The Medicaid Fraud Control Unit (the “Unit”) in the Office of the Attorney General investigates allegations of Medicaid fraud and the abuse and neglect of vulnerable individuals. Until recently, the Unit’s investigation of fraud cases was focused primarily on criminal fraud. With the enactment of the Maryland False Health Claims Act, the Unit now pursues significantly more civil fraud investigations.
The Maryland False Health Claims Act became effective on October 1, 2010. It allows the state to recover treble damages and a civil penalty of up to $10,000 per violation from anyone who violates the Act. The Act can be violated in nine enumerated ways involving submitting false claims to the state or failing to turn over money or property owed to the state.
In addition to allowing the state to file suit when it learns of Medicaid fraud, the False Health Claims Act contains provisions that allow private citizens who know that false or fraudulent claims have been submitted to the state to file suit on the government’s behalf. These lawsuits, called qui tam lawsuits, allow the state to recover monies in cases that might not otherwise have come to the government’s attention. The whistleblower who files the lawsuit is known as a relator.
A person who seeks to recover under the False Health Claims Act must file a complaint in the name of the state. That complaint must be filed under seal and is served only on the state, not the defendant. The relator must also serve the state with a statement of substantially all material evidence and information that the person possesses. The case remains under seal for at least 60 days to allow the state to investigate the allegations.
The Unit receives an average of one to two qui tam lawsuits each week. To ensure that a qui tam case can be reviewed as efficiently as possible, counsel filing qui tam lawsuits should keep the following tips in mind: complaints that are captioned Doe vs. Doe or Under Seal vs. Under Seal should be accompanied by a cover letter stating the names of the relator and defendant. Complaints and other information should be provided in electronic format whenever possible. Documents should be bates-labeled for ease of reference. An index should be provided if large numbers of documents are produced. Counsel should be alert to the fact that some relators may have privileged information regarding the defendant in a qui tam lawsuit. If there is any doubt about whether certain information is privileged, the issue should be discussed with the Unit before the information is disclosed.
After investigating, the state will decide whether to intervene and pursue the case further or whether to decline to intervene in the case. If the state intervenes, it usually files its own complaint, in which it may adopt some, all, or none of the relator’s original allegations. The state may also include additional allegations based on information known to it. If the state declines to intervene, the court is required to dismiss the case. This is a departure from the federal False Claims Act, which allows a relator to pursue a case even if the government has declined to intervene.
If the case results in a recovery for the state, the relator may be entitled to a portion of any monies paid. Generally, a relator may receive between 15 and 25 percent of the recovery. The exact amount is determined on a case-by-case basis after evaluating the relator’s contributions to the final outcome of the case. A relator may be awarded less than 15 percent of the recovery, or nothing, if the lawsuit is based on information disclosed in government reports, hearings, audits, or investigations; if the lawsuit is based on information disclosed in the news media; or if the relator participated in the misconduct on which the case was based.
The False Health Claims Act also created new tools for the Unit to investigate alleged false claims. The statute allows the state to seek discovery from any person during an investigation of either a qui tam lawsuit or during an independent investigation conducted by the state. Unlike in other civil cases, persons who receive discovery requests usually will not receive a complaint because the discovery relates to allegations raised in a qui tam lawsuit that is under seal or because the discovery relates to an independent investigation the Unit has undertaken in which no complaint has been filed. Likewise, persons who are served with discovery requests will not receive a subpoena, as every person from whom the state seeks discovery is considered a party such that no subpoena is required.
Shelly Martin is an Assistant Attorney General in the Medicaid Fraud Control Unit.