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Regular Session, 2012
HOUSE BILL NO. 501
BY REPRESENTATIVE LEGER
CIVIL/ACTIONS: Provides for qui tam actions in cases of misuse of public funds
AN ACT1
To enact Chapter 22-B of Title 39 of the Louisiana Revises Statutes of 1950, to be2
comprised of R.S. 39:2166 through 2166.8, relative to actions and qui tam actions;3
to authorize actions and qui tam actions for certain matters related to the misuse of4
public funds; to provide definitions, terms, procedures, conditions, and requirements;5
to provide relative to damages and awards; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. Chapter 22-B of Title 39 of the Louisiana Revises Statutes of 1950,8
comprised of R.S. 39:2166 through 2166.8, is hereby enacted to read as follows: 9
CHAPTER 22-B. MISUSE OF PUBLIC FUNDS10
§2166. Short title11
This Chapter shall be known and may be cited as the "Misuse of Public Funds12
Law".13
§2166.1. Definitions14
As used in this Chapter, the following terms shall have the following15
meanings:16
(1) "Claim" means any request or demand, whether under a contract or17
otherwise, for money or property which is made to any employee, officer, or agent18
of the state or a local government or to any contractor, grantee, or other recipient, if19
the state or a local government provides any portion of the money or property which20 HLS 12RS-986 ORIGINAL
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is requested or demanded or will reimburse such contractor, grantee, or other1
recipient for any portion of the money or property which is requested or demanded.2
(2) "False claim" means any claim which is, either in whole or part,3
fraudulent, fictitious, untrue, or misleading.4
(3) "Knowing" or "knowingly" means that, with respect to a claim or5
information relating to a claim, a person:6
(a) Has actual knowledge of such claim or information.7
(b) Acts in deliberate ignorance of the truth or falsity of such claim or8
information.9
(c) Acts in reckless disregard of the truth or falsity of such claim or10
information, regardless of whether there is specific proof of intent to defraud.11
(4) "Original source" means a person who has direct and independent12
knowledge of the information on which allegations are based and who has13
voluntarily provided the information to a unit of state or local government before14
filing an action under this Chapter based on the information.15
(5) "Person" means any natural person, partnership, corporation, association,16
or other legal entity or individual, other than a unit of state or local government.17
§2166.2. Civil actions and procedures18
A. The chief legal officer of a unit of state or local government may19
investigate violations pursuant to this Chapter and, upon reasonable belief that a20
person has violated or is in violation of this Chapter, may bring a qui tam action on21
behalf of the people of the state of Louisiana or on behalf of a local government22
against such person.23
B. Any person may bring a qui tam action for a violation of this Chapter on24
behalf of the people of the state of Louisiana or on behalf of a local government, in25
accordance with the following procedures:26
(1) A copy of the complaint and written disclosure of substantially all27
material evidence and information the person possesses shall be provided to each28
governmental unit affected by the civil action within thirty days after the complaint29 HLS 12RS-986 ORIGINAL
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is filed. The complaint shall remain under seal for at least sixty days, unless1
otherwise ordered by the court, and may not be served on the defendant until the2
court so orders. An affected governmental unit may elect to supersede or intervene3
and proceed with the action, to take no action, or to take joint action with other4
governmental units that may have sustained damages, and shall do so within sixty5
days after it receives both the complaint and the material evidence and information.6
The chief legal officer of a unit of state or local government may, for good cause7
shown and supported by affidavits or other submissions, move the court for8
extensions of the time during which the complaint remains under seal.9
(2) Prior to the expiration of the sixty-day period or any extensions obtained10
pursuant to Paragraph (1) of this Subsection, the chief legal officer of a governmental11
unit shall notify the court of the intent to:12
(i) File a complaint against the defendant on behalf of the people of the state13
of Louisiana or a local government, and thereby be substituted as the plaintiff in the14
action and convert the action in all respects from a qui tam action brought by a15
private person into a governmental enforcement action by a chief legal officer16
pursuant to Paragraph (1) of this Subsection.17
(ii) Intervene in such action, as of right, so as to aid and assist the plaintiff18
in the action.19
(iii) Decline to participate in the action.20
(3) When a chief legal officer notifies the court that it intends to file a21
complaint against the defendant and thereby be substituted as the plaintiff in the22
action, such complaint shall be filed within thirty days after the notification to the23
court.24
(4) When a chief legal officer notifies the court that it intends to intervene25
in the action, then such motion for intervention shall be filed within thirty days after26
