Bill gives stronger tweet to whistle-blowers

In what could be the most unorthodox deficit fix yet proposed this session, a small army of DFL legislators is backing a bill that they say could save millions by encouraging those working for state contractors to report rip-offs.

The bill, introduced this week as the "False Claims Act," would promise whistle-blowing employees up to 30 percent of lawsuit settlements reached with contractors that knowingly defrauded the state.

Similar laws have been passed by the federal government and 21 other states.

"It's going to generate claims that will bring money into state government" by creating "a financial incentive to bring these claims forward," said Sen. Ron Latz, DFL-St. Louis Park, at a State Capitol news conference Wednesday.

But opponents of the measure said that federal law already addresses most such claims and that the only beneficiaries of a new Minnesota law would be trial lawyers who stand to get more cases, regardless of their merit.

"The real question is, what is the unmet need that the state has that would be served by this?" said Jonathan Diesenhaus, a Washington, D.C.-based attorney who specializes in health care fraud cases and represents the Pharmaceutical Research and Manufacturers of America (PhRMA).

The bill has 25 sponsors in the House alone, including Rep. Nora Slawik of Maplewood, who has carried the legislation in previous sessions.

Under the bill, employees could bring claims on behalf of the state, Latz said. That in turn would open the door for law enforcement.

Those found guilty of intentional fraud could pay up to three times the state's actual damages. According to the legislators, such laws have saved $25 billion nationwide since 1986. "It's a taxpayer protection act as well," said Rep. Steve Simon, DFL-St. Louis Park.

But Tara Ryan, PhRMA's deputy vice president in Washington, said there are better ways to find fraud, such as opening up hot lines and offering rewards.

Speaking on behalf of the bill Wednesday was Neil Thompson, a Minneapolis pharmacist and lawyer who stands to get nearly $500,000 for reporting that Walgreens was overcharging Medicaid by millions. Walgreens settled the case with the federal government for $9.9 million.

Thompson said that employees often are best positioned to detect that fraud is occurring and how it's happening. "It takes people like me that understand [the industry] from the inside out," he said.