New law will enhance efforts to combat fraud

Gov. Neil Abercrombie recently signed into law Act 294, which amends the state and county false-claims acts and brings them into conformance with federal law.

The state and county false-claims acts allow private persons to file lawsuits on behalf of the government to recover monies fraudulently billed by government contractors.

Since Hawaii’s false-claims act was passed in 2000, more than $100 million dollars has been recovered for the state.

Under the false-claims acts, persons who report the fraud — called "relators" — may receive from 15 to 30 percent of the amounts recovered. These rewards provide a monetary incentive to report fraudulent activity.

Rarely does a single law provide so many benefits.

The law has an immediate monetary benefit by increasing by 10 percent the state’s share of federal Medicaid fraud recoveries.

The law strengthens the state and county false-claims acts by making it easier to prove fraudulent conduct by persons who submit false claims for payment to the counties and the state.

The law gives greater protections for whistleblowers who report fraudulent activity. In particular, it removes restrictions on government employees who report fraud and allows them to benefit from the false-claims act procedures and incentives.

The law empowers business and individuals who do not engage in fraudulent conduct by making it easier to prosecute wrongdoers.

Hawaii’s law also goes much further than almost every other state law. Under Act 294, Hawaii became only the second state to allow false claims act cases to be pursued for tax fraud.

Despite all of these important changes, however, the law can only be as effective as its implementation. The tool for recovery of fraudulent billings is in place. The challenge is how counties and the state can efficiently implement its provisions.

After receiving a report of fraud, state and county agencies must ensure that there is timely and thorough investigation and prosecution.

The key to the new law, however, is to ensure that the persons with knowledge of the fraud — employees and businesses — can report it confidentially and efficiently, while still preserving the right to share in any monetary recovery.

For example, the counties and the state should consider establishing an informal mechanism that will pay incentives — without the necessity of a lawsuit being filed — to any relator whose report resulted in a monetary recovery.

Sharing in the recovery of reported fraudulent billings is a small recompense for taking a very difficult step. Whistleblowers are often ostracized and criticized for coming forward. Some lose their jobs for trying to do the right thing.

It is estimated that up to 10 percent of all government health care charges are fraudulently billed. With public improvement projects and other government initiatives costing billions of dollars, the amount of taxpayer money being lost is staggering.

Act 294 creates a better and more effective tool to combat fraudulent activity and the waste of government and taxpayer monies. Our government must make sure it is properly implemented.