the notification to the court.27
(5) When the chief legal officer of an affected governmental unit declines28
to participate in the action, the qui tam action may proceed subject to judicial review.29 HLS 12RS-986 ORIGINAL
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C. When a chief legal officer decides to participate in a qui tam action, the1
court shall order that the qui tam complaint be unsealed and served at the time of the2
filing of the complaint or intervention motion by the unit of state or local3
government. After the complaint is unsealed, or if a complaint is filed by a chief4
legal officer pursuant to Paragraph (1) of this Subsection, the defendant shall be5
served with the complaint and summons. A copy of any complaint which alleges6
that damages were sustained by a unit of state or local government shall also be7
served on other governmental units that may have suffered damages. The defendant8
shall respond to the summons and complaint within thirty days.9
D. When a person brings a qui tam action pursuant to this Section, no person10
other than a chief legal officer may intervene or bring a related civil action based11
upon the facts underlying the pending action, unless such other person has first12
obtained the permission of a chief legal officer to intervene or to bring such related13
action. Nothing in this Section may be deemed to deny any person the right, upon14
leave of court, to file briefs amicus curiae.15
E.(1) Each legal representative in the qui tam action represents only the16
interests of its client. When a chief legal officer supercedes or intervenes in an17
action, the governmental unit has exclusive responsibility for prosecuting the action.18
When more than one governmental unit supercedes or intervenes in an action, the19
governmental units have joint responsibility for prosecuting the action. Under no20
circumstances shall a unit of state or a local government be bound by an act of the21
person bringing the original action. Such person may continue as a party to the22
action, subject to the limitations set forth in Paragraph (2) of this Subsection. Under23
no circumstances shall one governmental unit be bound by the act of another24
governmental unit that supercedes or intervenes in an action involving damages to25
both governmental units. When no governmental unit supercedes or intervenes in26
the qui tam action, the qui tam plaintiff is responsible for prosecuting the action,27
subject to a chief legal officer's right to supercede or intervene at a later date upon28
a showing of good cause.29 HLS 12RS-986 ORIGINAL
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(2)(i) A governmental unit may move to dismiss the action, notwithstanding1
the objections of the person initiating the action. The person shall be served with the2
motion to dismiss, and the court shall provide the person with an opportunity to be3
heard on the motion.4
(ii) A governmental unit may settle the action with the defendant,5
notwithstanding the objections of the person initiating the action, if the court6
determines, after the person initiating the action has had an opportunity to be heard,7
that the proposed settlement is fair, adequate, and reasonable with respect to all8
parties. Upon a showing of good cause, such opportunity to be heard may be held9
in camera.10
(iii) Upon a showing by a chief legal officer that the original plaintiff's11
unrestricted participation during the course of the litigation would interfere with or12
unduly delay the prosecution of the case, or upon a showing by the defendant that the13
original qui tam plaintiff's unrestricted participation during the course of the14
litigation would be for purposes of harassment, the court may impose limitations on15
the original plaintiff's participation in the case, such as:16
(a) Limiting the number of witnesses the person may call.17
(b) Limiting the length of the testimony of such witnesses.18
(c) Limiting the person's cross-examination of witnesses.19
(d) Otherwise limiting the person's participation in the litigation.20
(3) Notwithstanding any other provision of law and whether or not a chief21
legal officer elects to supercede or intervene in a qui tam action, a chief legal officer22
may pursue any remedy available with respect to the criminal or civil prosecution of23
the presentation of false claims, including any administrative proceeding to24
determine a civil monetary penalty, or may refer the matter to other departments of25
state or local government with jurisdiction over the claim. If any such alternate civil26
remedy is pursued in another proceeding, the person initiating the qui tam action has27
the same rights in such alternate civil proceeding as such person would have if the28
action had continued under this Section.29 HLS 12RS-986 ORIGINAL
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(4) Notwithstanding any other provision of law and whether or not a chief1
legal officer elects to supercede or intervene in a qui tam action, upon a showing by2
the governmental unit that certain actions of discovery by the person initiating the3
action would interfere with the governmental unit's investigation or prosecution of4
a criminal or civil matter arising out of the same facts, the court may stay such5
discovery for a period of not more than sixty days. The court may extend the period6
