Legislature(2015 - 2016)GRUENBERG 120
04/13/2016 01:00 PM House JUDICIARY
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HB 347-RECOVERY OF FALSE CLAIMS FOR STATE FUNDS 1:47:59 PM CHAIR LEDOUX announced that the next order of business would be HOUSE BILL NO. 347, "An Act relating to the limitation period to commence a false claims action; relating to recovery for false claims for state or municipal funds; and amending Rules 4, 24, and 46, Alaska Rules of Civil Procedure." 1:48:19 PM REPRESENTATIVE KELLER moved to adopt CSHB 347, Version 29- LS1505\H, Wallace, 4/12/16 as the working document. There being no objection, Version H was before the committee. REPRESENTATIVE KREISS-TOMKINS deferred to his staff, Reid Magdanz, to present CSHB 347. 1:49:04 PM REID MAGDANZ, Staff, Representative Jonathan Kreiss-Tomkins, Alaska State Legislature, said the substantive changes include deleting all mention of showings "in-camera" or presenting court filings in-camera because Alaska's courts rarely have in-camera filings. The term "qui tam plaintiff" was replaced throughout the bill with the term "private plaintiff" because it removes unnecessary Latin from Alaska's statutes. He related that, perhaps most substantively, the Act no longer applies to any claim brought under Title 43, Revenue and Taxation, because currently there are strong compliance measures for most of the state's tax collections for PFD dividends. He related that the sponsor "did not believe that this Act needed to apply to those, the federal Act is not applied to tax claims and most state acts do not apply to tax claims;" therefore, the committee substitute exempts tax claims. He noted the "more cosmetic" changes are where the template act had been transposed incorrectly, those sections were amended to bring this Act in line with other state acts, and the Federal Act. 1:51:26 PM REPRESENTATIVE CLAMAN thanked Mr. Magdanz for his email describing differences between this and the federal Act. An area of significant difference, he opined, is that the Statute of Limitations is at ten years, whereas, the Federal Act, Statute of Limitations, reads six years. He asked the reason for Alaska's time length being longer. MR. MAGDANZ responded that the New York's Act listed ten years, and noted that multiple people, including a person from "Taxpayers Against Fraud," had advised that New York is the best and strongest state for false claims acts. 1:52:38 PM REPRESENTATIVE CLAMAN asked, in terms of policy analysis, how many claims were filed in New York during the last four years, the statistics on when claims are brought in New York, or brought in other states with such a long Statute of Limitation. MR. MAGDANZ related that he has not looked at any of those numbers and is not stuck on the ten year Statute of Limitations. 1:53:16 PM REPRESENTATIVE KELLER put forth that he is struggling because this bill is so much, so fast, given that the legislature is toward the end of session, and it seems to compress time. He asked whether there are any witnesses to testify on the merits of this as far as business or anyone other than the witnesses that previously testified. CHAIR LEDOUX said that Stacie Kraly, Department of Law is available. REPRESENTATIVE KELLER asked whether there had been any opposition up to this point. REPRESENTATIVE KREISS-TOMKINS replied he had a conversation with someone in the oil & gas industry and their concerns were "positively, mostly resolved" through exempting taxation from Title 43. He stressed that that wasn't the intent of the bill because there are systems already in processes; therefore, it became a non-concern after revisions. 1:54:39 PM REPRESENTATIVE KELLER advised that depending upon whether the committee receives other input, he would not stand in the way of the bill moving, but that does not mean he has made up his mind. REPRESENTATIVE MILLETT asked whether Representative Kreiss- Tomkins had seen the False Claims Act in any other legislation that is going through the legislature. She recalled a portion of Medicaid reform with a bit of false claims and related a concern that those two bills do not contradict each other, and that it is being tracked. She reiterated she does not want two False Claims Acts going through that do not marry up and make Alaska's statutes convoluted. 