By: Moncrief S.B. No. 1528
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to false claims made with certain governmental entities;
1-2 providing a civil penalty.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-5 by adding Chapter 2259 to read as follows:
1-6 CHAPTER 2259. FALSE CLAIMS
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 2259.001. DEFINITIONS. In this chapter:
1-9 (1) "Claim" means a claim for money, property, or
1-10 services made to:
1-11 (A) an employee, officer, or agent of a
1-12 governmental entity; or
1-13 (B) a government contractor, if a portion of the
1-14 money, property, or services claimed was or is to be provided by a
1-15 governmental entity.
1-16 (2) "Government contractor" means a person who
1-17 receives money from a governmental entity to provide goods or a
1-18 service, acting within the course and scope of the person's
1-19 obligation to the governmental entity. The term includes a
1-20 contractor, grantee, or other recipient of money without regard to
1-21 whether the contractor, grantee, or recipient is under contract to
2-1 the governmental entity.
2-2 (3) "Governmental entity" means:
2-3 (A) the state;
2-4 (B) a local governmental entity;
2-5 (C) a board, commission, department, office, or
2-6 other agency in the executive branch of state government, including
2-7 an institution of higher education as defined by Section 61.003,
2-8 Education Code;
2-9 (D) the legislature or a legislative agency; or
2-10 (E) the supreme court, the court of criminal
2-11 appeals, a court of appeals, or the State Bar of Texas or another
2-12 judicial agency having statewide jurisdiction.
2-13 (4) "Local governmental entity" means:
2-14 (A) a municipality, county, public school
2-15 district, or special-purpose district or authority; or
2-16 (B) a court that receives any part of its
2-17 funding from a municipality or county.
2-18 (5) "Managing official" means an appointed or elected
2-19 official responsible for the management or oversight of a
2-20 governmental entity. In the case of the legislature, the term
2-21 means the speaker of the house of representatives or the lieutenant
2-22 governor. In the case of a court, the term means any judge or
2-23 justice of the court.
2-24 (6) "Prosecuting authority" means the attorney for a
2-25 local governmental entity or another local government official
3-1 charged with investigating, filing, and conducting civil legal
3-2 proceedings on behalf of a local governmental entity.
3-3 Sec. 2259.002. PROHIBITED ACTS. A person may not:
3-4 (1) present to an officer, employee, or agent of a
3-5 governmental entity or government contractor a false claim for
3-6 payment or approval;
3-7 (2) make or use a false record or statement to obtain
3-8 payment or approval of a false claim by a governmental entity or
3-9 government contractor;
3-10 (3) conspire to defraud a governmental entity or
3-11 government contractor by obtaining the payment or approval of a
3-12 false claim;
3-13 (4) deliver to a governmental entity or government
3-14 contractor less property than the amount of property for which the
3-15 person receives a receipt;
3-16 (5) make or deliver a receipt that falsely represents
3-17 the amount of property delivered that is to be used by a
3-18 governmental entity or government contractor;
3-19 (6) buy or accept as a pledge of an obligation or debt
3-20 public property from a person who may not sell or pledge the
3-21 property;
3-22 (7) make or use a false record or statement to
3-23 conceal, avoid, or decrease an obligation to pay or transmit money
3-24 or property to a governmental entity or government contractor;
3-25 (8) accept the benefits from a false claim made by any
4-1 person; or
4-2 (9) cause an act described by Subdivisions (1) through
4-3 (8) to be committed by another person.
4-4 (Sections 2259.003-2259.010 reserved for expansion
4-5 SUBCHAPTER B. LIABILITY FOR VIOLATIONS
4-6 Sec. 2259.011. LIABILITY FOR KNOWING VIOLATION. (a) A
4-7 court that finds that a person knowingly violated Section 2259.002
4-8 shall award the affected governmental entity:
4-9 (1) the actual damages sustained by the governmental
4-10 entity because of the violation;
4-11 (2) exemplary damages equal to two times the amount of
4-12 actual damages; and
4-13 (3) attorney's fees and costs incurred by the
4-14 governmental entity to recover the damages and penalty.
