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It's welcome news that Maryland Attorney General Brian Frosh is proposing legislation that will expand Maryland's False Claims Act (the current law addresses Medicaid fraud only), but the proposed legislation falls short because it lacks a vital element to the success of the federal False Claims Act: a strong, private qui tam provision.

The current federal False Claims Act has been hugely successful in fighting fraud against the federal government. One key to its success is that it allows private individuals, known as qui tam relators, and their lawyers to file a lawsuit on behalf of the federal government against alleged fraudsters. These qui tam relators are often industry insiders who witness fraud first hand. In most cases, the government would likely never discover the fraud without the help of these brave individuals.

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The proposed Maryland law, like the federal False Claims Act, allows qui tam relators to file suit, but unlike the federal law, it does not allow the qui tam relator to prosecute the case on her own if the government does not choose to intervene.

By way of background, the federal False Claims Act requires a qui tam relator to file her lawsuit under seal, and that suit remains under seal for 60 days or longer while the government investigates and determines whether it wants to intervene. If the government intervenes, it assumes primary responsibility for prosecuting the case, although the qui tam relator remains an important part of that investigation.

In the federal system, when prosecutors decline to intervene in a False Claims Act case, they allow private qui tam relators to pursue the fraudsters on their own. When this happens, the federal prosecutors continue to monitor the progress of the investigation and trial preparation and may intervene in the case at a later time in order to settle or try it. Regardless of whether the government eventually intervenes or allows the private qui tam relator to take the case to trial, if the qui tam relator is successful, the government gets the lion's share of the money recovered (between 70 percent and 85 percent). What this means is that the federal False Claims Act allows the federal government to harness the power of the private qui tam relator and her lawyers to fight fraud in cases where the government lacks the time and/or resources to do so.

Maryland's proposed law lacks this provision and would not allow private qui tam relators to go forward in cases where the government did not intervene, thus forgoing the resources of the private qui tam relators and their attorneys in recovering money stolen from the state and forgoing the recovery of perhaps millions of dollars stolen from its treasury.

So why does Maryland's proposed law lack this important provision? No doubt, fears of trial lawyers run amok may be one reason. Those fears, however, are unfounded. Like the federal False Claims Act, the Maryland False Claims Act could include provisions to prevent qui tam relators from going forward when the government, for example, shows that certain actions by the relator will interfere with an ongoing civil or criminal investigation or where important national security issues are implicated. Additionally, Maryland, like the federal government, could ensure that regardless of the stage of the pending litigation, the government is always free to step in and dismiss, settle or pursue the case. Likewise, as in the federal system, the cost of litigation and the heightened scrutiny placed on fraud cases by judges will also help to deter frivolous or vexatious suits in Maryland.

By allowing private qui tam relators to go forward under the watchful eye of Maryland state prosecutors, the state would be able to expand its prosecutorial resources and recover more money stolen from its taxpayers. It will also encourage more individuals who witness fraud to come forward with their evidence, and it will bring Maryland in line with the federal government and the governments of a number of other states who have qui tam provisions that mirror the federal law. Without such an expansion of the current proposed law, Maryland risks leaving millions of hard earned taxpayer dollars in the pockets of thieves.

Julie Grohovsky is a former federal prosecutor and a partner in the law firm of Wu, Grohovsky & Whipple, where her clients include qui tam relators. Her email is jgrohovsky@dcwhitecollar.com.

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