law has no position
on this bill.
1:49:42 PM
REPRESENTATIVE CLAMAN referred to the attorney general's notice
of the [complaint], and offered a circumstance where the
attorney general knows little or nothing about the claim and
decides it is a good claim. The attorney general then takes
over the claim and the qui tam plaintiff is out of the picture
as it is the state's lawsuit. He asked whether that is what
happens when the state decides to accept the claim.
MS. KRALY said in a sense yes, but the qui tam plaintiff is
still able to participate, possibly not given party status but
they are involved and if there is a settlement they have the
ability to participate and object to a settlement. She pointed
out that she has not studied this bill in detail, but the other
false claims acts read as such and they participate but the
litigation would be directed by the Department of Law.
1:50:57 PM
REPRESENTATIVE CLAMAN offered a second scenario in that after
being notified of the claim, the state moves to dismiss it. He
asked whether the determination is based on the merits based on
the facts, or a legal determination assuming the facts are as
the qui tam plaintiff says they are, it is still not a
recognizable claim under the False Claims Act so it should get
dismissed.
MS. KRALY opined that it could be done either way, and further
opined that there is kind of a merits based analysis but there
is also a substantive review that is required by the Department
of Law (DOL) that would then determine whether or not there was
sufficient evidence. For example, she offered, the complaint
comes in and alleges a situation within the public sphere and as
a matter of law, it is not a false claim and DOL would move to
dismiss, which is easy to decide. In the event there is not an
easy answer, which would go through the four or five provisions
in this bill and other bills like it, which reads these do not
constitute false claims; therefore, they can't proceed. At that
point, a more substantive review of the allegation would be
required through discovery and an investigation to determine the
merits of the allegations, she explained.
1:52:30 PM
REPRESENTATIVE CLAMAN asked how this bill gives the state or a
potential false claims plaintiff something they don't already
have by using the federal act.
MS. KRALY pointed out that the quick answer is that it allows a
false claims for state administered programs and, she opined
that the federal act would not allow pursuing a false claim for
a state funded program. She offered the example of Medicaid
programs and said there are a number of federal false claims
dealing with pharmaceuticals that the state participates in, but
those are a broader based issue and also have a federal
component to it. She opined that this would give the qui tam
plaintiff the ability to identify and pursue a false claim based
upon state funded activities under state statutes and
regulations.
1:53:50 PM
REPRESENTATIVE CLAMAN referred to the state's current budget
situation and asked the department's capacity to get involved in
the false claims actions on a state level.
MS. KRALY referred to the fiscal note attached to the Medicaid
reform bill (SB 74), and noted that the department asked for
some resources to pursue that. She said it is a matter of how
it would be calculated out and that it may require additional
resources by the Department of Law, but she is not familiar with
how the department will calculate those out.
1:54:47 PM
CHAIR LEDOUX asked who the Alaska False Claims Act might be used
against and noted that Medicaid has a federal component;
therefore, couldn't an action be brought under the federal law.
She asked for an example.
MS. KRALY deferred to the sponsor or his staff.
REPRESENTATIVE KREISS-TOMKINS deferred to his staff.
1:55:45 PM
MR. MAGDANZ said the definition of false claims in Sec. 2 of the
act applies to basically anyone asking the state for money or
resources or receiving money or resources from the state. He
offered that he has not performed a precise legal analysis to
know exactly which cases might fall under it or might not.
Basically, he noted, anyone who had a contract with the state
could be subject to a false claims action if they were
defrauding the state. For example, he said, IT procurement
cases.
1:56:42 PM
REPRESENTATIVE KREISS-TOMKINS asked whether Mr. Magdanz was
familiar with false claims brought in other states and
jurisdictions that settled, and the subject matter.
1:56:55 PM
MR. MAGDANZ answered that he copied a short list from the
"Taxpayers Against Fraud" website and many of the cases have to
do with medical claims or pharmaceuticals. He then offered
examples of different cases, such as, oil on public lands, the
United States Department of Housing and Urban Development (HUD)
...
1:57:34 PM
CHAIR LEDOUX questioned why that would have been brought under a
state statute.
MR. MAGDANZ responded that these are examples of claims brought
under federal statute.
1:57:48 PM
REPRESENTATIVE KELLER referred to [Sec. 37.10.110], beginning
page 1, line 11 through to page 2, line 24, and said he found
the language confusing and was advised that this language came
from the federal act. He pointed to [Sec. 37.10.110(a)(4)] on
page 2, lines 9-11, which read:
(4) possess or control public property or
money used or to be used by the state or a
municipality and knowingly deliver or cause to be
delivered less property than the amount for which the
person receives a certificate or receipt;
REPRESENTATIVE KELLER opined that Alaska is the only state where
all of the natural resources of the state are public property.
