As readers of this blog know, I have pushed heavily for a Maryland False Claims Act for the last two years. Both years, after much debate, a Maryland state FCA failed by a single vote in the state Senate.
This year, however, the Senate chamber reached an all-new level of stupidity. The Senator casting the final vote actually said something along the lines of “The last thing we need to do in this economy is create new penalties for people trying to create jobs.” So, Marylanders, you can let the false claims fly for government money, as long as you are creating jobs. The Baltimore Sun has the full, sordid, story.
What makes it all the more ironic is that, even if we assume for the purposes of argument that a False Claims Act makes a state less business-friendly, Maryland has already done almost everything it can do to make itself less friendly to big business. For example, by creating its own employment standards more favorable than the federal standards (i.e., under the Maryland Wage and Hour Law, the Maryland Human Rights Act, etc.) Maryland gives out of state companies looking to relocate to the D.C. metro area an entirely new set of regulations and laws to sort through.
It is widely known, of course, that varying employment standards are disfavored by big business, and I don’t blame them. If I were in Alabama, or Washington state, or New Mexico, and a client asked me to help them open a new branch office in the D.C. metro area, I would want to be familiar with the local laws and regulations in a given state when I made my decision. Most employers are familiar with federal standards, and so I would look for a place that follows those, like Virginia.
Maryland, on the other hand, has made the federal standard more favorable to the employee in almost every situation. For example, under the federal FLSA, an employee is entitled to double damages on an unpaid wage claim. Under the Maryland Wage and Hour Act, the employee can get treble damages.
What’s really funny is this: the Maryland Senate’s goal was to make Maryland more attractive to new business, and they will achieve that goal. But it will be the wrong kind of business, because Maryland will now be more likely to attract fraudfeasors than neighboring Virginia and D.C. In fact, for people with fraud as a business model, there is only one choice in the D.C. metro area, and it isn’t Virginia or D.C.
The actual truth is that qui tam laws and False Claims Act statutes are business friendly, and help to foster a more competitive business environment. Among many other reasons, qui tam and FCA statutes make a level playing field, and help to enforce the rules of doing business with the government.
For example, if you bid on government business, and you follow the rules and only make an honest bid, you are at a disadvantage against those less scrupulous members of the community that will make a dishonest bid. Qui tam states have less people making dishonest bids, because the potential damages are so high.
Now, of course, in Maryland, if someone falsely certifies their bid to the government for a contract, the penalty that would apply would be a mere slap on the wrist, probably a misdemeanor crime or something similar. In Virginia, however, a false certification on a bid for a government contract would subject the false bidder to damages in the amount of three times the value of the contract, plus a civil penalty of between $5,500 and $11,000 for each invoice submitted under the contract, plus attorney’s fees and costs.
And if our fraudfeasor discriminated against an employee who refused to go along with a fraud scheme, the fraudfeasor would owe the employee two times their back wages, in addition to all of the above.
It is a fact that Maryland will almost certainly get new business from this, and you know what? They are welcome to it.
How is this relevant to Virginia? For one, Attorney General candidate David Foster has made “job creation” a central plank of his campaign for the Republican nomination for Attorney General. He has left the details vague, but his campaign has focused on his knowledge of big business and its ways, and on his ability to use this knowledge to bring new business to Virginia.
I certainly hope that Foster isn’t referring to the same kind of job creation strategy that Maryland has apparently embraced. Mr. Foster, would you or anyone in your campaign care to comment about whether your strategy for job creation is similar to Maryland’s?