SF 540

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to operation of state government; establishing the Minnesota False
Claims Act; assessing penalties; proposing coding for new law as Minnesota
Statutes, chapter 12A.

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

Section 1.

new text begin [12A.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 provides any portion of the money or property which is requested or
demanded, or if the state 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, and 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
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,
political subdivision, or agency of the state.
new text end

Sec. 2.

new text begin [12A.02] LIABILITY FOR CERTAIN ACTS.
new text end

new text begin (a) Any person who commits any of the acts in clauses (1) through (7) is liable to the
state for a civil penalty of not less than $5,500 and not more than $11,000 per occurrence,
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, 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 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 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;
new text end

new text begin (7) is a beneficiary of an inadvertent submission of a false claim and, after
discovering the falsity of the claim, fails to disclose the falsity to the state within a
reasonable time, but not more than 30 days; or
new text end

new text begin (8) 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 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 A person violating this paragraph is also liable to the state for the costs of a civil
action brought to recover any penalty or damages.
new text end

Sec. 3.

new text begin [12A.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 [12A.04] RESPONSIBILITIES OF ATTORNEY GENERAL.
new text end

new text begin The attorney general may investigate violations of section 12A.02 and may employ
the investigative authority and methods set forth in section 8.31. If the attorney general
finds that a person has violated or is violating section 12A.02, the attorney general may
bring a civil action under this section against the person to enjoin any act in violation of
section 12A.02 and to recover damages and penalties. The attorney general need not
prove actual damages to the state in order to maintain an action under this section. In
any action brought by the attorney general under this section, the state may also recover
attorney fees, investigative expenses, and costs.
new text end

Sec. 5.

new text begin [12A.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, any 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 dismissed only with leave of the court, taking into account the public purposes of this
section and the best interests of the parties.
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 allegations 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 a member of the legislature or the judiciary, an elected officer of the
executive department of the state government, or a member of the governing body of a
political subdivision if the action is based upon evidence or information known to the state
or political subdivision at the time the action was brought;
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 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 filed pursuant to this section must be placed under seal until the
attorney general has decided whether to intervene. 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 send a copy of the
complaint to the attorney general by certified United States mail with return receipt
requested and shall include a written disclosure of substantially all material evidence and
information the plaintiff possesses.
new text end

Sec. 6.

new text begin [12A.06] ATTORNEY GENERAL INTERVENTION; MOTION TO
EXTEND TIME; UNSEALING OF COMPLAINT.
new text end

new text begin (a) Within 120 days after receiving a complaint and disclosure, 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 this section, 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 any such alternate remedy is pursued in
another proceeding, the person initiating the action has the same rights in that proceeding
as if the action had continued under this section. 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 this section. 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 [12A.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 Rules of Civil Procedure.
new text end

new text begin The defendant must respond to the complaint within 30 days after it is served on
the defendant.
new text end

Sec. 8.

new text begin [12A.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 this section, 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,
subsequently, upon timely application and good cause shown, the attorney general may
intervene. If the attorney general so intervenes, the person retains primary responsibility
for conducting the action and any recovery must be apportioned as if the attorney general
had not intervened.
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.
Upon the request of the person, the court shall determine whether settlement of the action
is consistent with the public purposes of this section and shall not approve the settlement
of the action unless it determines that the settlement is consistent with the public purposes
of this section.
new text end

Sec. 9.

new text begin [12A.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 this
section for not more than 120 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
the proposed discovery would interfere with its continuation.
new text end

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

Sec. 10.

new text begin [12A.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 section would interfere
with or unduly delay the conduct of an 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 [12A.11] LIMITATION OF ACTIONS; REMEDIES.
new text end

new text begin (a) An action pursuant to this section 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, estops the person
found guilty from denying an essential element of that offense in an action pursuant to this
section based upon the same transaction as the criminal proceeding.
new text end

new text begin (c) The provisions of this section are not exclusive and shall be liberally construed
and applied to promote the public interest. The remedies provided for in this section
are in addition to any other remedies provided for in any other law or available under
common law.
new text end

Sec. 12.

new text begin [12A.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 12A.05
prevails in or settles an action pursuant to this section, the person may recover costs,
attorney fees, and the 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 defendant prevails in the action, the court may award 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 solely for harassment.
new text end

Sec. 13.

new text begin [12A.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 12A.05, the person shall receive not less than 15 percent or more than 33
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 50 percent of any recovery,
as the court determines to be reasonable.
new text end

Sec. 14.

new text begin [12A.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 section, 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 section, including
investigation for bringing or testifying in such an action.
new text end

new text begin (c) An employer who violates this subdivision 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 12A.12, including costs and attorney fees.
new text end