Wayne Allison Interview Part 2: Working With the Oklahoma AG on State Claims

It was my pleasure to interview Wayne Allison a distinguished False Claims Act attorney who works in Oklahoma. We hope readers will have an opportunity to avail themselves of Wayne’s deep insight into this area of practice. Like many who have chosen this area of practice Wayne came to working on False Claims cases relatively later in his professional career. As a result he brings a wealth of perspective to his work and to his understanding of whistleblower law. Click here for part 1 or part 3.

Tony: You’ve obviously brought cases under both the Federal statute and the Oklahoma statute. Do you find that the Oklahoma Attorney General’s Office is generally supportive of these types of actions or is it just too soon to determine, which in your experience at least so far with regard to bringing these cases?

Wayne: So far, everything that I have brought underneath the State False Claims Act I have brought in a federal forum. I have not exercised the State False Claims Act without pleading it such that I tie it into Federal False Claims, because with Medicaid 75 to 80 percent of the Medicaid budget comes from the Feds. A violation or false claim at the state level under Medicaid if pled correctly qualifies as a Federal False Claim Act violation, and then I plead the State False Claim Act as well and request federal court to take supplemental jurisdiction. I have avoided the State False Claims Act exclusively because some of the limitations of the statute. There are significant limitations in the statute that make it not as effective in rewarding and facilitating qui tam actions and that also limits the amount the State can collect.

Tony: That’s interesting. What are the limitations?

Wayne: The OIG does a review of each state’s False Claims Act statute and the Oklahoma statute was put in place in 2007. The OIG reviewed the Oklahoma statute in 2011 and there are federal incentive moneys that can be obtained by a state if the state legislature makes their state level qui tam and False Claims Act provisions at least as effective and rewarding in facilitating cases as the federal law. So, in 2011, there is an opinion from the Federal HHS OIG that the Oklahoma law does not pass muster, so Oklahoma does not get those federal dollars. And there are 6 or 7 specific items that make the Oklahoma law less effective– even though it’s similar in many respects.

For example, even though it’s at the same 15 to 25 percent relator share and a 25 to 30 percent for cases in which the government does not intervene, there’s an additional couple of quirky items in it that give the court a great deal of leeway to limit the relator share. Even if there is an original source relator, the court can effectively overrule the original source argument and fall back on a provision that says the relator cannot get more than 10%, because there was a prior action somewhere based on comparable facts. So, as applied, it’s dangerous for the relator to rely on the state alone. Statutes of limitations are not as good for a retaliation claim. There’s no relation back provision. If a court concludes that there has been certain public disclosure type, the court is required to dismiss the action and there is no due process or opportunity to argue at that point. It is simply over and done. There are some very stringent intervention requirements that put some constraints on the Oklahoma Attorney General. Instead of $5,500 to $11,000 per claim as a penalty, it’s $5,000 to $11,000. Probably the most dangerous potentially is that if a court would conclude that a relator had planned, or initiated, or even participated in the activities that are alleged to be subject to the Oklahoma False Claims Act, so even participation, –it doesn’t limit this to a knowing participating or voluntary participation. If you are just part of the machine and doing your job, you can be completely excluded from a recovery. So, that coupled with lesser protections from retaliation makes the Oklahoma False Claims Act far less desirable than the Federal. With that being said, I’m always happy to have the Attorney General jump in with the Department of Justice should they choose. So, I always plead both. In that way, they are always put on notice, but in Oklahoma, doing it alone under the Oklahoma False Claims Act is a fool’s play in my opinion.

Tony: That is very, very dangerous. I do not like the sound of the language regarding somebody participating because, as you know, it’s very difficult for many people who work in a normal workplace to completely avoid participating in the fraud if the boss is telling them to participate in the fraud. That’s an unusual provision.

Wayne: I mean, to be witness to fraudulent activities, an employee is typically handling some piece of the process in order to get the information necessary. You’ve got to have first-hand eyes on it typically. If those first-hand eyes of fraudulent scheme involve any form of participation, you’ve got a likelihood of certainly having to argue it and potentially getting knocked out of the case.

Tony: In your experience, is the Oklahoma U.S. Attorney playing this pretty much on the basis of a meritorious analysis? I mean, we get all these suspicious questions all the time as relator’s counsel, as to whether one officer or another is subject to some form of pressure, but my experience is most U.S. Attorneys offices at least start out by doing an analysis based on the merits. Do you have any contrary evidence or you feel that the U.S. Attorney’s office in Oklahoma is basically reading it as they get it?

Wayne: I think the U.S. Attorney’s office here, the Western District in Oklahoma, Department of Justice or the U.S. Attorney’s Office, gives it a meritorious view out of the box and I also recognize that, they’re all smart folks and they’re all busy and they also defend the United States in all kinds of claims. So, they are the United States Attorneys and they have their hands full in a number of things. I’d like them to pick up every case that I bring in and go supplement information and go hog wild. The reality is I think they’re humans. I think they’re sharp professionals and I think they have limited time. You know, I think their motives are proper, but if they look at something and it’s really hard or the bang for the buck doesn’t look like it might be there– I don’t necessarily fault them for, not extending excessive resources for low-end rewards or shying away from things that look like all the pieces aren’t there. I think they have to assess the case the same way that you and I do. You have to look at it and not just look at the black and white theoretical classroom considerations on did they violate a claim or not, but you have to put in all the practical considerations.

One of the down sides of it, and I don’t know states that do it the other way, but I do know that there are some states out there that if you have a violation of a Federal False Claims Act that is also pleaded properly as violating the State False Claims Act, there can be a double recovery. In Oklahoma, the Oklahoma False Claims Act specifically prohibits any kind of duplicative recovery. So, if the Federal False Claims Act case gets any kind of recovery and the State False Claims Act recovery is due, it’s netted. It seems to disfavor the  state government in the efforts to recover on some fraud and abuse actions.

Tony: Are there any efforts to improve the Act as far as you know or is it just one of these things that got enacted this way and were stuck with the law that we’ve got, which is better than nothing obviously?

Wayne: I have seen no action, not that there hasn’t been, but there were a couple of slight tweaks to language in 2009 and a little bit in 2011. It was basically adding in some very specific provisions about the Oklahoma Healthcare Authority and its right to go in, and investigate and participate in recovery or takeover the administrative activity, but nothing to substantively deal with what the OIG said in a 3- to 4-page memo in March 2011 that the Oklahoma False Claims Act falls far short. I think it even said the Oklahoma Statute is simply not at least as effective as the Federal law in rewarding and facilitating qui tam action. So, it’s pretty significant notice from the Feds. And I have seen no activity legislatively to try to fix it.

The Oklahoma False Claims Act