4-15 (b) The court may reduce the amount of exemplary damages
4-16 awarded under Subsection (a)(2) to an amount not less than the
4-17 amount of actual damages if the person who knowingly violated
4-18 Section 2259.002:
4-19 (1) furnished an official of the governmental entity
4-20 responsible for investigating false claims violations with all
4-21 information known to the person about the violation not later than
4-22 the 30th day after the official requested the information; and
4-23 (2) otherwise fully cooperated with any investigation
4-24 by the governmental entity.
4-25 (c) A person knowingly violates Section 2259.002 if the
5-1 person:
5-2 (1) acts with actual knowledge of the facts that
5-3 constitute the violation;
5-4 (2) acts in deliberate ignorance or reckless disregard
5-5 of those facts or the truth or falsity of those facts; or
5-6 (3) acts without actual knowledge of the facts that
5-7 constitute the violation and, after the violation, learns the facts
5-8 that constitute the violation and fails to take action to mitigate
5-9 or rectify the violation.
5-10 Sec. 2259.012. CIVIL PENALTY. In addition to amounts
5-11 awarded under Section 2259.011, the court may award to the affected
5-12 governmental entity a civil penalty of not more than $10,000 for
5-13 each false claim unless the person who knowingly violated Section
5-14 2259.002 cooperated in the investigation as described by Sections
5-15 2259.011(b)(1) and (2).
5-16 Sec. 2259.013. LIABILITY JOINT AND SEVERAL; PROPORTIONATE
5-17 RESPONSIBILITY INAPPLICABLE. Liability under this subchapter is
5-18 joint and several for a violation committed by more than one
5-19 person. Chapter 33, Civil Practice and Remedies Code, does not
5-20 apply to an action brought under this chapter.
5-21 Sec. 2259.014. EXCEPTIONS. A court may not award exemplary
5-22 damages and attorney's fees and costs under Section 2259.011 or a
5-23 civil penalty under Section 2259.012 against a person if the total
5-24 actual damages resulting from all violations for which damages are
5-25 being assessed against the person in the case is less than $500.
6-1 Sec. 2259.015. DEPOSIT OF MONEY. (a) Money collected on
6-2 behalf of a governmental entity shall be deposited to the credit of
6-3 the general revenue fund of the state or of the local governmental
6-4 entity, as appropriate.
6-5 (b) If the action is brought in the names of both the state
6-6 and one or more local governmental entities, the court shall
6-7 apportion the award of damages, exemplary damages, and any civil
6-8 penalty among the state and those local entities on the basis of
6-9 the loss incurred. Attorney's fees and costs shall be awarded to
6-10 the entity that incurred the fees and costs.
6-11 Sec. 2259.016. LIMITATIONS. (a) Subject to Subsection (b),
6-12 an action under this subchapter must be brought not later than the
6-13 third anniversary of the date on which the violation was discovered
6-14 by:
6-15 (1) the attorney general or prosecuting authority; or
6-16 (2) a managing official of the affected governmental
6-17 entity, other than a managing official who participated in the
6-18 violation.
6-19 (b) An action under this subchapter may not be brought after
6-20 the 10th anniversary of the date on which the violation was
6-21 committed.
6-22 Sec. 2259.017. APPLICATION OF LAW GOVERNING EXEMPLARY
6-23 DAMAGES. Chapter 41, Civil Practice and Remedies Code, does not
6-24 apply to exemplary damages awarded under Section 2259.011 or to the
6-25 civil penalty awarded under Section 2259.012.
7-1 (Sections 2259.018-2259.020 reserved for expansion
7-2 SUBCHAPTER C. ATTORNEY GENERAL ACTION
7-3 Sec. 2259.021. ATTORNEY GENERAL INVESTIGATION. (a) The
7-4 attorney general shall investigate alleged violations of Section
7-5 2259.002 involving state funds.
7-6 (b) If the attorney general finds that a person has violated
7-7 Section 2259.002, the attorney general may bring an action under
7-8 Subchapter B against the person.
7-9 Sec. 2259.022. AFFECTED LOCAL GOVERNMENTAL ENTITY. (a) If
7-10 the attorney general brings an action under Subchapter B on a claim
7-11 that involves local government funds as well as state funds, the
7-12 attorney general shall provide a copy of the complaint to the
7-13 appropriate prosecuting authority.
7-14 (b) The attorney general shall mail the complaint to the
7-15 prosecuting authority by certified mail, return receipt requested,
7-16 not later than the date on which the complaint is filed.
