By Maxey H.B. No. 703
75R2801 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to false claims made with certain governmental entities;
1-3 providing a civil penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-6 by adding Chapter 2259 to read as follows:
1-7 CHAPTER 2259. FALSE CLAIMS
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 2259.001. 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 local governmental entity;
2-3 (C) a board, commission, department, office, or
2-4 other agency in the executive branch of state government, including
2-5 an institution of higher education as defined by Section 61.003,
2-6 Education Code;
2-7 (D) the legislature or a legislative agency; or
2-8 (E) the supreme court, the court of criminal
2-9 appeals, a court of appeals, or the State Bar of Texas or another
2-10 judicial agency having statewide jurisdiction.
2-11 (4) "Local governmental entity" means:
2-12 (A) a municipality, county, public school
2-13 district, or special-purpose district or authority; or
2-14 (B) a court that receives any part of its
2-15 funding from a municipality or county.
2-16 (5) "Managing official" means an appointed or elected
2-17 official responsible for the management or oversight of a
2-18 governmental entity. In the case of the legislature, the term
2-19 means the speaker of the house of representatives or the lieutenant
2-20 governor. In the case of a court, the term means any judge or
2-21 justice of the court.
2-22 (6) "Prosecuting authority" means the attorney for a
2-23 local governmental entity or another local government official
2-24 charged with investigating, filing, and conducting civil legal
2-25 proceedings on behalf of a local governmental entity.
2-26 Sec. 2259.002. PROHIBITED ACTS. A person may not:
2-27 (1) present to an officer, employee, or agent of a
3-1 governmental entity or government contractor a false claim for
3-2 payment or approval;
3-3 (2) make or use a false record or statement to obtain
3-4 payment or approval of a false claim by a governmental entity or
3-5 government contractor;
3-6 (3) conspire to defraud a governmental entity or
3-7 government contractor by obtaining the payment or approval of a
3-8 false claim;
3-9 (4) deliver to a governmental entity or government
3-10 contractor less property than the amount of property for which the
3-11 person receives a receipt;
3-12 (5) make or deliver a receipt that falsely represents
3-13 the amount of property delivered that is to be used by a
3-14 governmental entity or government contractor;
3-15 (6) buy or accept as a pledge of an obligation or debt
3-16 public property from a person who may not sell or pledge the
3-17 property;
3-18 (7) make or use a false record or statement to
3-19 conceal, avoid, or decrease an obligation to pay or transmit money
3-20 or property to a governmental entity or government contractor;
3-21 (8) accept the benefits from a false claim made by any
3-22 person; or
3-23 (9) cause an act described by Subdivisions (1) through
3-24 (8) to be committed by another person.
3-25 (Sections 2259.003-2259.010 reserved for expansion
3-26 SUBCHAPTER B. LIABILITY FOR VIOLATIONS
3-27 Sec. 2259.011. LIABILITY FOR KNOWING VIOLATION. (a) A
4-1 court that finds that a person knowingly violated Section 2259.002
4-2 shall award the affected governmental entity:
4-3 (1) the actual damages sustained by the governmental
4-4 entity because of the violation;
4-5 (2) exemplary damages equal to two times the amount of
4-6 actual damages; and
4-7 (3) attorney's fees and costs incurred by the
4-8 governmental entity to recover the damages and penalty.
4-9 (b) The court may reduce the amount of exemplary damages
4-10 awarded under Subsection (a)(2) to an amount not less than the
4-11 amount of actual damages if the person who knowingly violated
4-12 Section 2259.002:
4-13 (1) furnished an official of the governmental entity
4-14 responsible for investigating false claims violations with all
4-15 information known to the person about the violation not later than
4-16 the 30th day after the official requested the information; and
4-17 (2) otherwise fully cooperated with any investigation
4-18 by the governmental entity.
4-19 (c) A person knowingly violates Section 2259.002 if the
4-20 person:
4-21 (1) acts with actual knowledge of the facts that
4-22 constitute the violation;
4-23 (2) acts in deliberate ignorance or reckless disregard
4-24 of those facts or the truth or falsity of those facts; or
4-25 (3) acts without actual knowledge of the facts that
4-26 constitute the violation and, after the violation, learns the facts
4-27 that constitute the violation and fails to take action to mitigate
5-1 or rectify the violation.
5-2 Sec. 2259.012. CIVIL PENALTY. In addition to amounts
5-3 awarded under Section 2259.011, the court may award to the affected
5-4 governmental entity a civil penalty of not more than $10,000 for
5-5 each false claim unless the person who knowingly violated Section
5-6 2259.002 cooperated in the investigation as described by Sections
5-7 2259.011(b)(1) and (2).
5-8 Sec. 2259.013. LIABILITY JOINT AND SEVERAL; PROPORTIONATE
5-9 RESPONSIBILITY INAPPLICABLE. Liability under this subchapter is
5-10 joint and several for a violation committed by more than one
5-11 person. Chapter 33, Civil Practice and Remedies Code, does not
5-12 apply to an action brought under this chapter.
5-13 Sec. 2259.014. EXCEPTIONS. A court may not award exemplary
5-14 damages and attorney's fees and costs under Section 2259.011 or a
5-15 civil penalty under Section 2259.012 against a person if the total
5-16 actual damages resulting from all violations for which damages are
5-17 being assessed against the person in the case is less than $500.
5-18 Sec. 2259.015. DEPOSIT OF MONEY. (a) Money collected on
5-19 behalf of a governmental entity shall be deposited to the credit of
5-20 the general revenue fund of the state or of the local governmental
5-21 entity, as appropriate.
5-22 (b) If the action is brought in the names of both the state
5-23 and one or more local governmental entities, the court shall
5-24 apportion the award of damages, exemplary damages, and any civil
5-25 penalty among the state and those local entities on the basis of
5-26 the loss incurred. Attorney's fees and costs shall be awarded to
5-27 the entity that incurred the fees and costs.
6-1 Sec. 2259.016. LIMITATIONS. (a) Subject to Subsection (b),
6-2 an action under this subchapter must be brought not later than the
6-3 third anniversary of the date on which the violation was discovered
6-4 by:
6-5 (1) the attorney general or prosecuting authority; or
6-6 (2) a managing official of the affected governmental
6-7 entity, other than a managing official who participated in the
6-8 violation.
6-9 (b) An action under this subchapter may not be brought after
6-10 the 10th anniversary of the date on which the violation was
6-11 committed.
6-12 Sec. 2259.017. APPLICATION OF LAW GOVERNING EXEMPLARY
6-13 DAMAGES. Chapter 41, Civil Practice and Remedies Code, does not
6-14 apply to exemplary damages awarded under Section 2259.011 or to the
6-15 civil penalty awarded under Section 2259.012.
6-16 (Sections 2259.018-2259.020 reserved for expansion
6-17 SUBCHAPTER C. ATTORNEY GENERAL ACTION
6-18 Sec. 2259.021. ATTORNEY GENERAL INVESTIGATION. (a) The
6-19 attorney general shall investigate alleged violations of Section
6-20 2259.002 involving state funds.
6-21 (b) If the attorney general finds that a person has violated
6-22 Section 2259.002, the attorney general may bring an action under
6-23 Subchapter B against the person.
6-24 Sec. 2259.022. AFFECTED LOCAL GOVERNMENTAL ENTITY. (a) If
6-25 the attorney general brings an action under Subchapter B on a claim
6-26 that involves local government funds as well as state funds, the
6-27 attorney general shall provide a copy of the complaint to the
7-1 appropriate prosecuting authority.
7-2 (b) The attorney general shall mail the complaint to the
7-3 prosecuting authority by certified mail, return receipt requested,
7-4 not later than the date on which the complaint is filed.
7-5 (c) The prosecuting authority may intervene in an action
7-6 brought by the attorney general under this subchapter not later
7-7 than the 60th day after the date the prosecuting authority receives
7-8 the copy of the complaint. The court may permit the prosecuting
7-9 authority to intervene after that date for good cause.
