The success of the 1986 amendments to the federal False Claims Act (FCA) spurred some states and localities to enact similar qui tam laws. For example, Texas passed a False Claims Act in 1995, known as the Texas Medicaid Fraud Prevention Act. While this law applies only to fraud against the Texas Medicaid program, Medicaid is approximately one quarter of the Texas budget. The Medicaid program in Texas, as in all states, is funded jointly by the state and federal governments. The Texas FCA was largely ignored until 1997, when the Texas legislature added a qui tam provision. Slowly, whistleblowers learned of this qui tam provision, and began filing cases in Texas.

In 1999, the Texas Attorney General created a new Civil Medicaid Fraud Section of his office, and Pat O’Connell became the first Chief of that Section, a position he held for almost nine years. During Pat’s tenure, he led Texas to intervene in cases filed by whistleblowers against many wrongdoers who ripped off the Texas Medicaid program, from multinational pharmaceutical manufacturers, to hospitals and medical and dental practices. As a result of his Section’s success, the number of cases filed under the Texas FCA exploded from the first few that were filed before Pat started, to approximately 175 cases by the time he left his position. The lawyers in the Section increased steadily over Pat’s tenure, from the original two up to forty authorized by the Texas legislature in 2007 under a business plan Pat developed. Starting with two lawyers, Pat necessarily developed strong relationships with other government lawyers and with a number of whistleblowers’ lawyers, which served Texas well. From fiscal year 2000 through fiscal year 2012, Texas has recovered over a billion dollars under its FCA.

Due to his Section’s success, Pat was invited to testify before Congress about his experiences three times, the last of which assisted in persuading Congress to include a provision in the Deficit Reduction Act of 2005 (DRA) encouraging states to enact their own False Claims Acts. The DRA provision granted to states with FCAs that meet federal standards an additional 10% portion of any federal Medicaid funds recovered through Medicaid-related actions brought under FCAs. As a result, Texas, which pays approximately 40% of Medicaid expenditures in the state (the federal government pays the remainder), can retain 50% of the recoveries under its DRA-compliant statute, instead of 40%.

As of early 2012, 28 states, plus Washington, D.C., New York City, Chicago and Allegany County (Pittsburgh), Pennsylvania, have enacted state or local FCAs with functioning qui tam provisions: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia, Washington and Wisconsin. Eight of the state FCAs apply to Medicaid fraud only, including Colorado, Connecticut, Georgia, Iowa, Louisiana, Maryland, Michigan, Texas, and Wisconsin.