84R10612 SCL-D
By: Raymond H.B. No. 2062
A BILL TO BE ENTITLED
AN ACT
relating to false claims against the state and actions by the state
and private persons to prosecute those claims; providing a civil
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 10, Government Code, is
amended by adding Chapter 2116 to read as follows:
CHAPTER 2116. FALSE CLAIMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2116.001. DEFINITIONS. In this chapter:
(1) "Claim" includes any request or demand, under a
contract or otherwise, for money or property that is made to a
contractor, grantee, or other recipient if this state:
(A) provides any portion of the money or property
that is requested or demanded; or
(B) will reimburse the contractor, grantee, or
other recipient for any portion of the money or property that is
requested or demanded.
(2) "Documentary material" means the original or a
copy of any book, record, report, memorandum, paper, communication,
tabulation, chart, or other document, or data compilations stored
in or accessible through computer or other information retrieval
systems, together with instructions and all other materials
necessary to use or interpret the data compilations, and any
product of discovery.
(3) "Product of discovery" means:
(A) the original or a copy of a deposition,
interrogatory, document, thing, result of inspection of land or
other property, examination, or admission, that is obtained by any
method of discovery in a judicial or administrative proceeding of
an adversarial nature;
(B) a digest, analysis, selection, compilation,
or derivation of any item listed in Paragraph (A); and
(C) an index, instruction, or other aid or means
of access to any item listed in Paragraph (A).
(4) "Qui tam action" means an action brought by a
private person against a person for the commission of a false claim
under Section 2116.101.
(5) "Qui tam plaintiff" means the person bringing a
qui tam action.
(6) "State" means state government as defined by
Section 101.001, Civil Practice and Remedies Code.
Sec. 2116.002. WHEN A PERSON ACTS KNOWINGLY. In this
chapter, a person acts "knowingly" with respect to information if
the person:
(1) has knowledge of the information;
(2) acts with conscious indifference to the truth or
falsity of the information; or
(3) acts in reckless disregard of the truth or falsity
of the information.
Sec. 2116.003. CERTAIN ACTIONS BARRED. (a) A person may
not bring a qui tam action based on allegations or transactions that
are the subject of a civil suit that has already been filed or an
administrative penalty proceeding in which the state is already a
party.
(b) A person may not bring a qui tam action against a member
of the legislature, a member of the judiciary, or a senior official
of the executive branch if the action is based on evidence or
information known to the state when the action was brought.
(c) Except as provided by Subsection (d), on motion of the
attorney general, a court may, after considering all the equities,
dismiss a qui tam plaintiff if the elements of the actionable false
claims alleged in the qui tam complaint have been publicly
disclosed specifically in the news media or in a publicly
disseminated governmental report at the time the complaint is
filed.
(d) A court may not dismiss a qui tam plaintiff under
Subsection (c) if the qui tam plaintiff has knowledge of the
elements of the actionable false claims alleged, independent of the
disclosure in the news media or in a publicly disseminated
governmental report, and has voluntarily provided the information
to the attorney general before filing the qui tam action.
Sec. 2116.004. CHAPTER NOT APPLICABLE TO MEDICAID FRAUD.
This chapter does not apply to an unlawful act described by Section
36.002, Human Resources Code, relating to Medicaid fraud.
SUBCHAPTER B. INVESTIGATION BY ATTORNEY GENERAL
Sec. 2116.051. RESPONSIBILITY OF ATTORNEY GENERAL. The
attorney general shall diligently investigate the commission of a
false claim under Section 2116.101 and may bring a civil action
against the person committing the false claim.
Sec. 2116.052. INVESTIGATION. (a) The attorney general
may take action under Subsection (b) if the attorney general has
reason to believe that:
(1) a person has information or custody or control of
documentary material relevant to the subject matter of an
investigation of an alleged false claim;
(2) a person is committing, has committed, or is about
to commit a false claim; or
(3) it is in the public interest to conduct an
investigation to ascertain whether a person is committing, has
committed, or is about to commit a false claim.
