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State False Claims Act Regulations

The Officer of the New York State Attorney General has promulgated emergency regulations under the State False Claims Act. The regulations were published in the September 26, 2007 State Register, and were effective when filed with the Department of State on September 10, 2007. According to the Attorney General's office, adoption of ah emergency rule was necessary because "in the absence of a rule, a procedural vacuum exists that is contrary to the public interest" due to the lack of guidance or procedures for investigating potential false claims.

The Attorney General's office intends to use its authority under General Business Law Section 352 (aka the Martin Act) to investigate conduct that it believes violates the State False Claims Act. Under the Martin Act, the Attorney General has the authority to subpoena witnesses and documents. As David Ross, Esq. pointed out in a recent post to the Health Law Section's Listserve, it is questionable whether the Attorney General can use its powers under one statute to enforce another statute. The Martin Act is New York's "blue sky" law. It has a broad scope and has been liberally interpreted by the courts. We will see whether the courts will be willing to further extend its scope to govern false claims submitted to Medicaid.

Two interesting points as background:

- In a white paper that it published in December 2005, the Healthcare Association of New York State (HANYS) argued against the enactment of a State False Claims Act, in part, on the basis that the Attorney General already had the authority to prosecute fraud under Section 63 of the Executive Law. This Section gives the Attorney General authority to go to court to obtain an injunction and an order for restitution and damages "whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business." Under subdivision 8 of Section 63, the Attorney General or a designated deputy may subpoena witnesses, examine them under oath, and compel the production of papers for examination and audit. Failure to comply constitutes a misdemeanor.

- Before the current version of the State False Claims Act was passed as Article 13 of the State Finance Law, there were a number of other bills that addressed the same issue. Assemblyman Brodsky introduced A.02027 in January 2005. This bill would have added a new Article 16 to the State Finance Law. Section 235 of this new article would have given the Attorney General the authority to issue a civil investigative demand when investigating a potential false claims action.

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This page contains a single entry from the blog posted on October 11, 2007 1:57 PM.

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