PRINTER'S NO. 4730
No. 2994 Session of 2006
INTRODUCED BY KENNEY, ROSS, WATSON, SONNEY, CORNELL, BAKER,
BALDWIN, BELFANTI, BEYER, BOYD, BUNT, CALTAGIRONE, CAPPELLI,
CRAHALLA, DALEY, FAIRCHILD, FLAHERTY, GINGRICH, HARRIS,
HERSHEY, JAMES, M. KELLER, KILLION, MICOZZIE, R. MILLER,
NICKOL, PHILLIPS, SIPTROTH, E. Z. TAYLOR, TIGUE, WILT AND
YOUNGBLOOD, OCTOBER 4, 2006
REFERRED TO COMMITTEE ON JUDICIARY, OCTOBER 4, 2006
AN ACT
1 Providing for liability for false claims, for treble damages,
2 costs and civil penalties, for powers of the Attorney
3 General, for qui tam actions and for adoption of legislative
4 history of the Federal False Claims Act; establishing the
5 Office of Inspector General; providing for its functions;
6 transferring functions from the Office of General Counsel to
7 the Office of Inspector General; and transferring functions,
8 personnel and resources from the Office of State Inspector
9 General to the Office of Inspector General.
10 TABLE OF CONTENTS
11 Chapter 1. Preliminary Provisions
12 Section 101. Short title.
13 Section 102. Definitions.
14 Chapter 3. False Claims
15 Section 301. Acts subjecting persons to liability for treble
16 damages, costs and civil penalties; exceptions.
17 Section 302. Attorney General investigations and prosecutions;
18 powers of prosecuting authority; civil actions by
19 individuals as qui tam plaintiff and as private
1 citizen; jurisdiction of courts.
2 Section 303. Limitation of actions; activities antedating this
3 article; burden of proof.
4 Section 304. Remedies under other laws; severability of
5 provisions; liberality of legislative
6 construction; adoption of legislative history.
7 Section 305. Regulations.
8 Chapter 5. Office of Inspector General
9 Section 501. Office.
10 Section 502. Inspector General.
11 Section 503. Specific powers related to unemployment
12 compensation and welfare.
13 Section 504. Complaint reporting; disclosure of identity;
14 reprisals.
15 Chapter 7. Transfer
16 Section 701. Transfer.
17 Section 702. Employment status.
18 Chapter 21. Miscellaneous Provisions
19 Section 2101. Effective date.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 CHAPTER 1
23 PRELIMINARY PROVISIONS
24 Section 101. Short title.
25 This act shall be known and may be cited as the False Claims
26 Act.
27 Section 102. Definitions.
28 The following words and phrases when used in this act shall
29 have the meanings given to them in this section unless the
30 context clearly indicates otherwise:
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1 "Claim." Any request or demand for money, property or
2 services made to any employee, officer or agent of the
3 Commonwealth, or to any contractor, grantee or other recipient,
4 whether under contract or not, if any portion of the money,
5 property or services requested or demanded, issued from or was
6 provided by the Commonwealth, hereinafter "Commonwealth funds,"
7 or if the Commonwealth will reimburse such contractor, grantee
8 or other recipient for any portion of the money or property
9 which is requested or demanded.
10 "Employer." Any natural person, corporation, firm,
11 association, organization, partnership, business, trust or
12 Commonwealth-affiliated entity involved in a nongovernmental
13 function, including State universities and State hospitals.
14 "Knowing" and "knowingly." Whenever a person, with respect
15 to information, does any of the following:
16 (1) Has actual knowledge of the information.
17 (2) Acts in deliberate ignorance of the truth or falsity
18 of the information.
19 (3) Acts in reckless disregard of the truth or falsity
20 of the information. Proof of specific intent to defraud is
21 not required.
22 "Office." The Office of Inspector General established in
23 section 501.
24 "Person." Any natural person, corporation, firm,
25 association, organization, partnership, business or trust.
