ANNAPOLIS, Md. (February 23, 2010) – Lt. Governor Anthony G. Brown testified earlier today before the Maryland Senate Judicial Proceedings Committee in favor of SB 279: Maryland False Health Claims Act of 2010. The bill was introduced as part of the O’Malley-Brown legislative package earlier this year and was listed as one of Brown’s top priorities for the 2010 session. As much as 10 percent of State Medicaid funding is lost to fraud each year in Maryland. The Maryland False Health Claims Act of 2010 will dramatically increase the State’s ability to recover stolen funds and will save taxpayers millions of dollars.
“Since we first took office, Governor O’Malley and I have worked tirelessly to make government more efficient and effective. We have also set goals to improve health care, expand coverage and lower costs. The Maryland False Health Claims Act of 2010 can help us reach all of those goals,” said Lt. Governor Brown. “Especially during these difficult economic times, when we are forced to do more with less, it is important that we recover funds that are lost through fraudulent practices. We can recover $9 to $10 million a year, using conservative estimates, if we pass this bill and we can save taxpayers even more in future years through identification, enforcement and deterrence. We know most doctors, nurses and providers are honest and upstanding men and women who adhere to the rules and the laws in our code. However, fraud exists, costing us millions of dollars each year that could be used for Medicaid patients and other important services throughout State government.”
Brown was joined on a panel by Secretary of Health and Mental Hygiene John M. Colmers and Acting Insurance Commissioner Beth Sammis. Immediately after Lt. Governor Brown’s panel spoke, a panel of experts testified in support of the bill, including Jeb White, President of Taxpayers Against Fraud, Daniel Miller, former Director of the Delaware MFCU, Patrick O’Connell, former Texas Assistant Attorney General and Chief of Medicaid Fraud Section and Zachary Kitts, a Virginia attorney.
“Studies have shown that health care fraud is a growing problem, yet Maryland lacks the tools that a majority of other states and the federal government have for combating it. In difficult economic times it is appalling to permit health care fraud to go unpunished while at the same time cutting provider fees and other programs. Fraudulent schemes are increasingly complex and often require someone with inside knowledge to uncover,” said Secretary Colmers.
“Medicaid is uniquely positioned to detect fraudulent activity because of its large claim volume. When Medicaid stops fraud, this also eliminates fraud in other markets and helps contain health care costs in the public and private sector. Stopping health care fraud helps all of us,” said Commissioner Sammis.
SB 279 will protect Maryland and its Medicaid budget against theft. Like the Federal False Claims Act (FCA), the bill enables the State to recover treble damages and civil penalties from individuals who knowingly make false claims against State health plans. It permits both the Attorney General and individuals to file suit on behalf of the State, and it sets forth specific guidelines regarding the State’s right to intervene, move to dismiss, limit the relator’s participation and settle the action. Finally, the bill delineates the circumstances and permissible amount of a relator’s award and a defendant’s right to recover attorney’s fees and costs for any frivolous actions.
Under current law, the state can do little to recover dollars paid out through false claims. The State’s only recourse is to bring administrative actions against suspected perpetrators, but this laborious, painstaking process limits any recovery to actual losses only, with no penalties or damages to deter repeat offenders.
“Fraud schemes, by their very nature, thrive in the dark. Whistleblowers, on the other hand, detect and deter these deceptive practices by shining the light of truth. Unless Maryland adequately protects and incentives whistleblowers with a False Claims Act, fraudsters will continue to drain the State coffers with impunity,” said Taxpayers Against Fraud President Jeb White.
“The passage of the Delaware False Claims and Reporting Act is the single most important step Delaware has taken in the last ten years in its fight against fraud. Our recoveries from both in-state and national cases have risen significantly as a direct result of the passage of the False Claims Act,” said Dan Miller, former Director of the Delaware MFCU.
The Federal FCA, enacted in 1986, has returned over $24 billion to government coffers. Additional studies have shown that for every $1 spent on fraud enforcement, the government has recovered $15. However, the reach of the Federal FCA is limited because it can only pursue the largest and most global cases of fraud. States that have enacted their own FCAs have increased recoveries by as much as 100 percent. Virginia, for example, recovered $100 million in the two years after it enacted an FCA. Prior to enacting an FCA, the Commonwealth recovered approximately $20 million. In addition, because of an incentive created by Congressional action under the Deficit Reduction Act (DRA), states enacting FCAs which meet specific “DRA-compliant” requirements receive an additional 10 percent share of all Medicaid fraud recoveries.
“Since the implementation of the Texas Medicaid Fraud Prevention Act in 1997, Texas has recovered nearly half a billion dollars from providers who had defrauded the Texas Medicaid system. Maryland would be well served by passage of a similar act,” said Patrick O’Connell, former Texas Assistant Attorney General and Chief of the Civil Medicaid Fraud Section.
“If Maryland wants to know what kind of returns she can expect under a Maryland False Claims Act, there is no need to speculate,” said Virginia attorney Zachary Kitts. “Virginia has recovered an average of more than $228 million per year since passage of the Virginia Fraud Against Taxpayers Act, and that is just the recoveries for healthcare fraud. Tens of millions more have been recovered in non-healthcare cases.”
Governor O’Malley introduced identical legislation last year which was defeated by a single vote in the Senate Judicial Proceedings Committee. Brown, who is tasked to lead the administration’s health care efforts, is championing this bill and one other – a bill creating a Patient-Centered Medical Home program that will improve the quality of health care and lower costs for patients and insurers. Hearings for that bill will be scheduled next month.