1:55:34 PM REPRESENTATIVE KREISS-TOMKINS said he had conversations with staff in the other body that are (indisc.) at legislation and the two bills are substantially similar. He noted that one bill applies to a narrower scope ... just Medicaid or (indisc.) spoken with the drafters at Legislative Legal and Research Services, and he is looking to attach an amendment to the committee substitute. He explained that the amendment basically speaks to both pieces of legislation, and in the event they both become law they can gracefully integrate into each other as possible. REPRESENTATIVE MILLETT reiterated that her only concern is that Title 43 marry up with Medicaid false claims report. REPRESENTATIVE CLAMAN asked whether Representative Kreiss- Tomkins's expectation is to get this bill on the floor of the House of Representative before gaveling out, or to get the bill through the committee with the idea of refiling next year. REPRESENTATIVE KREISS-TOMKINS answered that next year is a possibility, but there is a companion bill in the other body that the chair expressed the intention of hearing and moving it out, and it has no other committee of referral. Although, there is another committee of referral in this body with the House Finance Committee being the next stop. He said he sees a possibility that it could pass this session given there hasn't been any opposition. In the event legitimate concerns arise that have not been worked through, he would slow the bill down to be sure there is a good product. 1:57:35 PM REPRESENTATIVE CLAMAN noted he shares some of Representative Keller's concerns, and questions the fairly significant change to prosecutorial powers in creating the right for private rights of action. His concern is that with the significant change to prosecutorial powers to put more out into the public, because he is worried groups may ask, "how did you get there, how did this happen, and how did we not know about it." He acknowledged that the Federal False Claims Act cases are incredibly complex with interesting features and he was unsure the public "is even aware this is going on." CHAIR LEDOUX pointed out that this bill was noticed and heard approximately a week ago. She noted that SB 174 just came over the other day, and there were many people in the public here to testify, and online. She stated that the information is put online, they get the word out, and that's the best they can do. REPRESENTATIVE CLAMAN said he understands. 1:59:17 PM REPRESENTATIVE KREISS-TOMKINS stated he finds comfort that precedence language is in state law, and in other instances. Also, the Medicaid reform bill, false claims act provision, has not attracted any opposition or concern, to the best of his knowledge. He described it as almost secondary companion legislation that has been vetted to an extent that that gives him a little more assurance, but it is a point very well taken. CHAIR LEDOUX asked Representative Kreiss-Tomkins whether he has an amendment he would like to bring to this committee. 2:00:24 PM The committee took an at-ease from 2:00 p.m. to 2:03 p.m. 2:03:11 PM REPRESENTATIVE KREISS-TOMKINS moved to adopt Amendment 1, Version 29-LS1505\H.1, Wallace, 4/13/16, which read: Page 2, following line 26: Insert a new subsection to read: "(c) This section does not apply to, and a claim may not be brought under this section for, a claim relating to the medical assistance program if a separate false claims procedure for medical assistance claims under AS 47.05 and AS 47.07 is provided by law." Reletter the following subsection accordingly. Page 2, line 31: Delete "AS 37.10.110(c)" Insert "AS 37.10.110(d)" Page 3, line 5: Delete "AS 37.10.110(c)" Insert "AS 37.10.110(d)" Page 3, line 16: Delete "(a)" Page 3, lines 24 - 26: Delete all material. Page 4, line 3: Delete "The" Insert "Except as provided in (c) of this section, the" Page 4, following line 6: Insert a new subsection to read: "(c) If a separate false claims procedure for medical assistance claims under AS 47.05 and AS 47.07 is provided by law, a complaint under this section shall be filed with the court and remain confidential for at least 60 days, and may not be served on the defendant until the court so orders. The state may elect to intervene or proceed with the action within 60 days after the state receives both the complaint and the material evidence and information." Reletter the following subsections accordingly. Page 4, line 14, following "section": Insert "or confidential under (c) of this section" Page 4, line 15: Delete "under seal" Insert "and may be filed under seal or remain confidential, as provided under (b) or (c) of this section" Page 4, line 17: Delete "(d)" Insert "(e)" Page 10, line 30, through page 11, line 15: Delete all material and insert: "* Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to read: INDIRECT COURT RULE AMENDMENT. (a) AS 37.10.125, added by sec. 2 of this Act, has the effect of amending Rule 4, Alaska Rules of Civil Procedure, by changing