Yes, I took a break this fall to catch up on personal business. Posting should resume shortly.
Category Archives: Uncategorized
A great story starring one of our community’s favorite businesses:
Maryland’s Flying Dog Brewery won in its battle with the Michigan Liquor Control Commission, after the agency tried to ban the sale of Flying Dog’s delicious, Belgian-style IPA because of the brew’s name: Raging Bitch….
Now, Flying Dog has announced that it will use the damages received in that case to found the ‘1st Amendment Society,’ a non-profit dedicated to awareness-raising and advocacy around free-speech issues and organizing events that promote “the arts, journalism and civil liberties.”
Flying Dog will launch the organization with a May 31 event at the National Press Club in Washington, D.C., featuring constitutional lawyer Alan Gura. Some of the society’s first orders of business will be establishing a scholarship at the University of Maryland’s College of Journalism and hosting a banned-book club this summer at Flying Dog Brewery.
“The long-awaited decision from Montgomery County Child Protective Services has arrived at the home of Danielle and Alex Meitiv, and it finds them ‘responsible’ for ‘unsubstantiated child neglect’ for letting their kids walk outside, unsupervised. If that decision makes no sense to you, either — how can parents be responsible for something that is unsubstantiated? — welcome to the place where common sense crashes into bureaucratic craziness.” [Lenore Skenazy, Free-Range Kids] The “finding of unsubstantiated child neglect means CPS will keep a file on the family for at least five years and leaves open the question of what would happen if the Meitiv children get reported again for walking without adult supervision.” [Donna St. George, Washington Post] Earlier here and here.
Heroin use has been rising steeply in our area: this Frederick Gorilla article has details. Users mostly go to Baltimore to buy their supplies. The state of Maryland already authorizes a needle-exchange program aimed to reducing the rate at which users spread debilitating diseases to each other through sharing injection works. Legislators this past term voted to relax the program’s rules slightly so as to permit exchanges on other than a 1-to-1 basis.
Del. Michael Hough vehemently opposes needle exchange, and has chosen to make this an issue in his primary challenge to Senate Minority Leader David Brinkley (R-New Market). Brinkley believes (as do most experts) that this low-cost way of preventing the spread of HIV and hepatitis will actually save taxpayers money over the long run, aside from its humanitarian impact. I’m a libertarian who’d like the state out of drug issues entirely, but campaigning against this one tiny program strikes me as being like watching the state spend millions treating polio or tetanus and then getting all bent out of shape when it asks to spend thousands on vaccines.
Dave Schmidt, who ran for Alderman last year on the Republican line in Frederick, wrote on his Facebook page:
…Making this about a waste of taxpayer dollars is not only misleading, and dangerous thinking, it is wholesale inaccurate. There is case study after case study that proves that a clean-needle program will not only save lives, but lower the government cost burden over time. There is something fundamentally wrong with the idea that someone suffering from a disease (even if they acquired it voluntarily) should be forced to live an ever increasingly destructive lifestyle because we don’t like what they do. Even if it is despicable in my mind to make this about money, or placing a dollar figure on the life of a fellow citizen, that argument is invalid. This should be about how we care for those sick and unable to care for themselves. Providing a path out, not shutting the door in their face because its going to cost us a dime up front.
For more data, here’s a 2008 report affirming needle exchange effectiveness from S. Robert Lichter’s STATS, the statistical center (often perceived as leaning right of center) at George Mason U. in Virginia and a 2005 paper from the Centers for Disease Control.
I’ve been writing and speaking out for years about the evils of the federal False Claims Act and its state-level equivalents, but I certainly never expected the law to wind up becoming an issue in my hometown race for state senator. Yet that’s what has happened in Maryland’s District 4, where as Bethany Rodgers of the Frederick News-Post reported, candidates David Brinkley and Michael Hough have traded charges vigorously on the issue. Del. Hough (unusually for a Republican) crossed over to support the proposed Maryland version of the FCA in this year’s legislative session, but the bill failed on the last day of session when Brinkley, considered a master of the intricacies of the legislative process, used a procedural maneuver to kill the bill single-handedly, bitterly disappointing the bill’s sponsors, liberal Montgomery County Democrats Brian Frosh and Sam Arora, as well as the state’s trial lawyer lobby, which had made the bill a priority.