of such stay upon a further showing that the governmental unit has pursued the7
criminal or civil investigation or proceedings with reasonable diligence and that any8
proposed discovery in the civil action will interfere with the ongoing criminal or civil9
investigation or proceedings.10
§2166.3. False or fraudulent claim liability11
The court may assess liability against a person who does any of the12
following:13
(1) Knowingly presents or causes to be presented to any employee, officer,14
or agent of the state or a local government, a false or fraudulent claim for payment15
or approval.16
(2) Knowingly makes, uses, or causes to be made or used a false record or17
statement to get a false or fraudulent claim paid or approved by the state or a local18
government.19
(3) Conspires to defraud the state or a local government by getting a false or20
fraudulent claim allowed or paid.21
(4) Has possession, custody, or control of property or money used or to be22
used by the state or a local government and, intending to defraud the state or a local23
government or willfully to conceal the property or money, delivers or causes to be24
delivered less property or money than the amount for which the person receives25
certificate or receipt.26
(5) Is authorized to make or deliver a document certifying receipt of property27
used or to be used by the state or a local government and, intending to defraud the28 HLS 12RS-986 ORIGINAL
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state or a local government, makes or delivers the receipt knowing that information1
on the receipt is not true.2
(6) Buys or receives as a pledge of an obligation or debt public property3
from an officer or employee of the state or a local government, knowing that the4
officer or employee lawfully may not sell or pledge the property.5
(7) Knowingly makes, uses, or causes to be made or used a false record or6
statement to conceal, avoid, or decrease an obligation to pay or transmit money or7
property to the state or a local government.8
§2166.4. Civil monetary penalty and recovery9
A. Upon finding of liability, the court may order the person to pay:10
(1) To the state, a civil penalty of not less than five thousand dollars and not11
more than ten thousand dollars, plus three times the amount of damages which the12
state sustains because of the act of that person.13
(2) To any local government, three times the amount of damages sustained14
by such local government because of the act of that person.15
B. The court may waive recovery, except for actual damages, if the court16
finds that:17
(1) The person committing the violation of this Section furnished all18
information known to such person about the violation to those officials responsible19
for investigating false claims violations on behalf of the governmental unit that20
sustained damages, within thirty days after the date on which such person first21
obtained the information.22
(2) The person fully cooperated with any government investigation of such23
violation.24
(3) At the time the person furnished information about the violation, no25
criminal prosecution, civil action, or administrative action had commenced with26
respect to such violation, and the person did not have actual knowledge of the27
existence of an investigation into such violation.28 HLS 12RS-986 ORIGINAL
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C. A person who violates the provisions of this Section shall also be liable1
for attorney fees and costs of a civil action brought to recover any such penalty or2
damages.3
§2166.5. Recovery awarded to qui tam plaintiff4
A. When a chief legal officer supercedes or intervenes in the qui tam action,5
the person or persons who initiated the qui tam action may receive collectively6
between fifteen and twenty-five percent of the proceeds recovered in the action or7
in settlement of the action. The court shall determine the percentage of the proceeds8
to which a person commencing a qui tam civil action is entitled by considering the9
extent to which the plaintiff substantially contributed to the prosecution of the action.10
When the court finds that an action was based primarily on public disclosures of11
information relating to allegations or transactions in a criminal, civil, or12
administrative hearing, in a legislative or administrative report, hearing, audit, or13
investigation prepared by the state or by one of its local governmental units, or from14
the news media, the court may only award sums if the person or persons bringing the15
action is an original source of the information.16
B. When a chief legal officer does not supercede or intervene in the action,17
the person or persons who initiated the qui tam action may receive between18
twenty-five and thirty percent of the proceeds recovered in the action or settlement19
of the action. The court shall determine the percentage of the proceeds to which a20
person commencing a qui tam action is entitled by considering the extent to which21
the plaintiff substantially contributed to the prosecution of the action.22
C. In any action brought pursuant to this Chapter, the court shall determine23
the percentage of the proceeds to which a unit of state or local government is entitled24
in accordance with R.S. 39:2166.4 by considering the extent of the governmental25
