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Laws to fight fraud urged; Panel scrutinizes state contracting after Young scandal; 'Whistle-blower' incentive


A commission assigned to look at the way state government buys goods and services is recommending that Maryland adopt a "whistle-blower" law to encourage people to turn in companies that defraud the state.

The commission, chaired by Baltimore lawyer Charles O. Monk II, also says state officials in charge of procurement should be required by law to document outside inquiries while a contract is up for bid, and to include that information in the public record.

The objective, Monk said, is to discourage those who might try to exert behind-the-scenes influence over contract awards -- whether the pressure comes from a legislator, lobbyist, vendor or elsewhere.

"The underlying theme of everything we proposed was to get the [procurement] process as open as possible, to shed as much light on it as we can and to make it as competitive as we can," Monk said.

At the suggestion of legislative leaders, Gov. Parris N. Glendening appointed the commission to study state health care procurement practices in March after a scandal that led to Larry Young's expulsion from the state Senate.

A state grand jury later handed up a nine-count bribery and extortion indictment against Young, charging him with using his office to shake down two health care companies for more than $72,000.

The Monk commission's report to Glendening concluded that the health care procurement system "in general is efficient and effective at protecting the state against conflicts of interest and undue influence."

The report made several recommendations for strengthening the system, including the proposed whistle-blower law, which Monk said would be patterned after the Federal False Claims Act.

Like the federal statute, the law, if adopted, would give those who know of wrongdoing in government contracting a financial incentive to expose it. The whistle-blower could get a share of money recovered through court proceedings.

"The adoption of a whistle-blower statute does give you greater access to information about potential fraudulent activity," Monk said.

Deputy Attorney General Donna Hill Staton, a member of the commission, said California, Florida, Illinois and the District of Columbia have whistle-blower laws.

"This would certainly be an effective tool in increasing the state's ability, particularly in the area of Medicaid fraud, to recover money that was fraudulently obtained from the state," she said.

As is the case with several of the commission's other proposals, the whistle-blower measure would apply to all areas of procurement, not just health care.

The commission also recommended that a law be enacted requiring state procurement officers to document outside inquiries they get about a pending contract and to restrict the information they give in response to such inquiries.

"We thought this was a good way of making it known that persons seeking to have outside influence ought to be careful -- that their attempts to influence are going to be written down and reported," Monk said.

Monk said the commission "certainly took into consideration" the controversy surrounding Young. Young, who chaired a key Senate committee, urged state officials to award a multimillion-dollar health care contract to PrimeHealth, a health maintenance organization.

Pub Date: 2/02/99

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