(b) In investigating a false claim, the attorney general
may:
(1) require the person to file on a prescribed form a
statement in writing, under oath or affirmation, as to all the facts
and circumstances concerning the alleged false claim and other
information considered necessary by the attorney general;
(2) examine under oath a person in connection with the
alleged false claim; and
(3) execute in writing and serve on the person a civil
investigative demand requiring the person to produce the
documentary material and permit inspection and copying of the
material under Section 2116.053.
(c) The office of the attorney general may not release or
disclose information that is obtained under Subsection (b)(1) or
(2) or any documentary material or other record derived from the
information except:
(1) by court order for good cause shown;
(2) with the consent of the person who provided the
information;
(3) to an employee of the attorney general;
(4) to an agency of this state, the United States, or
another state;
(5) to any attorney representing the state under
Section 2116.055 or in a civil action brought under Subchapter D;
(6) to a political subdivision of this state; or
(7) to a person authorized by the attorney general to
receive the information.
(d) The attorney general may use documentary material
derived from information obtained under Subsection (b)(1) or (2),
or copies of that material, as the attorney general determines
necessary in the enforcement of this chapter, including
presentation before a court.
(e) If a person fails to file a statement as required by
Subsection (b)(1) or fails to submit to an examination as required
by Subsection (b)(2), the attorney general may file in a district
court of Travis County a petition for an order to compel the person
to file the statement or submit to the examination within a period
stated by court order. Failure to comply with an order entered
under this subsection is punishable as contempt.
(f) An order issued by a district court under this section
is subject to appeal to the supreme court.
Sec. 2116.053. CIVIL INVESTIGATIVE DEMAND. (a) An
investigative demand must:
(1) state the rule or statute under which the alleged
unlawful act is being investigated and the general subject matter
of the investigation;
(2) describe the class or classes of documentary
material to be produced with reasonable specificity to fairly
indicate the documentary material demanded;
(3) prescribe a return date within which the
documentary material is to be produced; and
(4) identify an authorized employee of the attorney
general to whom the documentary material is to be made available for
inspection and copying.
(b) A civil investigative demand may require disclosure of
any documentary material that is discoverable under the Texas Rules
of Civil Procedure.
(c) Service of an investigative demand may be made by:
(1) delivering an executed copy of the demand to the
person to be served or to a partner, an officer, or an agent
authorized by appointment or by law to receive service of process on
behalf of that person;
(2) delivering an executed copy of the demand to the
principal place of business in this state of the person to be
served; or
(3) mailing by registered or certified mail an
executed copy of the demand addressed to the person to be served at
the person's principal place of business in this state or, if the
person has no place of business in this state, to a person's
principal office or place of business.
(d) Documentary material demanded under this section shall
be produced for inspection and copying during normal business hours
at the office of the attorney general or as agreed by the person
served and the attorney general.
(e) The office of the attorney general may not produce for
inspection or copying or otherwise disclose the contents of
documentary material obtained under this section except:
(1) by court order for good cause shown;
(2) with the consent of the person who produced the
information;
(3) to an employee of the attorney general;
(4) to an agency of this state, the United States, or
another state;
(5) to any attorney representing the state under
Section 2116.055 or in a civil action brought under Subchapter D;
(6) to a political subdivision of this state; or
(7) to a person authorized by the attorney general to
receive the information.
(f) The attorney general shall prescribe reasonable terms
and conditions allowing the documentary material to be available
for inspection and copying by the person who produced the material
or by an authorized representative of that person. The attorney
general may use the documentary material or copies of it as the
attorney general determines necessary in the enforcement of this
chapter, including presentation before a court.
(g) A person may file a petition, stating good cause, to
extend the return date for the demand or to modify or set aside the
demand. A petition under this section shall be filed in a district
court of Travis County and must be filed before the earlier of:
(1) the return date specified in the demand; or
(2) the 20th day after the date the demand is served.
(h) Except as provided by court order, a person on whom a
demand has been served under this section shall comply with the
terms of an investigative demand.
