By Hirschi H.B. No. 1469
74R3305 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to false claims made with certain state governmental
1-3 entities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle F, Title 10, Government Code, is
1-6 amended by adding Chapter 2258 to read as follows:
1-7 CHAPTER 2258. FALSE CLAIMS
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 2258.001. DEFINITIONS. In this chapter:
1-10 (1) "Claim" means a claim for money, property, or
1-11 services made to:
1-12 (A) an employee, officer, or agent of a
1-13 governmental entity; or
1-14 (B) a government contractor, if a portion of the
1-15 money, property, or services claimed was or is to be provided by a
1-16 governmental entity.
1-17 (2) "Government contractor" means a person who
1-18 receives money from a governmental entity to provide goods or a
1-19 service, acting within the course and scope of the person's
1-20 obligation to the governmental entity. The term includes a
1-21 contractor, grantee, or other recipient of money without regard to
1-22 whether the contractor, grantee, or recipient is under contract to
1-23 the governmental entity.
1-24 (3) "Governmental entity" means:
2-1 (A) the state;
2-2 (B) a board, commission, department, office, or
2-3 other agency in the executive branch of state government, including
2-4 an institution of higher education as defined by Section 61.003,
2-5 Education Code;
2-6 (C) the legislature or a legislative agency; or
2-7 (D) the supreme court, the court of criminal
2-8 appeals, a court of appeals, or the State Bar of Texas or another
2-9 judicial agency having statewide jurisdiction.
2-10 (4) "Managing official" means an appointed or elected
2-11 official responsible for the management or oversight of a
2-12 governmental entity. In the case of the legislature, the term
2-13 means the speaker of the house of representatives or the lieutenant
2-14 governor. In the case of a court, the term means any judge or
2-15 justice of the court.
2-16 Sec. 2258.002. PROHIBITED ACTS. A person may not:
2-17 (1) present to an officer, employee, or agent of a
2-18 governmental entity or government contractor a false claim for
2-19 payment or approval;
2-20 (2) make or use a false record or statement to obtain
2-21 payment or approval of a false claim by a governmental entity or
2-22 government contractor;
2-23 (3) conspire to defraud a governmental entity or
2-24 government contractor by obtaining the payment or approval of a
2-25 false claim;
2-26 (4) deliver to a governmental entity or government
2-27 contractor less property than the amount of property for which the
3-1 person receives a receipt;
3-2 (5) make or deliver a receipt that falsely represents
3-3 the amount of property delivered that is to be used by a
3-4 governmental entity or government contractor;
3-5 (6) buy or accept as a pledge of an obligation or debt
3-6 public property from a person who may not sell or pledge the
3-7 property;
3-8 (7) make or use a false record or statement to
3-9 conceal, avoid, or decrease an obligation to pay or transmit money
3-10 or property to a governmental entity or government contractor; or
3-11 (8) cause an act described by Subdivisions (1) through
3-12 (7) to be committed by another person.
3-13 (Sections 2258.003-2258.010 reserved for expansion
3-14 SUBCHAPTER B. LIABILITY FOR VIOLATIONS
3-15 Sec. 2258.011. LIABILITY FOR KNOWING VIOLATION. (a) A
3-16 court that finds that a person knowingly violated Section 2258.002
3-17 shall award the affected governmental entity:
3-18 (1) the actual damages sustained by the governmental
3-19 entity because of the violation;
3-20 (2) exemplary damages equal to two times the amount of
3-21 actual damages; and
3-22 (3) reasonable expenses, attorney's fees, and costs
3-23 incurred by the governmental entity to recover the damages and
3-24 penalty.
3-25 (b) The court may reduce the amount of exemplary damages
3-26 awarded under Subsection (a)(2) to an amount not less than the
3-27 amount of actual damages if the person who knowingly violated
4-1 Section 2258.002:
4-2 (1) furnished an official of the governmental entity
4-3 responsible for investigating false claims violations with all
4-4 information known to the person about the violation not later than
4-5 the 30th day after the official requested the information; and
4-6 (2) otherwise fully cooperated with any investigation
4-7 by the governmental entity.
4-8 (c) A person knowingly violates Section 2258.002 if the
4-9 person:
4-10 (1) acts with actual knowledge of the facts that
4-11 constitute the violation; or
4-12 (2) acts in deliberate ignorance or reckless disregard
4-13 of those facts or the truth or falsity of those facts.
4-14 Sec. 2258.012. CIVIL PENALTY. In addition to amounts
4-15 awarded under Section 2258.011, the court shall award to the
4-16 affected governmental entity a civil penalty of at least $5,000 but
4-17 not more than $10,000 for each false claim unless the person who
4-18 knowingly violated Section 2258.002 cooperated in the investigation
4-19 as described by Sections 2258.011(b)(1) and (2).
