LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                           May 3, 1995



 TO:     Honorable Curtis Seidlits, Chair       IN RE: Committee Substitute
         Committee on State Affairs                           forHouse Bill
         House of Representatives               No. 2748
         Austin, Texas                                  By: Alvarado








FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
2748 (relating to false claims made with certain governmental
entities) this office has determined the following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.

The bill would add a new Subchapter E, Private Cause of Action. 
In addition, the bill would add Section 2258 to the Government
Code prohibiting a person from presenting to a governmental
entity or a governmental contractor a false claim for payment or
approval.   The bill defines "claim" as a claim for money,
property or service made to a governmental entity or a government
contractor.  The Office of the Attorney General (OAG) would be
responsible for investigating and prosecuting charges of false
claims when state funds are involved.  Local prosecuting
authorities are responsible for investigating, filing and
conducting legal proceedings when local governmental funds are
involved.  The state may assume primary responsibility in actions
brought be a local prosecuting attorney when state funds are
involved.  It is expected that the bill would result in increased
investigations and litigation by the Office of the Attorney
General. 

Office of the Attorney General estimates indicate that 4
additional employees will be needed in order to comply with the
provisions of the bill, including 2 attorneys, 1 investigator and    




1 legal assistant.  The OAG estimates that the cost to general
revenue would be $276,313 in FY 1996 and $261,044 annually in FY 
1997-2000.

The bill provides for actual damages, exemplary damages,
attorney's fees and costs and a civil penalty of not more than
$10,000 for each false claim.  The civil penalty is waived if the
person who knowingly violated the list of "prohibited acts" in
Section 2258.0002 cooperated in the investigation.  The OAG and
Comptroller of Public Accounts cannot determine the amount of
estimated revenue to the state's general revenue fund from actual
and exemplary damages, reasonable expenses and civil penalties as
authorized by the bill.

Under the provisions of the bill, local prosecuting authorities
would be responsible for investigating, filing and conducting
legal proceedings when local government funds are involved in any
alleged false claim.


The fiscal implication to the State or units of local government
cannot be determined.


Source:   Office of the Attorney General
          LBB Staff: JK, DC, DF