(i) A person who has committed a false claim has submitted
to the jurisdiction of this state, and personal service of an
investigative demand under this section may be made on the person
outside of this state.
(j) This section does not limit the authority of the
attorney general to conduct investigations or to access a person's
documentary materials or other information under another state or
federal law, the Texas Rules of Civil Procedure, or the Federal
Rules of Civil Procedure.
(k) If a person fails to comply with an investigative
demand, or if copying and reproduction of the documentary material
demanded cannot be satisfactorily accomplished and the person
refuses to surrender the documentary material, the attorney general
may file in a district court of Travis County a petition for an
order to enforce the investigative demand.
(l) If a petition is filed under Subsection (k), the court
may determine the matter presented and may enter an order to
implement this section.
(m) Failure to comply with a final order entered under
Subsection (l) is punishable by contempt.
(n) A final order issued by a district court under
Subsection (l) is subject to appeal to the supreme court.
Sec. 2116.054. INJUNCTIVE RELIEF. (a) If the attorney
general has reason to believe that a person is committing, has
committed, or is about to commit a false claim, the attorney general
may institute an action for an appropriate order to restrain the
person from committing or continuing the false claim.
(b) An action under this section shall be brought in a
district court of Travis County, or in a county in which any part of
the false claim occurred, is occurring, or is about to occur.
Sec. 2116.055. ATTORNEY GENERAL AS RELATOR IN FEDERAL
ACTION. To the extent permitted by 31 U.S.C. Sections 3729-3733,
the attorney general may bring an action as relator under 31 U.S.C.
Section 3730 with respect to an act for which a person may be held
liable under 31 U.S.C. Section 3729. The attorney general may
contract with a private attorney to represent the state under this
section.
Sec. 2116.056. STANDARD OF PROOF. The standard of proof for
all elements of a cause of action under this chapter is
preponderance of the evidence.
Sec. 2116.057. CHAPTER 41, CIVIL PRACTICE AND REMEDIES
CODE, INAPPLICABLE TO ACTION UNDER THIS CHAPTER. Chapter 41, Civil
Practice and Remedies Code, is not applicable to a cause of action
under this chapter.
SUBCHAPTER C. FALSE CLAIMS
Sec. 2116.101. FALSE CLAIMS. (a) A person commits a false
claim if the person:
(1) knowingly presents, or causes to be presented, to
an officer, employee, or agent of this state, or to any contractor,
grantee, or other recipient of state funds, a false or fraudulent
claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used
a false record or statement to get a false or fraudulent claim paid
or approved;
(3) conspires to defraud this state by getting a false
or fraudulent claim allowed or paid, or conspires to defraud this
state by knowingly making, using, or causing to be made or used, a
false record or statement to conceal, avoid, or decrease an
obligation to pay or transmit money or property to this state;
(4) has possession, custody, or control of public
property or money used or to be used by this state and knowingly
delivers or causes to be delivered less property than the amount for
which the person receives a certificate or receipt;
(5) is authorized to make or deliver a document
certifying receipt of property used or to be used by this state and
knowingly makes or delivers a receipt that falsely represents the
property used or to be used;
(6) knowingly buys, or receives as a pledge of an
obligation or debt, public property from any person who lawfully
may not sell or pledge the property;
(7) knowingly makes, uses, or causes to be made or used
a false record or statement to conceal, avoid, or decrease an
obligation to pay or transmit money or property to this state;
(8) knowingly conceals, avoids, or decreases an
obligation to pay or transmit money or property to this state; or
(9) is a beneficiary of an inadvertent submission of a
false claim to any employee, officer, or agent of this state, or to
any contractor, grantee, or other recipient of state funds,
subsequently discovers the falsity of the claim, and fails to
disclose the false claim to this state within a reasonable time
after discovery of the false claim.
(b) Proof of the person's specific intent to commit a false
claim under Subsection (a) is not required in a civil or
administrative proceeding to show that a person acted "knowingly"
with respect to information under this chapter.