He pointed this out, not because he sees it as a large problem,
but rather because it is simply importing language without a
careful analysis of all of the language in every single
subsection.
Representative Keller referred to [Sec. 37.10.110(a)(6)] on page
2, lines 15-16, which read:
(6) knowingly buy or receive as a pledge of
an obligation or debt public property from a person
who may not lawfully sell or pledge the property.
REPRESENTATIVE KELLER referred to [Sec. 37.10.110(a)(8)] on page
2, lines 15-16, which read:
(8) fail to disclose a false claim to
the state or a municipality within a reasonable time
after discovery of the false claim if the person is a
beneficiary of an inadvertant submission of a false
claim to an employee, officer, or agent of the state
or a municipality or to a contractor, grantee, or
other recipient of state or municipal funds.
REPRESENTATIVE KELLER described subsections (4), (6), and (8) as
confusing because it is difficult to imagine a case where this
might be applied. He asked whether this language had been
carefully considered, whether this language is common to
Alaska's laws, and whether the committee is doing things it may
regret.
2:00:01 PM
MR. MAGDANZ acknowledged that this language was largely drawn
from other examples in templet legislation, and that
Representative Keller made good points.
CHAIR LEDOUX said she is not moving HB 347 today and opened
public testimony.
2:01:04 PM
DAVID BOYLE said he is testifying on his own behalf and that he
is a member of the Alaska Policy Forum. He explained that the
Alaska False Claims Act has a deterring effect on preventing
fraud, such as Medicaid fraud. More importantly, he noted, it
rewards public employees and protects them from reprisal
actions, it rewards everyday Alaskans to be active in daily
governmental functions, and there are 29 states including
Washington D.C., with false claims acts. He then listed various
cases within the federal program, which included: the McKesson
Corporation (Pharmacy) was found guilty of $151 million for
sales in Medicaid fraud; the Walter Investment Management
Corporation submitted $30 million in false claims to the United
States Department of Housing and Urban Development (HUD) and
they later received $5.5 million in reward incentives; and
recently 12 Detroit public school principals, an assistant
superintendent, and the vendor were charged by the FBI in an
illegal bribery and kick-back scheme - fraudulent invoices for
supplies totaling over $900 thousand. In 2009, the Alaska
Policy Forum recommended to the Anchorage School District that
they "Formulate, invest, and implement a fraud waste and abuse
policy to ensure most efficient operations. The focus on fraud
and abuse should be: 1. procurement and contracting and the
potential theft of district property. This requires that
stringent equipment control policies be established and
followed. The comprehensive fraud and abuse policy should also
include full whistleblower protection and incentives for the
identification of fraud waste -and abuse." Unfortunately, he
said, the Anchorage School District did not agree because it
would be too difficult to implement and the incentivization of
the program would not be fair. He asked that the committee pass
HB 347 out of committee because "we need to squeeze every penny
out of the Alaska budget due to our fiscal crisis."
2:03:51 PM
STEVEN MERRILL said he is testifying on behalf of the Alaska
Policy Forum, is an Anchorage attorney, "and a long-time freedom
fighter." Mr. Merrill offered testimony as follows:
My statement here for you today is entitled, Gangsters
Beware, and I want to start with an old Scottish
proverb: 'Thieves operate in the dark, yet are visible
in many ways people can see.'
Every year paperwork con artists, from mega billion
dollar corporations to family run fraud shacks rip off
American government to the tune of untold billions of
dollars. Few perpetrators are ever caught. The ones
that are caught typically are discovered and exposed
by those working in some way with the fraudster.
Maybe someone who becomes outraged at the crime being
committed. But that kind of event might usually be
the end for justice, just silent, disgusted what was
happening. That is unless the potential whistleblower
manages to use the only effective means that has ever
been in the United States for exposing fraud against
the public treasury. That is called the False Claims
Act. It's time Alaska joined 29 other states in
trying to do something about the tens of millions of
dollars in state government, right here in our state,
is conned into giving to flim-flam men every year.
