76R12018 DLF-F
By Alvarado H.B. No. 101
Substitute the following for H.B. No. 101:
By Alvarado C.S.H.B. No. 101
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to false claims made with certain governmental entities.
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. CIVIL REMEDIES FOR CERTAIN 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
1-22 the governmental entity.
1-23 (3) "Governmental entity" means:
1-24 (A) the state; or
2-1 (B) a local governmental entity.
2-2 (4) "Knowingly," with respect to information, means
2-3 that a person:
2-4 (A) has actual knowledge of the information; or
2-5 (B) acts in deliberate ignorance or reckless
2-6 disregard of the truth or falsity of the information.
2-7 (5) "Local governmental entity" means:
2-8 (A) a county; or
2-9 (B) a joint airport board.
2-10 (6) "Prosecuting authority" means the attorney charged
2-11 with investigating, filing, and conducting civil legal proceedings
2-12 on behalf of a local governmental entity.
2-13 (7) "Public employee" means an employee of a
2-14 governmental entity.
2-15 Sec. 2259.002. PROHIBITED ACTS. A person may not:
2-16 (1) knowingly present to an officer, employee, or
2-17 agent of a governmental entity or government contractor a false
2-18 claim for payment or approval;
2-19 (2) knowingly make or use a false record or statement
2-20 to obtain payment or approval of a false claim by a governmental
2-21 entity or government contractor;
2-22 (3) conspire to defraud a governmental entity or
2-23 government contractor by obtaining the payment or approval of a
2-24 false claim;
2-25 (4) knowingly deliver to a governmental entity or
2-26 government contractor less property than the amount of property for
2-27 which the person receives a receipt;
3-1 (5) knowingly make or deliver a receipt for property
3-2 used or to be used by a governmental entity or government
3-3 contractor that falsely represents the amount of property received;
3-4 (6) knowingly buy or accept as a pledge of an
3-5 obligation or debt public property from a person who may not sell
3-6 or pledge the property;
3-7 (7) knowingly make or use a false record or statement
3-8 to conceal, avoid, or decrease an obligation to pay or transmit
3-9 money or property to a governmental entity or government
3-10 contractor; or
3-11 (8) knowingly cause an act described by Subdivisions
3-12 (1)-(7) to be committed by another person.
3-13 Sec. 2259.003. SOVEREIGN IMMUNITY NOT WAIVED. This chapter
3-14 does not waive sovereign immunity.
3-15 (Sections 2259.004-2259.010 reserved for expansion
3-16 SUBCHAPTER B. LIABILITY FOR VIOLATIONS
3-17 Sec. 2259.011. LIABILITY FOR VIOLATION. (a) A court that
3-18 finds that a person violated Section 2259.002 shall award the
3-19 affected governmental entity:
3-20 (1) the actual damages sustained by the governmental
3-21 entity because of the violation;
3-22 (2) exemplary damages equal to two times the amount of
3-23 actual damages; and
3-24 (3) reasonable attorney's fees and costs incurred by
3-25 the governmental entity to recover the damages and penalty.
3-26 (b) The court may reduce the amount of exemplary damages
3-27 awarded under Subsection (a)(2) to an amount not less than the
4-1 amount of actual damages if the person who violated Section
4-2 2259.002:
4-3 (1) furnished an official of the governmental entity
4-4 responsible for investigating false claims violations with all
4-5 information known to the person about the violation not later than
4-6 the 30th day after the date on which the person obtained the
4-7 information; and
4-8 (2) otherwise fully cooperated with any investigation
4-9 by the governmental entity.
4-10 Sec. 2259.012. CIVIL PENALTY. In addition to amounts
4-11 awarded under Section 2259.011, the court may award to an affected
4-12 governmental entity a civil penalty of not more than $10,000 for
4-13 each false claim unless the person who violated Section 2259.002
4-14 cooperated in the investigation as described by Sections
4-15 2259.011(b)(1) and (2).
4-16 Sec. 2259.013. LIABILITY JOINT AND SEVERAL; PROPORTIONATE
4-17 RESPONSIBILITY INAPPLICABLE. Liability under this subchapter is
4-18 joint and several for a violation committed by more than one
4-19 person. Chapter 33, Civil Practice and Remedies Code, does not
4-20 apply to an action brought under this chapter.
