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Minnesota Legislature

Office of the Revisor of Statutes

HF 8

3rd Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:32am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 01/12/2009
1st Engrossment Posted on 02/09/2009
2nd Engrossment Posted on 03/05/2009
3rd Engrossment Posted on 05/04/2009

Current Version - 3rd Engrossment

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A bill for an act
relating to state government; establishing the Minnesota False Claims Act;
assessing penalties; proposing coding for new law as Minnesota Statutes, chapter
15C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [15C.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of this chapter, the terms in this section have
the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Claim. new text end

new text begin "Claim" includes any request or demand, whether under a contract
or otherwise, for money or property which is made to a contractor, grantee, or other
recipient if the state has provided or will provide any portion of the money or property
which is requested or demanded, or if the state has reimbursed or will reimburse the
contractor, grantee, or other recipient for any portion of the money or property which is
requested or demanded.
new text end

new text begin Subd. 3. new text end

new text begin Knowing and knowingly. new text end

new text begin "Knowing" and "knowingly" mean that a
person, with respect to information:
new text end

new text begin (1) has actual knowledge of the information;
new text end

new text begin (2) acts in deliberate ignorance of the truth or falsity of the information; or
new text end

new text begin (3) acts in reckless disregard of the truth or falsity of the information.
new text end

new text begin No proof of specific intent to defraud is required.
new text end

new text begin Subd. 4. new text end

new text begin Original source. new text end

new text begin "Original source" means a person who has direct and
independent knowledge of information which is probative of any essential element of the
allegations in an action brought pursuant to this section which was not obtained from a
public source and who either voluntarily provided the information to the state before
bringing an action based on the information or whose information provided the basis for
or caused an investigation, hearing, audit, or report that led to the public disclosure of the
allegations or transactions upon which an action brought pursuant to this section is based.
new text end

new text begin Subd. 5. new text end

new text begin Person. new text end

new text begin "Person" means any natural person, partnership, corporation,
association or other legal entity, including the state and any department, agency, or
political subdivision of the state.
new text end

new text begin Subd. 6. new text end

new text begin State. new text end

new text begin "State" means the state of Minnesota and includes any department,
agency, or political subdivision of the state.
new text end

Sec. 2.

new text begin [15C.02] LIABILITY FOR CERTAIN ACTS.
new text end

new text begin Subdivision 1. new text end

new text begin Liability. new text end

new text begin (a) Any person who commits any of the acts in clauses (1)
to (8) is liable to the state for a civil penalty of not less than $5,000 and not more than
$10,000 per false claim, plus three times the amount of damages which the state sustains
because of the act of that person, except as otherwise provided in paragraph (b):
new text end

new text begin (1) knowingly presents, or causes to be presented, to an officer or employee of the
state of Minnesota a false or fraudulent claim for payment or approval;
new text end

new text begin (2) knowingly makes or uses, or causes to be made or used, a false record or
statement to get a false or fraudulent claim paid or approved by the state;
new text end

new text begin (3) knowingly conspires to either present a false or fraudulent claim to the state for
payment or approval or make, use, or cause to be made or used a false record or statement
to obtain payment or approval of a false or fraudulent claim;
new text end

new text begin (4) has possession, custody, or control of public property or money used, or to be
used, by the state and knowingly delivers or causes to be delivered to the state less money
or property than the amount for which the person receives a receipt;
new text end

new text begin (5) is authorized to prepare or deliver a receipt for money or property used, or to
be used, by the state and knowingly prepares or delivers a receipt that falsely represents
the money or property;
new text end

new text begin (6) knowingly buys, or receives as a pledge of an obligation or debt, public property
from an officer or employee of the state who lawfully may not sell or pledge the property;
or
new text end

new text begin (7) knowingly makes or 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 the state.
new text end

new text begin (b) The court may assess not less than two times the amount of damages which the
state sustains because of the act of the person if:
new text end

new text begin (1) the person committing a violation under paragraph (a) furnished officials of the
state responsible for investigating the false claims violations with all information known
to the person about the violation within 30 days after the date on which the defendant first
obtained the information;
new text end

