Controversial Medicaid Fraud Bill Voted Down in Maryland

Published June 1, 2009

A Maryland bill supporters said would help crack down on Medicaid fraud in the state was defeated by a 24-23 vote in the state Senate.

Analysts say the bill was less an effort to crack down on Medicaid fraud than an attempt to find quick revenue to help balance the state’s budget.

Among other provisions, SB 272 would have authorized fines of $5,000 to $10,000 and triple damages against persons found guilty of fraud. Currently Maryland can penalize people only for the amount of the fraud.

The bill also would have allowed whistleblowers to file lawsuits on behalf of the state and collect up to a third of the returns.

Hoping for $22 Million

“The taxpayer should always care about fraud and abuse in a system that’s publicly funded,” said Shaun Adamec, a spokesman for Maryland Gov. Martin O’Malley (D). “This bill would bring the state in line with recommendations from the federal government and would allow the state to collect on instances of fraud and abuse.”

Adamec said the state stood to gain $11 million in damages and another $11 million in federal Medicaid matches because the bill would have aligned the state’s law with federal law, which would raise Maryland’s share of Medicaid repayments from 50 percent to 60 percent.

“From just a budgetary standpoint, that’s appealing to taxpayers,” Adamec said.

Incentive for False Accusations

Nancy Fiedler, senior vice president for the Maryland Hospital Association, an Elkridge-based advocate for state hospitals, disagreed, saying the bill was redundant. “State and federal laws already sufficiently address the Medicaid fraud problem,” she said.

In addition, Fiedler said the bill’s provision allowing whistleblowers to collect one-third of the money recovered from Medicaid fraud “would have given them incentive to falsely accuse medical providers, driving away doctors from taking Medicaid cases.

“If you’ve got a lot of harried physicians who are further harried by false claims brought about them, that’s just one more irritant,” Fiedler continued. “More doctors will say, ‘Oh, forget it,’ and they’ll move to a friendlier state.”

Adamec dismissed the argument that further reducing the already-dwindling number of doctors willing to take on Medicaid cases would present a problem.

“The money lost by litigation of health care providers and physicians leaving would be offset by the potential damages and Medicaid funds Maryland would have gained from the passage of the law,” Adamec said.

Rush to Judgment

Fiedler disagrees with the O’Malley administration’s claim the state would reap $22 million in repayments and fines. She says SB 272 proponents’ judgment was impaired by their rush to generate projected revenue to balance the budget.

“The law was unneeded overall,” Fiedler said. “They’re doing this out of desperation to fill a budget hole.”

Adamec said he hoped the law would be reconsidered before the April 30 end of the legislative session.

Jillian Melchior ([email protected]) writes from Michigan.

For more information …

Senate Bill 272: