Threats are generally not actionable, since every claim needs both liability and damages. In other words, it's not enough that they made a mistake and might have made a worse mistake, they have to actually have harmed you. Generally, the "no harm, no foul" rule applies.
Here, if you get the error corrected and don't have to pay any fine and don't get any negative credit entry (or get it removed if their erroneously report somethin negative), you haven't been harmed. Yes, you still suffer the aggravation and inconvenience of correcting their mistake, but that's not something you can sue for.
PLEASE READ THIS BEFORE YOU COMMENT, EMAIL ME OR PHONE ME. I'm only licensed in CA. This answer doesn't make me your lawyer, and neither do follow-up comments and/or emails and/or phone calls, and you shouldn't expect me to respond to your further questions if you haven't hired me. We need an actual agreement confirmed in writing before any attorney-client relationship is formed. This answer doesn't constitute legal advice, and shouldn't be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.
In addition to what Ms. Koslyn said, states have sovereign immunity. What you need to do is prove to MD's MVA that you moved from the state and show them the vehicle was continually insured. That should take care of the problem. IF it gets reported, you can send a letter to them asking that they remove the report since it was incorrect. Also, dispute it with the credit bureaus. I do not believe that it will come to that. Usually, all that is required is faxing some documents back and forth or mailing a statement.
Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.