A good idea in theory

Two and a half years ago, the Maryland General Assembly passed the “Asset Recovery for Exploited Seniors Act,” designed to provide the elderly, and in some cases their estates, additional options to recover financial assets they may have lost due to undue coercion, misrepresentations, intimidation, or outright fraud. A good overview of the Act’s goals and operations appeared in a MSBA Section (Elder Law & Disability Rights) article.

Generally, the Act provides authority to the Consumer Protection Division of the AG’s office to bring civil actions seeking recovery on behalf of the exploited adult (or their estate if they’re deceased), where there has been a violation of the criminal statute that prohibits obtaining funds from vulnerable adults through “deception, intimidation, or undue influence.”
So far so good, right? According to statistics provided in the Fiscal and Policy Note that was published reviewing the initial bill when it was introduced, in 2015 some 150 criminal cases were brought against individuals in Maryland for elder abuse, but, for various reasons, only 14 of those cases led to convictions. Adding additional authorities to the CPD/AG to bring separate civil actions in an effort to try to recover more funds on behalf of the victims certainly seems both smart policy and laudable generally.

Yet several questions remain about how the Act will play out in operation, notably when it comes to the question of “standing.”

In other statutes where the General Assembly has delegated authority to the AG to bring civil proceedings on behalf of private parties, it has generally done so where it anticipates that AG action may be needed to protect a wider class of private parties, or to protect something unquestionably linked to public interests. For the former, Md. Comm. Law § 11-209(b)(5) is an excellent example as it allows AG actions to restrain and seek damages from antitrust violations, which likely would affect not just a few companies suffering damages, but also wider consumers. For the latter, Md. Bus. Reg. § 6.5-102, which allows AG actions on behalf of or to protect charitable trusts, also seems to have a strong link to public interests, especially given the strong public interest flavor contained in the statutes’ definitions of charitable assets.

The reasons for these limitations and careful delegations of authority to the AG to only be able to bring civil suits on behalf of private parties where there is a separate public interest lie both in sound public policy (e.g., not wanting the AG to be able to use the power of the State to take one side in a private dispute), and legal areas – e.g., “standing.” Although most people think of “standing” requirements for individuals to bring actions (i.e., they have an injury that needs redress as part of an actual controversy), “standing” also applies to State actors like Attorneys General. There, although the jurisprudence is a bit confusing and somewhat muddled, most agree that at least from cases like Snapp v. Puerto Rico ex ref. Barez, 458 U.S. 592 (1982), courts require that for a State to act parens patriae on behalf of a private litigant, it must be able to articulate some interest apart from the interests of the private parties.

Which brings us back to the Asset Recovery for Exploited Seniors Act. There, while an argument could be made that Maryland has a generally compelling public interest in protecting its seniors, there needs to be more to be able to differentiate what Maryland’s interests are in recovering funds for seniors or their estates, from the interests of those seniors and estates. In the Asset Recovery Act, it seems that the analysts reviewing the bill for the General Assembly anticipated this issue, and thought that by requiring a “violation” of the underlying criminal prohibition (but not necessarily a conviction), that would be enough to provide the AG with “standing” as not only would the State’s public interests be clearer (protecting seniors and upholding the law), but also the injuries would be more specific and concrete. Yet while the Fiscal and Policy Note more clearly links that a “violation” of the criminal law means even without a conviction, there must have been at least an arrest or charging of a crime (or potentially formal administrative investigation and findings) for the AG to then have “standing” to bring a civil action, the Act itself is silent as to what constitutes a “violation.”

Partly owing to its relative newness, Maryland appellate courts haven’t yet weighed in on this issue, so its still a bit unclear where the exact parameters are going to be set if this issue arises. Or rather, when this issue arises.
And its important too, not just in the narrow context of providing additional abilities to recover funds for those who’ve been defrauded or intimidated.
More and more state Attorneys General are actively pursuing cases on behalf of their citizens, acting parens patriae to file actions against private parties based upon the health of the public (e.g., tobacco litigation), or the environment. On this latter front, former Maryland AG Gansler reviewed some of the history of parens patriae actions and their potential application to environmental issues in 2010, suggesting more such actions are to come.
In the short term though, let’s hope that when Maryland courts do provide any review of standing issues associated with the Asset Recovery Act, they take the opportunity to provide realistic guidelines generally on parens patriae actions, as it looks like those issues won’t be going away.

The devil is in the details

Responding to a client’s request for a notional corporate & federal contractor compliance program last week, I was struck by the need to balance providing an overview of the general drivers and elements involved, without reinventing the wheel. Ultimately, if the client (in this case with limited overseas and federal experience, considering acquiring a smaller company already in the federal contracting and overseas marketspace) does head down this path, that’s only the beginning of a long process. It may start with a lot of work educating the client generally on how compliance programs need to be designed and work to be effective, then focus on the particular acquisition being considered, but ultimately its going to end up in the details of designing and implementing a program. And that’s when the fun starts, because while there’s no shortage of existing materials providing templates and outlines for both individual policy elements (e.g., FCPA training outlines) and overall business codes of ethics, designing an operational & functional compliance program — the meat, if you will — requires more than just a general familiarity with your client’s general market and external legal drivers. To do it right, you’re going to need to know as much detail as you can about how your client operates, from accounting, to business development, bid preparation, manufacturing & sourcing, and even hiring.
For now though, take a look at our notional outline providing an overall framework for a compliance program, and let us know how you’d conceptually structure one differently.

Dodge a bullet or put off hard work for another day?

Recently, the Maryland Senate Judiciary Proceedings Committee entertained testimony on SB 152, designed ostensibly to address genuine concerns that Humane Societies and counties across Maryland have, stemming from what can be exorbitant costs of caring for animals seized pursuant to criminal investigations. The initial draft of SB 152 seemed to provide a solution to this problem, but the question is whether the solution was the right one, and whether the GA might want to reconsider any additions substantially changing the existing legislative scheme before addressing what look to be structural problems with how it is already being implemented. I was invited to provide brief oral testimony to the Committee, and supplemented it with later written comments, a link to which appears below. The end result appears to have been for the original SB 152 to be replaced by a far simpler measure, which essentially only codifies in the statutes the already-existing discretion trial judges have to order boarding costs as restitution. But, whether this leads to renewed interest to address other aspects of the existing scheme, or to find more creative ways to address HS’ funding shortfalls, remains to be seen.