Alaska needs its own false claims act, as proposed
here by Representative Kreiss-Tomkins, it also needs a
whistleblower protection act, and an Alaska fraud hot-
line so people can be aware of these laws, both
government contractors, government employees, and
management of government contractors, so everyone
knows what the law is and how they can contact a
confidential source. The fraud hot-line could offer
confidentiality that is kept outside the direct state
record keeping, which is quite often very important to
a whistleblower. I helped the Alaska Policy Forum
this year draft a false claims act for Alaska that is
drawn from a number of state laws across the county.
So -- that is the case also with this bill proposed by
Representative Kreiss-Tomkins, primarily drawn, I'm
told, from the New York statute. The major difference
between the two is that the New York law caps
whistleblower compensation at a 25 percent share of
the total recovery. And it also, more importantly and
to me oddly, sets a minimum amount in controversy that
is quite high, $350 thousand dollar limit.
2:06:54 PM
Now most states, and most -- and the federal
government have a higher cap and no floor. Typically
the cap is 30-35 percent. The difference between
these approaches can be critical to whether a case is
going to be accepted or not. One that may not have an
exceptionally large recovery to be had. A false claim
could be for vast millions of dollars or for rip offs
that do not even reach $100 thousand dollars. Why
should lesser fees face no consequences -- no possible
consequences? The solution we propose is to delete
the cap in this bill and to use brackets like tax
brackets for determining the (indisc.) share of the
recovery. A higher proportion of the first dollar
recovered and a lesser proportion as the size of the
recovery rises. Ladies and gentlemen, this proposed
new law, before the committee, would finally greatly
endanger the hosts of parasites who are routinely
stealing the public funds of Alaska. This year let's
make the first serious effort ever in Alaska to combat
fraud, waste and abuse of public funds. Thank you.
2:08:14 PM
MR. MERRILL, in response to Chair LeDoux, agreed to forward a
copy of the qui tam bill formulated by the Alaska Policy Forum.
CHAIR LEDOUX said the committee would like to compare their bill
with the current HB 347 to determine how to make it into a
better bill.
MR. MERRILL advised that the Alaska Public Forum bill recommends
a hot-line law and a whistleblower protection act which, he
opined, are necessary components of this.
2:09:22 PM
RAY KREIG, Alaska Policy Forum, said he is probably testifying
both on behalf of the Alaska Policy Forum and himself. He
offered testimony as follows:
And I just wanted to say, in listening to the earlier
questions, including Madam Chair your own questions of
'Why do we need this if there is a federal statute?'
Just to give you a little bit of history, the Policy
Forum was looking into the excesses of the new crime
lab on Tudor Road while it was being proposed. And I
got involved with that investigation and our first
attention at the Policy Forum to the problem with
Alaska not having fraud, waste, and abuse statutes
came from our interviewing a former crime lab
director, Chris Beheim. He strongly felt that our
state procedures and statutes were lacking in this
area. And the ongoing outcome of the investigations
surrounding the crime lab was this whitepaper that Mr.
Beheim was a co-author of, that came out and was
distributed to the legislature several months ago. We
didn't know about this hearing today, we had no idea
it was coming up. Mr. Beheim undoubtedly would have
testified, but he's just unavailable right now as this
is going on. So, I am not nearly the expert on the
statute, obviously, as Mr. Merrill but I thought the
committee should know that the retired crime lab
director Beheim was the original origin of this and
strongly is in favor of passing this legislation and
the other accompanying whistleblower legislation
that's in the Policy Forum whitepaper. Thank you very
much.
CHAIR LEDOUX held public testimony open.
2:12:31 PM
MS. KRALY clarified for the record the issue of the federal
False Claims Act in Medicaid and explained there is a reason to
have a state false claims act even when Medicaid is involved.
She further explained that if the state had an approved and
federally certified Alaska False Claims Act, the State of Alaska
would receive a ten percentage point swing for Alaska from the
federal government for monies recovered under its state false
claims act, a 55/45 percent axle. She expressed that the record
should be clear that the fact that the federal act would allow
the state to pursue Medicaid claims under that federal act, the
state act has a direct benefit to the State of Alaska.
2:13:31 PM
REPRESENTATIVE KELLER noted that there are fraud occasions now
and asked whether any federal monies are currently available for
that which the state has pursued.
MS. KRALY responded that the state has participated in multiple
class actions related to Medicaid and Medicaid fraud through the
Consumer Protection Section, Medicaid Fraud Control Unit of the
Department of Law (DOL).
REPRESENTATIVE KELLER asked whether there is federal money that
helps the state in those fraud investigations now.