4-20 Sec. 2258.013. LIABILITY JOINT AND SEVERAL. Liability under
4-21 this subchapter is joint and several for a violation committed by
4-22 more than one person.
4-23 Sec. 2258.014. DEPOSIT OF MONEY. Money collected on behalf
4-24 of a governmental entity shall be deposited to the credit of the
4-25 general revenue fund.
4-26 (Sections 2258.015-2258.020 reserved for expansion
4-27 SUBCHAPTER C. ATTORNEY GENERAL ACTION
5-1 Sec. 2258.021. ATTORNEY GENERAL INVESTIGATION. (a) The
5-2 attorney general shall investigate alleged violations of Section
5-3 2258.002.
5-4 (b) If the attorney general finds that a person has violated
5-5 Section 2258.002, the attorney general may bring an action under
5-6 Subchapter B against the person.
5-7 (Sections 2258.022-2258.030 reserved for expansion
5-8 SUBCHAPTER D. ACTION BY PRIVATE PERSON
5-9 Sec. 2258.031. PRIVATE CAUSE OF ACTION. A person may bring
5-10 an action for a violation of Section 2258.002 on behalf of the
5-11 person and the state.
5-12 Sec. 2258.032. COMPLAINT; SERVICE ON ATTORNEY GENERAL. (a)
5-13 A complaint filed under Section 2258.031 shall be filed in camera
5-14 and shall remain under seal until the day after the last day the
5-15 attorney general may intervene under Section 2258.033 or 2258.034.
5-16 (b) A copy of the complaint, with a written disclosure of
5-17 substantially all material evidence in the possession of the
5-18 plaintiff, shall be served on the attorney general not later than
5-19 the fifth day after the date the complaint is filed.
5-20 (c) Citation may not be served on the defendant except on
5-21 order of the court.
5-22 Sec. 2258.033. INTERVENTION BY ATTORNEY GENERAL. (a) Not
5-23 later than the 60th day after the date the attorney general
5-24 receives the complaint and the written disclosure of the evidence
5-25 under Section 2258.032(b), the attorney general shall notify the
5-26 court and the plaintiff:
5-27 (1) that the attorney general will conduct the action
6-1 in the name of the state; or
6-2 (2) that the attorney general declines to conduct the
6-3 action.
6-4 (b) If the attorney general notifies the court that the
6-5 attorney general will conduct the action, the attorney general
6-6 shall assume primary responsibility for conducting the action. If
6-7 the attorney general declines to conduct the action, the plaintiff
6-8 may continue to conduct the action.
6-9 (c) On motion of the attorney general for good cause shown,
6-10 the attorney general may intervene in an action under this
6-11 subchapter at any time. Intervention under this subsection does
6-12 not limit the right of the private plaintiff to conduct the action.
6-13 (d) A person other than the attorney general may not
6-14 intervene in an action brought under this subchapter.
6-15 Sec. 2258.034. EXTENSIONS OF TIME. On motion of the
6-16 attorney general, for good cause shown, the court may extend the
6-17 period during which the complaint remains under seal under this
6-18 subchapter. A motion made under this section, and any affidavit
6-19 supporting the motion, must be filed in camera.
6-20 Sec. 2258.035. DISMISSAL; SETTLEMENT. (a) An action
6-21 conducted by a private person under Section 2258.031 may be
6-22 dismissed at the request of the parties only on order of the court.
6-23 The court may not dismiss an action under this section unless the
6-24 written consent of the attorney general, stating the attorney
6-25 general's reasons for consenting, has been filed with the court.
6-26 (b) An action conducted by the attorney general may be
6-27 dismissed only after notice to the private plaintiff and the
7-1 private plaintiff has been provided an opportunity for a hearing.
7-2 (c) The attorney general may settle an action under this
7-3 chapter, without regard to the objection of the private plaintiff,
7-4 if the court determines, after hearing, that the settlement is
7-5 fair, adequate, and reasonable under the circumstances. On a
7-6 showing of good cause, a hearing under this subsection may be held
7-7 in camera.
7-8 Sec. 2258.036. PARTICIPATION OF PRIVATE PLAINTIFF. (a) The
7-9 court may limit the participation of a private plaintiff in an
7-10 action conducted by the attorney general if:
7-11 (1) the attorney general establishes that the private
7-12 plaintiff's participation would:
7-13 (A) interfere with or unduly delay the attorney
7-14 general's prosecution of the action; or
7-15 (B) be repetitious, irrelevant, or for the
7-16 purpose of harassment; or
7-17 (2) the defendant establishes that the private
7-18 plaintiff's participation would be for the purpose of harassment or
7-19 would result in an undue burden on or unnecessary expense to the
7-20 defendant.
