Businesses Oppose Proposed Ohio Fraud Legislation

Some Ohio businesses are opposing a bill backed by the attorney general that would create tougher penalties on fraud and give whistle-blowers a slice of the damages or repayments.

The proposed legislation, known as the Ohio “false claims act” in a reference to its federal counterpart, would apply to any contracts issued by the state and the money paid out for them, the Dayton Daily News reported.

The attorney general’s office depicts it as a way to provide incentives that encourage people who know of fraud to report it, but business groups like the Ohio Chamber of Commerce and the Ohio Hospital Association contend it would open the door for more people to bring false claims in hopes that companies would settle and they’d get a chunk of the settlement.

The chamber and the OHA said they support anti-fraud measures but won’t back the bill in its current form.

“We think it does nothing more than encourage lawsuits,” said Linda Woggon, the chamber’s executive vice president. “You can make a business out of just bringing lawsuits knowing a business is going to settle and you’re going to get a third of it.”

Opponents of the measure say the possibility of such payoffs outweighs the risk of the bill’s penalties for lawyers who bring frivolous suits.

It’s not clear how the measure would fare in the Legislature. A tamer version limited to Medicaid fraud was opposed by business groups and died in committee five years ago, the newspaper said.

The bill also would allow Ohio to keep 50 percent of the damages instead of the current federal limit of 40 percent during cases involving misuse of federal money, and whistle-blowers would get 15 to 30 percent of a settlement, the newspaper said.

One such case helped renew the call for a false claims act. Allegations of Medicaid fraud by Dayton-based CareSource led to a $26 million settlement in a case spurred by two former employees under the federal false claims act, which applies only to federal funds.

But Medicaid fraud is only one of the areas that would be covered.

“The most important part of this bill for me is that it would allow the Ohio taxpayers to recover on things like road construction on bridge construction or building construction, or IT services that are paid to a state agency,” attorney Rick Morgan Jr., who represented the CareSource whistle-blowers, told the newspaper.

The bill was sponsored by state Sen. Jim Hughes, R-Columbus. Rep. Ross McGregor of Springfield, a fellow Republican, said he waited on his plan to write a House companion bill while the Senate considers the idea.

The goal is to “make sure it’s a balanced approach that will still achieve its goal of reducing if not eliminating Medicaid fraud but at the same time not being overly restrictive of business,” McGregor said.