April 9, 2015

Maryland Passes False Claims Act

MarylandHouseBy the C|C Whistleblower Lawyer Team

Yesterday, by a vote of 88 to 51, the Maryland House of Delegates approved passage of the Maryland False Claims Act.  It was previously passed by the Maryland Senate by a vote of 46 to 1 and now goes to Governor Larry Hogan for his signature.  The law greatly expands Maryland’s existing False Claims law which was limited to cases of Medicaid and healthcare-related fraud.  It also will allow whistleblowers to share in any government recovery and offer them protections against retaliation from their employer.  See Maryland AG Press Release.

Passage of the bill was apparently Maryland Attorney General Frosh’s top priority for the 2015 legislative session.  In a press release his office issued yesterday, the Attorney General made clear his vision of the critical role the new law will play in helping the State combat fraud, particularly with the help of whistleblowers.

The False Claims Act is a proven tool and I am confident it will recoup millions for the state, while creating a level playing field allowing honest businesses to thrive.  It has been effective for the federal government.  It has been effective in states all over the country.  And it is going to work in Maryland.  . . .  Often, employees have the most detailed knowledge of what their companies are doing, but need the right incentive to come forward. This law creates incentives for integrity, and we all will benefit.

Maryland has recovered nearly $62 million over the past four years from Medicaid-related cases initiated by whistleblowers and others.  The State believes these numbers will greatly increase under the new law.  The law does have one wrinkle, however, that many are criticizing as significantly handicapping the ultimate impact it could have.  Unlike the federal False Claims Act and that of numerous states, it would not allow whistleblowers to pursue the case if the government chooses not to intervene.  See Maryland’s Proposed False Claims Act Doesn’t Go Far Enough to Fight Fraud.

The absence of this full-fledged qui tam provision takes away a very powerful component of the more full-bodied False Claims Acts which allow whistleblowers to go forward when the government chooses not to for reasons that often having nothing to do with the merits of the case, such as a lack of resources.  Nevertheless, passage of the legislation is a good first step and hopefully will encourage the many states without False Claims Act legislation to follow suit.

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