7-21 (b) The court may limit the participation of a private
7-22 plaintiff under this section in any appropriate manner, including:
7-23 (1) limiting the number of witnesses the private
7-24 plaintiff may call;
7-25 (2) limiting the length of testimony of the private
7-26 plaintiff's witnesses; or
7-27 (3) limiting the private plaintiff's cross-examination
8-1 of a witness.
8-2 Sec. 2258.037. ACTION CONDUCTED BY PRIVATE PLAINTIFF;
8-3 PROVISION OF DOCUMENTS TO ATTORNEY GENERAL. In an action conducted
8-4 by a private plaintiff, the plaintiff shall, at the request of the
8-5 attorney general, serve the attorney general with all pleadings
8-6 filed in the action and provide the attorney general, at the
8-7 attorney general's expense, with copies of deposition transcripts.
8-8 Sec. 2258.038. SUSPENSION OF DISCOVERY. (a) On motion of
8-9 the attorney general, the court may stay discovery in an action
8-10 under this subchapter if the attorney general demonstrates that
8-11 discovery conducted by the private plaintiff would interfere with
8-12 the investigation or prosecution of a criminal or civil matter
8-13 arising out of the same facts.
8-14 (b) Suspension of discovery under this section may not
8-15 exceed 60 days, except that the court may extend the suspension if
8-16 the attorney general demonstrates that:
8-17 (1) the state has pursued the investigation or
8-18 prosecution with reasonable diligence; and
8-19 (2) discovery conducted by the private plaintiff would
8-20 interfere with the investigation or prosecution.
8-21 (c) A motion made under this section shall be filed in
8-22 camera, and any hearing under this section must be held in camera.
8-23 Sec. 2258.039. ALTERNATE REMEDY. (a) The state may elect
8-24 to pursue an alternate remedy to a violation of Section 2258.002,
8-25 including an administrative proceeding to obtain a civil penalty
8-26 under another applicable law.
8-27 (b) If an alternate civil remedy is pursued, the private
9-1 plaintiff may participate in that proceeding to the same extent and
9-2 subject to the same limitations as a plaintiff in an action
9-3 conducted by the attorney general under this subchapter.
9-4 Sec. 2258.040. AWARD TO PRIVATE PLAINTIFF IF ATTORNEY
9-5 GENERAL ASSUMES RESPONSIBILITY FOR ACTION. (a) Except as provided
9-6 by Subsection (b), in an action for which the attorney general
9-7 assumes primary responsibility, the court shall award the private
9-8 plaintiff a portion of the recovery, including any recovery
9-9 obtained by settlement, equal to at least 15 percent but not more
9-10 than 25 percent of the recovery. In making the award, the court
9-11 shall consider the extent to which the private plaintiff
9-12 substantially contributed to the prosecution of the action.
9-13 (b) The court's award to the private plaintiff may not
9-14 exceed 10 percent of the recovery if the court finds that the
9-15 action is based primarily on disclosure of specific information,
9-16 other than information for which the private plaintiff is the
9-17 original source under Section 2258.044, in:
9-18 (1) a criminal, civil, or administrative proceeding;
9-19 (2) a governmental report or audit; or
9-20 (3) a report published by a private entity.
9-21 (c) The court shall also award to the private plaintiff
9-22 reasonable expenses, attorney's fees, and costs. This award shall
9-23 be paid by the defendant.
9-24 Sec. 2258.041. AWARD IN ACTION CONDUCTED BY PRIVATE
9-25 PLAINTIFF. (a) In an action in which the attorney general does
9-26 not assume primary responsibility under this subchapter, the court
9-27 shall award the private plaintiff a portion of the recovery,
10-1 including any recovery obtained by settlement, equal to at least 25
10-2 percent but not more than 30 percent of the recovery to compensate
10-3 the plaintiff for conducting the action.
10-4 (b) The court shall also award to the private plaintiff
10-5 reasonable expenses, attorney's fees, and costs. This award shall
10-6 be paid by the defendant.
10-7 Sec. 2258.042. REDUCTION IN PAYMENT TO PRIVATE PLAINTIFF.
10-8 (a) The court may reduce the amount paid to a private plaintiff
10-9 under Section 2258.040 or 2258.041 if the court finds that the
10-10 private plaintiff planned or initiated the violation of Section
10-11 2258.002.
