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A BILL TO BE ENTITLED
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AN ACT
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relating to false claims against the state and actions by private |
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persons to prosecute those claims; providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 10, Government Code, is |
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amended by adding Chapter 2116 to read as follows: |
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CHAPTER 2116. FALSE CLAIMS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 2116.001. DEFINITIONS. In this chapter: |
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(1) "Qui tam action" means an action brought by a |
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private person against a person for the commission of a false claim |
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under Section 2116.051. |
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(2) "Qui tam plaintiff" means the person bringing a |
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qui tam action. |
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(3) "State" means state government as defined by |
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Section 101.001, Civil Practice and Remedies Code. |
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Sec. 2116.002. CERTAIN ACTIONS BARRED. (a) A person may |
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not bring a qui tam action based on allegations or transactions that |
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are the subject of a civil suit or an administrative penalty |
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proceeding in which the state is already a party. |
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(b) A person may not bring a qui tam action against a member |
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of the legislature, a member of the judiciary, or a senior official |
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of the executive branch if the action is based on evidence or |
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information known to the state when the action was brought. |
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(c) On motion of the attorney general, a court may, after |
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considering all the equities, dismiss a qui tam action if the |
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elements of the actionable false claims alleged in the qui tam |
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complaint have been publicly disclosed specifically in the news |
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media or in a publicly disseminated governmental report, at the |
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time the complaint is filed. |
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Sec. 2116.003. CHAPTER NOT APPLICABLE TO MEDICAID FRAUD. |
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This chapter does not apply to an unlawful act described by Section |
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36.002, Human Resources Code, relating to Medicaid fraud. |
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[Sections 2116.004-2116.050 reserved for expansion] |
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SUBCHAPTER B. FALSE CLAIMS |
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Sec. 2116.051. FALSE CLAIMS. (a) In this section: |
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(1) "Claim" includes any request or demand, under a |
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contract or otherwise, for money or property that is made to a |
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contractor, grantee, or other recipient if this state: |
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(A) provides any portion of the money or property |
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that is requested or demanded; or |
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(B) will reimburse the contractor, grantee, or |
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other recipient for any portion of the money or property that is |
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requested or demanded. |
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(2) "Knowingly" does not require specific intent to |
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defraud. "Knowingly" means: |
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(A) actual knowledge of the information; |
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(B) deliberate ignorance of the truth or falsity |
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of the information; or |
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(C) reckless disregard of the truth or falsity of |
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the information. |
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(b) A person commits a false claim if the person: |
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(1) knowingly presents, or causes to be presented, to |
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an officer, employee, or agent of this state, or to any contractor, |
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grantee, or other recipient of state funds, a false or fraudulent |
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claim for payment or approval; |
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(2) knowingly makes, uses, or causes to be made or used |
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a false record or statement to get a false or fraudulent claim paid |
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or approved; |
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(3) conspires to defraud this state by getting a false |
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or fraudulent claim allowed or paid, or conspires to defraud this |
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state by knowingly making, using, or causing to be made or used, a |
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false record or statement to conceal, avoid, or decrease an |
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obligation to pay or transmit money or property to this state; |
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(4) has possession, custody, or control of public |
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property or money used or to be used by this state and knowingly |
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delivers or causes to be delivered less property than the amount for |
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which the person receives a certificate or receipt; |
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(5) is authorized to make or deliver a document |
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certifying receipt of property used or to be used by this state and |
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knowingly makes or delivers a receipt that falsely represents the |
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property used or to be used; |
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(6) knowingly buys, or receives as a pledge of an |
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obligation or debt, public property from any person who lawfully |
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may not sell or pledge the property; |
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(7) knowingly makes, uses, or causes to be made or used |
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a false record or statement to conceal, avoid, or decrease an |
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obligation to pay or transmit money or property to this state; or |
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(8) is a beneficiary of an inadvertent submission of a |
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false claim to any employee, officer, or agent of this state, or to |
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any contractor, grantee, or other recipient of state funds, |
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subsequently discovers the falsity of the claim, and fails to |
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disclose the false claim to this state within a reasonable time |
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after discovery of the false claim. |
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Sec. 2116.052. CIVIL PENALTY. (a) A person who commits a |
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false claim under Section 2116.051 is liable to this state for a |
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civil penalty equal to the sum of: |
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(1) an amount not less than $5,000 and not more than |
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$10,000; |