Del. Hough defended his position on Facebook as follows:
And at Red Maryland, a blog that has endorsed Hough, Brian Griffiths seeks to defend Hough from what he calls “bizarre accusations that he has sided with trial lawyers” in supporting the FCA, though such accusations would seem no more than baldly true (the question is hardly whether he sided with them, but whether he was right to do so). “I have absolutely no idea on what planet it is a conservative ideal to oppose harsher penalties for people who wish to defraud the people out of taxpayer funds.”
So what do these laws do, and why have they turned into a flashpoint for intense opposition from the business community, to the point where the Maryland Chamber of Commerce would vocally oppose HB 867 as “burdensome and unfair” in its provisions and Maryland Business for Responsive Government would treat it as a key vote, to Hough’s disadvantage?
Based on a Civil War era statute but drastically expanded in 1986 into its modern form, the False Claims Act allows freelance informers to accuse entities dealing with the government of fraud, and then pocket a hefty share of the proceeds of a resulting judgment or settlement. To encourage suit-filing, the law awards treble or other multiple damages, attorney’s fees, stiff statutory damages and other enhancers. The model in effect is privatized law enforcement — what could go wrong? And indeed the idea appealed for a time to many modern Republicans, even Ronald Reagan — until actual experience began to show its flaws:
- The law has made rich various employees who participated in frauds themselves, or who failed to inform higher-ups of their discovery of accounting problems (which of course might have upset the chance of bagging an FCA award for themselves). It has even provided a reason to *not* report fraud too quickly, as in the famous case of a GE employee later accused by chairman John Welch of having “sat back and waited in the weeds so the damages would mount.”
- While the law has been used against many genuine frauds, it also gets deployed against what many would see as simple differences of opinion in complicated, high-stakes areas of government contracting — reimbursement formulas, overhead rates — as well as against industry customs accepted as normal by the players and not challenged by the government at the time. Because stakes are so high — including treble or other multiple damages — defendants often settle for some fraction of the demand. The law thus incentivizes actions based on gray areas of contracting regulation with high stakes over actions based on definite or classic frauds where recovery will not be large (say, because the fraudster will be bankrupt.)
- Animal rights activists have used the law to go after a cancer researcher who received federal funds for animal research, supposedly on the theory that he misrepresented the results of his research. That’s one of many instances in which the law is used to pursue vendettas or for extra legal leverage in disputes between private actors — say, between labor unions or community organizers and the companies they attack.
- A hedge fund was found to have sold short the stock of a target firm (betting that its stock would fall) and then filed a False Claims Act naming the company, predictably bringing about the very stock drop it had bet on.
By the time the business community had begun to mobilize to point out the issues of fairness and practicality at stake, the law had made a group of lawyers immensely rich, and they have formed the nucleus of a powerful lobby with many allies in elected office — mostly Democrats, but also including a Republican here and here — to defend the law and push for its further expansion. By 2009, when another expansion was proposed, Hans von Spakovsky and Brian Walsh of the Heritage Foundation were writing that: “Tort lawyers are about to get another big payoff from Congress and the Obama administration for the hundreds of millions of dollars they contributed to candidates in the last election cycle (over 75% of which went to Democrats). … amendments to the federal False Claims Act that will hurt our economy but make the trial lawyers very happy indeed.” (full report). Inserting FCA-like provisions into the Dodd-Frank bill was a key objective of liberal Democrats, and their success in doing so is seen by many businesses as among the worst features of that law.
The proposed Maryland version would have gone much further — with consequently even greater risk of abuse — than the federal FCA or its various state equivalents. For example, it had a much less usable statute of limitations, meaning that clever lawyers could reach back to sue over long-distant supposed misdeeds. And as the Council on State Taxation warned, because it had vague language that did not exclude tax disputes, it might be seized on to justify suits by Lawyer A demanding a retroactive hike in the tax bill of Company B — plus multiple damages, lawyers’ fees, etc. — and a court might agree to let such a claim go forward.
Del. Hough does not seem to have been very persuasive in convincing Republican colleagues that HB 867 represented the true conservative position. (Virtually every Democrat voted for the bill.) Every single Republican member of the Senate joined in siding with Sen. Brinkley’s position against Del. Hough’s, and so did the great majority of Republican delegates, including every other GOP member of the Frederick County delegation. (That includes Hough’s own slate-mate Kathy Afzali, as well as Kelly Schulz and Patrick Hogan.) Of big-time conservatives in the House of Delegates, virtually every one sided with Brinkley’s position over Hough’s, the most notable exception being Del. Michael Smigiel of the Eastern Shore.
Smigiel, it should be noted, has the good excuse of being a trial lawyer in his day job.