10-12 (b) In making a reduction under this section, the court
10-13 shall consider the role of the private plaintiff in advancing the
10-14 action and any relevant circumstance relating to the violation.
10-15 (c) If the private plaintiff is convicted of an offense in
10-16 connection with activity that is a violation of Section 2258.002,
10-17 the private plaintiff may not recover under this subchapter and may
10-18 be dismissed from the action on motion of any party.
10-19 Sec. 2258.043. FRIVOLOUS ACTIONS; ATTORNEY'S FEES. (a) In
10-20 an action in which the attorney general does not assume primary
10-21 responsibility under this subchapter, the court shall award
10-22 reasonable expenses, attorney's fees, and costs to the defendant
10-23 if:
10-24 (1) the defendant prevails in the action; and
10-25 (2) the court finds that the action was:
10-26 (A) groundless and brought in bad faith; or
10-27 (B) groundless and brought for the purpose of
11-1 harassment.
11-2 (b) The private plaintiff shall pay an award made under this
11-3 section.
11-4 (c) In this section, "groundless" means:
11-5 (1) having no basis in fact; or
11-6 (2) not warranted by existing law or a good faith
11-7 argument for the extension, modification, or reversal of existing
11-8 law.
11-9 Sec. 2258.044. CERTAIN ACTIONS BARRED. (a) A private
11-10 plaintiff may not bring an action against a managing official under
11-11 this subchapter if the action is based on information known to the
11-12 attorney general or another government official with authority to
11-13 investigate the matter at the time the action is brought.
11-14 (b) A private plaintiff may not bring an action under this
11-15 subchapter if the subject matter of the action is the subject of a
11-16 civil, administrative, or criminal action previously brought in the
11-17 name of the state.
11-18 (c) A private plaintiff may not bring an action under this
11-19 subchapter if the action is based solely on disclosures of specific
11-20 information, other than information for which the private plaintiff
11-21 is the original source, in:
11-22 (1) a criminal, civil, or administrative proceeding;
11-23 (2) a governmental report or audit; or
11-24 (3) a report published by a private entity.
11-25 (d) For purposes of Subsection (c), a person is the original
11-26 source of information if the person has direct and independent
11-27 knowledge of the information and has voluntarily provided the
12-1 information to the attorney general or another appropriate
12-2 government official before filing an action under this subchapter.
12-3 Sec. 2258.045. STATE NOT LIABLE FOR EXPENSES. The state is
12-4 not liable for and may not pay a private plaintiff's expenses
12-5 incurred in bringing an action under this subchapter.
12-6 (Sections 2258.046-2258.060 reserved for expansion
12-7 SUBCHAPTER E. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
12-8 Sec. 2258.061. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE
12-9 IN ACTION. A person is entitled to:
12-10 (1) disclose information relevant to an alleged
12-11 violation of Section 2258.002 to a governmental entity, the
12-12 attorney general, or a law enforcement agency; or
12-13 (2) testify or otherwise participate in the
12-14 furtherance of an action filed or to be filed under this chapter.
12-15 Sec. 2258.062. PROHIBITED CONDUCT BY EMPLOYER. (a) An
12-16 employer may not:
12-17 (1) adopt or enforce a rule or policy that prevents an
12-18 employee from exercising the employee's rights under Section
12-19 2258.061; or
12-20 (2) discriminate against an employee, including
12-21 discharging, demoting, suspending, threatening, harassing, or
12-22 denying promotion to the employee, because the employee has
12-23 exercised the employee's rights under Section 2258.061.
12-24 (b) An employer who violates Subsection (a) is liable to the
12-25 employee for:
12-26 (1) actual damages, including damages for lost wages;
12-27 (2) reinstatement to employment with the seniority
13-1 status, if applicable, that the employee would have had in the
13-2 absence of the discrimination;
13-3 (3) exemplary damages equal to not less than two times
13-4 the amount of lost wages; and
13-5 (4) reasonable expenses, attorney's fees, and costs.
13-6 SECTION 2. This Act takes effect September 1, 1995, and
13-7 applies only to conduct that occurs on or after that date. Conduct
13-8 that occurred before the effective date of this Act is governed by
13-9 the law applicable to the conduct immediately before the effective
13-10 date of this Act, and that law is continued in effect for that
13-11 purpose.
13-12 SECTION 3. The importance of this legislation and the
13-13 crowded condition of the calendars in both houses create an
13-14 emergency and an imperative public necessity that the
13-15 constitutional rule requiring bills to be read on three several
13-16 days in each house be suspended, and this rule is hereby suspended.