Modification to Tennessee Medicaid False Claims Act clarifies that employees, contractors and agents are entitled to relief for employment discrimination for efforts to stop violations of the Act.

Analysis:  The Tennessee Medicaid False Claims Act (“the Act”) is an important statute that is intended to prevent the filing of false or fraudulent Medicaid claims.  It has a specific provision that provides protections to employees and others who are discriminated against for taking any action against Medicaid fraud under the statute.  On April 11, 2013, Governor Bill Haslam signed Public Chapter No. 99 which was passed by the Tennessee Legislature in the 2013 Tennessee Legislative session.  It basically clarifies that this statute is also intended to provide protection to individuals who attempt to stop any violation of the Act.  Specifically they are entitled to protections if they experience any employment discrimination as a result of their actions to stop violations of the Act.  Prior to this amendment, the statute was not very clear on this issue.  The Tennessee legislature bill summary provides a good summary of the intent of this new legislation.  It provides as follows:

Generally, under the present Tennessee Medicaid False Claims Act (the Act), any employee, contractor, or agent who is discriminated against in the terms and conditions of employment because of lawful acts done in furtherance of an action for Medicaid fraud, including investigation for, initiation of, testimony for, or assistance in such an action, is entitled to all relief necessary to make the employee, contractor, or agent whole, including reinstatement, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained, including litigation costs and reasonable attorney's fees.

This bill clarifies that employees, contractors and agents would additionally be entitled to the relief described above for employment discrimination due to any effort of such person to stop a violation of the Act.

The new language is now found in T.C.A. § 71-5-183(g) which provides as follows:

(g) Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action under this section or other efforts to stop one (1) or more violations of §§ 71–5–181 — 71–5–185. The relief shall include reinstatement with the same seniority status the employee, contractor, or agent would have had but for the discrimination, two (2) times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An action under this subsection (g) may be brought in the appropriate court for the relief provided in this subsection (g), but may not be brought more than three (3) years after the date when the retaliation occurred.

As a result, if an employee, contractor, or agent is subject to employment discrimination in any manner because of lawful acts done by them to stop a violation of the Act, then they are entitled to significant relief under the statue.  In fact, the relief includes reinstatement to their position, two times the amount of back pay, interest on the back pay, compensation for any special damages sustained, in addition to litigation costs and reasonable attorney’s fees.  The key operative portion of the Act is mainly found in T.C.A. § 71-5-182.  This is a significantly detailed statute that needs to be reviewed carefully, however, subsection (a)(1) provides as follows:

(a) Subject to subdivision (a)(2), any person who:

(1)(A) Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval under the Medicaid program;

(B) Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim under the Medicaid program;

(C) Conspires to commit a violation of subdivision (a)(1)(A), (a)(1)(B), or (a)(1)(D); or

(D) Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money, or property to the state, or knowingly conceals, or knowingly and improperly, avoids, or decreases an obligation to pay or transmit money or property to the state, relative to the Medicaid program;

is liable to the state for a civil penalty of not less than five thousand dollars ($5,000) and not more than twenty-five thousand dollars ($25,000), adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990, compiled in 28 U.S.C. § 2461 note; Public Law 101-410, plus three (3) times the amount of damages which the state sustains because of the act of that person.

This legislative change is an important clarification under the statute.  Employers must be very careful not to discriminate or take adverse employment actions against anyone who is essentially a whistleblower for Medicaid Fraud.  If an employer has a need or reason to take an adverse employment against such a whistleblower, the employer must proceed very carefully to make sure the employer is not inviting a lawsuit.  Legal counsel should be consulted if this situation arises to try to do everything possible to avoid litigation.