4-21 Sec. 2259.014. EXCEPTIONS. (a) A court may not award
4-22 exemplary damages and attorney's fees and costs under Section
4-23 2259.011 or a civil penalty under Section 2259.012 against a person
4-24 if the total actual damages resulting from all violations for which
4-25 damages are being assessed against the person in the case is less
4-26 than $25,000.
4-27 (b) This chapter does not apply to a claim made under:
5-1 (1) a workers' compensation law of this state; or
5-2 (2) Chapter 36, Human Resources Code.
5-3 Sec. 2259.015. DEPOSIT OF MONEY. (a) Money collected on
5-4 behalf of a governmental entity shall be deposited to the general
5-5 revenue fund of the state or paid to the local governmental entity,
5-6 as appropriate.
5-7 (b) If the action is brought by or on behalf of both the
5-8 state and one or more local governmental entities, the court shall
5-9 apportion any award of damages, exemplary damages, and a civil
5-10 penalty among the affected governmental entities according to the
5-11 loss incurred by each affected entity and shall award each affected
5-12 entity the reasonable attorney's fees and costs incurred by the
5-13 entity.
5-14 Sec. 2259.016. LIMITATIONS. (a) A civil action under this
5-15 chapter may not be brought after the later of:
5-16 (1) the sixth anniversary of the date on which the
5-17 violation of Section 2259.002 was committed; or
5-18 (2) the third anniversary of the date on which facts
5-19 material to the right of action are known or reasonably should have
5-20 been known by the official of the governmental entity charged with
5-21 responsibility to act in the circumstances, subject to Subsection
5-22 (b).
5-23 (b) An action under this chapter may not be brought after
5-24 the 10th anniversary of the date on which the violation was
5-25 committed.
5-26 Sec. 2259.017. APPLICATION OF LAW GOVERNING EXEMPLARY
5-27 DAMAGES. Chapter 41, Civil Practice and Remedies Code, does not
6-1 apply to exemplary damages awarded under Section 2259.011 or to the
6-2 civil penalty awarded under Section 2259.012.
6-3 Sec. 2259.018. VENUE. (a) An action under this chapter
6-4 that is brought by or on behalf of only the state shall be brought:
6-5 (1) in Travis County;
6-6 (2) in a county in which the defendant resides or has
6-7 a place of business; or
6-8 (3) in a county in which all or part of the acts or
6-9 omissions giving rise to the cause of action occurred.
6-10 (b) An action under this chapter that is brought by or on
6-11 behalf of only a local governmental entity shall be brought in the
6-12 county in which that entity's seat of government is located.
6-13 (c) An action under this chapter that is brought by or on
6-14 behalf of both the state and one or more local governmental
6-15 entities shall be brought:
6-16 (1) in Travis County; or
6-17 (2) in a county in which a local governmental entity's
6-18 seat of government is located.
6-19 (d) If an action is initially brought by or on behalf of
6-20 only the state in a county of proper venue and a local governmental
6-21 entity intervenes or is otherwise subsequently joined as a
6-22 plaintiff, venue as to the claim of the local governmental entity
6-23 continues in the county in which the action was initially brought.
6-24 (Sections 2259.019-2259.050 reserved for expansion
6-25 SUBCHAPTER C. ATTORNEY GENERAL ACTION
6-26 Sec. 2259.051. ATTORNEY GENERAL INVESTIGATION. (a) The
6-27 attorney general shall investigate alleged violations of Section
7-1 2259.002 involving state funds.
7-2 (b) If the attorney general finds that a person has violated
7-3 Section 2259.002, the attorney general may bring an action under
7-4 Subchapter B against the person. The action must be brought in a
7-5 district court.
7-6 Sec. 2259.052. AFFECTED LOCAL GOVERNMENTAL ENTITY. (a) If
7-7 the attorney general brings an action under Subchapter B on a claim
7-8 that involves local government funds as well as state funds, the
7-9 attorney general shall provide a copy of the petition to the
7-10 appropriate prosecuting authority.
7-11 (b) The attorney general shall mail the petition to the
7-12 prosecuting authority by certified mail, return receipt requested,
7-13 not later than the date on which the petition is filed.
7-14 (c) The prosecuting authority may intervene in an action
7-15 brought by the attorney general under this subchapter not later
7-16 than the 60th day after the date on which the prosecuting authority
7-17 receives the copy of the petition. The court may permit the
7-18 prosecuting authority to intervene after that date for good cause.