Sec. 2116.102. CIVIL REMEDIES. (a) A person who commits a
false claim under Section 2116.101 is liable to this state for:
(1) a civil penalty in an amount not less than $5,000
and not more than $15,000 for each false claim committed by the
person;
(2) except as provided by Subsection (b), three times
the amount of damages that this state sustains directly or
indirectly as a result of the act of the person; and
(3) fees, expenses, and costs reasonably incurred in
obtaining relief or civil remedies or conducting investigations
under this chapter, including court costs, reasonable attorney's
fees, witness fees, and deposition fees.
(b) A court may assess not less than two times the amount of
damages under Subsection (a)(2) if the court finds:
(1) that the person committing a false claim furnished
the attorney general with all information known to the person about
the false claim on or before the 30th day after the date the person
first obtained the information;
(2) that the person committing a false claim fully
cooperated with any investigation of the false claim; and
(3) at the time the person furnished information about
the false claim, a criminal prosecution, civil action, or
administrative action had not commenced in relation to the false
claim and the person did not have actual knowledge of the existence
of an investigation into the false claim.
SUBCHAPTER D. ACTIONS BY PRIVATE PERSONS
Sec. 2116.151. ACTIONS BY PRIVATE PERSON AUTHORIZED;
ALTERNATIVE REMEDY SOUGHT BY STATE. (a) Subject to Section
2116.201, a private person may bring a civil action against a person
committing a false claim under Section 2116.101.
(b) The action is a qui tam action on behalf of both the
person and the state.
(c) The qui tam action must be brought in the name of this
state.
(d) No person other than the attorney general may intervene
or bring a related action based on the facts underlying a pending
action under this subchapter.
Sec. 2116.152. INITIATION OF ACTION. (a) A qui tam
plaintiff shall serve a copy of the petition and a written
disclosure of substantially all material evidence and information
the person possesses on the attorney general in compliance with the
Texas Rules of Civil Procedure.
(b) The petition shall be filed in camera and, except as
provided by Subsection (d) or (e), shall remain under seal until at
least the 180th day after the date the petition is filed or the date
on which the state elects to intervene, whichever is earlier. The
petition may not be served on the defendant until the court orders
service on the defendant.
(c) The state may elect to intervene and proceed with the
action not later than the 180th day after the date the attorney
general receives the petition and the material evidence and
information.
(d) At the time the state intervenes, the attorney general
may file a motion with the court requesting that the petition remain
under seal for an extended period.
(e) The state may, for good cause shown, move the court to
extend the 180-day deadline under Subsection (b) or (c). A motion
under this subsection may be supported by affidavits or other
submissions in camera.
(f) An action under this subchapter may be dismissed before
the end of the period during which the petition remains under seal
only if the court and the attorney general consent in writing to the
dismissal and state their reasons for consenting.
Sec. 2116.153. ANSWER BY DEFENDANT. A defendant is not
required to file in accordance with the Texas Rules of Civil
Procedure an answer to a petition filed under this subchapter until
the petition is unsealed and served on the defendant.
Sec. 2116.154. CHOICE OF STATE. (a) Not later than the
last day of the period described by Section 2116.152(c) or an
extension of that period as provided by Section 2116.152(e), the
state shall:
(1) proceed with the action; or
(2) notify the court that the state declines to take
over the action.
(b) If the state declines to take over the action, the qui
tam plaintiff is entitled to conduct the action.
Sec. 2116.155. ACTION CONDUCTED BY STATE. (a) This section
applies to a qui tam action the state takes over under Section
2116.154(a)(1).
(b) The state has the primary responsibility for
prosecuting the action and is not bound by an act of the qui tam
plaintiff.
(c) Subject to this section, the qui tam plaintiff is
entitled to continue as a party to the action.
(d) Notwithstanding the objection of the qui tam plaintiff,
the state may dismiss the action for good cause if:
(1) the state notifies the qui tam plaintiff that a
motion to dismiss has been filed; and
(2) the court provides the qui tam plaintiff with an
opportunity for a hearing on the motion.
