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Maryland False Claims Act

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Today marks the one year anniversary of the Maryland False Claims Act. Passed with near-unanimous support (46-1) the Maryland False Claims Act joined the already existing Maryland False Health Claims Act to expand the civil legal tools used to combat fraud. Under the Maryland False Claims Act, private citizens, or “whistleblowers” can sue parties who are defrauding the State Government. Prior to the passage of the Act, private citizens could only bring suit against parties who submitted false claims for payment to state health plans, including Medicaid. However, for the past year now, private citizens have been able to bring suit on behalf of the State of Maryland against any party submitting false claims for payment of any State money.
The federal False Claims Act, on which many state false claims acts are based, allows whistleblowers to bring lawsuits alleging fraud against the federal government. These whistleblowers are suing “on behalf of the government.” That is, the government is the true injured party (the party whose money has been taken through fraud) but the whistleblower can act as the plaintiff bringing the case before the court. This private, qui tam, cause of action was created to incentivize whistleblowers to come forward. Whistleblowers inside companies have a better view of fraud their company may be engaging in, but outing the fraud is not a simple task. As incentive, whistleblowers receive a percentage of the money recovered in a successful trial or settlement brought by the whistleblower’s lawsuit.
The Maryland False Claims Act is similar to the federal False Claims Act but doesn’t go far enough. Under the federal False Claims Act, the whistleblower can continue to litigate the case if the U.S. Government chooses not to “intervene,” or take over the case. Under the Maryland False Claims Act, while a private whistleblower can file suit under the Act, they cannot litigate the case themselves if the Maryland Government chooses not to intervene.
However, this is still an improvement from just over one year ago, before the Maryland False Claims Act went into effect. Fraud against the States and Federal Governments exists in every industry, not just healthcare. Now whistleblowers in any industry where they know of parties knowingly submitting false claims to the government for money can file suit on behalf of Maryland. If Maryland intervenes in a case brought by a whistleblower and that case is successful, the whistleblower is awarded between 15% and 25% of the proceeds recovered in the action.