ANNAPOLIS — The Senate rejected legislation Monday night that would have expanded the Maryland False Health Claims Act to cover all state contractors.
On a 27-19 vote in the 2014 session’s waning hours, the Senate voted to postpone indefinitely the proposed Maryland False Claims Act. Sen. David R. Brinkley, R-Frederick and Carroll, moved to postpone Senate consideration, saying the bill’s “impact on business is certainly not clear.”
The proposed Maryland False Claims Act would have permitted employees who blow the whistle and bring suit against contractors that overcharge or otherwise defraud the state to collect up to 25 percent of the state’s recovery through civil litigation. House Bill 867, which the House of Delegates passed 93-37 on March 17, would have also permitted the state to recover triple damages and the whistleblower to recover attorney’s fees.
Under current law, the 2010 False Health Claims Act, whistleblower actions can be brought only against healthcare institutions and providers.
Del. Sam Arora, chief sponsor of the failed bill, said he was “surprised and disappointed” by the Senate’s rejection.
The Senate “voted to tie Maryland’s hands when it comes to fighting fraud against taxpayers,” added Arora, D-Montgomery. “In the final hours of session, it’s not uncommon for misinformation to kill good bills. I went up against some of the most well-heeled special interests in the state and came up a yard short this year.”
Arora’s opposition included the Maryland Chamber of Commerce, which said the prevention of fraud should remain a state responsibility and not be turned into an incentive for private citizens to file questionable lawsuits in search of whistleblower recoveries.
“The attorney general’s office is able to go after fraud,” Mathew Palmer, of the chamber, told the Senate Judicial Proceedings Committee on March 25. “While we support vigorous enforcement of the law by the state against persons attempting to defraud state programs, we do not endorse creating a new private cause of action for individuals to pursue these claims.”
Bill Pitcher, of the Mid-Atlantic Petroleum Dealers Association, told the Senate panel that the recovery provisions of the bill, including triple damages and attorney’s fees, are draconian and would discourage honest companies from doing business with the state for fear of potentially crippling litigation.
But Baltimore City and Montgomery and Prince George’s counties supported the ill-fated legislation in written testimony submitted to the Senate committee.
“Most fraud is uncovered by whistleblowers who take a tremendous risk in revealing the truth,” Baltimore Mayor Stephanie Rawlings-Blake’s Office of Government Relations stated. “While substantial, health-related fraud is only a small portion of the total fraud committed against Maryland counties and Baltimore City, HB 867 presents a more robust False Claims Act that provides an incentive for whistleblowers to come forward, offering protection from retaliation and a portion of the recovery.”