new text begin (2) the person fully cooperated with any state investigation of the violation; and
new text end

new text begin (3) at the time the person furnished the state with information about the violation,
no criminal prosecution, civil action, or administrative action had commenced under this
section with respect to the violation, and the person did not have actual knowledge of the
existence of an investigation into the violation.
new text end

new text begin (c) A person violating this section is also liable to the state for the costs of a civil
action brought to recover any penalty or damages.
new text end

new text begin Subd. 2. new text end

new text begin Right to cure. new text end

new text begin There shall be no action against any person under this
section for inadvertence or mistake.
new text end

Sec. 3.

new text begin [15C.03] EXCLUSION.
new text end

new text begin This chapter does not apply to claims, records, or statements made under portions
of Minnesota Statutes relating to taxation.
new text end

Sec. 4.

new text begin [15C.04] RESPONSIBILITIES OF ATTORNEY GENERAL.
new text end

new text begin The attorney general may investigate violations of section 15C.02. If the attorney
general finds that a person has violated or is violating section 15C.02, the attorney general
may bring a civil action under this section against the person to enjoin any act in violation
of section 15C.02 and to recover damages and penalties.
new text end

Sec. 5.

new text begin [15C.05] PRIVATE REMEDIES; COMPLAINT UNDER SEAL; COPY
OF COMPLAINT AND WRITTEN DISCLOSURE OF EVIDENCE TO BE SENT
TO ATTORNEY GENERAL.
new text end

new text begin (a) Except as otherwise provided in this section, a person may maintain an action
pursuant to this section on the person's own account and that of the state if money,
property, or services provided by the state are involved; the person's own account and
that of a political subdivision if money, property, or services provided by the political
subdivision are involved; or on the person's own account and that of both the state and a
political subdivision if both are involved. After such an action is commenced, it may be
voluntarily dismissed only if the court and the attorney general give written consent to the
dismissal and their reasons for consenting.
new text end

new text begin (b) If an action is brought pursuant to this section, no other person may bring
another action pursuant to this section based on the same facts which are the subject of
the pending action.
new text end

new text begin (c) An action may not be maintained by a person pursuant to this section:
new text end

new text begin (1) against the legislature, the judiciary, an executive department of the state, or a
political subdivision, and their members or employees;
new text end

new text begin (2) if the action is based upon allegations or transactions that are the subject of a
civil action or an administrative proceeding for a monetary penalty to which the state or a
political subdivision of the state is already a party; or
new text end

new text begin (3) unless the action is brought by an original source of the information or the
attorney general initiates or intervenes in the action, if the action is based upon the public
disclosure of allegations or transactions: (i) in a criminal, civil, or administrative hearing;
(ii) in an investigation, report, hearing, or audit conducted by or at the request of the house
of representatives or the senate; (iii) by an auditor or the governing body of a political
subdivision; or (iv) from the news media.
new text end

new text begin (d) A complaint in an action pursuant to this section must be commenced by filing
the complaint with the court in camera, and the court must place it under seal for at least
60 days. No service may be made upon the defendant until the complaint is unsealed.
new text end

new text begin (e) If a complaint is filed under this section, the plaintiff shall serve a copy of the
complaint on the attorney general in accordance with the Minnesota Rules of Civil
Procedure and shall also serve at the same time a written disclosure of substantially all
material evidence and information the plaintiff possesses.
new text end

Sec. 6.

new text begin [15C.06] ATTORNEY GENERAL INTERVENTION; MOTION TO
EXTEND TIME; UNSEALING OF COMPLAINT.
new text end

new text begin (a) Within 60 days after receiving a complaint and disclosure pursuant to section
15C.05, the attorney general shall intervene or decline intervention or, for good cause
shown, move the court to extend the time for doing so. The motion may be supported by
affidavits or other submissions in chambers.
new text end

new text begin (b) The complaint must be unsealed after the attorney general decides whether
or not to intervene.
new text end

