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Title 42, The Public Health and WelfareRelease 119-110

§1396h State False Claims Act Requirements for Increased State Share of Recoveries

Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XIX — GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS › § 1396h

Last updated Sep 22, 2026|Official source

Summary

If a State has a law against false or fraudulent claims that meets certain rules, the federal share of any money the State recovers under that law is cut by 10 percentage points. The HHS Inspector General, working with the Attorney General, must say the State law meets the rules. The rules are: the law makes people liable under the federal false-claims standard (31 U.S.C. 3729) for Medicaid spending (1396b(a)); it gives whistleblowers tools and rewards at least as strong as the federal qui tam rules (31 U.S.C. 3730–3732); it requires new cases to be filed under seal for 60 days so the State AG can review them; and it includes civil penalties at least equal to the federal penalty. A State law in effect on January 1, 2007 that meets these rules stays treated as compliant so long as it keeps meeting them. States can cover more programs or spending and still qualify.

Full Legal Text

Title 42, §1396h

The Public Health and Welfare, Source: USLM XML via OLRC

(a)In general
Notwithstanding section 1396d(b) of this title, if a State has in effect a law relating to false or fraudulent claims that meets the requirements of subsection (b), the Federal medical assistance percentage with respect to any amounts recovered under a State action brought under such law, shall be decreased by 10 percentage points.
(b)Requirements
For purposes of subsection (a), the requirements of this subsection are that the Inspector General of the Department of Health and Human Services, in consultation with the Attorney General, determines that the State has in effect a law that meets the following requirements:
(1)The law establishes liability to the State for false or fraudulent claims described in section 3729 of title 31 with respect to any expenditure described in section 1396b(a) of this title.
(2)The law contains provisions that are at least as effective in rewarding and facilitating qui tam actions for false or fraudulent claims as those described in sections 3730 through 3732 of title 31.
(3)The law contains a requirement for filing an action under seal for 60 days with review by the State Attorney General.
(4)The law contains a civil penalty that is not less than the amount of the civil penalty authorized under section 3729 of title 31.
(c)Deemed compliance
A State that, as of January 1, 2007, has a law in effect that meets the requirements of subsection (b) shall be deemed to be in compliance with such requirements for so long as the law continues to meet such requirements.
(d)No preclusion of broader laws
Nothing in this section shall be construed as prohibiting a State that has in effect a law that establishes liability to the State for false or fraudulent claims described in section 3729 of title 31, with respect to programs in addition to the State program under this subchapter, or with respect to expenditures in addition to expenditures described in section 1396b(a) of this title, from being considered to be in compliance with the requirements of subsection (a) so long as the law meets such requirements.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 1396h, act Aug. 14, 1935, ch. 531, title XIX, § 1909, as added and amended Oct. 30, 1972, Pub. L. 92–603, title II, §§ 242(c), 278(b)(9), 86 Stat. 1419, 1454; Oct. 25, 1977, Pub. L. 95–142, § 4(b), 91 Stat. 1181; Dec. 5, 1980, Pub. L. 96–499, title IX, § 917, 94 Stat. 2625; Aug. 18, 1987, Pub. L. 100–93, § 4(a)–(c), 101 Stat. 688, 689, related to criminal penalties for acts involving Medicare and State health care programs, prior to being renumbered section 1128B of title XI of act Aug. 14, 1935, by section 4(d) of Pub. L. 100–93 and transferred to section 1320a–7b of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 109–171, title VI, § 6031(b), Feb. 8, 2006, 120 Stat. 73, as amended by Pub. L. 109–432, div. B, title IV, § 405(c)(2)(A)(iii), Dec. 20, 2006, 120 Stat. 3000, provided that: “Except as provided in section 6034(e) [set out as an

Effective Date

of 2006 Amendment note under section 1396a of this title], the

Amendments

made by this section [enacting this section] take effect on January 1, 2007.”

Reference

Citations & Metadata

Citation

42 U.S.C. § 1396h

Title 42, The Public Health and Welfare

Last Updated

Sep 22, 2026

Release point: 119-110