7-19 (Sections 2259.053-2259.100 reserved for expansion
7-20 SUBCHAPTER D. ACTION BROUGHT BY PROSECUTING AUTHORITY
7-21 Sec. 2259.101. PROSECUTING AUTHORITY INVESTIGATION. (a)
7-22 The prosecuting authority shall investigate alleged violations of
7-23 Section 2259.002 involving funds belonging to a local governmental
7-24 entity.
7-25 (b) If the prosecuting authority finds that a person has
7-26 violated Section 2259.002, the prosecuting authority may bring an
7-27 action under Subchapter B against the person. The action must be
8-1 brought in a district court
8-2 Sec. 2259.102. ATTORNEY GENERAL. (a) If the prosecuting
8-3 authority brings an action under Subchapter B on a claim that
8-4 involves state funds as well as local government funds, the
8-5 prosecuting authority shall provide a copy of the petition to the
8-6 attorney general.
8-7 (b) The prosecuting authority shall mail the petition to the
8-8 attorney general by certified mail, return receipt requested, not
8-9 later than the date on which the petition is filed.
8-10 (c) Not later than the 60th day after the date on which the
8-11 attorney general receives the copy of the petition, the attorney
8-12 general shall:
8-13 (1) notify the court that the attorney general intends
8-14 to proceed with the action and assume primary responsibility for
8-15 conducting the action; or
8-16 (2) notify the court that the attorney general
8-17 declines to assume primary responsibility for conducting the
8-18 action.
8-19 (d) If the attorney general assumes primary responsibility
8-20 for conducting the action, the local governmental entity may
8-21 continue as a party in the action. If the attorney general
8-22 declines to assume primary responsibility for conducting the
8-23 action, the prosecuting authority may continue to conduct the
8-24 action.
8-25 (Sections 2259.103-2259.150 reserved for expansion
8-26 SUBCHAPTER E. PRIVATE CAUSE OF ACTION
8-27 Sec. 2259.151. PRIVATE ACTION. (a) A person may bring a
9-1 civil action on behalf of the person and a governmental entity for
9-2 a violation of Section 2259.002. The action must be brought in a
9-3 district court.
9-4 (b) A person other than the attorney general or the
9-5 prosecuting authority may not intervene in, or bring a separate
9-6 action based on the facts underlying, a pending action filed under
9-7 this subchapter.
9-8 (c) A person may not bring a private action based on the
9-9 facts underlying a civil action or an administrative proceeding for
9-10 a monetary penalty in which a governmental entity is already a
9-11 party.
9-12 Sec. 2259.152. SERVICE OF PETITION; PETITION FILED IN
9-13 CAMERA. (a) A person who brings an action under this subchapter
9-14 shall serve a copy of the petition in the action, accompanied by a
9-15 written disclosure of substantially all material evidence and
9-16 information the person possesses, on:
9-17 (1) the attorney general, if the claim involves state
9-18 funds; and
9-19 (2) the prosecuting authority, if the claim involves
9-20 local government funds.
9-21 (b) The petition shall be filed in camera, shall remain
9-22 under seal until at least the 60th day after the date on which the
9-23 petition was filed, and may not be unsealed or served on the
9-24 defendant until the court orders that the petition be unsealed or
9-25 served. The attorney general or the prosecuting authority, for
9-26 good cause shown, may move to extend the time during which the
9-27 petition remains under seal. The motion shall be filed in camera,
10-1 and a copy of the motion shall be served on the person bringing the
10-2 action.
10-3 (c) Service on the attorney general and the prosecuting
10-4 authority under this section shall be made in the manner provided
10-5 by Rule 21a, Texas Rules of Civil Procedure.
10-6 (d) Service on the defendant, on the unsealing of an action
10-7 under this subchapter, shall be made in the manner provided by Rule
10-8 106, Texas Rules of Civil Procedure.
10-9 Sec. 2259.153. INTERVENTION. (a) In an action involving
10-10 only state funds, the attorney general may assume responsibility
10-11 for prosecuting the action by intervening not later than the later
10-12 of:
10-13 (1) the 60th day after the date of receipt of service
10-14 of the petition and written disclosure under Section 2259.152; or
10-15 (2) the date on which the petition is unsealed by
10-16 order of the court.
10-17 (b) In an action involving only local government funds, the
10-18 prosecuting authority may assume responsibility for prosecuting the
10-19 action by intervening not later than the later of:
10-20 (1) the 60th day after the date of receipt of service
10-21 of the petition and written disclosure under Section 2259.152; or
10-22 (2) the date on which the petition is unsealed by
10-23 order of the court.
