Wisconsin False Claims Act Repeal Costs State $11 Million

The Wisconsin Center for Investigative Journalism has estimated that the state of Wisconsin gave up $11 million when it weakened the Wisconsin False Claims Act and then repealed it as part of the 2015-2017 budget process.

The Federal False Claims Act, 31 U.S.C. § 3729 et. seq., is the nation’s leading law fighting fraud. Several billion dollars are recovered through it by the Justice Department every year. It has been used to fight health care fraud, mortgage fraud and government contract fraud, among others.  In cases where money is recovered from fraud against both the federal and state governments, such as Medicaid fraud, the United States offers additional money to those states which have their own version of the False Claims Act. In Wisconsin, it was adopted in 2007 and called the False Claims for Medical Assistance Act.

When Wisconsin Governor Scott Walker signed the state’s budget on July 12, 2015, a provision in the budget repealed the False Claims Act. In doing so, Wisconsin became the first state to repeal its state False Claims Act. There were no public discussions or hearings on the repeal of the law according to news reports at the time. After it happened, a spokeswoman for the Wisconsin Attorney General reportedly said that there were numerous laws allowing the state to prosecute Medicaid fraud and the repeal would not have much impact.

Although there are other laws targeting fraud, none provide for incentives to whistleblowers. According to the Association of Certified Fraud Examiners, whistleblowers are the number 1 method for identifying waste, fraud and abuse in government and the private sector. The 2016 Global Fraud Study published by the group estimates that 40 percent of misspending is caught through whistleblower tips.

Wisconsin joined Pennsylvania in the minority of states without a state version of the False Claims Act. Pennsylvania has from time to time considered adopting one, but has not passed it yet. In March of this year, PA State Rep. Brandon Neuman reintroduced the Taxpayer Protection Against Fraud Act in the Pennsylvania House. It is estimated that Pennsylvania loses $200 million a year through Medicare and Medicaid fraud and abuse.