new text begin (c) Notwithstanding the attorney general's decision regarding intervention in an
action brought by a plaintiff under section 15C.05, the attorney general may pursue the
claim through any alternate remedy available to the state, including any administrative
proceeding to determine a civil money penalty. If the attorney general pursues any such
alternate remedy in another proceeding, the person initiating the action has the same rights
in that proceeding as if the action had continued under section 15C.05. Any finding of fact
or conclusion of law made in the other proceeding that has become final is conclusive on
all parties to an action under section 15C.05. For purposes of this paragraph, a finding
or conclusion is final if it has been finally determined on appeal to the appropriate state
court, if the time for filing an appeal has expired, or if the finding or conclusion is not
subject to judicial review.
new text end

Sec. 7.

new text begin [15C.07] SERVICE OF UNSEALED COMPLAINT AND RESPONSE
BY DEFENDANT.
new text end

new text begin When unsealed, the complaint shall be served on the defendant pursuant to Rule 3 of
the Minnesota Rules of Civil Procedure.
new text end

new text begin The defendant must respond to the complaint within 20 days after it is served on
the defendant.
new text end

Sec. 8.

new text begin [15C.08] ATTORNEY GENERAL AND PRIVATE PARTY ROLES.
new text end

new text begin (a) Except as otherwise provided by this section, if the attorney general does not
intervene at the outset in an action brought by a person pursuant to section 15C.05, the
person has the same rights in conducting the action as the attorney general would have
had. A copy of each pleading or other paper filed in the action, and a copy of the transcript
of each deposition taken, must be mailed to the attorney general if the attorney general
so requests and pays the cost of doing so.
new text end

new text begin (b) If the attorney general elects not to intervene at the outset in the action, the
attorney general may intervene subsequently, upon timely application and good cause
shown. If the attorney general so intervenes, the attorney general subsequently has
primary responsibility for conducting the action.
new text end

new text begin (c) If the attorney general elects at the outset of the action to intervene, the attorney
general has the primary responsibility for prosecuting the action. The person who initially
brought the action remains a party, but the person's acts do not bind the attorney general.
new text end

new text begin (d) Whether or not the attorney general intervenes in the action, the attorney general
may move to dismiss the action for good cause. The person who brought the action must
be notified of the filing of the motion and may oppose it and present evidence at the
hearing. The attorney general may also settle the action. If the attorney general intends to
settle the action, the attorney general shall notify the person who brought the action. The
state may settle the action with the defendant notwithstanding the objections of the person
initiating the action if the court determines, after a hearing, that the proposed settlement
is fair, adequate, and reasonable under all the circumstances. Upon a showing of good
cause, such a hearing may be held in camera.
new text end

Sec. 9.

new text begin [15C.09] STAY OF DISCOVERY; EXTENSION.
new text end

new text begin (a) The court may stay discovery by a person who brought an action under section
15C.05 for not more than 60 days if the attorney general shows that the proposed discovery
would interfere with the investigation or prosecution of a civil or criminal matter arising
out of the same facts, whether or not the attorney general participates in the action.
new text end

new text begin (b) The court may extend the stay upon a further showing that the attorney general
has pursued the civil or criminal investigation or proceeding with reasonable diligence and
that the proposed discovery would interfere with its continuation.
new text end

new text begin (c) Discovery may not be stayed for a total of more than six months over the
objection of the person who brought the action, except for good cause shown by the
attorney general.
new text end

new text begin (d) A showing made pursuant to this section must be made in chambers.
new text end

Sec. 10.

new text begin [15C.10] COURT-IMPOSED LIMITATION UPON PARTICIPATION
OF PRIVATE PLAINTIFF IN ACTION.
new text end

new text begin Upon a showing by the attorney general in an action in which the attorney general
has intervened that unrestricted participation by a person under this chapter would
interfere with or unduly delay the conduct of the action, or would be repetitious, irrelevant,
or solely for harassment, the court may limit the person's participation by, among other
measures, limiting the number of witnesses, the length of the testimony of the witnesses,
or the cross-examination of witnesses by the person.
new text end

Sec. 11.

