BILL ANALYSIS
C.S.H.B. 2748
By: Alvarado
05-02-95
Committee Report (Substituted)
BACKGROUND
Texas does not have a statutory provision for exposing fraud by
governmental contractors. Currently there is no recourse for
exposing a false claim for money, property, or services to certain
state and local governmental agencies.
PURPOSE
HB 2748 creates an offense and a remedy for exposing and
prosecuting false claims against the state and local entities
and/or their agents.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subtitle F, Title 10, Government Code, by adding
Chapter 2258 FALSE CLAIMS as follows:
Sec. 2258.001 DEFINITIONS defines "Claim", "Governmental
contractor", "Governmental entity", "Local Governmental
entity", "Managing official", and "Prosecuting
authority."
Sec. 2558.002 PROHIBITED ACTS establishes actions which
shall be prohibited.
SUBCHAPTER B. LIABILITY FOR VIOLATIONS
Sec. 2258.011 LIABILITY FOR KNOWING VIOLATION (a) establishes
what shall be awarded to the governmental entity in the event
of a violation of Sec. 2558.002.
(b) Establishes when the court may reduce exemplary damages to
an amount no less than actual damages.
(c) Establishes what constitutes a violation of Sec. 2258.002.
Sec. 2258.012 CIVIL PENALTY states that in addition to amounts
under Sec. 2258.001, the court may award $10,000 per false
claim unless there was a known violation of 2258.002 and that
person cooperated in the investigation as described by Sec.
2258.001(b)(1) and (b)(2).
Sec. 2258.013 LIABILITY JOINT AND SEVERAL states that
liability shall be joint and several.
Sec. 2258.014 EXCEPTIONS provides exceptions to awarding
damages.
Sec. 2258.015 DEPOSIT OF MONEY (a) states that money collected
shall be deposited to general revenue fund or to local
government as appropriate.
(b) If action is brought jointly with state and local
government the court shall apportion all damages. The court
will apportion based on cost incurred. Attorney's fees shall
be awarded based on entity that incurred cost.
Sec. 2258.016 LIMITATIONS establish statute of limitations.
Sec. 2258.017 APPLICATION OF OTHER LAW defines application of
Civil Law.
SUBCHAPTER C. ATTORNEY GENERAL ACTIONS
Sec. 2258.021 ATTORNEY GENERAL INVESTIGATION establishes that
Attorney General's role concerning violations. Also
establishes that the Attorney General shall bring action
against violators.
Sec. 2258.022 AFFECTED LOCAL GOVERNMENTAL ENTITY (a) Defines
delivery of complaint for a claim involving state and local
funds.
(b) The Attorney General shall maintain complaints.
(c) A prosecuting authority may intervene no later than the
60th day after complaint is received.
SUBSECTION D. ACTION BROUGHT BY PROSECUTING AUTHORITY
Sec. 2258.031 PROSECUTING AUTHORITY INVESTIGATION allows the
prosecuting to investigate alleged violations and bring action
against violators.
Sec. 2258.032 ATTORNEY GENERAL establishes the Attorney
General's role in prosecuting offenders.
SUBCHAPTER E. PRIVATE CAUSE OF ACTION
Sec. 2258.041 PRIVATE ACTION provides that a person may bring
a civil action in a district court in this state for a
violation of Section 2258.002.
Sec. 2258.042 SERVICE OF PETITION A person who brings an
action shall serve a copy of the petition on the attorney
general and the prosecutive authority of the local government,
if the claim involves local government funds.
Sec. 2258.043 INTERVENTION (a) The attorney general may assume
responsibility for prosecution of an action involving only
state funds.
(b) The prosecuting authority may assume responsibility for
prosecution of an action involving only local government
funds.
(c) The attorney general may assume responsibility for
prosecution of an action involving state and local government
funds.
(d) If the attorney general assumes primary responsibility
under Subsection (c), the prosecuting authority may enter an
appearance and appear as a party in the action.
(e) If the attorney general does not assume primary
responsibility under Subsection (c), the prosecuting authority
may assume responsibility for prosecution.
Sec. 2258.044 AWARD TO PRIVATE PARTY IF GOVERNMENT PROSECUTES
ACTION (a) If the attorney general or the prosecuting
authority assumes responsibility for prosecution of the action
under Subsection 2258.043, and the action is settled or the
court enters a judgment for the state or the local government,
the court shall award a reasonable portion of the settlement
or judgment to the person who commenced the action under this
subchapter.
(b) The court shall consider the value of evidence disclosed
by the person when determining the amount to award a person
under this section. 10% of the settlement or judgement is
considered reasonable.
Sec. 2258.045 AWARD TO PRIVATE PARTY IF GOVERNMENT DOES NOT
PROSECUTE ACTION (a) If the attorney general or the
prosecuting authority does not assume responsibility for
prosecution of the action under Subsection 2258.043, and the
action is settled or the court enters a judgment for the state
or the local government, the court shall award a reasonable
portion of the settlement or judgment to the person who
prosecuted the action under this subchapter.
(b) The court shall consider the value of the person's
prosecution of the action when determining the amount to award
a person under this section. 25% of the settlement or
judgement is considered reasonable.
(c) Court may also award expenses to the person who prosecuted
the action.
SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
Sec. 2258.051 RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE IN
ACTION establishes that a person is entitled to disclose
information, assist in investigation, and testify at the
request of the attorney general.
Sec. 2258.052 PROHIBITED CONDUCT BY EMPLOYER establishes
prohibited conduct of employers. Also establishes liability
for violators.
SECTION 2. Effective date: September 1, 1995. Makes application
of this act prospective.
SECTION 3. Emergency Clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
C.S.H.B. 2748 includes Subchapter E. Private Cause of Action not
included in original bill. Sec. 2258.041 allows for a private
person to bring a civil action in district court for a violation of
this statute on behalf of the state,local government or both as
appropriate. This subchapter also allows for a private party to be
awarded portion of a settlement or judgement for commencing an
action under this subchapter.
SUMMARY OF COMMITTEE ACTION
Pursuant to posting of public notice, the Committee on State
Affairs convened in a public hearing on April 24, 1995 to consider
HB 2748. The Chair laid out HB 2748 and recognized Rep. Alvarado
to explain the bill. Rep. S. Turner laid out a complete committee
substitute which was not adopted. The following person testified
for the bill: Richard Levy representing TX AFL-CIO. The following
person testified neutrally on the bill: Carey Smith representing
himself. The Chair recognized Rep. Alvarado to close. The Chair
left HB 2748 pending. In a public hearing on April 27, 1995, the
Chair laid out HB 2748. Rep. S. Turner laid out a complete
committee substitute which was adopted without objection. The bill
was reported favorably as substituted with the recommendation that
it do pass and be printed by a record vote of 14 ayes, 0 nays, 1
pnv, 0 absent.