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Delegate says fraud ruling shows need to expand False Health Claims Act

Del. Sam Arora, whose bill to expand Maryland’s False Health Claims Act to all state contractors failed in the General Assembly last session, said the state’s $300,000 share of a Medicaid fraud judgment proves the need for broader legislation to protect the state’s taxpayers.

“I think the success of the health-only law portends well for expanding the law to protect more state funds,” said Arora, D-Montgomery, who plans to reintroduce the bill next year. “Why not protect the rest of our dollars?”

Arora’s comments Wednesday followed a federal judge’s order that Bethesda cardiologist Ishtiaq A. Malik and his two medical practices in Washington — Ishtiaq A. Malik M.D. P.C. and Advanced Nuclear Diagnostics P.C. — pay $17.4 million for making false or fraudulent claims for reimbursement for cardiac stress tests to state and federal health care programs.

The figure includes at least $305,151.24 for Maryland — or triple the amount of improperly billed services reimbursed by the state’s Medicaid program — Maryland Attorney General Douglas F. Gansler said in a statement announcing the recovery.

Maryland recovered $13 million under the False Health Claims Act in fiscal 2013, according to Gansler’s office.

“This law’s proven success raises the obvious question of why it remains narrowly limited to protecting only health care funds,” Arora said, citing the attorney general’s office’s data regarding the amount returned to the state under the False Health Claims Act. “I think the time is right to expand.”

Arora’s proposed legislation would provide for triple damages, like the 2010 False Health Claims Act. The measure would also permit employees who blow the whistle on Maryland contractors that overcharge or otherwise defraud the state to collect up to 25 percent of the state’s recovery, Arora said, noting that in many cases the corporate cheating is uncovered by people inside the company.

“You are leaving the door open to some mischief,” Arora said, noting the millions of dollars the state pays in public works contracts unrelated to health care. “The key here is making sure that whistleblowers can come forward. We know that we are not going to find this stuff unless we have a strong whistleblower provision.”

The Maryland Chamber of Commerce lobbied against Arora’s bill last session, calling it “unfair to business.”

In written testimony, the chamber said it supports “vigorous enforcement of the law by the state against persons attempting to defraud state programs.” But the chamber added it opposes “creating a new private cause of action for individuals to pursue these claims.”

“If the state contracts out its enforcement responsibilities to private individuals, businesses will face increased defense costs and the state will have no incentive to curtail cases of marginal merit,” the chamber added.

Arora said Wednesday that businesses have voiced a valid concern that a poorly drafted false claims law could leave them vulnerable to meritless claims by disgruntled employees.

To prevent such frivolous litigation, Arora said his bill would bar false-claim lawsuits from going forward unless the Office of the Maryland Attorney General finds merit, intervenes and pursues the litigation.

“I am under no illusion that this is going to be easy” to get the bill passed, Arora said, noting that General Assembly members face re-election in November 2014. “I don’t know what the election-year dynamics are.”

But the delegate voiced hope that opposition to the bill will be more difficult in the session that begins in January due to the state’s success in recovering tax dollars under the False Health Claims Act.

“We know this regime is working in the health care sector,” Arora said. “To say let’s just leave it there … that is a hard position for anyone to defend.”

Judge Robert L. Wilkins ruled Tuesday in a lawsuit the federal government filed against Malik and his medical practices in the U.S. District Court in Washington in 2012. Maryland and the District of Columbia joined the litigation in February.

The lawsuit alleged that Malik and his practices made illegal claims to Medicaid, Medicare and other government health programs through double billing for some services and submitting claims for services that were not provided.

Of the $17.4 million, nearly $1.7 million is for civil penalties. Maryland’s share of the $1.7 million has not yet been determined.

“Although we hope to never again confront this type of fraud, let this penalty send a message that this type of theft of taxpayer dollars carries a severe penalty,” Gansler said in the statement.

Malik’s attorney, Frederick D. Cooke Jr., declined to comment on Wilkins’ order or plans to appeal. Cooke is with Rubin, Winston, Diercks, Harris & Cooke LLP in Washington.