Maryland Healthcare Fraud/Medicare Fraud Enforcement

The federal government often accomplishes this task with the assistance of the Maryland Medicaid Fraud Control Unit (MFCU). Both entities are, in turn, often assisted in their efforts by the bravery and actions of whistleblowers.

Modeled after the federal False Claims Act, the Maryland False Claims Act permits private citizens to bring qui tam actions on behalf of the State of Maryland to recover treble damages and civil penalties. Code Ann. Md. Health Gen. Prov. 2-601 et seq. Effective June 1, 2015, the coverage of the Maryland False Claims Act expanded false claims beyond Medicaid (MD Code Ann. Gen. Prov. § 6-101, et seq.)

Nolan Auerbach & White represents whistleblowers in federal court only. We will bring cases on behalf of whistleblowers under the Maryland qui tam statute as part of an action under the federal False Claims Act. We do so under the Court’s pendent jurisdiction.

The liability provisions of the Maryland False Claims Act, Md. Health General Code Subtitle 6 § 2-602, provide that:

(a) A person may not:

(1) Knowingly present or cause to be presented a false or fraudulent claim for payment or approval;

(2) Knowingly make, use, or cause to be made or used a false record or statement material to a false or fraudulent claim …

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(9) Knowingly make any other false or fraudulent claim against a State health plan or a State health program.

False Claims Act cases that were originally brought in a Maryland federal court include:

A case resolved in 2019 against Hart to Heart Ambulance Services, d/b/a/ Hart to Heart Transportation Services. The U.S. Attorney’s Office for the District of Maryland announced the $1.25 million settlement, arising out of allegations that the company billed the Government for transportation services that were not medically necessary.

A case against MedStar Health Inc. (MedStar) in Columbia, Maryland, MedStar Union Memorial Hospital, and MedStar Franklin Square Medical Center was settled in the amount of $35 million. The complaint was filed by three whistleblowers who were surgeons at Cardiac Surgery Associates in Baltimore. The Complaint alleged that Medstar paid kickbacks to MidAtlantic Cardiovascular Associates, a cardiology group based in Pikesville, Maryland, in exchange for referrals, through professional services contracts at Union Memorial and Franklin Square Hospitals in Baltimore. This 2019 settlement also resolved a second qui tam lawsuit brought by former patients of John Wang, M.D. who claimed that he, MedStar, and Union Memorial performed medically unnecessary percutaneous transluminal coronary angioplasties with stent placement procedures. The settlement was unusual based on the fact that these whistleblower complaints emanated from patients as well as physicians.

Blue Cross Blue Shield of Michigan agreed to pay $27.6 million to settle this qui tam suit with the Government and relator Darcy Flynn. Blue Cross Blue Shield was accused of improper billing and submitting false documentation to the Government as the fiscal intermediary for Medicare in Michigan. Under a contract with CMS, Blue Cross Blue Shield managed the Part A program and was required to audit cost reports of participating hospitals, determine which costs were authorized, and make the appropriate payments. The complaint alleged that the Government was defrauded as a result of cursory and inadequate audits. When HCFA asked to review specific audits, Blue Cross Blue Shield “corrected” the audits and backdated revised work papers to conceal that the original audits were poorly done.

St. Joseph Medical Center in Towson, Md. agreed to pay the United States $22 million to settle allegations that it violated the False Claims Act, the Anti-Kickback Act, and the Stark Law when it entered into a series of professional services contracts with MidAtlantic Cardiovascular Associates (MACVA). From January 1, 1996 to January 1, 2006, St. Joseph’s allegedly paid various forms of illegal remuneration to MACVA to induce referrals of patients insured by federal health care programs for cardiac procedures.

Pharmaceutical manufacturer Alpharma Inc., then a wholly-owned subsidiary of King Pharmaceuticals, agreed to pay $42.5 million to resolve allegations that, from 2000 through 2009, it illegally marketed its morphine-based drug, Kadian, by paying healthcare providers to promote or prescribe the drug and by making false representations about the drug’s safety and efficacy. Under the agreement, the proceeds from the settlement were split between the federal government and various states, with the United States receiving roughly $33.6 million to resolve the federal claims and the states receiving approximately $8.9 million to settle their respective claims.

Pediatrix Medical Group Inc., whose network of affiliated physician groups provides medical services in various hospital neonatal intensive care units in 32 states and Puerto Rico, agreed to pay the government over $25 million to settle allegations that Pediatrix improperly billed Medicaid, TRICARE and the Federal Employees Health Benefits Program for neonatal care provided by their doctors. The company has agreed to abide by the terms of a Corporate Integrity Agreement (CIA) for five years. According to the settlement agreement, from January 1996 through December 1999, Pediatrix improperly applied CPT billing codes to neonatal services that did not accurately correspond to the medical condition of the infant or the services provided.