7-10 (Sections 2259.023-2259.030 reserved for expansion
7-11 SUBCHAPTER D. ACTION BROUGHT BY PROSECUTING AUTHORITY
7-12 Sec. 2259.031. PROSECUTING AUTHORITY INVESTIGATION. (a) A
7-13 prosecuting authority shall investigate alleged violations of
7-14 Section 2259.002 involving funds belonging to a local governmental
7-15 entity.
7-16 (b) If the prosecuting authority finds that a person has
7-17 violated Section 2259.002, the prosecuting authority may bring an
7-18 action under Subchapter B against the person.
7-19 Sec. 2259.032. ATTORNEY GENERAL. (a) If the prosecuting
7-20 authority brings an action under Subchapter B on a claim that
7-21 involves state funds as well as local government funds, the
7-22 prosecuting authority shall provide a copy of the complaint to the
7-23 attorney general.
7-24 (b) The prosecuting authority shall mail the complaint to
7-25 the attorney general by certified mail, return receipt requested,
7-26 not later than the date on which the complaint is filed.
7-27 (c) Not later than the 60th day after the date the attorney
8-1 general receives the copy of the complaint, the attorney general
8-2 shall:
8-3 (1) notify the court that the attorney general intends
8-4 to proceed with the action and assume primary responsibility for
8-5 conducting the action; or
8-6 (2) notify the court that the attorney general
8-7 declines to assume primary responsibility for conducting the
8-8 action.
8-9 (d) If the attorney general assumes primary responsibility
8-10 for conducting the action, the prosecuting authority may continue
8-11 as a party in the action. If the attorney general declines to
8-12 assume primary responsibility for conducting the action, the
8-13 prosecuting authority may continue to conduct the action.
8-14 (Sections 2259.033-2259.040 reserved for expansion
8-15 SUBCHAPTER E. PRIVATE CAUSE OF ACTION
8-16 Sec. 2259.041. PRIVATE ACTION. A person may bring a civil
8-17 action in a district court in this state for a violation of Section
8-18 2259.002 in the name of the person and the name of the state, the
8-19 name of a local government, or both the state and the local
8-20 government, as appropriate.
8-21 Sec. 2259.042. SERVICE OF PETITION. (a) A person who
8-22 brings an action under this subchapter shall serve a copy of the
8-23 petition in the action on:
8-24 (1) the attorney general, if the claim involves state
8-25 funds; and
8-26 (2) the prosecuting authority of the local government,
8-27 if the claim involves local government funds.
9-1 (b) Service under this section shall be made in the manner
9-2 provided by Rule 21a, Texas Rules of Civil Procedure.
9-3 Sec. 2259.043. INTERVENTION. (a) In an action involving
9-4 only state funds, the attorney general may assume responsibility
9-5 for prosecution of the action by entering an appearance not later
9-6 than the 60th day after the date the attorney general receives
9-7 service of the petition under Section 2259.042.
9-8 (b) In an action involving only local government funds, the
9-9 prosecuting authority may assume responsibility for prosecution of
9-10 the action by entering an appearance not later than the 60th day
9-11 after the date the prosecuting authority receives service of the
9-12 petition under Section 2259.042.
9-13 (c) In an action involving state and local government funds,
9-14 the attorney general may assume primary responsibility for
9-15 prosecution of the action by entering an appearance not later than
9-16 the 60th day after the date the attorney general receives service
9-17 of the petition under Section 2259.042.
9-18 (d) If the attorney general assumes primary responsibility
9-19 for prosecution of the action under Subsection (c), the prosecuting
9-20 authority may, not later than the 60th day after the date the
9-21 prosecuting authority receives service of the petition under
9-22 Section 2259.042, enter an appearance and proceed as a party in the
9-23 action.
9-24 (e) If the attorney general does not assume primary
9-25 responsibility for prosecution of the action under Subsection (c),
9-26 the prosecuting authority may assume responsibility for prosecution
9-27 of the action not later than the 30th day after the last date the
10-1 attorney general may enter an appearance under this section.