26 "Subjects of transfer." Personnel, allocations,
27 appropriations, equipment, supplies, records, contracts, rights
28 and obligations.
29 CHAPTER 3
30 FALSE CLAIMS
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1 Section 301. Acts subjecting persons to liability for treble
2 damages, costs and civil penalties; exceptions.
3 (a) Liability.--Any person who commits any of the following
4 acts shall be liable to the Commonwealth for three times the
5 amount of damages which the Commonwealth sustains because of the
6 act of that person. A person who commits any of the following
7 acts shall also be liable to the Commonwealth for the costs of a
8 civil action brought to recover any of those penalties or
9 damages and shall be liable to the Commonwealth for a civil
10 penalty of not less than $5,000 and not more than $10,000 for
11 each violation:
12 (1) Knowingly presents or causes to be presented to any
13 employee, officer or agent of the Commonwealth or to any
14 contractor, grantee or other recipient of Commonwealth funds,
15 a false or fraudulent claim for payment or approval.
16 (2) Knowingly makes, uses or causes to be made or used,
17 a false record or statement to get a false or fraudulent
18 claim paid or approved.
19 (3) Conspires to defraud the Commonwealth by getting a
20 false claim allowed or paid or conspires to defraud the
21 Commonwealth by knowingly making, using or causing to be made
22 or used, a false record or statement to conceal, avoid or
23 decrease an obligation to pay or transmit money or property
24 to the Commonwealth.
25 (4) Has possession, custody or control of public
26 property or money used or to be used by the Commonwealth and
27 knowingly delivers or causes to be delivered less property
28 that the amount for which the person receives a certificate
29 or receipt.
30 (5) Is authorized to make or deliver a document
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1 certifying receipt of property used or to be used by the
2 Commonwealth and knowingly makes or delivers a receipt that
3 falsely represents the property used or to be used.
4 (6) Knowingly buys or receives as a pledge of an
5 obligation or debt, public property from any person who
6 lawfully may not sell or pledge the property.
7 (7) Knowingly makes, uses or causes to be made or used,
8 a false record or statement to conceal, avoid or decrease an
9 obligation to pay or transmit money or property to the
10 Commonwealth.
11 (8) Is a beneficiary of an inadvertent submission of a
12 false claim to any employee, officer or agent of the
13 Commonwealth or to any contractor, grantee or other recipient
14 of Commonwealth funds, subsequently discovers the falsity of
15 the claim and fails to disclose the false claim to the
16 Commonwealth within a reasonable time after discovery of the
17 false claim.
18 (b) Damages limitation.--Notwithstanding subsection (a), the
19 court may assess not less than two times the amount of damages
20 which the Commonwealth sustains because of the act of the person
21 described in that subsection and no civil penalty if the court
22 finds all of the following:
23 (1) The person committing the violation furnished
24 officials of the Commonwealth who are responsible for
25 investigating false claims violations with all information
26 known to that person about the violation within 30 days after
27 the date on which the person first obtained the information.
28 (2) The person fully cooperated with any investigation
29 by the Commonwealth.
30 (3) At the time the person furnished the Commonwealth
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1 with information about the violation, no criminal
2 prosecution, civil action or administrative action has
3 commenced with respect to the violation, and the person did
4 not have actual knowledge of the existence of an
5 investigation into the violation.
6 (c) Exclusion.--This section does not apply to claims,
7 records or statements made pursuant to the act of March 4, 1971
8 (P.L.6, No.2), known as the Tax Reform Code of 1971.
9 Section 302. Attorney General investigations and prosecutions;
10 powers of prosecuting authority; civil actions by
11 individuals as qui tam plaintiff and as private
12 citizen; jurisdiction of courts.
13 (a) Responsibilities of the Attorney General.--The Attorney
14 General diligently shall investigate a violation under section
15 301. If the Attorney General finds that a person has violated or
16 is violating section 301, the Attorney General may bring a civil
17 action under this section against that person.