(e) Notwithstanding the objection of the qui tam plaintiff,
the state may settle the action if the court determines, after a
hearing, that the proposed settlement is fair, adequate, and
reasonable under all the circumstances. On a showing of good cause,
the court may hold the hearing in camera.
(f) On a showing by the state that unrestricted
participation in the litigation of the action by the qui tam
plaintiff would interfere with or unduly delay the state's
prosecution of the case or would be repetitious, irrelevant, or for
purposes of harassment, the court may impose limitations on the
person's participation, including:
(1) limiting the number of witnesses the qui tam
plaintiff may call;
(2) limiting the length of the testimony of witnesses
called by the qui tam plaintiff;
(3) limiting the qui tam plaintiff's cross-examination
of witnesses; or
(4) otherwise limiting the participation by the qui
tam plaintiff in the litigation.
(g) On a showing by the defendant that unrestricted
participation in the litigation of the action by the qui tam
plaintiff would be for purposes of harassment or would cause the
defendant undue burden or unnecessary expense, the court may limit
the participation by the qui tam plaintiff in the litigation.
Sec. 2116.156. ACTION CONDUCTED BY QUI TAM PLAINTIFF. (a)
This section applies to a qui tam action the state declines to take
over under Section 2116.154(a)(2).
(b) At the request of the state, the state shall be served
with copies of all pleadings filed in the action and shall be
provided with copies of all discovery requests and responses,
including documents produced and deposition transcripts.
(c) Without limiting the status and rights of the qui tam
plaintiff, the court may, on a showing of good cause and
notwithstanding the initial decision of the state to decline to
take over the action, permit the state to intervene at a later date.
Sec. 2116.157. STAY OF CERTAIN DISCOVERY. (a) On a
showing by the state that certain actions of discovery by the qui
tam plaintiff would interfere with the state's investigation or
prosecution of a criminal or civil matter arising out of the same
facts, the court may stay the discovery for a period not to exceed
60 days.
(b) The court shall hear a motion to stay discovery under
this section in camera.
(c) The court may extend the period prescribed by Subsection
(a) on a further showing in camera that the state has pursued the
criminal or civil investigation or proceedings with reasonable
diligence and that any proposed discovery in the civil action will
interfere with the ongoing criminal or civil investigation or
proceedings.
Sec. 2116.158. AWARD TO QUI TAM PLAINTIFF. (a) If the
state proceeds with an action under this subchapter, the person
bringing the action is entitled, except as provided by Subsection
(b), to receive an award of at least 15 percent, but not more than 25
percent, of the proceeds of the action, depending on the extent to
which the person substantially contributed to the prosecution of
the action.
(b) If the state declines to proceed with an action under
Section 2116.154(a)(2), the qui tam plaintiff is entitled, except
as provided by Subsection (c), to receive an award of at least 25
percent but not more than 30 percent of the proceeds of the action.
(c) If the court finds, on motion of the attorney general,
that the action is based primarily on disclosures of specific
information, other than information provided by the person bringing
the action, relating to allegations or transactions in a civil or
criminal hearing, in a legislative or administrative report,
hearing, audit, or investigation, or from the news media, the court
may award the amount the court considers appropriate but not more
than 10 percent of the proceeds of the action. The court shall
consider the significance of the information and the role of the
person bringing the action in advancing the case to litigation.
(d) A payment to a person under this section shall be made
from the proceeds of the action. A person receiving a payment under
this section is also entitled to receive from the defendant an
amount for reasonable expenses, reasonable attorney's fees, and
costs that the court finds to have been necessarily incurred. The
court's determination of expenses, fees, and costs to be awarded
under this subsection shall be made only after the defendant has
been found liable in the action or has settled the action.
(e) In this section, "proceeds of the action" means the
amount recovered by the state pursuant to a judgment or settlement
of the qui tam action or the resolution of an alternate remedy
pursued by the state under Section 2116.201. The term does not
include attorney's fees, costs, and expenses incurred in bringing
the action.
