By: Wentworth S.B. No. 1752
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-4 by adding Chapter 2259 to read as follows:
1-5 CHAPTER 2259. FALSE CLAIMS
1-6 SUBCHAPTER A. GENERAL PROVISIONS
1-7 Sec. 2259.001. DEFINITIONS. In this chapter:
1-8 (1) "Claim" means a claim for money, property, or
1-9 services made to:
1-10 (A) an employee, officer, or agent of a
1-11 governmental entity; or
1-12 (B) a government contractor, if a portion of the
1-13 money, property, or services claimed was or is to be provided by a
1-14 governmental entity.
1-15 (2) "Government contractor" means a person who
1-16 receives money from a governmental entity to provide goods or a
1-17 service, acting within the course and scope of the person's
1-18 obligation to the governmental entity. The term includes a
1-19 contractor, grantee, or other recipient of money without regard to
1-20 whether the contractor, grantee, or recipient is under contract to
1-21 the governmental entity.
1-22 (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:
3-1 (1) present to an officer, employee, or agent of a
3-2 governmental entity or government contractor a false claim for
3-3 payment or approval;
3-4 (2) make or use a false record or statement to obtain
3-5 payment or approval of a false claim by a governmental entity or
3-6 government contractor;
3-7 (3) conspire to defraud a governmental entity or
3-8 government contractor by obtaining the payment or approval of a
3-9 false claim;
3-10 (4) deliver to a governmental entity or government
3-11 contractor less property than the amount of property for which the
3-12 person receives a receipt;
3-13 (5) make or deliver a receipt that falsely represents
3-14 the amount of property delivered that is to be used by a
3-15 governmental entity or government contractor;
3-16 (6) buy or accept as a pledge of an obligation or debt
3-17 public property from a person who may not sell or pledge the
3-18 property;
3-19 (7) make or use a false record or statement to
3-20 conceal, avoid, or decrease an obligation to pay or transmit money
3-21 or property to a governmental entity or government contractor;
3-22 (8) accept the benefits from a false claim made by any
3-23 person; or
3-24 (9) cause an act described by Subdivisions (1) through
3-25 (8) to be committed by another person.
3-26 (Sections 2259.003-2259.010 reserved for expansion
4-1 SUBCHAPTER B. LIABILITY FOR VIOLATIONS
4-2 Sec. 2259.011. LIABILITY FOR KNOWING VIOLATION. (a) A
4-3 court that finds that a person knowingly violated Section 2259.002
4-4 shall award the affected governmental entity:
4-5 (1) the actual damages sustained by the governmental
4-6 entity because of the violation;
4-7 (2) exemplary damages equal to two times the amount of
4-8 actual damages; and
4-9 (3) attorney's fees and costs incurred by the
4-10 governmental entity to recover the damages and penalty.
4-11 (b) The court may reduce the amount of exemplary damages
4-12 awarded under Subsection (a)(2) to an amount not less than the
4-13 amount of actual damages if the person who knowingly violated
4-14 Section 2259.002:
4-15 (1) furnished an official of the governmental entity
4-16 responsible for investigating false claims violations with all
4-17 information known to the person about the violation not later than
4-18 the 30th day after the official requested the information; and
4-19 (2) otherwise fully cooperated with any investigation
4-20 by the governmental entity.
4-21 (c) A person knowingly violates Section 2259.002 if the
4-22 person:
4-23 (1) acts with actual knowledge of the facts that
4-24 constitute the violation;
4-25 (2) acts in deliberate ignorance or reckless disregard
4-26 of those facts or the truth or falsity of those facts; or
5-1 (3) acts without actual knowledge of the facts that
5-2 constitute the violation and, after the violation, learns the facts
5-3 that constitute the violation and fails to take action to mitigate
5-4 or rectify the violation.
5-5 Sec. 2259.012. CIVIL PENALTY. In addition to amounts
5-6 awarded under Section 2259.011, the court may award to the affected
5-7 governmental entity a civil penalty of not more than $10,000 for
5-8 each false claim unless the person who knowingly violated Section
5-9 2259.002 cooperated in the investigation as described by Sections
5-10 2259.011(b)(1) and (2).
5-11 Sec. 2259.013. LIABILITY JOINT AND SEVERAL; PROPORTIONATE
5-12 RESPONSIBILITY INAPPLICABLE. Liability under this subchapter is
5-13 joint and several for a violation committed by more than one
5-14 person. Chapter 33, Civil Practice and Remedies Code, does not
5-15 apply to an action brought under this chapter.
5-16 Sec. 2259.014. EXCEPTIONS. (a) A court may not award
5-17 exemplary damages and attorney's fees and costs under Section
5-18 2259.011 or a civil penalty under Section 2259.012 against a person
5-19 if the total actual damages resulting from all violations for which
5-20 damages are being assessed against the person in the case is less
5-21 than $500.
5-22 (b) This chapter does not apply to a claim made under a
5-23 workers' compensation law of this state.
5-24 Sec. 2259.015. DEPOSIT OF MONEY. (a) Money collected on
5-25 behalf of a governmental entity shall be deposited to the credit of
5-26 the general revenue fund of the state or of the local governmental
6-1 entity, as appropriate.