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(2) except as provided by Subsection (b), three times |
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the amount of damages that this state sustains because of the act of |
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the person; and |
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(3) the costs of a civil action brought to recover the |
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penalty. |
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(b) A court may assess not less than two times the amount of |
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damages under Subsection (a)(2) if the court finds: |
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(1) that the person committing a false claim furnished |
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the attorney general with all information known to the person about |
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the false claim on or before the 30th day after the date the person |
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first obtained the information; |
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(2) that the person committing a false claim fully |
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cooperated with any investigation of the false claim; and |
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(3) at the time the person furnished information about |
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the false claim, a criminal prosecution, civil action, or |
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administrative action had not commenced in relation to the false |
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claim and the person did not have actual knowledge of the existence |
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of an investigation into the false claim. |
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Sec. 2116.053. EXCLUSION. This subchapter does not apply |
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to a claim, record, or statement made under the Tax Code. |
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[Sections 2116.054-2116.100 reserved for expansion] |
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SUBCHAPTER C. ACTIONS BY PRIVATE PERSONS |
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Sec. 2116.101. DEFINITION. In this subchapter, "proceeds |
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of the action" means the amount of money awarded to the state in a |
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final judgment or agreed to be paid to the state in a settlement |
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agreement as a result of the qui tam action. The term does not |
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include attorney's fees, costs, or expenses incurred in bringing |
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the action. |
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Sec. 2116.102. ACTIONS BY PRIVATE PERSON AUTHORIZED; |
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ALTERNATIVE REMEDY SOUGHT BY STATE. (a) Subject to Section |
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2116.151, a private person may bring a civil action against a person |
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committing a false claim under Section 2116.051. |
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(b) The action is a qui tam action on behalf of both the |
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person and the state. |
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(c) The qui tam action must be brought in the name of this |
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state. |
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Sec. 2116.103. INITIATION OF ACTION. (a) A qui tam |
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plaintiff shall serve a copy of the petition and a written |
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disclosure of substantially all material evidence and information |
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the person possesses on the attorney general in compliance with the |
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Texas Rules of Civil Procedure. |
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(b) The petition shall be filed in camera and shall remain |
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under seal until at least the 60th day after the date the petition |
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is filed. The attorney general is entitled to access to the |
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petition. The petition may not be served on the defendant until the |
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court orders service on the defendant. |
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(c) The state may elect to intervene and proceed with the |
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action not later than the 60th day after the date the attorney |
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general receives the petition and the material evidence and |
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information. |
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(d) The state may, for good cause shown, move the court to |
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extend the time during which the petition remains under seal under |
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Subsection (b). A motion under this subsection may be supported by |
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affidavits or other submissions in camera. |
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(e) An action under this subchapter may be dismissed before |
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the end of the period prescribed by Subsection (b), as extended as |
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provided by Subsection (d), if applicable, only if the court and the |
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attorney general consent in writing to the dismissal and state |
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their reasons for consenting. |
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Sec. 2116.104. ANSWER BY DEFENDANT. A defendant is not |
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required to file an answer to a petition filed under this subchapter |
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until the 20th day after the date the petition is unsealed and |
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served on the defendant in compliance with the Texas Rules of Civil |
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Procedure. |
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Sec. 2116.105. CHOICE OF STATE. (a) On or before the last |
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day of the period described by Section 2116.103(c), the state |
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shall: |
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(1) take over the qui tam action and proceed to conduct |
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it; or |
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(2) notify the court that it declines to take over the |
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action and allow the qui tam plaintiff to conduct it. |
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(b) The court shall not permit any person other than the |
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attorney general to intervene in the action or bring a related |
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action based on the facts underlying the pending action. |
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Sec. 2116.106. ACTION CONDUCTED BY STATE. (a) This |
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section applies to a qui tam action the state takes over under |
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Section 2116.105(a)(1). |
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(b) The state has the primary responsibility for |
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prosecuting the action and is not bound by an act of the qui tam |
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plaintiff. |
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(c) Subject to this section, the qui tam plaintiff is |
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entitled to continue as a party to the action. |
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(d) Notwithstanding the objection of the qui tam plaintiff, |
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the state may dismiss the action for good cause if: |
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(1) the state notifies the qui tam plaintiff that a |
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motion to dismiss has been filed; and |
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(2) the court provides the qui tam plaintiff with an |
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opportunity for a hearing on the motion. |