10-24 (c) In an action involving state and local government funds,
10-25 the attorney general and the prosecuting authority may intervene in
10-26 the action not later than the later of:
10-27 (1) the 60th day after the date of receipt of service
11-1 of the petition and written disclosure under Section 2259.152; or
11-2 (2) the date on which the petition is unsealed by
11-3 order of the court.
11-4 (d) In an action subject to Subsection (c) in which only the
11-5 attorney general intervenes, the attorney general has primary
11-6 responsibility for prosecuting the action. If only the prosecuting
11-7 authority intervenes, the prosecuting authority has primary
11-8 responsibility for prosecuting the action. If both the attorney
11-9 general and the prosecuting authority intervene in the action, the
11-10 attorney general may assume primary responsibility for prosecuting
11-11 the action or may delegate that responsibility to the prosecuting
11-12 authority.
11-13 (e) In an action in which the attorney general or the
11-14 prosecuting authority intervenes, the person filing the action may
11-15 continue as a party to and participate in the action, subject to
11-16 any limitation imposed by the court on motion of the attorney
11-17 general or the prosecuting authority.
11-18 (f) In an action in which neither the attorney general nor
11-19 the prosecuting authority intervenes, the person filing the action
11-20 may prosecute the action.
11-21 Sec. 2259.154. AWARD TO PRIVATE PARTY IF GOVERNMENT
11-22 PROSECUTES ACTION. (a) If the attorney general or the prosecuting
11-23 authority intervenes and assumes responsibility for prosecuting the
11-24 action, the court, subject to Subsections (b) and (c), shall award
11-25 to the person bringing the action at least 15 percent, but not more
11-26 than 25 percent, of the proceeds of any settlement or judgment,
11-27 considering the significance of the information provided by the
12-1 person and the person's role in advancing the action to settlement
12-2 or judgment.
12-3 (b) The court shall award the person bringing the action at
12-4 least 5 percent, but not more than 15 percent, of the proceeds of
12-5 any settlement or judgment, considering the significance of the
12-6 information provided by the person and the person's role in
12-7 advancing the action to settlement or judgment, if the court finds
12-8 that:
12-9 (1) the private action is based primarily on
12-10 allegations or transactions of fraud that, before the action was
12-11 filed, were publicly disclosed in:
12-12 (A) a newspaper or magazine of general
12-13 circulation;
12-14 (B) a radio or television broadcast of a
12-15 licensed communications facility;
12-16 (C) a filed criminal indictment not under seal;
12-17 (D) a legislative, judicial, or administrative
12-18 hearing open to the public; or
12-19 (E) a written, publicly distributed official
12-20 report issued under governmental authority; and
12-21 (2) the person bringing the action was not a source of
12-22 the disclosures described by Subdivision (1).
12-23 (c) The court may not award the person bringing the action
12-24 any portion of the proceeds of any settlement or judgment if the
12-25 court finds that:
12-26 (1) the private action is based entirely on
12-27 allegations or transactions of fraud that, before the action was
13-1 filed, were publicly disclosed in any medium described by
13-2 Subsection (b)(1); and
13-3 (2) the person bringing the action was not a source of
13-4 the disclosures described by Subdivision (1).
13-5 (d) A person receiving an award under this section is
13-6 entitled to recover from the defendant reasonable attorney's fees,
13-7 costs, and expenses.
13-8 Sec. 2259.155. AWARD TO PRIVATE PARTY IF GOVERNMENT DOES NOT
13-9 PROSECUTE ACTION. (a) If the attorney general or the prosecuting
13-10 authority does not intervene and assume responsibility for
13-11 prosecuting the action, the court shall award to the person
13-12 bringing the action at least 25 percent, but not more than 35
13-13 percent, of the proceeds of any settlement or judgment, considering
13-14 the significance of the information provided by the person and the
13-15 person's role in advancing the action to settlement or judgment.
13-16 (b) A person receiving an award under this section is
13-17 entitled to recover from the defendant reasonable attorney's fees,
13-18 costs, and expenses.
13-19 (c) The court may award to a defendant, against the person
13-20 bringing the action, reasonable attorney's fees and expenses if the
13-21 defendant prevails in the action and the court finds that the
13-22 action was clearly frivolous, clearly vexatious, or brought
13-23 primarily for purposes of harassment. A governmental entity is not
13-24 liable for attorney's fees and expenses incurred by a defendant.