10-2 Sec. 2259.044. AWARD TO PRIVATE PARTY IF GOVERNMENT
10-3 PROSECUTES ACTION. (a) If the attorney general or the prosecuting
10-4 authority assumes responsibility for prosecution of the action
10-5 under Section 2259.043 and the action is settled or the court
10-6 enters a judgment for the state or the local government, the court
10-7 shall award a reasonable portion of the settlement or judgment to
10-8 the person who commenced the action under this subchapter.
10-9 (b) In determining the amount to award a person under this
10-10 section, the court shall consider the value of any information or
10-11 evidence disclosed by the person. An award of 10 percent of the
10-12 settlement or judgment is presumed to be reasonable.
10-13 Sec. 2259.045. AWARD TO PRIVATE PARTY IF GOVERNMENT DOES
10-14 NOT PROSECUTE ACTION. (a) If the attorney general or the
10-15 prosecuting authority does not assume responsibility for
10-16 prosecution of the action under Section 2259.043 and the action is
10-17 settled or the court enters a judgment for the state or the local
10-18 government, the court shall award to the person who prosecuted the
10-19 action under this subchapter:
10-20 (1) a reasonable portion of the settlement or
10-21 judgment; and
10-22 (2) reasonable expenses incurred by the person in
10-23 prosecuting the action.
10-24 (b) In determining the amount to award a person under
10-25 Subsection (a), the court shall consider the value of the person's
10-26 prosecution of the action. An award of 25 percent of the
10-27 settlement or judgment is presumed to be reasonable.
11-1 (Sections 2259.046-2259.050 reserved for expansion
11-2 SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
11-3 Sec. 2259.051. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE
11-4 IN ACTION. A person is entitled to:
11-5 (1) disclose information relevant to an alleged
11-6 violation of Section 2259.002 to a governmental entity, a
11-7 prosecuting authority, the attorney general, or a law enforcement
11-8 agency;
11-9 (2) assist, at the request of the attorney general or
11-10 a prosecuting authority, in the investigation of an alleged
11-11 violation of Section 2259.002; or
11-12 (3) testify or otherwise participate, at the request
11-13 of the attorney general or a prosecuting authority, in the
11-14 furtherance of an action filed or to be filed under this chapter.
11-15 Sec. 2259.052. PROHIBITED CONDUCT BY EMPLOYER. (a) An
11-16 employer may not:
11-17 (1) adopt or enforce a rule or policy that prevents an
11-18 employee from exercising the employee's rights under Section
11-19 2259.051; or
11-20 (2) discriminate against an employee, including
11-21 discharging, demoting, suspending, threatening, harassing, or
11-22 denying promotion to the employee, because the employee has
11-23 exercised the employee's rights under Section 2259.051.
11-24 (b) An employer who violates Subsection (a) is liable to the
11-25 employee for:
11-26 (1) actual damages, including damages for lost wages;
11-27 (2) reinstatement to employment with the seniority
12-1 status, if applicable, that the employee would have had in the
12-2 absence of the discrimination;
12-3 (3) exemplary damages equal to not less than two times
12-4 the amount of lost wages; and
12-5 (4) attorney's fees and costs.
12-6 (c) An employee may not recover under Subsection (b) unless:
12-7 (1) the employee exercised the employee's rights under
12-8 Section 2259.051; and
12-9 (2) to the extent the employee participated in the
12-10 violation of Section 2259.002, the employee participated in
12-11 response to harassment, threats of termination or demotion, or
12-12 other coercion by the employer.
12-13 SECTION 2. This Act takes effect September 1, 1997, and
12-14 applies only to conduct that occurs on or after that date. Conduct
12-15 that occurred before the effective date of this Act is governed by
12-16 the law applicable to the conduct immediately before the effective
12-17 date of this Act, and that law is continued in effect for that
12-18 purpose.
12-19 SECTION 3. The importance of this legislation and the
12-20 crowded condition of the calendars in both houses create an
12-21 emergency and an imperative public necessity that the
12-22 constitutional rule requiring bills to be read on three several
12-23 days in each house be suspended, and this rule is hereby suspended.