Significantly Amended False Claims Legislation Passes the Senate Floor

Senate Bill 347 – Maryland False Claim Act of 2015 is headed to the House of Delegates after the Chamber and other business groups were able to substantially amend the bill.  The bill is a top priority for the new Attorney General Brian Frosh and his only legislative initiative in 2015.  The Chamber worked to have the Senate Judicial Proceeding (JPR) Committee adopt a number of amendments to make the bill less onerous to businesses contracting with the State. These amendments include a 10 year statute of limitations applied to claims, removal of provisions that would have allowed for retroactive implementation of the Act, removal of provisions which allowed the State to recover attorney’s fees and court costs, and the adoption of provisions to clarify that a business can only be prosecuted for retaliation of a whistleblower if the State can prove it was directly associated with the false claim suit.

The Chamber also sought to clarify the definition of “knowing and knowingly” in the bill to ensure the act would only apply to claims if the business knew that the information they were providing the State was false. This amendment was rejected in JPR by a vote of 6 to 5, however, the Chamber was successful in adding that same amendment to the bill of the Senate Floor. The combination of these amendments creates a much less onerous version of the legislation and provides important protection for businesses against frivolous lawsuits or having cases filed for simple billing mistakes or errors.

The House of Delegates has heard the cross-filed version of the legislation, however, has not yet acted on the legislation. The Judiciary Committee is likely to conform the House version to the Senate version and move the bills simultaneously.  We will continue to monitor this bill, but feel confident that our important amendments will remain in place to protect the business community.