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(e) Notwithstanding the objection of the qui tam plaintiff, |
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the state may settle the action if the court determines, after a |
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hearing, that the proposed settlement is fair, adequate, and |
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reasonable under all the circumstances. |
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(f) On a showing by the state that unrestricted |
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participation in the litigation of the action by the qui tam |
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plaintiff would interfere with or unduly delay the state's |
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prosecution of the case or would be repetitious, irrelevant, or for |
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purposes of harassment, the court may impose limitations on the |
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person's participation, including: |
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(1) limiting the number of witnesses the qui tam |
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plaintiff may call; |
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(2) limiting the length of the testimony of witnesses |
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called by the qui tam plaintiff; |
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(3) limiting the qui tam plaintiff's cross-examination |
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of witnesses; or |
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(4) otherwise limiting the participation by the qui |
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tam plaintiff in the litigation. |
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(g) On a showing by the defendant that unrestricted |
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participation in the litigation of the action by the qui tam |
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plaintiff would be for purposes of harassment or would cause the |
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defendant undue burden or unnecessary expense, the court may limit |
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the participation by the qui tam plaintiff in the litigation. |
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Sec. 2116.107. ACTION CONDUCTED BY QUI TAM PLAINTIFF. (a) |
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This section applies to a qui tam action the state declines to take |
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over under Section 2116.105(a)(2). |
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(b) The qui tam plaintiff is entitled to conduct the action. |
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(c) At the request of the state, the qui tam plaintiff shall |
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serve the state with a copy of each pleading filed in the action, |
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each motion filed related to discovery, and all documents related |
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to discovery, including interrogatories and deposition |
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transcripts. The state is responsible for the expense of making and |
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serving the copies. |
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(d) On a showing of good cause, the court may, during the |
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course of the action, permit the state to intervene. The court may |
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not, as a result of the intervention, limit the status or |
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entitlement of the qui tam plaintiff to conduct the action. |
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Sec. 2116.108. STAY OF CERTAIN DISCOVERY. (a) This |
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section applies without regard to whether the state takes over or |
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declines to take over the qui tam action. |
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(b) On a showing by the state that certain actions of |
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discovery by the qui tam plaintiff would interfere with the state's |
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investigation or prosecution of a criminal or civil matter arising |
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out of the same facts, the court may stay the discovery for a period |
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not to exceed 60 days. |
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(c) The court shall hear a motion to stay discovery under |
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this section in camera. |
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(d) The court may extend the period prescribed by Subsection |
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(b) on a further showing in camera that the state has pursued the |
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criminal or civil investigation or proceedings with reasonable |
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diligence and that any proposed discovery in the civil action will |
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interfere with the ongoing criminal or civil investigation or |
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proceedings. |
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Sec. 2116.109. AWARD TO QUI TAM PLAINTIFF WHEN STATE |
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PROCEEDS WITH ACTION. (a) This section applies to a qui tam action |
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the state takes over under Section 2116.105(a)(1). |
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(b) Except as provided by Subsection (c), the court shall |
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award the qui tam plaintiff at least 15 percent but not more than 25 |
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percent of the proceeds of the action, depending on the extent to |
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which the court determines the person substantially contributed to |
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the prosecution of the action. |
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(c) If the court finds that the action is based primarily on |
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disclosures of specific information, other than information |
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provided by the qui tam plaintiff, relating to allegations or |
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transactions in a criminal or civil hearing, in a legislative or |
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administrative report, hearing, audit, or investigation, or from |
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the news media, the court may award the amount the court considers |
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appropriate but not more than 10 percent of the proceeds of the |
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action. The court shall consider the significance of the |
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information and the role of the qui tam plaintiff in advancing the |
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case to litigation. |
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(d) A payment to a person under this section shall be made |
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from the proceeds of the action. A person receiving a payment under |
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this section is also entitled to receive an amount for reasonable |
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expenses that the court finds to have been necessarily incurred, |
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plus reasonable attorney's fees and costs. Expenses, fees, and |
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costs shall be awarded against the defendant. |
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Sec. 2116.110. AWARD TO QUI TAM PLAINTIFF WHEN STATE DOES |
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NOT PROCEED WITH ACTION. (a) This section applies to a qui tam |
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action the state declines to take over under Section |
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2116.105(a)(2). |
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(b) The court shall award the qui tam plaintiff an amount |
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the court decides is reasonable for collecting the civil penalty |
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and damages but not less than 25 percent and not more than 30 |
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percent of the proceeds of the action. |
