SF 1428

as introduced - 84th Legislature (2005 - 2006) 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; or
new text end

new text begin (2) 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 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 $5,000 and not more than $10,000 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. 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 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 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) A civil action under this section may be brought for
activity prior to the effective date of this section if the
limitations period in paragraph (a) has not lapsed.
new text end

new text begin (d) 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