6-2 (b) If the action is brought in the names of both the state
6-3 and one or more local governmental entities, the court shall
6-4 apportion the award of damages, exemplary damages, and any civil
6-5 penalty among the state and those local entities on the basis of
6-6 the loss incurred. Attorney's fees and costs shall be awarded to
6-7 the entity that incurred the fees and costs.
6-8 Sec. 2259.016. LIMITATIONS. (a) Subject to Subsection (b),
6-9 an action under this subchapter must be brought not later than the
6-10 third anniversary of the date on which the violation was discovered
6-11 by:
6-12 (1) the attorney general or prosecuting authority; or
6-13 (2) a managing official of the affected governmental
6-14 entity, other than a managing official who participated in the
6-15 violation.
6-16 (b) An action under this subchapter may not be brought after
6-17 the 10th anniversary of the date on which the violation was
6-18 committed.
6-19 Sec. 2259.017. APPLICATION OF LAW GOVERNING EXEMPLARY
6-20 DAMAGES. Chapter 41, Civil Practice and Remedies Code, does not
6-21 apply to exemplary damages awarded under Section 2259.011 or to the
6-22 civil penalty awarded under Section 2259.012.
6-23 (Sections 2259.018-2259.020 reserved for expansion
6-24 SUBCHAPTER C. ATTORNEY GENERAL ACTION
6-25 Sec. 2259.021. ATTORNEY GENERAL INVESTIGATION. (a) The
6-26 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.
7-5 Sec. 2259.022. AFFECTED LOCAL GOVERNMENTAL ENTITY. (a) If
7-6 the attorney general brings an action under Subchapter B on a claim
7-7 that involves local government funds as well as state funds, the
7-8 attorney general shall provide a copy of the complaint to the
7-9 appropriate prosecuting authority.
7-10 (b) The attorney general shall mail the complaint to the
7-11 prosecuting authority by certified mail, return receipt requested,
7-12 not later than the date on which the complaint is filed.
7-13 (c) The prosecuting authority may intervene in an action
7-14 brought by the attorney general under this subchapter not later
7-15 than the 60th day after the date the prosecuting authority receives
7-16 the copy of the complaint. The court may permit the prosecuting
7-17 authority to intervene after that date for good cause.
7-18 (Sections 2259.023-2259.030 reserved for expansion
7-19 SUBCHAPTER D. ACTION BROUGHT BY PROSECUTING AUTHORITY
7-20 Sec. 2259.031. PROSECUTING AUTHORITY INVESTIGATION. (a) A
7-21 prosecuting authority shall investigate alleged violations of
7-22 Section 2259.002 involving funds belonging to a local governmental
7-23 entity.
7-24 (b) If the prosecuting authority finds that a person has
7-25 violated Section 2259.002, the prosecuting authority may bring an
7-26 action under Subchapter B against the person.
8-1 Sec. 2259.032. ATTORNEY GENERAL. (a) If the prosecuting
8-2 authority brings an action under Subchapter B on a claim that
8-3 involves state funds as well as local government funds, the
8-4 prosecuting authority shall provide a copy of the complaint to the
8-5 attorney general.
8-6 (b) The prosecuting authority shall mail the complaint to
8-7 the attorney general by certified mail, return receipt requested,
8-8 not later than the date on which the complaint is filed.
8-9 (c) Not later than the 60th day after the date the attorney
8-10 general receives the copy of the complaint, the attorney general
8-11 shall:
8-12 (1) notify the court that the attorney general intends
8-13 to proceed with the action and assume primary responsibility for
8-14 conducting the action; or
8-15 (2) notify the court that the attorney general
8-16 declines to assume primary responsibility for conducting the
8-17 action.
8-18 (d) If the attorney general assumes primary responsibility
8-19 for conducting the action, the prosecuting authority may continue
8-20 as a party in the action. If the attorney general declines to
8-21 assume primary responsibility for conducting the action, the
8-22 prosecuting authority may continue to conduct the action.
8-23 (Sections 2259.033-2259.040 reserved for expansion
8-24 SUBCHAPTER E. PRIVATE CAUSE OF ACTION
8-25 Sec. 2259.041. PRIVATE ACTION. A person may bring a civil
8-26 action in a district court in this state for a violation of Section
9-1 2259.002 in the name of the person on behalf of:
9-2 (1) the state;
9-3 (2) the prosecuting authority; or
9-4 (3) both the state and the prosecuting authority, as
9-5 appropriate.
9-6 Sec. 2259.042. SERVICE OF PETITION. (a) A person who
9-7 brings an action under this subchapter shall serve a copy of the
9-8 petition in the action on:
9-9 (1) the attorney general, if the claim involves state
9-10 funds; and
9-11 (2) the prosecuting authority of the local government,
9-12 if the claim involves local government funds.
9-13 (b) Service under this section shall be made in the manner
9-14 provided by Rule 21a, Texas Rules of Civil Procedure.
