NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7989
SPONSOR: Barnwell TITLE OF BILL: An act to amend the state finance law, in relation to
adjustment of penalties due to inflation
PURPOSE:
This legislation provides for the adjustment of the minimum and maximum
penalty amounts provided in New York's False Claims Act in order to
maintain compliance with the federal Deficit Reduction Act of 2005,
Social Security Act § 1090(a) by providing for penalty provisions equal-
ly effective to the federal False Claims Act.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1. Sets forth the legislative intent.
Section 2. Amends subsection 1 of section 189 of Article XIII of the
state finance law to automatically adjust the minimum and maximum penal-
ty amounts to equal the civil penalty allowed under the federal False
Claims Act, if and as the penalties are adjusted for inflation.
Section 3. Provides that this act shall take effect immediately.
JUSTIFICATION:
The NY False Claims Act ("NY FCA") will need to be amended in order for
New York to maintain compliance with the federal Deficit Reduction Act
of 2005, Social Security Act § 1090(a) (the "DRA") by providing for
penalty provisions equally effective to the federal False Claims Act
("federal FCA"). The DRA provides a financial incentive for a State to
enact a law relating to the submission of false claims to the Medicaid
program in a form that is sufficiently similar to the federal FCA.
The U.S. Health and Human Services Office of the Inspector General ("HHS
OIG") is the oversight agency for the nation's MFCUs, and as such, it
monitors and makes determinations as to whether a State's FCA is suffi-
ciently similar to the federal FCA in order to be designated as DRA
Compliant. When HHS OIG determines that a state's FCA is DRA Compliant,
the state is entitled to retain 10% more of its MFCU's Medicaid recov-
eries made under the state's FCA. Most recently on February 19, 2014,
HHS OIG determined that the NY FCA was DRA Compliant, after NY Regu-
lations were amended in the 2013-2014 State Budget (S. 2606-D/A. 30067P)
to sufficiently match NY's regulatory structure to the federal FCA.
The federal FCA, amended effective August 1, 2016, provides for adjust-
ment of federal civil penalties based on inflation, whereas the NY FCA
currently provides only for fixed penalties. Therefore, the NY FCA must
be amended in order for the state to be held DRA compliant and continue
to receive 60 percent of Medicaid recoveries, as opposed to 50 percent.
Recoveries under State Finance Law § 189(1) by the Attorney General's
Medicaid Fraud Control Unit routinely exceed $100 million per year.
Therefore, the state is at risk of losing tens of millions of dollars
annually.
Furthermore, this act maintains the state's compliance with the DRA and
federal FCA penalties without the need for legislation enactments to
adjust for inflation.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None. The Bill preserves a greater share of Medicaid false claims act
recoveries from the federal government to the state.
EFFECTIVE DATE:
This act shall take effect immediately.
