SF 82

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:10am

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 a request or demand, whether under a contract or
otherwise, for money or property that is made to a contractor, grantee, or other recipient if
the state has provided or will provide a portion of the money or property that is requested
or demanded, or if the state has reimbursed or will reimburse the contractor, grantee, or
other recipient for a portion of the money or property that 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 that is probative of an essential element of the
allegations in an action brought under this chapter that 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 under this chapter 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 a 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 a 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 (a) A person who commits any act described in clauses (1) to (8) is liable to the state
for a civil penalty of not less than $5,500 and not more than $11,000 per false or fraudulent
claim, plus three times the amount of damages that 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 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 makes, uses, or causes 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;
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, knowingly fails to disclose the falsity to the state
within a reasonable time; or
new text end

new text begin (8) 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 that 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 or fraudulent claim violation with all
information known to the person about the violation within 30 days after the date on which
the person 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 been commenced under
this chapter 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 (d) Except for conduct described in paragraph (a), clause (7), a person is not liable
under this section for mere inadvertence or mistake with respect to activities involving a
false or fraudulent claim.
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 an 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
under this chapter 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 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 under this section, no other person may bring another
action under this section based on the same facts that are the subject of the pending action.
new text end

new text begin (c) An action may not be maintained by a person under 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) by the news media.
new text end

new text begin (d) A complaint in an action under this section must be commenced by filing the
complaint with the court in chambers 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 at the same time shall serve 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 under 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 an administrative
proceeding to determine a civil monetary penalty. If the attorney general pursues an
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. A 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 must be served on the defendant pursuant to Rule 3 of
the Minnesota Rules of Civil Procedure. 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 under section 15C.05, the person
has the same rights in conducting the action as the attorney general would have. 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 of 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, the hearing may be held in chambers.
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. 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 [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 limiting the
number of witnesses, the length of the testimony of the witnesses, the cross-examination
of witnesses by the person, or by other measures.
new text end

Sec. 11.

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

new text begin (a) An action under 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 later, 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 a 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 under this
chapter based upon the same transaction as the criminal proceeding.
new text end

new text begin (c) In an action under this chapter, the state and any plaintiff under section 15C.05
must prove the 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 under 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. These expenses must be awarded against the defendant
and are not 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 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 solely 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 is entitled to 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 any time, 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 is reasonable. If the
attorney general does not intervene in the action at the outset but subsequently intervenes,
the person is entitled to receive not less than 15 percent or more than 30 percent of any
recovery, as the court determines is reasonable based on the person's participation in the
action before the attorney general intervened.
new text end

Sec. 14.

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

new text begin (a) An employer must 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 under this chapter, including investigation
for, bringing, or testifying in the action.
new text end

new text begin (b) An employer must 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 under this chapter, including investigation
for bringing or testifying in the 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 under section 15C.12, including costs and attorney fees.
new text end