18 (b) Actions by private persons.--
19 (1) A person may bring a civil action for a violation of
20 this act for the person and for the Commonwealth in the name
21 of the Commonwealth. The person bringing the action shall be
22 referred to as the qui tam plaintiff. Once filed, the action
23 may be dismissed only with the written consent of the court,
24 taking into account the best interest of the parties involved
25 and the public purposes behind this chapter.
26 (2) A copy of the complaint and written disclosure of
27 substantially all material evidence and information the
28 person possesses shall be served on the Attorney General. The
29 complaint shall also be filed in camera and shall remain
30 under seal for at least 60 days and shall not be served on
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1 the defendant until the court so orders. The Commonwealth may
2 elect to intervene and proceed with the action within 60 days
3 after it receives both the complaint and the material
4 evidence and the information.
5 (3) The Commonwealth may, for good cause shown, move the
6 court for extensions of the time during which the complaint
7 remains under seal under paragraph (2). Any such motions may
8 be supported by affidavits or other submissions in camera.
9 The defendant shall not be required to respond to any
10 complaint filed under this section until after the complaint
11 is unsealed and served upon the defendant pursuant to the
12 Pennsylvania Rules of Civil Procedure.
13 (4) Before the expiration of the 60-day period or any
14 extensions obtained under paragraph (3), the Commonwealth
15 shall:
16 (i) proceed with the action, in which case the
17 action shall be conducted by the Commonwealth; or
18 (ii) notify the court that it declines to take over
19 the action, in which case the person bringing the action
20 shall have the right to conduct the action.
21 (5) When a person brings a valid action under this
22 subsection, no person other than the Commonwealth may
23 intervene or bring a related action based on the facts
24 underlying the pending action.
25 (c) Rights of the parties to qui tam actions.--
26 (1) If the Commonwealth proceeds with the action, it
27 shall have the primary responsibility for prosecuting the
28 action and shall not be bound by an act of the person
29 bringing the action. Such person shall have the right to
30 continue as a party to the action, subject to the limitations
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1 set forth in paragraph (2).
2 (2) (i) The Commonwealth may seek to dismiss the action
3 for good cause notwithstanding the objections of the qui
4 tam plaintiff if the qui tam plaintiff has been notified
5 by the Commonwealth of the filing of the motion and the
6 court has provided the qui tam plaintiff with an
7 opportunity to oppose the motion and present evidence at
8 a hearing.
9 (ii) The Commonwealth may settle the action with the
10 defendant notwithstanding the objections of the qui tam
11 plaintiff if the court determines, after a hearing
12 providing the qui tam plaintiff an opportunity to present
13 evidence, that the proposed settlement is fair, adequate
14 and reasonable under all of the circumstances.
15 (iii) Upon a showing by the Commonwealth that
16 unrestricted participation during the course of the
17 litigation by the person initiating the action would
18 interfere with or unduly delay the Commonwealth's
19 prosecution of the case or would be repetitious,
20 irrelevant or for purposes of harassment, the court may,
21 in its discretion, impose limitations on the person's
22 participation, such as:
23 (A) limiting the number of witnesses the person
24 may call;
25 (B) limiting the length of the testimony of such
26 witnesses;
27 (C) limiting the person's cross-examination of
28 witnesses; or
29 (D) otherwise limiting the participation by the
30 person in the litigation.
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1 (iv) Upon a showing by the defendant that
2 unrestricted participation during the course of the
3 litigation by the person initiating the action would be
4 for purposes of harassment or would cause the defendant
5 undue burden or unnecessary expense, the court may limit
6 the participation by the person in the litigation.
7 (3) If the Commonwealth elects not to proceed with the
8 action, the person who initiated the action shall have the
9 right to conduct the action. If the Commonwealth so requests,
10 it shall be served with copies of all pleadings filed in the
11 action and shall be supplied with copies of all deposition
12 transcripts at the Commonwealth's expense. When a person
13 proceeds with the action, the court, without limiting the
14 status and rights of the person initiating the action, may
15 permit the Commonwealth to intervene at a later date upon a
16 showing of good cause.
