Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

I previously reported on how the Maryland Senate watered down its "Little FCA" bill so that lawsuits would not cost so much for the contractors who actually commit fraud against the State of Maryland. The amended version of SB 279 does not permit a court to require fraudsters to pay compensatory damages, and it prohibits whistleblowers from pursuing qui tam lawsuits unless the Maryland Attorney General chooses to intervene. It also makes the award of attorney fees discretionary. Now the Maryland House has concurred in the amended Senate bill.  While the new bill is better than having no False Claims Act (FCA), it is not good enough to give Maryland the millions of dollars it would receive from federal FCA cases if it had a full strength "Little FCA."

The House did beat back two amendments that would have either decimated or limited the Little FCA.  One, by Delage Shank, would have the State police fraud by contractors by hiring yet another contractor to audit the other contractors -- and would have erased all the qui tam provisions.  Another, by Delegate Tarrant, would have allowed whistleblower lawsuits only for those frauds committed after October 1, 2010 -- allowing fraudsters another six months to commit fraud without fear of this new liability. This Maryland web page will soon have links to the roll call votes so Maryland citizens can see if their delegates voted for this weak protection, or for no protection at all.

Perhaps now will be a good time to ask Maryland's legislators to plan for passage next year of a bill that will actually qualify Maryland for the millions it is missing if it had a whistleblower law strong enough to qualify for the federal Grassley Amendment.

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The Maryland Senate yesterday passed a state version of the False Claims Act (FCA) by a vote of 37 in favor and 8 against. Before passing this bill, however, the Senate watered it down with an amendment. The Maryland False Health Claims Act of 2010, SB 279, as amended, no longer allows the state (or a whistleblower acting on behalf of the state) to obtain compensatory damages. The amendment also requires a court to dismiss the action if the State of Maryland declines to intervene. The Senate's amendment also waters down the provision for attorney fees. It now provides that attorney's fees and costs "may" be allowed by the court, and that the court must consider the amount of penalties and damages recovered. This last provision is contrary to prevailing law that calls on courts to award attorney fees based on market rates, without regard to any proportionality to the amount of recovery. The Senate's bill also allows courts to reduce the amount of the whistleblower's recovery if the court finds that the whistleblower participated in the violation. A more enlightened view would have barred recovery only if the person caused the violation through actions other than following orders of a superior. Also, I mentioned before that Maryland could gain even more if this bill covered all frauds, and not just those arising in medical care programs. Perhaps the Maryland House will consider these shortcomings when its Judiciary and Appropriations committee conducts the bill at its first hearing on April 1. The Senate bill does include an anti-retaliation provision, Section 2-607, that would allow employees to sue if they suffer retaliation for participating in a lawsuit, objecting to a violation, or refusing to participate in a violation. According to a Baltimore Sun article, the state administration estimates that between 5 and 10 percent of the state's $6 billion in annual medical spending is lost in fraudulent claims. The article quotes a spokesperson for the hospital association as saying that the amendment would cost the state the extra 10% it would receive from federal false claims lawsuits in the state. This refers to the Grassley Amendment to the federal FCA which increases a state's share if the state's law meets certain minimum requirements.  Apparently, making hospital administrators happy is more important to Maryland's Senators than protecting taxpayer dollars.

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WBAL-TV of Baltimore reports that the Maryland legislature is moving forward with a bill to create a "Little FCA" in Maryland.  Modeled on the federal False Claims Act (FCA), and looking for the benefits of the Grassley Amendment, Little FCAs provide financial rewards to whistleblowers who file sealed complaints against fraud by government contractors. Under the Grassley Amendment, state and local governments with Little FCAs receive a higher percentage of the fraud recoveries in their states. The WBAL story reports that Virginia has recovered $228 million a year since adopting their Little FCA.

Who can say no to free money for the state treasury? WBAL reports that medical providers and the Chamber of Commerce have opposed the bill.  However, none would speak to WBAL.  What would they say? "We should be able to get away with fraud"? WBAL says critics have previously claimed that the reward provision would encourage frivolous lawsuit and put pressure on businesses to settle. The $228 million Virginia gets every year does not sound frivolous to me.  The pressure to settle, though, sounds pretty good. Indeed, the FCA's reward provision is the most effective tool ever in the detection and proof of frauds against the government.

The administration of Gov. Martin O'Malley said the bill is likely to be amended.  My suggestion: don't limit the bill to medical fraud. Maryland deserves to get the enhanced recovery for all frauds in the state.

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