new text begin [15C.11] LIMITATION OF ACTIONS; REMEDIES.
new text end

new text begin (a) An action pursuant to this chapter may not be commenced more than three years
after the date of discovery of the fraudulent activity by the attorney general or more than
six years after the fraudulent activity occurred, whichever occurs last, but in no event more
than ten years after the date on which the violation is committed.
new text end

new text begin (b) A finding of guilt in a criminal proceeding charging false statement or fraud,
whether upon a verdict of guilty or a plea of guilty or nolo contendere, stops the person
found guilty from denying an essential element of that offense in an action pursuant to this
chapter based upon the same transaction as the criminal proceeding.
new text end

new text begin (c) In any action under this chapter, the state and any qui tam plaintiff must prove
all essential elements of the cause of action, including damages, by a preponderance of
the evidence.
new text end

Sec. 12.

new text begin [15C.12] AWARD OF EXPENSES AND ATTORNEY FEES.
new text end

new text begin If the attorney general or a person who brought an action under section 15C.05
prevails in or settles an action pursuant to this chapter, the court may authorize the person
to recover reasonable costs, reasonable attorney fees, and the reasonable fees of expert
consultants and expert witnesses. Those expenses must be awarded against the defendant,
and may not be allowed against the state or a political subdivision. If the attorney general
does not intervene in the action and the person bringing the action conducts the action, and
if the defendant prevails in the action, the court shall award to the defendant reasonable
expenses and attorney fees against the party or parties who participated in the action if
it finds that the action was clearly frivolous or vexatious or brought in substantial part
for harassment.
new text end

Sec. 13.

new text begin [15C.13] DISTRIBUTION TO PRIVATE PLAINTIFF IN CERTAIN
ACTIONS.
new text end

new text begin If the attorney general intervenes at the outset in an action brought by a person
under section 15C.05, the person shall receive not less than 15 percent or more than 25
percent of any recovery in proportion to the person's contribution to the conduct of the
action. If the attorney general does not intervene in the action at the outset, the person is
entitled to receive not less than 25 percent or more than 30 percent of any recovery of
the civil penalty and damages, or settlement, as the court determines to be reasonable.
For recoveries whose distribution is governed by federal code or rule, the basis for
calculating the portion of the recovery the person is entitled to receive shall not include
such amounts reserved for distribution to the federal government or designated in their
use by such federal code or rule.
new text end

Sec. 14.

new text begin [15C.14] EMPLOYER RESTRICTIONS; LIABILITY.
new text end

new text begin (a) An employer shall not adopt or enforce any rule or policy forbidding an employee
to disclose information to the state, a political subdivision, or a law enforcement agency,
or to act in furtherance of an action pursuant to this chapter, including investigation for
bringing or testifying in such an action.
new text end

new text begin (b) An employer shall not discharge, demote, suspend, threaten, harass, deny
promotion to, or otherwise discriminate against an employee in the terms or conditions
of employment because of lawful acts done by the employee on the employee's behalf
or on behalf of others in disclosing information to the state, a political subdivision, or a
law enforcement agency in furtherance of an action pursuant to this chapter, including
investigation for bringing or testifying in such an action.
new text end

new text begin (c) An employer who violates this section is liable to the affected employee in a civil
action for damages and other relief, including reinstatement, twice the amount of lost
compensation, interest on the lost compensation, any special damage sustained as a result
of the discrimination, and punitive damages if appropriate. The employer is also liable for
expenses recoverable pursuant to section 15C.12, including costs and attorney fees.
new text end

Sec. 15.

new text begin [15C.15] DEPOSIT OF FUNDS.
new text end

new text begin The net proceeds received by the state in an action under this chapter, after
distributions to private plaintiffs, must be deposited in the state treasury as follows:
new text end

new text begin (1) an amount equal to the actual amount of damages that the state sustains because of
an act specified in section 15C.02 must be deposited in the fund that sustained the damage;
new text end

new text begin (2) to the extent permitted under the Minnesota Constitution, any amount received
by the state in excess of the amount specified in clause (1) must be deposited in the
general fund.
new text end