17 (4) Whether or not the Commonwealth proceeds with the
18 action, upon a showing by the Commonwealth that certain
19 actions of discovery by the person initiating the action
20 would interfere with the Commonwealth's investigation or
21 prosecution of a criminal or civil matter arising out of the
22 same facts, the court may stay such discovery for a period of
23 not more than 60 days. Such a showing shall be conducted in
24 camera. The court may extend the 60-day period upon a further
25 showing in camera that the Commonwealth has pursued the
26 criminal or civil investigation or proceedings with
27 reasonable diligence and any proposed discovery in the civil
28 action will interfere with the ongoing criminal or civil
29 investigations or proceedings.
30 (5) Notwithstanding subsection (b), the Commonwealth may
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1 elect to pursue its claim through any alternate remedy
2 available to the Commonwealth, including any administrative
3 proceeding to determine a civil money penalty. If any such
4 alternate remedy is pursued in another proceeding, the person
5 initiating the action shall have the same rights in such
6 proceeding as the person would have had if the action had
7 continued under this section. Any finding of fact or
8 conclusion of law made in the other proceeding that has
9 become final shall be conclusive on all parties to an action
10 under this section. For purposes of the preceding sentence, a
11 finding or conclusion is final if it has been finally
12 determined on appeal to the appropriate court of the
13 Commonwealth, if all time for filing such an appeal with
14 respect to the finding or conclusion has expired or if the
15 finding or conclusion is not subject to judicial review.
16 (d) Award to qui tam plaintiff.--
17 (1) If the Commonwealth proceeds with an action brought
18 by a person under subsection (b), such person shall, subject
19 to the second sentence of this paragraph, receive at least
20 15% but not more than 25% of the proceeds of the action or
21 settlement of the claim, which includes damages, civil
22 penalties, payments for costs of compliance and any other
23 economic benefit realized by the government as a result of
24 the action, depending upon the extent to which either or both
25 the person and his counsel substantially contributed to the
26 prosecution of the action. Where the action is one which the
27 court finds to be based primarily on disclosures of specific
28 information, other than information provided by the person
29 bringing the action, relating to allegations or transactions
30 specifically in a criminal, civil or administrative hearing
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1 or in a legislative or administrative report, hearing, audit
2 or investigation or from the news media, the court may award
3 such sums as it considers appropriate but in no case more
4 than 10% of the proceeds, taking into account the
5 significance of the information and the role of the person
6 bringing the action in advancing the case to litigation. Any
7 payment to a person under the first or second sentence of
8 this paragraph shall be made from the proceeds. Any such
9 person shall also receive an amount for reasonable expenses
10 which the appropriate Commonwealth court judge finds to have
11 been necessarily incurred, plus reasonable attorney fees and
12 costs. All such expenses, fees and costs shall be awarded
13 against the defendant.
14 (2) If the Commonwealth does not proceed with an action
15 under this section, the person bringing the action or
16 settling the claim shall receive an amount which the court
17 decides is reasonable for collecting the civil penalty and
18 damages. The amount shall not be less than 25% and not more
19 than 30% of the proceeds of the action or settlement and
20 shall be paid out of the proceeds, which includes damages,
21 civil penalties, payments for costs of compliance and any
22 other economic benefit realized by the government as a result
23 of the action. The person shall also receive an amount for
24 reasonable expenses which the appropriate Commonwealth court
25 judge finds to have been necessarily incurred, plus
26 reasonable attorney fees and costs. All such expenses, fees
27 and costs shall be awarded against the defendant.
28 (3) Whether or not the Commonwealth proceeds with the
29 action, if the court finds that the action was brought by a
30 person who planned and initiated the violation of section
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1 301(a) upon which the action was brought, then the court may,
2 to the extent the court considers appropriate, reduce the
3 share of the proceeds of the action which the person would
4 otherwise receive under paragraph (1) or (2), taking into
5 account the role of that person in advancing the case to
6 litigation and any relevant circumstances pertaining to the
7 violation. If the person bringing the action is convicted of
8 criminal conduct arising from his or her role in the
9 violation of section 301(a), that person shall be dismissed
10 from the civil action and shall not receive any share of the
11 proceeds of the action. Such dismissal shall not prejudice
12 the right of the Commonwealth to continue the action.