MS. KRALY answered that if the action is prosecuted or dealt
with through the Medicaid Fraud Control Unit there is federal
funding that pays for the attorneys and investigators that work
on those cases and they provide an "administrative match" and
they are funded at 75 percent federal dollars to 25 percent
state dollars.
2:15:00 PM
NANCY MEADE, General Counsel, Administrative Staff, Office of
the Administrative Director, Alaska Court System (ACS), said the
record should be clear that the Alaska Court System is still
looking at the impact HB 347 may have on the court system. She
noted that the Department of Law (DOL) provided an indeterminate
fiscal note on the grounds that they are unclear as to how many
cases this might generate. There is some expectation that the
cases it does generate will be mostly by self-represented
parties. She offered that this is a policy call and should the
legislature pass the bill, the court system will be able to
implement it. She advised that she spoke to the staff of the
sponsor regarding the unusual procedures in the bill, and that
perhaps it isn't quite as stylized to what is typically done in
Alaska as it could be. It is unclear how a complaint will be
filed with the court in-camera and then remain under seal for
60-days because currently there are no procedures set up,
although, she noted, the court system could develop a procedure
if it becomes law. She suggested that it could be more
efficient and effective that the complaints are delivered
directly to the attorney general's office without having the
court more or less be the babysitter for those complaints for
60-days until the attorney general decides what to do. She
noted it is something her office will work out and she looks
forward to continuing to work with the sponsor's office.
2:16:40 PM
CHAIR LEDOUX asked why Ms. Meade thought that most of the
complaints will be brought by pro per plaintiffs.
MS. MEADE opined that if the complaints or claims have merit,
the attorney general's office would be inclined to take the case
and pursue the case. With regard to oil companies, she opined,
the Department of Revenue routinely audits and the attorney
general's office pursues the audit on every single tax return
the oil companies file. She referred to Medicaid and said it
appears that if the attorney general was told there was a
problem with a doctor falsely making Medicaid claims against the
state, the attorney general would pursue it. It is true that
this is for those cases that the attorney general opts not to
pursue either because it doesn't think there is enough evidence
to win, or alternatively, it doesn't have the resources to
pursue every single case. She offered that some of these will
be brought by self-represented people whether there is a lot of
basis for them, or maybe not.
2:18:08 PM
CHAIR LEDOUX referred to the incentive piece and asked whether
Ms. Meade believes this would bring out employees of companies
who see something legitimately wrong in their companies. Yet,
without the bill the employees might ask themselves whether they
really want to step forward. Although, if they see there is a
monetary reward to it they might take that chance, and if it's
legitimate they will find an attorney.
MS. MEADE agreed, and said that the intent of the bill is to
help people who witness legitimate fraud recover the funds for
the state and receive a reward. She related that, particularly
in this state, there are a high number of self-represented
litigants and under this bill self-represented people could
pursue claims that the attorney general's office determines are
not pursuable. Again, she said, this is the committee's policy
call and those are some of the questions she has as she
determines how this bill will affect the court system.
2:19:34 PM
CHAIR LEDOUX asked why the claims would be filed in-camera.
MS. MEADE responded that that is exactly her question. The bill
reads that the complaint shall be filed with the court in-camera
and remain under seal with the court holding it for 60-days,
which is not the typical procedure for a complaint. She
expressed that she was unsure what the judge would be looking
for in the in-camera review to decide whether the next step
should be taken or not. Again, she related, those are
procedural issues that could perhaps be worked out with the
sponsor and possibly a different procedure could be developed.
2:20:17 PM
REPRESENTATIVE CLAMAN noted there is the potential of pro per
claims being brought, but isn't another one of the likely
consequences of having a false claims act in the state is that
there will be some group of law firms that become specialists in
bringing these claims because that is his impression on a
national level.
MS. MEADE expressed that she would be speculating and does not
know the consequences of false claims acts in other states.
2:21:25 PM
CHAIR LEDOUX asked Representative Kreiss-Tomkins whether he can
advise the committee as to why the bill reads filing in-camera.
REPRESENTATIVE KREISS-TOMKINS deferred to Ms. Kraly or Mr.
Magdanz, and opined that the preview is to be certified by the
federal government as a false claims act on the state level in
order to receive enhanced recovery for Medicaid fraud. He asked
the witnesses whether this language is different from what is in
the Medicaid reform bill in the Senate.