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(c) A payment to a person under this section shall be made |
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from the proceeds of the action. A person receiving a payment under |
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this section is also entitled to receive an amount for reasonable |
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expenses that the court finds to have been necessarily incurred, |
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plus reasonable attorney's fees and costs. Expenses, fees, and |
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costs shall be awarded against the defendant. |
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(d) The court may award to the defendant reasonable |
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attorney's fees and expenses incurred in defending against the |
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action if: |
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(1) the defendant prevails in the action; and |
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(2) the court finds that the claim of the qui tam |
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plaintiff was clearly frivolous or vexatious, or brought primarily |
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for purposes of harassment. |
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Sec. 2116.111. REDUCTION OF AWARD. (a) This section |
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applies without regard to whether the state takes over or declines |
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to take over the qui tam action. |
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(b) If the court finds that the qui tam plaintiff planned |
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and initiated the false claim that is the basis of the qui tam |
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action, the court may, to the extent the court considers |
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appropriate, reduce the share of the proceeds of the action the |
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person would otherwise receive under Section 2116.109 or 2116.110, |
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taking into account the qui tam plaintiff's role in advancing the |
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case to litigation and any relevant circumstances pertaining to the |
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violation. |
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(c) If the qui tam plaintiff is convicted of criminal |
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conduct arising from the person's role in the false claim, the court |
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shall dismiss the plaintiff from the civil action and the plaintiff |
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may not receive any share of the proceeds of the action. A |
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dismissal under this subsection does not prejudice the right of the |
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state to continue the qui tam action. |
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Sec. 2116.112. STATE NOT LIABLE FOR CERTAIN EXPENSES. The |
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state is not liable for expenses that a qui tam plaintiff incurs in |
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bringing an action under this subchapter, including any award the |
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court may make on behalf of the defendant under Section |
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2116.110(d). |
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Sec. 2116.113. RETALIATION BY EMPLOYER AGAINST PERSON |
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BRINGING SUIT PROHIBITED. (a) A person who is discharged, demoted, |
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suspended, threatened, harassed, or in any other manner |
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discriminated against in the terms of employment by the person's |
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employer because of a lawful act taken by the person in furtherance |
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of a qui tam action, including investigation for, initiation of, |
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testimony for, or assistance in a qui tam action filed or to be |
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filed, is entitled to all relief necessary to make the person whole, |
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including: |
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(1) reinstatement with the same seniority status the |
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person would have had but for the discrimination; and |
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(2) two times the amount of back pay, interest on the |
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back pay, and compensation for any special damages sustained as a |
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result of the discrimination, including litigation costs and |
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reasonable attorney's fees. |
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(b) A person may bring an action in the appropriate district |
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court for the relief provided in this section. |
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[Sections 2116.114-2116.150 reserved for expansion] |
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SUBCHAPTER D. ACTION BY STATE |
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Sec. 2116.151. STATE MAY PURSUE AN ALTERNATE REMEDY. (a) |
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After a qui tam action is filed, the state may elect to prosecute |
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the false claim that is the subject of the action through any |
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alternate remedy available to the state, including any |
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administrative proceeding to determine an administrative penalty. |
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(b) The qui tam plaintiff has the same rights in the other |
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proceeding as the person would have had if the action had continued |
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in the original forum, including a monetary award as provided by |
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Subchapter C. |
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(c) A finding of fact or conclusion of law made in the other |
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proceeding that has become final is conclusive on all parties to the |
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qui tam action. For purposes of this subsection, a finding or |
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conclusion is final if: |
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(1) the finding or conclusion has been finally |
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determined on appeal to the appropriate court; |
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(2) no appeal has been filed with respect to the |
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finding or conclusion and all time for filing an appeal has expired; |
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or |
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(3) the finding or conclusion is not subject to |
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judicial review. |
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Sec. 2116.152. RESPONSIBILITIES OF THE ATTORNEY GENERAL. |
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The attorney general shall diligently investigate the commission of |
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a false claim under Section 2116.051 and may bring a civil action |
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against the person committing the false claim. |
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SECTION 2. This Act applies only to a false claim as |
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described by Section 2116.051, Government Code, as added by this |
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Act, that takes place on or after the effective date of this Act. A |
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false claim takes place on or after the effective date of this Act |
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only if all elements of the false claim take place on or after the |
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effective date of this Act. |
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SECTION 3. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2007. |