Punish false claims

March 07, 2007|By Sidney Rocke

By failing to enact a false claims act, our state is missing an important safeguard against fraud and waste of taxpayer dollars. The federal government has had its False Claims Act, or FCA, in place since the Civil War - when the Union Army realized it was being swindled by unscrupulous contractors who were supplying lame mules, yet charging for healthy animals.

In a reaction to what we would today call blatant rip-offs, Congress passed a law allowing the government to respond to these false claims by seeking triple damages and additional hefty penalties. This accomplished two things.

First, it allowed for fuller justice when false claims are filed, because simply suing for a refund of money paid does not take into account the tremendous cost in time and effort it sometimes takes to discover, assess and correct the damage from inferior goods or shoddy workmanship. Second, the possibility of paying more than triple damages for false claims has a deterrent effect on government contractors on the federal level, who now have a greater incentive to deliver what they promise and to bill correctly.

Another important aspect of the federal law is its qui tam or whistle-blower provision. This allows any person with information about false claims to the government to file suit on its behalf in exchange for a percentage of the amount recovered. These whistle-blowers often have invaluable inside information about fraud schemes, and the lure of a big recovery can make them take the risk of losing their jobs when the false claims are revealed.

Nearly two dozen states, including Virginia, and the District of Columbia have enacted a version of the false claims act. The trend will likely accelerate, because a new federal law allows states that pass their own version of the FCA to maintain an even greater proportion of Medicaid false claims recoveries. Although Medicaid is funded by a set formula of federal and state funds, the feds will allow states pursuing their own false claims actions to keep a share of the sums recovered that is higher than the share of state money defrauded.

Put in concrete terms, if a medical clinic is caught charging Medicaid $100,000 for medical care never provided, the attorney general's office could negotiate a settlement for $200,000 and our state could keep the lion's share of it. It is not often that Maryland is given an opportunity like that, and difficult to fathom why we wouldn't take advantage of it.

A state FCA would cover a wide range of government purchases: construction contracts, Medicaid claims, personal services - basically any transaction where someone seeks payment from the state. Certainly, most government contractors are honest. They would have little to fear, because the law would not cover reasonable mistakes, but rather intentional false claims or bills submitted out of recklessness.

Of course, it would not provide a miracle cure for all fraud against our state. And like all powerful tools, it should be wielded carefully, with government attorneys only pursuing cases supported by substantial evidence.

However, there is no good reason the Maryland treasury should not have this protection. It is high time for the legislature to act.

Sidney Rocke is a former Maryland assistant attorney general and supervisor of the attorney general's Health Care Fraud Unit. His e-mail is sidneyrocke@yahoo.com.

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