unit's interest and the role of the governmental unit in prosecution of the action.26
D. With the exception of a court award of costs, expenses, or attorney fees,27
any payment to a person pursuant to this Section shall be made from the proceeds.28 HLS 12RS-986 ORIGINAL
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E. In any action brought pursuant to this Chapter, the court may award an1
amount for reasonable expenses that the court finds to have been necessarily2
incurred, plus reasonable attorney fees, and costs. All such expenses, fees, and costs3
shall be awarded directly against the defendant and shall not be charged from the4
proceeds, but may only be awarded if the governmental unit or the qui tam action5
plaintiff prevails in whole or in part in the action.6
F. When the court finds that the qui tam action was brought by a person who7
planned or initiated the violation of this Chapter upon which the action was brought,8
then the court may reduce the share of the proceeds that person would otherwise be9
entitled to receive, taking into account the role of such person in advancing the case10
to litigation and any relevant circumstances pertaining to the violation. When the11
person bringing the qui tam action is convicted of criminal conduct arising from a12
role in the violation of this Chapter, that person shall be dismissed from the qui tam13
action and shall not receive any share of the proceeds of the action. Such dismissal14
does not prejudice the right of a chief legal officer to supercede or intervene in such15
action and to prosecute the same on behalf of a unit of state or local government.16
G. No governmental unit shall be liable for any expenses that any person17
incurs in bringing a qui tam action pursuant to this Chapter.18
§2166.6. Limitation of actions19
A civil action provided by this Chapter shall be commenced no later than six20
years after the date on which the violation of this Chapter is committed or not more21
than three years after the date when facts material to the right of action are known22
or reasonably should have been known by the official of the unit of state or local23
government charged with responsibility to act in the circumstances, whichever24
occurs later. An action provided by this Chapter shall commence by the filing of the25
complaint.26
§2166.7. Whistleblower protection and cause of action27
A. An employee who is discharged, demoted, suspended, threatened,28
harassed, or in any other manner discriminated against in the terms and conditions29 HLS 12RS-986 ORIGINAL
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of employment by a public or private employer because of lawful acts done by the1
employee on behalf of the employer or others in furtherance of an action brought2
pursuant to this Chapter, including investigating, initiating, testifying, or assisting3
in an action filed or to be filed under this Chapter, is entitled to all relief necessary4
to make the employee whole. Such relief may include but is not limited to:5
(1) An injunction to restrain continued discrimination.6
(2) Reinstatement to the position the employee would have had but for the7
discrimination or to an equivalent position.8
(3) Reinstatement of full employment benefits and seniority rights.9
(4) Payment of two times back pay, plus interest.10
(5) Compensation for any special damages sustained as a result of the11
discrimination, including litigation costs and reasonable attorney fees.12
B. An employee described in this Section may bring an action in the13
appropriate court for relief.14
§2166.8. Regulations15
The chief legal officer of a unit of state or local government may adopt rules16
and regulations as necessary to effectuate the purposes of this Chapter.17
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Leger HB No. 501
Abstract: Creates the "Misuse of Public Funds Law". Prohibits false or fraudulent claims
in relation to obtaining money or property from public funds and authorizes civil
actions by the chief legal officer or by persons to recover amounts obtained in
violation of the "Misuse of Public Funds Law".
Proposed law provides for the "Misuse of Public Funds Law".
Proposed law defines "claim", "false claim", "knowing" or "knowingly", "original source",
and "person".
Proposed law authorizes the chief legal officer of a unit of state or local government to
investigate violations of the Misuse of Public Funds Law upon reasonable belief that a
person has violated or is in violation of the law, and provides that he may bring a qui tam
action on behalf of the people of the state of La. or on behalf of a local government. HLS 12RS-986 ORIGINAL
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Proposed law authorizes any person to bring a qui tam action for a violation of the Misuse
of Public Funds Law on behalf of the people of the state of La. or on behalf of a local
government, and sets forth the procedures for bringing such an action, including providing
copies of all evidence to each governmental unit within 30 days of filing the complaint.
Proposed law provides that the complaint the complaint shall remain under seal for at least
60 days, and may not be served on the defendant until the court so orders, but also provides
that an affected governmental unit may elect to supercede or intervene and proceed with the
action, to take no action, or to take joint action with other governmental units.
