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Criminal Law

civil penalty is not less than $5,500 and not more than $11,000 per violation, while under the MFHCA, there is no minimum civil penalty but the maximum civil penalty per violation is $10,000.51

Moreover, under the MFHCA, the court is required

to consider enumerated mitigating factors when determining the appropriate fines and damages against a person or entity deemed liable to the State. Te FCA contains no such provision.52

Another important

difference also exists in the statutes’ respective attorneys’ fees provisions: under the FCA, if the government prevails, the relator’s reasonable attorney’s fees and reasonable expenses “shall” be paid by the defendant, but under the MFHCA, if the state prevails, reasonable attorney’s fees and reasonable expenses “may” be awarded to the relator against the defendant.53 statutes’ limitations provisions include a subtle difference:

Finally, the the

FCA provides that a civil action under the Act cannot be brought more than six years after the date on which the underlying violation occurred, as does the MFHCA.54

But the FCA also

incorporates a discovery rule, allowing a claim to be brought no more than 3 years after the date when facts material to the right of action are known or reasonably should have been known “by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed.”55

In the context of the

FCA, this provision essentially extends the statute of limitations to 10 years. Te MFHCA also contains this kind of clause, but the discovery rule runs against the relator as well, limiting the statute of limitations to three years after discovery by the relator or the State.56

Interestingly, the MFHCA also contains a liberal

retroactivity clause, allowing suit to be brought for activity that occurred prior to October 1, 2010 if the six-year limitations period has not lapsed.57

DRA Compliance Because the MFHCA is significantly different from the


FCA, Maryland is not entitled to receive an added allocation in Medicaid fraud recoveries provided by the federal Deficit Reduction Act of 2005 (DRA).58

M Y Te Medicaid program is CM

jointly funded by the state and federal governments, with the federal government paying, on average, approximately 57 percent of a state Medicaid program’s costs. Tat means, in a normal FCA settlement involving Medicaid funds, a state like Maryland would be entitled to only about 43 percent of the recovery. Under the DRA, however, states with “qualifying” false claims statutes are entitled to receive an additional 10 percent from the federal government of any recovery from fraud on the Medicaid


51 31 U.S.C. § 3729; MD HEALTH GEN. § 2-604(a)(7) – (8). 52 See generally 31 U.S.C. § 3729 et seq. 53 31 U.S.C. § 3730(d)(1); MD HEALTH GEN. § 2-605(a)(4); 54 31 U.S.C. § 3731(b)(1); MD HEALTH GEN. § 2-609(a)(1). 55 31 U.S.C. § 3731(b)(2). 56 MD HEALTH GEN. § 2-609(a)(2). 57 MD HEALTH GEN. § 2-609(b). 58 Deficit Reduction Act of 2005, P.L. 109-171, 120 Stat. 4.

program.59 Key elements required to “qualify” include allowing qui

tam suits, providing whistleblower protections and penalties, and notable in evaluating the MFHCA, allowing relators to proceed with litigation when the state declines to intervene and providing for periods during which the lawsuit is not disclosed to anyone but the government. Because the MFHCA does not comply with the latter requirements, Maryland is losing out on receiving an extra 10 percent of the recoveries in Medicaid fraud suits.


As this article is intended to be but a primer for those unfamiliar with the FCA and the MFHCA, a number of issues that typically arise in qui tam cases like materiality, public disclosure, original source, first-to-file, and statutes of limitations issues are left to another day. While the texts of the FCA and MFHCA seem relatively simple, the prosecution of such suits can be complicated and complex. In the end, with the epidemic in corporate wrong-doing and the government’s ballooning deficit, the FCA and its state counterparts like the MFHCA are vital. Although not as robust as the FCA, the Maryland False Health Claims Act of 2010 provides a mechanism for those with knowledge of fraud to come forward and help protect the state from those who siphon off health-care funds reserved for the sick, poor, and elderly for their own gain. 

QuarterlyTrialReporter-3'5x4'5.pdf 8/7/2007 11:51:23 AM

59 42 U.S.C. § 1396h(b). Trial Reporter / Summer 2011 29

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