2:22:18 PM
MS. KRALY referred to the in-camera and under seal requirement
in this bill and opined that there is an under seal provision
language in SB 74, but she needed to confirm. She explained
that the Office of the Inspector General has guidelines for
purposes of certifying a Medicaid False Claims Act and that
language is required to be a state act in order to receive
certification, especially as to it being under seal. The
purpose of the in-camera provision is to allow the Department of
Law to investigate the merits of the claim without the person
who committed the alleged false claims being served with the
complaint which, she noted, goes back to the question of
protecting against frivolous complaints. Normally, a complaint
is filed, the defendant is served, and answers happen. Whereas,
in this bill, the complaint is filed in-camera, under seal, and
is confidential; therefore, the Department of Law has the
ability to properly investigate the claim to determine the
merits of the claim and to avoid the frivolous lawsuits or
inappropriate prosecution of the claim before it is determined
necessary to proceed. It is a procedural safeguard, she
described, to avoid individuals who may be alleged to have
committed frauds or false claims from having to defend something
before it is actually proven that it's a meritorious claim. She
reiterated that it is a procedural safeguard built into all of
the false claims she reviewed while working on the other bill,
and then she reviewed this bill this past week.
2:24:18 PM
CHAIR LEDOUX questioned whether it would be just the opposite by
allowing someone to be investigated without their knowledge of
an investigation. She said she does not see it as something
that is going to safeguard the interests of the defendant, but
rather something that allows a person to file a suit against
another person and investigate that suit without them being
aware of it. She added that it is not necessarily a bad thing,
but the reasoning.
MS. KRALY agreed that there is truth to Chair LeDoux's statement
and some accuracy to what Ms. Kraly said as well. She opined
that in order to investigate the claim, the Department of Law
has the ability to conduct discovery and seek subpoenas. Absent
an open court file, she said she was not sure how it happens
under the construction of the False Claims Act. It would be
necessary to have a court case number and a case to proceed in
order to get a subpoena and do those sorts of things. She
opined that it is a procedural safeguard and she could look into
it further, but generally those are the protections that are out
there to alleviate some of those issues. Further, she related,
it is a requirement for federal certification in false claims
for Medicaid purposes.
2:25:53 PM
REPRESENTATIVE KELLER asked whether the in-camera requirement
was to protect health records.
MS. KRALY answered that there could be other confidential
proprietary tax information. When filed under seal, there is
limited access of information not allowed to be shared elsewhere
under an administrative rule to court personnel, she said. It
would protect not just health information but potentially other
business information that would be proprietary in nature.
REPRESENTATIVE KELLER asked the number of qui tam cases in
Alaska she is aware of.
MS. KRALY answered that she is not familiar with whether there
are active cases currently, but she could provide information to
the committee regarding the number of cases the state has
participated in on the federal level and information regarding
recoveries.
2:26:53 PM
REPRESENTATIVE CLAMAN referred to the 60-day period and
commented that it has been part of federal law since it was
enacted, just after the Civil War, and he opined that it relates
to all of the things being discussed and not being able to
investigate the claim before the evidence goes away. He
surmised there are the issues of how the government gets its
investigation together, and how the investigation is performed
before the party finds out they are being investigated. He said
he thought that it may have to do with whistleblower protections
in that if someone comes forward and the government elects to
take on the lawsuit, the complaining party has more protections
than they might if they were going solo.
MS. KRALY noted those were excellent points.
2:28:44 PM
MS. MEADE said that, although, the language may be required by
federal law, Alaska has definite definitions for what is "under
seal" and what is "confidential." She explained that documents
filed "under seal" are available solely to the judge, whereas,
documents filed "confidential" are available to the judge, the
judge's assistant, and court employees for case processing
purposes. Ms. Meade reiterated that she would like to work with
the sponsor regarding possible language that documents can be
filed confidentially, which is different than under seal. She
noted that she continues to wonder what filing with the court
in-camera means, and they will work on that.
[HB 347 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 347 - Supporting Documents - Article Alaska Policy Forum 02-10-2016.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| HB 347 - Sponsor Statement.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| HB 347 - Sectional Analysis.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| HB 347 - Version A.PDF |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| HB 347 - Fiscal Notes -LAW-CIV-04-01-16.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| Amendment 9 - Conceptual Language.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |
| Amendment 10 - Supporting Document.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |
| Amendment 30.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |
| HB 205 - Amendments 1-30.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |
| HB 347 - Supporting Documents - Alaska Policy Forum Report.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 347 |
| HB 205 - Support Document - Letter Newt Gingrich 03.31.16.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |
| HB 205 - Support Document - Letter Violent Crimes Compensation Board 04.07.16.pdf |
HJUD 4/7/2016 1:00:00 PM |
HB 205 |