7-17 (c) The prosecuting authority may intervene in an action
7-18 brought by the attorney general under this subchapter not later
7-19 than the 60th day after the date the prosecuting authority receives
7-20 the copy of the complaint. The court may permit the prosecuting
7-21 authority to intervene after that date for good cause.
7-22 (Sections 2259.023-2259.030 reserved for expansion
7-23 SUBCHAPTER D. ACTION BROUGHT BY PROSECUTING AUTHORITY
7-24 Sec. 2259.031. PROSECUTING AUTHORITY INVESTIGATION. (a) A
7-25 prosecuting authority shall investigate alleged violations of
8-1 Section 2259.002 involving funds belonging to a local governmental
8-2 entity.
8-3 (b) If the prosecuting authority finds that a person has
8-4 violated Section 2259.002, the prosecuting authority may bring an
8-5 action under Subchapter B against the person.
8-6 Sec. 2259.032. ATTORNEY GENERAL. (a) If the prosecuting
8-7 authority brings an action under Subchapter B on a claim that
8-8 involves state funds as well as local government funds, the
8-9 prosecuting authority shall provide a copy of the complaint to the
8-10 attorney general.
8-11 (b) The prosecuting authority shall mail the complaint to
8-12 the attorney general by certified mail, return receipt requested,
8-13 not later than the date on which the complaint is filed.
8-14 (c) Not later than the 60th day after the date the attorney
8-15 general receives the copy of the complaint, the attorney general
8-16 shall:
8-17 (1) notify the court that the attorney general intends
8-18 to proceed with the action and assume primary responsibility for
8-19 conducting the action; or
8-20 (2) notify the court that the attorney general
8-21 declines to assume primary responsibility for conducting the
8-22 action.
8-23 (d) If the attorney general assumes primary responsibility
8-24 for conducting the action, the prosecuting authority may continue
8-25 as a party in the action. If the attorney general declines to
9-1 assume primary responsibility for conducting the action, the
9-2 prosecuting authority may continue to conduct the action.
9-3 (Sections 2259.033-2259.040 reserved for expansion
9-4 SUBCHAPTER E. PRIVATE CAUSE OF ACTION
9-5 Sec. 2259.041. PRIVATE ACTION. A person may bring a civil
9-6 action in a district court in this state for a violation of Section
9-7 2259.002 in the name of the person and the name of the state, the
9-8 name of a local government, or both the state and the local
9-9 government, as appropriate.
9-10 Sec. 2259.042. SERVICE OF PETITION. (a) A person who
9-11 brings an action under this subchapter shall serve a copy of the
9-12 petition in the action on:
9-13 (1) the attorney general, if the claim involves state
9-14 funds; and
9-15 (2) the prosecuting authority of the local government,
9-16 if the claim involves local government funds.
9-17 (b) Service under this section shall be made in the manner
9-18 provided by Rule 21a, Texas Rules of Civil Procedure.
9-19 Sec. 2259.043. INTERVENTION. (a) In an action involving
9-20 only state funds, the attorney general may assume responsibility
9-21 for prosecution of the action by entering an appearance not later
9-22 than the 60th day after the date the attorney general receives
9-23 service of the petition under Section 2259.042.
9-24 (b) In an action involving only local government funds, the
9-25 prosecuting authority may assume responsibility for prosecution of
10-1 the action by entering an appearance not later than the 60th day
10-2 after the date the prosecuting authority receives service of the
10-3 petition under Section 2259.042.
10-4 (c) In an action involving state and local government funds,
10-5 the attorney general may assume primary responsibility for
10-6 prosecution of the action by entering an appearance not later than
10-7 the 60th day after the date the attorney general receives service
10-8 of the petition under Section 2259.042.
10-9 (d) If the attorney general assumes primary responsibility
10-10 for prosecution of the action under Subsection (c), the prosecuting
10-11 authority may, not later than the 60th day after the date the
10-12 prosecuting authority receives service of the petition under
10-13 Section 2259.042, enter an appearance and proceed as a party in the
10-14 action.
10-15 (e) If the attorney general does not assume primary
10-16 responsibility for prosecution of the action under Subsection (c),
10-17 the prosecuting authority may assume responsibility for prosecution
10-18 of the action not later than the 30th day after the last date the
10-19 attorney general may enter an appearance under this section.
