Expansion of Maryland Anti-Fraud Law Blocked At the Goal Line By Knaves

by Brian J. Markovitz
April 11th, 2014

"Death of the fraudster" by Georg Auer Hohensalzburg

Are you a Marylander?

Do you want your hard earned tax money going to companies who are defrauding the Maryland state government?

Probably not.

But, if you don't mind companies who contract with the Maryland state government who fraudulently take taxpayer funds, then Monday, April 7, 2014, the last day of the legislative session, was a great day for you.

On that day, the Maryland False Claims Act Amendment, HB 867, which passed the Maryland House of Delegates, was just about to make it through to a final vote on the Maryland Senate floor when it was postponed.  This delay killed the bill for another year.  This postponement was evidently orchestrated in last minute, backroom deals that are the all-too-familiar, stereotypical control of our country’s legislative bodies by special interest groups.

Currently, Maryland law only covers fraudulently taken health care funds, such as Medicaid.  This allows the state to recover illegally taken health care funds and subjects healthcare contractors who fraudulently obtain Maryland funds to penalties and damages.  House Bill 867’s enactment would have allowed the state to recover and penalize fraud on all of Maryland’s funds in the same manner, not just healthcare.

In theory, everyone should be against fraud.  Pope Francis, for instance, recently took a seriously hardline on people who steal from the government, implying by quoting Jesus that they be thrown in the sea with a stone around their neck.  President Abraham Lincoln came up with the idea for the federal law (aka “Lincoln’s Law”) in 1863 that House Bill 867 essentially duplicated.  The Federal False Claims Act even has bipartisan support in Congress, a rarity today.  So, what could be wrong with treating fraudulent non-healthcare contractors like fraudulent healthcare contractors?  Somehow stopping the stealing of taxpayer money is bad for business. Of course, this is true if your business is illegally obtaining and performing contracts with the State of Maryland.

What opponent groups fail to explain is that unreported and unrecovered fraud hurts, not only taxpayers, but honest businesses too who are at a competitive disadvantage by following the law.  As Jonathan Swift wrote in Gulliver’s Travels:

They [the Lilliputians] look upon fraud as a greater crime than theft, and therefore seldom fail to punish it with death; for they allege that care and vigilance, with a very common understanding, may preserve a man’s goods from thieves, but honesty has no defence against superior cunning; and, since it is necessary that there should be a perpetual intercourse of buying and selling, and dealing upon credit, where fraud is permitted and connived at, or has no law to punish it, the honest dealer is always undone, and the knave gets the advantage.

In Gulliver’s Travels, Lemuel Gulliver explains that he tried to defend a Lilliputian’s fraudulent actions to the state (“the emperor”) but realizing that there was no legitimate defense felt “heartily ashamed.”  While we can expect no such self-reflection by the special interests who support and are funded by the “knaves,” hopefully, the average citizen, like the little Lilliputians can make a push to enact a “law to punish” fraud next session.

Click here to get your state senator’s contact information. To see if they voted to kill the bill (a “yea” being bad), go here.

Brian Markovitz is a principal in the firm’s Labor and Employment and Civil Litigation practice groups who focuses primarily on helping victims who have suffered severe injustice in the workplace. He represents individuals throughout Maryland, the Washington D.C. area and across the country in complex employment litigation and appellate matters involving wrongful termination, retaliation by employers in response to reporting fraud or misconduct and discrimination on the basis of race, gender, age and sexual orientation. 

Contact Brian Markovitz

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