Statement Of Attorney General Spitzer On Proposed Medicaid Fraud Legislation

One of my top legislative priorities in recent years has been the enactment of strong legislation to enhance the detection, investigation, and prosecution of Medicaid fraud.

The bill that the Legislature is expected to pass this week, while making slight improvements, fails to enact the most important Medicaid reforms that will save taxpayer dollars. Even worse, the bill contains provisions that will protect some criminals from being held accountable for their actions.

First, the bill fails to include either the False Claims Act or the Martin Act for Health Care. The False Claims Act would allow us to learn about ongoing frauds that otherwise would never be revealed, and has been a highly successful anti-fraud measure at the federal level and in other states. The Martin Act for Health Care would enhance our ability to investigate and prosecute wrongdoers, by providing my office with the powers that we have used so successfully to root out fraud on Wall Street.

Second, the bill adds new "Health Care Fraud" crimes that are essentially useless. In particular, these new crimes:

  • Impose lower penalties on those who engage in Medicaid fraud than those who defraud money from private corporations; and
  • Exempt from prosecution Medicaid recipients who are defrauding the system.

Worst of all, the bill contains an amnesty provision for individuals who knowingly engage in Medicaid fraud, but who can claim that they were following the instructions of their supervisors. This excuse is simply unacceptable and unprecedented in fraud and larceny statutes.

Indeed, just last week the President of the New York State District Attorneys Association said that, because of the "major deficiencies" in the bill, these new crimes "would not offer any significant help to us in prosecuting those engaged in health care fraud."

In short, the Legislature’s so-called Medicaid fraud "reform" bill excludes the most important fraud-fighting reforms, and includes new crimes that seem designed to protect those who engage in these criminal activities.

The Legislature should drop the harmful crimes from the bill, and add the Martin Act and False Claims Act provisions. If they do not, it will clearly demonstrate that they are not serious about addressing the problem of Medicaid fraud.