10-20 Sec. 2259.044. AWARD TO PRIVATE PARTY IF GOVERNMENT
10-21 PROSECUTES ACTION. (a) If the attorney general or the prosecuting
10-22 authority assumes responsibility for prosecution of the action
10-23 under Section 2259.043 and the action is settled or the court
10-24 enters a judgment for the state or the local government, the court
10-25 shall award a reasonable portion of the settlement or judgment to
11-1 the person who commenced the action under this subchapter.
11-2 (b) In determining the amount to award a person under this
11-3 section, the court shall consider the value of any information or
11-4 evidence disclosed by the person. An award of 10 percent of the
11-5 settlement or judgment is presumed to be reasonable.
11-6 Sec. 2259.045. AWARD TO PRIVATE PARTY IF GOVERNMENT DOES
11-7 NOT PROSECUTE ACTION. (a) If the attorney general or the
11-8 prosecuting authority does not assume responsibility for
11-9 prosecution of the action under Section 2259.043 and the action is
11-10 settled or the court enters a judgment for the state or the local
11-11 government, the court shall award to the person who prosecuted the
11-12 action under this subchapter:
11-13 (1) a reasonable portion of the settlement or
11-14 judgment; and
11-15 (2) reasonable expenses incurred by the person in
11-16 prosecuting the action.
11-17 (b) In determining the amount to award a person under
11-18 Subsection (a), the court shall consider the value of the person's
11-19 prosecution of the action. An award of 25 percent of the
11-20 settlement or judgment is presumed to be reasonable.
11-21 (Sections 2259.046-2259.050 reserved for expansion
11-22 SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
11-23 Sec. 2259.051. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE
11-24 IN ACTION. A person is entitled to:
11-25 (1) disclose information relevant to an alleged
12-1 violation of Section 2259.002 to a governmental entity, a
12-2 prosecuting authority, the attorney general, or a law enforcement
12-3 agency;
12-4 (2) assist, at the request of the attorney general or
12-5 a prosecuting authority, in the investigation of an alleged
12-6 violation of Section 2259.002; or
12-7 (3) testify or otherwise participate, at the request
12-8 of the attorney general or a prosecuting authority, in the
12-9 furtherance of an action filed or to be filed under this chapter.
12-10 Sec. 2259.052. PROHIBITED CONDUCT BY EMPLOYER. (a) An
12-11 employer may not:
12-12 (1) adopt or enforce a rule or policy that prevents an
12-13 employee from exercising the employee's rights under Section
12-14 2259.051; or
12-15 (2) discriminate against an employee, including
12-16 discharging, demoting, suspending, threatening, harassing, or
12-17 denying promotion to the employee, because the employee has
12-18 exercised the employee's rights under Section 2259.051.
12-19 (b) An employer who violates Subsection (a) is liable to the
12-20 employee for:
12-21 (1) actual damages, including damages for lost wages;
12-22 (2) reinstatement to employment with the seniority
12-23 status, if applicable, that the employee would have had in the
12-24 absence of the discrimination;
12-25 (3) exemplary damages equal to not less than two times
13-1 the amount of lost wages; and
13-2 (4) attorney's fees and costs.
13-3 (c) An employee may not recover under Subsection (b) unless:
13-4 (1) the employee exercised the employee's rights under
13-5 Section 2259.051; and
13-6 (2) to the extent the employee participated in the
13-7 violation of Section 2259.002, the employee participated in
13-8 response to harassment, threats of termination or demotion, or
13-9 other coercion by the employer.
13-10 SECTION 2. This Act takes effect September 1, 1997, and
13-11 applies only to an action commenced on or after that date without
13-12 regard to whether the act on which the action is based occurred
13-13 before, on, or after that date. An action commenced before the
13-14 effective date of this Act is governed by the law applicable to the
13-15 action immediately before the effective date of this Act, and that
13-16 law is continued in effect for that purpose.
13-17 SECTION 3. The importance of this legislation and the
13-18 crowded condition of the calendars in both houses create an
13-19 emergency and an imperative public necessity that the
13-20 constitutional rule requiring bills to be read on three several
13-21 days in each house be suspended, and this rule is hereby suspended.