LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 6, 1997 TO: Honorable Rodney Ellis, Chair IN RE: Senate Bill No. 1528 Committee on Jurisprudence By: Moncrief Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1528 ( Relating to false claims made with certain governmental entities; providing a civil penalty.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1528-As Introduced Implementing the provisions of the bill would result in a net negative impact of $(711,621) to General Revenue Related Funds through the biennium ending August 31, 1999. 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 amend the Government Code to prohibit the making of false claims for payment or approval to certain governmental entities or government contractors. The bill would also prohibit certain other actions (prohibited acts) that would defraud a governmental entity or government contractor. The bill would also permit private individuals to bring a civil action for a violation of the prohibited acts. A new "whistle blower" protection would be provided to employees disclosing information, assisting or testifying in an action, and employees would have a new cause of action against governmental employers for violation of these protections. The bill would require a court that finds a person knowingly committed a prohibited act to award the affected entity's actual damages, exemplary damages equal to two times the actual damages, and attorney's fees and costs. The court could also award the affected entity a civil penalty of not more than $10,000 for each false claim. Money collected on behalf of a governmental entity would be deposited to the credit of the general revenue fund or the local governmental entity. Fiscal Analysis The Attorney General would be required to investigate alleged violations of prohibited acts involving state funds, and local authorities would be required to investigate alleged violations involving local government funds. The bill would increase the workload of the Office of the Attorney General because of increased litigation and additional investigative responsibilities. Methodolgy The Attorney General would represent agencies with contracts that could be the subject of a false claim under the bill and would be involved in the investigation of such claims, which would require additional staff as follows: Assistant Attorney General III -- 1.5; Investigator I -- 1; Legal Assistant II -- 0.5; Legal Secretary I -- 0.5. The Attorney General would also incur expenditures for capital items. The Office of the Attorney General states that the "whistle blower" provisions in the bill are different from the standard whistle blower act (Chapter 554, Government Code) which could cause the state to have more monetary exposure. The state could be liable for damages with no monetary caps, as well as liable for punitive damages. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Change in Number Savings/(Cost) of State from General Employees from Revenue Fund FY 1997 0001 1998 ($361,825) 3.5 1998 (349,796) 3.5 2000 (349,796) 3.5 2001 (349,796) 3.5 2002 (349,796) 3.5 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 ($361,825) 1999 (349,796) 2000 (349,796) 2001 (349,796) 2002 (349,796) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Local governments through their prosecuting attorneys would have similar responsibilities as the Office of the Attorney General to investigate and file lawsuits on false claims. The bill would have a fiscal impact on local governments that do not currently undertake such actions. Local governments would also have the same potential monetary exposure with regard to whistle blower actions by employees. Source: Agencies: 302 Office of the Attorney General 303 General Services Commission 304 Comptroller of Public Accounts LBB Staff: JK ,BB ,JC