Proposed law provides that an affected governmental unit shall elect to supercede, intervene,
or take other action within 60 days after it receives both the complaint and the material
evidence and information, and provides additional procedures for proceeding with the action.
Proposed law requires the court to unseal the complaint when a chief legal officer decides
to participate in a qui tam action, and provides that if a complaint is filed by a chief legal
officer, the defendant shall be served with the complaint and summons, and the defendant
shall respond to the summons and complaint within 30 days.
Proposed law prohibits anyone other than the chief legal officer from intervening in the qui
tam action unless the chief legal officer gives such permission.
Proposed law provides additional procedures for dismissal and settlement of the action.
Proposed law provides for limiting the participation of the original plaintiff upon a showing
that the original plaintiff's unrestricted participation would interfere with or unduly delay the
prosecution of the case, or upon a showing by the defendant that the original qui tam
plaintiff's unrestricted participation during the course of the litigation would be for purposes
of harassment.
Proposed law provides for factors by which the court may assess liability against a person
in violation of proposed law.
Proposed law provides that, upon a finding of liability, the court may order the person to pay
to the state a civil penalty of not less than $5,000 and not more than $10,000, plus three
times the amount of damages which the state sustained, and may order the person to pay to
any local government three times the amount of damages sustained by such local
government.
Proposed law authorizes the court to waive recovery, except for actual damages, if the court
finds that:
(1)The person committing the violation furnished all information known to such person
about the violation to those officials responsible for investigating false claims
violations on behalf of the governmental unit that sustained damages, within 30 days
after the date on which such person first obtained the information.
(2)The person fully cooperated with any government investigation of such violation.
(3)At the time the person furnished information about the violation, no criminal
prosecution, civil action, or administrative action had commenced with respect to
such violation, and the person did not have actual knowledge of the existence of an
investigation into such violation.
Provides that a person who violates proposed law is also liable for attorney fees and costs
of a civil action brought to recover any such penalty or damages. HLS 12RS-986 ORIGINAL
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Proposed law provides that when a chief legal officer supercedes or intervenes in the qui tam
action, then the person who initiated the qui tam action may receive collectively between
15% and 25% of the proceeds recovered in the action or in settlement of the action, and
provides that the court shall determine the percentage awarded.
Proposed law provides that when a chief legal officer does not supercede or intervene in the
action, then the person who initiated the qui tam action may receive between 25% and 30%
of the proceeds recovered in the action or settlement of the action, and provides that the
court shall determine the percentage awarded.
Proposed law provides that the court may award an amount for reasonable expenses that the
court finds to have been necessarily incurred, plus reasonable attorney fees, and costs.
Proposed law provides that when the court finds that the qui tam action was brought by a
person who planned or initiated the violation upon which the action was brought, then the
court may reduce the share of the proceeds that person would otherwise be entitled to
receive, taking into account the role of such person in advancing the case to litigation and
any relevant circumstances pertaining to the violation.
Proposed law provides that when the person bringing the qui tam action is convicted of
criminal conduct arising from a role in the violation, that person shall be dismissed from the
qui tam action and shall not receive any share of the proceeds of the action.
Provides that no governmental unit is liable for any expenses that any person incurs in
bringing a qui tam action under proposed law.
Provides that a civil action under proposed law shall be commenced no later than six years
after the date on which the violation is committed or not more than three years after the date
when facts material to the right of action are known or reasonably should have been known
by the official of the unit of state or local government charged with responsibility to act in
the circumstances, whichever occurs later.
Proposed law provides that an employee who is discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the terms and conditions of
employment by a public or private employer because of lawful acts done by the employee
on behalf of the employer or others in furtherance of an action brought under proposed law,
is entitled to all relief necessary to make the employee whole.
Proposed law provides that relief necessary to make the employee whole includes:
(1)An injunction to restrain continued discrimination.
(2)Reinstatement to the position the employee would have had but for the
discrimination or to an equivalent position.
(3)Reinstatement of employment benefits and seniority rights.
(4)Payment of two times back pay, plus interest.
(5)Compensation for any special damages sustained as a result of the discrimination,
including litigation costs and reasonable attorney fees.
Provides that the chief legal officer of a unit of state or local government may adopt rules
and regulations as necessary to effectuate the purposes of proposed law.
(Adds R.S. 39:2166-2166.8)