9-15 Sec. 2259.043. INTERVENTION. (a) In an action involving
9-16 only state funds, the attorney general may assume responsibility
9-17 for prosecution of the action by entering an appearance not later
9-18 than the 60th day after the date the attorney general receives
9-19 service of the petition under Section 2259.042.
9-20 (b) In an action involving only local government funds, the
9-21 prosecuting authority may assume responsibility for prosecution of
9-22 the action by entering an appearance not later than the 60th day
9-23 after the date the prosecuting authority receives service of the
9-24 petition under Section 2259.042.
9-25 (c) In an action involving state and local government funds,
9-26 the attorney general may assume primary responsibility for
10-1 prosecution of the action by entering an appearance not later than
10-2 the 60th day after the date the attorney general receives service
10-3 of the petition under Section 2259.042.
10-4 (d) If the attorney general assumes primary responsibility
10-5 for prosecution of the action under Subsection (c), the prosecuting
10-6 authority may, not later than the 60th day after the date the
10-7 prosecuting authority receives service of the petition under
10-8 Section 2259.042, enter an appearance and proceed as a party in the
10-9 action.
10-10 (e) If the attorney general does not assume primary
10-11 responsibility for prosecution of the action under Subsection (c),
10-12 the prosecuting authority may assume responsibility for prosecution
10-13 of the action not later than the 30th day after the last date the
10-14 attorney general may enter an appearance under this section.
10-15 Sec. 2259.044. AWARD TO PRIVATE PARTY IF GOVERNMENT
10-16 PROSECUTES ACTION. (a) If the attorney general or the prosecuting
10-17 authority assumes responsibility for prosecution of the action
10-18 under Section 2259.043 and the action is settled or the court
10-19 enters a judgment for the state or the local government, the court
10-20 shall award a reasonable portion of the settlement or judgment to
10-21 the person who commenced the action under this subchapter.
10-22 (b) In determining the amount to award a person under this
10-23 section, the court shall consider the value of any information or
10-24 evidence disclosed by the person. An award of 10 percent of the
10-25 settlement or judgment is presumed to be reasonable.
10-26 Sec. 2259.045. AWARD TO PRIVATE PARTY IF GOVERNMENT DOES
11-1 NOT PROSECUTE ACTION. (a) If the attorney general or the
11-2 prosecuting authority does not assume responsibility for
11-3 prosecution of the action under Section 2259.043 and the action is
11-4 settled or the court enters a judgment for the state or the local
11-5 government, the court shall award a reasonable portion of the
11-6 settlement or judgment to the person who prosecuted the action
11-7 under this subchapter.
11-8 (b) In determining the amount to award a person under
11-9 Subsection (a), the court shall consider the value of the person's
11-10 prosecution of the action. An award of 25 percent of the
11-11 settlement or judgment is presumed to be reasonable.
11-12 (c) The court may also award to the person who prosecuted
11-13 the action reasonable expenses incurred by the person in
11-14 prosecuting the action.
11-15 (Sections 2259.046-2259.050 reserved for expansion
11-16 SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
11-17 Sec. 2259.051. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE
11-18 IN ACTION. A person is entitled to:
11-19 (1) disclose information relevant to an alleged
11-20 violation of Section 2259.002 to a governmental entity, a
11-21 prosecuting authority, the attorney general, or a law enforcement
11-22 agency;
11-23 (2) assist, at the request of the attorney general or
11-24 a prosecuting authority, in the investigation of an alleged
11-25 violation of Section 2259.002; or
11-26 (3) testify or otherwise participate, at the request
12-1 of the attorney general or a prosecuting authority, in the
12-2 furtherance of an action filed or to be filed under this chapter.
12-3 Sec. 2259.052. PROHIBITED CONDUCT BY EMPLOYER. (a) An
12-4 employer may not:
12-5 (1) adopt or enforce a rule or policy that prevents an
12-6 employee from exercising the employee's rights under Section
12-7 2259.051; or
12-8 (2) discriminate against an employee, including
12-9 discharging, demoting, suspending, threatening, harassing, or
12-10 denying promotion to the employee, because the employee has
12-11 exercised the employee's rights under Section 2259.051.
12-12 (b) An employer who violates Subsection (a) is liable to the
12-13 employee for:
12-14 (1) actual damages, including damages for lost wages;
12-15 (2) reinstatement to employment with the seniority
12-16 status, if applicable, that the employee would have had in the
12-17 absence of the discrimination;
12-18 (3) exemplary damages equal to not less than two times
12-19 the amount of lost wages; and
12-20 (4) attorney's fees and costs.
12-21 (c) An employee may not recover under Subsection (b) unless:
12-22 (1) the employee exercised the employee's rights under
12-23 Section 2259.051; and
12-24 (2) to the extent the employee participated in the
12-25 violation of Section 2259.002, the employee participated in
12-26 response to harassment, threats of termination or demotion, or
13-1 other coercion by the employer.
13-2 SECTION 2. This Act takes effect September 1, 1999, and
13-3 applies only to conduct that occurs on or after that date. Conduct
13-4 that occurred before the effective date of this Act is governed by
13-5 the law applicable to the conduct immediately before the effective
13-6 date of this Act, and that law is continued in effect for that
13-7 purpose.