False Claims Bill Would Increase Lawsuits and Legal Costs

The House of Delegates passed legislation that would authorize a person to file suit on behalf of the state for an alleged false claim and recover up to 25 percent of the proceeds. The bill, HB 867, was heard by the Senate Judicial Proceedings committee yesterday. 

The Maryland Chamber of Commerce opposes the legislation because the new standards in this bill for prosecuting alleged fraud are unfair to businesses and would put a chilling effect on businesses contracting with the State. The penalties outlined in the bill include a $10,000 penalty per violation, treble damages and attorney’s fees. 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. 

“The Chamber believes this would increase legal costs for business, and the state would have no incentive to curtail cases of marginal merit,” said Mathew Palmer, the Maryland Chamber’s Senior Vice President of Government Affairs.

Similar legislation addressing health care false claims passed in 2010, with proponents claiming that the state would recover $300 million per year in fraudulent Medicaid claims. The fiscal note for HB 867 states that only $3.7 million was recovered in 2011, $1.2 million in 2012, and $12 million so far in 2013.  That is nowhere near the estimates the proponents predicted.  Also, the Attorney General’s office admits that, of those settlements, only $112,000 would have been unrecoverable if Maryland’s false claims laws were not in place. 

For more information, contact Mathew Palmer at mpalmer@mdchamber.org

Legislative Issues Tag: Civil Liability

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