13-25 Sec. 2259.156. LIMITATIONS ON AWARD TO PRIVATE PARTY. If
13-26 the court finds that a private action was brought by a person who
13-27 planned and initiated the violation of Section 2259.002 on which
14-1 the action was brought, the court may, to the extent the court
14-2 considers appropriate, reduce the award that the person would
14-3 otherwise receive under Section 2259.154 or 2259.155, considering
14-4 the person's role in advancing the action to settlement or judgment
14-5 and any relevant circumstances pertaining to the violation. If the
14-6 person bringing the action is convicted of a criminal offense
14-7 arising from the person's role in the violation of Section
14-8 2259.002, the person may not receive an award under this chapter.
14-9 Sec. 2259.157. LIMITATION ON PRIVATE ACTIONS BY PUBLIC
14-10 EMPLOYEES. A public employee who, in the course and scope of the
14-11 employee's employment, obtains knowledge of a violation of Section
14-12 2259.002 may bring a private action under this subchapter only if:
14-13 (1) the public employee provides written disclosure of
14-14 substantially all material evidence and information that the
14-15 employee possesses to:
14-16 (A) the attorney general, if the claim involves
14-17 state funds; and
14-18 (B) the prosecuting authority, if the claim
14-19 involves local government funds; and
14-20 (2) an affected governmental entity does not commence
14-21 a judicial or administrative proceeding to prosecute the claim
14-22 before the 181st day after the later of the date of receipt of the
14-23 written disclosure by:
14-24 (A) the attorney general; or
14-25 (B) the prosecuting authority.
14-26 (Sections 2259.158-2259.200 reserved for expansion
14-27 SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
15-1 Sec. 2259.201. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE
15-2 IN ACTION. A person is entitled to:
15-3 (1) disclose information relevant to an alleged
15-4 violation of Section 2259.002 to the attorney general, a
15-5 prosecuting authority, a governmental entity, or a law enforcement
15-6 agency;
15-7 (2) assist, at the request of the attorney general or
15-8 a prosecuting authority, in the investigation of an alleged
15-9 violation of Section 2259.002;
15-10 (3) testify or otherwise participate, at the request
15-11 of the attorney general or a prosecuting authority, in the
15-12 furtherance of an action filed or to be filed under this chapter;
15-13 or
15-14 (4) take any other lawful action in furtherance of an
15-15 action filed or to be filed under this chapter.
15-16 Sec. 2259.202. PROHIBITED CONDUCT BY EMPLOYER. (a) An
15-17 employer may not:
15-18 (1) adopt or enforce a rule or policy that prevents an
15-19 employee from exercising the employee's rights under Section
15-20 2259.201; or
15-21 (2) discriminate against an employee, including
15-22 discharging, demoting, suspending, threatening, harassing, or
15-23 denying promotion to the employee, because the employee has
15-24 exercised the employee's rights under Section 2259.201.
15-25 (b) An employer who violates Subsection (a) is liable to the
15-26 employee for:
15-27 (1) actual damages, including damages for lost wages;
16-1 (2) reinstatement to employment with the seniority
16-2 status, if applicable, that the employee would have had in the
16-3 absence of the discrimination;
16-4 (3) exemplary damages equal to not less than two times
16-5 the amount of lost wages; and
16-6 (4) reasonable attorney's fees and costs.
16-7 (c) An employee may not recover under Subsection (b) unless:
16-8 (1) the employee exercised the employee's rights under
16-9 Section 2259.201; and
16-10 (2) to the extent the employee participated in the
16-11 violation of Section 2259.002, the employee participated in
16-12 response to harassment, threats of termination or demotion, or
16-13 other coercion by the employer.
16-14 (d) Chapter 554 establishes the exclusive procedures and
16-15 remedies available to a public employee for a violation of Section
16-16 2259.201.
16-17 SECTION 2. This Act takes effect September 1, 1999, and
16-18 applies only to conduct that occurs on or after that date. Conduct
16-19 that occurred before the effective date of this Act is governed by
16-20 the law applicable to the conduct immediately before the effective
16-21 date of this Act, and that law is continued in effect for that
16-22 purpose.
16-23 SECTION 3. The importance of this legislation and the
16-24 crowded condition of the calendars in both houses create an
16-25 emergency and an imperative public necessity that the
16-26 constitutional rule requiring bills to be read on three several
16-27 days in each house be suspended, and this rule is hereby suspended.