Testimony Highlights Need for TMFPA Change

The testimony in favor of changes to the Texas Medicaid Fraud Prevention Act by Austin administrative attorney Jason Ray is important for Medicaid providers to read.   He testified on April 14 supporting the committee substitute version of bill HB3802 regarding proposed changes to the TMFPA.

Ray has been instrumental over the last decade in representing Medicaid dentists and other providers who have been accused of Medicaid fraud under the act.

“Whistleblower should bring evidence of wrongdoing”

Here is what he said:

My name is Jason Ray. I’m a board-certified administrative law attorney here in Austin, Texas. I’ve been here for about 28 years. I’m testifying in support of the committee substitute for House Bill 3082. As background, after working at the Office of the Attorney General for many years, and in fact, with Mr. Winter, for many of those years, I moved to the private sector and for the last 10 years, I’ve concentrated my practice on advising and representing private plaintiffs qui tam whistleblowers as well as defending those that have been accused of Medicaid fraud in Texas, and in federal court.

Committee substitute for House Bill 3082 provides a sorely needed check on private plaintiffs who’ve come to see the TMFPA, not the federal False Claims Act, but the Texas version of the Medicaid statute as a wonderfully efficient tool to extract big settlements from successful Medicaid providers regardless of the merit of this, of the claims that they might bring.

It seems obvious that a whistleblower should bring evidence of wrongdoing if they intend to invoke the name and the power of the state of Texas. And if the whistleblower has no evidence of any unlawful activity, then the TMFPA shouldn’t be used to allow those private plaintiffs to effectively force what is a full-scale multi-year audit of a Medicaid provider’s business and of every patient that they might have seen going backwards. And they certainly shouldn’t be able to do it under the guise of discovery and a law enforcement action.

The committee substitute is narrowly drawn to reach only fishing expeditions in Medicaid fraud cases where the state does not intervene. So the committee substitute doesn’t affect court jurisdiction or require dismissal of cases where the private plaintiff has no evidence of unlawful acts, those to some extent are already covered by the civil rules and the Rules of Civil Procedure. It simply provides for the possible recovery of a defendant’s attorney fees when the private plaintiff is not the original source of the information in the plaintiff’s lawsuit. But where the client private plaintiff instead plans to engage in a fishing expedition that might reveal some possible technical violation that the Medicaid provider accidentally occurred years ago.

Private plaintiff whistleblowers are motivated in part because they get a cut of any recovery or settlement. And that makes sense. That’s led, unfortunately, some plaintiffs to sue first and ask questions later to gather evidence. Right now, the law allows them to do that, without consequence. Under those circumstances, the whistleblower hasn’t actually disclosed any wrongdoing. They’re just using the TMFPA to try to find possible wrongdoing. They’re essentially opening the case and then deciding after they get into the defendant’s files, whether or not they might have something that’s actually actionable.

Committee substitute for House Bill 3082 is very narrowly drafted in cases where the state hasn’t intervened. Thus, the private plaintiff is acting solely on behalf of the State of Texas. Because it’s drafted narrowly and would expressly permit defendants to recover attorneys fees associated with defending claims that are brought by a private plaintiff. That’s not really a whistleblower because he’s not the original source of any information.

I’m testifying in favor of this committee substitute and I asked you to report favorably.

Wording of changes

HB3802, if passed, will amend section 36.112 of the Texas Human Resources Code as follows:

Sec. 36.112.  AWARD TO DEFENDANT FOR FRIVOLOUS ACTION.  (a)  Chapter 105, Civil Practice and Remedies Code, applies in an action under this subchapter with which the state proceeds.

(b)  If the state does not proceed with an action under this subchapter and the person who brought the action proceeds with the action, the court may award the defendant reasonable attorney’s fees and expenses to the same extent the defendant would be entitled to recover those fees and expenses under Section 105.002, Civil Practice and Remedies Code, if the state had proceeded with the action, provided that:

(1)  the court finds that the action is frivolous; and

(2)  the person who brought the action was not the original source of the information on which the action is based.

SECTION 2.  The changes in law made by this Act apply only to an action commenced on or after the effective date of this Act.  An action commenced before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 3.  This Act takes effect September 1, 2021.

This will be very good news indeed for all honest Medicaid providers when passed.


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