the procedure for initiating an action and for the timing of service. (b) AS 37.10.125(f) and 37.10.130, added by sec. 2 of this Act, have the effect of amending Rule 24, Alaska Rules of Civil Procedure, by limiting intervention and by changing the procedure for intervention by allowing the state or a municipality to intervene at various times and for various reasons in a false claims action brought by a private party. (c) AS 37.10.130(d), added by sec. 2 of this Act, has the effect of amending Rule 46, Alaska Rules of Civil Procedure, by limiting the participation of a private party in a false claims action in certain circumstances." Renumber the following bill sections accordingly. Page 11, line 23: Delete "secs. 8 - 10 of this Act receive" Insert "sec. 8 of this Act receives" CHAIR LEDOUX objected for purposes of discussion. REPRESENTATIVE KREISS-TOMKINS advised that this language was conceived by the drafters of Legislative Legal and Research Services, and conversations with staff within the building to create a graceful reconciliation between this legislation and the false claims act contained within the Medicaid reform bill. CHAIR LEDOUX asked, "So what does it do?" REPRESENTATIVE KREISS-TOMKINS deferred to Mr. Magdanz. 2:03:46 PM MR. MAGDAN said the amendment provides that this bill and the False Claims Act in SB 74, can live harmoniously in statute, and provides that if there is a false claims act in law that applies to Medicaid claims, that this act does not cover Medicaid claims. Another change contains feedback from the court system, in the case there is a separate Medicaid false claims act, the standard for filing cases in this act goes from "under seal" to "confidential." The reason "under seal" was included, he explained to the best of his knowledge, it is necessary to include "under seal" to meet federal guidelines for the Medical False Claims Act. If this act does not apply to Medicaid claims, there is no need for the higher standard of "under seal;" therefore, it was changed to "confidential." 2:05:11 PM REPRESENTATIVE KELLER asked for clarification as to whether Mr. Magdanz testified that this amendment does change it to "confidential," or is that something additional yet to be done. MR. MAGDANZ answered that this amendment does change it to "confidential," in the event SB 74 passes. 2:05:53 PM NANCY MEADE, General Counsel, Administrative Staff, Office of the Administrative Director, Alaska Court System, advised that she was just handed the amendment and judging from Mr. Magdanz testimony it would be good for the court system. She explained that it is more difficult for the court system to handle documents "under seal" than "confidential" as they have different meanings. She then stated she would look closely at the amendment to determine exactly what it says. CHAIR LEDOUX noted that the court system had concerns about the bill in its original form and asked whether those problems have been resolved to her satisfaction. MS. MEADE responded that the sponsor and staff have satisfactorily addressed the issues the court system had with the original version of the bill. CHAIR LEDOUX, in response to Representative Keller, asked whether anyone was available from the Department of Law. There was no response. 2:07:10 PM REPRESENTATIVE CLAMAN advised he is not offering an amendment at this time but he will if this bill makes it to the floor of the House of Representatives. He suggested possibly making the Statute of Limitations track with the Federal Statute of Limitation's time period. In terms of potential parties that may be liable under false claims acts, if the legislature is going down this road it appears the expectation should be consistent with where they would be under the federal law. REPRESENTATIVE CLAMAN, in response to Chair LeDoux, stated that under federal law, the limit is six years and businesses that may be subject to a false claims act should be aware of the additional four years. He said he likes the idea that the two acts are pretty consistent. CHAIR LEDOUX pointed out that this bill has another stop on its way to the floor of the House of Representatives, and Representative Claman may want to discuss that issue with the sponsor. 2:08:07 PM CHAIR LEDOUX removed her objection to Amendment 1. There being no objection, Amendment 1 was adopted. CHAIR LEDOUX opened public testimony. After ascertaining no one wished to testify, closed public testimony. 2:09:07 PM REPRESENTATIVE KELLER moved to report CSHB 347, Version 29- LS1505\H, Wallace, 4/13/16, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 347(JUD) passed out of the House Judiciary Standing Committee.