Sec. 2116.159. REDUCTION OF AWARD. (a) If the court finds
that the qui tam plaintiff planned and initiated the false claim
that is the basis of the qui tam action, the court may, to the extent
the court considers appropriate, reduce the share of the proceeds
of the action the person would otherwise receive under Section
2116.158, taking into account the qui tam plaintiff's role in
advancing the case to litigation and any relevant circumstances
pertaining to the violation.
(b) If the qui tam plaintiff is convicted of criminal
conduct arising from the person's role in the false claim, the court
shall dismiss the plaintiff from the civil action and the plaintiff
may not receive any share of the proceeds of the action. A
dismissal under this subsection does not prejudice the right of the
state to continue the qui tam action.
Sec. 2116.160. STATE NOT LIABLE FOR CERTAIN EXPENSES. The
state is not liable for expenses that a qui tam plaintiff incurs in
bringing an action under this subchapter.
Sec. 2116.161. RETALIATION BY EMPLOYER AGAINST PERSON
BRINGING SUIT PROHIBITED. (a) A person who is discharged, demoted,
suspended, threatened, harassed, or in any other manner
discriminated against in the terms of employment by the person's
employer because of a lawful act taken by the person in furtherance
of a qui tam action, including investigation for, initiation of,
testimony for, or assistance in a qui tam action filed or to be
filed, is entitled to all relief necessary to make the person whole,
including:
(1) reinstatement with the same seniority status the
person would have had but for the discrimination; and
(2) two times the amount of back pay, interest on the
back pay, and compensation for any special damages sustained as a
result of the discrimination, including litigation costs and
reasonable attorney's fees.
(b) A person may bring an action in the appropriate district
court for the relief provided in this section.
SUBCHAPTER E. ACTION BY STATE
Sec. 2116.201. STATE MAY PURSUE ALTERNATE REMEDY. (a)
After a qui tam action is filed, the state may elect to prosecute
the false claim that is the subject of the action through any
alternate remedy available to the state, including any
administrative proceeding to determine an administrative penalty.
(b) The qui tam plaintiff has the same rights in the other
proceeding as the person would have had if the action had continued
in the original forum, including a monetary award as provided by
Subchapter D.
(c) A finding of fact or conclusion of law made in the other
proceeding that has become final is conclusive on all parties to the
qui tam action. For purposes of this subsection, a finding or
conclusion is final if:
(1) the finding or conclusion has been finally
determined on appeal to the appropriate court;
(2) no appeal has been filed with respect to the
finding or conclusion and all time for filing an appeal has expired;
or
(3) the finding or conclusion is not subject to
judicial review.
SECTION 2. Section 41.002(d), Civil Practice and Remedies
Code, is amended to read as follows:
(d) Notwithstanding any provision to the contrary, this
chapter does not apply to:
(1) Section 15.21, Business & Commerce Code (Texas
Free Enterprise and Antitrust Act of 1983);
(2) an action brought under the Deceptive Trade
Practices-Consumer Protection Act (Subchapter E, Chapter 17,
Business & Commerce Code) except as specifically provided in
Section 17.50 of that Act;
(3) an action brought under Chapter 36, Human
Resources Code; [or]
(4) an action brought under Chapter 21, Insurance
Code; or
(5) an action brought under Chapter 2116, Government
Code.
SECTION 3. (a) Except as provided by Subsection (b) of this
section, this Act applies only to a false claim as described by
Section 2116.101, Government Code, as added by this Act, that takes
place on or after the effective date of this Act. A false claim
takes place on or after the effective date of this Act only if all
elements of the false claim take place on or after the effective
date of this Act.
(b) This Act applies to acts occurring before the effective
date of this Act that would have constituted a false claim as
described by Section 2116.101, Government Code, as added by this
Act, if that section had been effective at the time of the acts, if:
(1) the acts were reported or made known to a state
agency within a reasonable period of time after the date of their
occurrence; and
(2) the acts are the subject of an ongoing
investigation by a state agency on or after the effective date of
this Act.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2015.