13 (4) If the Commonwealth does not proceed with the action
14 and the person bringing the action conducts the action, the
15 court may award to the defendant its reasonable attorney fees
16 and expenses if the defendant prevails in the action and the
17 court finds that the claim of the person bringing the action
18 was clearly frivolous, clearly vexatious or brought primarily
19 for purposes of harassment.
20 (e) Certain actions barred.--
21 (1) No court shall have jurisdiction over an action
22 brought under subsection (b) against a member of the
23 legislative branch, a member of the judiciary or a senior
24 executive branch official if the action is based on evidence
25 or information known to the Commonwealth when the action was
26 brought.
27 (2) In no event may a person bring an action under
28 subsection (b) which is based upon allegations or
29 transactions which are the subject of a civil suit or an
30 administrative civil money penalty proceeding in which the
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1 Commonwealth is already a party.
2 (3) Upon motion of the Attorney General, the court may,
3 in consideration of all the equities, dismiss a relator of
4 the elements of the actionable false claims alleged in the
5 qui tam complaint which have been publicly disclosed,
6 specifically in the news media or in a publicly disseminated
7 governmental report, at the time the complaint is filed.
8 (f) Commonwealth not liable for certain expenses.--The
9 Commonwealth is not liable for expenses which a person incurs in
10 bringing an action under this section.
11 (g) Private action for retaliation action.--Any employee who
12 is discharged, demoted, suspended, threatened, harassed or in
13 any other manner discriminated against in the terms and
14 conditions of employment by his or her employer because of
15 lawful acts done by the employee on behalf of the employee or
16 others in furtherance of an action under this section, including
17 investigation for, initiation of, testimony for or assistance in
18 an action filed or to be filed under this section, shall be
19 entitled to all relief necessary to make the employee whole.
20 Such relief shall include reinstatement with the same seniority
21 status such employee would have had but for the discrimination,
22 two times the amount of back pay, interest on the back pay and
23 compensation for any special damages sustained as a result of
24 the discrimination, including litigation costs and reasonable
25 attorney fees. An employee may bring an action in the
26 appropriate court of this Commonwealth for the relief provided
27 in this subsection.
28 (h) Civil investigative demand.--
29 (1) (i) The Attorney General shall have the authority
30 to issue civil investigative demands pursuant to
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1 paragraph (2).
2 (ii) Nothing contained in this subsection shall be
3 construed to limit the regulatory or investigative
4 authority of any department or agency of the Commonwealth
5 whose functions might relate to persons, enterprises, or
6 matters falling within the scope of this chapter.
7 (2) (i) Whenever the Attorney General has reason to
8 believe that any person or enterprise may be in
9 possession, custody, or control of any documentary
10 material relevant to an investigation under this chapter,
11 the Attorney General may issue in writing, and cause to
12 be served upon such person or enterprise, a civil
13 investigative demand requiring the production of such
14 material for examination.
15 (ii) Each such demand shall:
16 (A) state the nature of the conduct constituting
17 the alleged violation which is under investigation,
18 the provision of law applicable thereto and the
19 connection between the documentary material demanded
20 and the conduct under investigation;
21 (B) describe the class or classes of documentary
22 material to be produced thereunder with such
23 definiteness and certainty as to permit such material
24 to be fairly identified;
25 (C) state that the demand is returnable
26 forthwith or prescribe a return date which will
27 provide a reasonable period of time within which the
28 material so demanded may be assembled and made
29 available for inspection and copying or reproduction;
30 (D) identify an investigator to whom such
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1 material shall be made available; and
2 (E) contain the following statement printed
3 conspicuously at the top of the demand: "You have the
4 right to seek the assistance of any attorney and he
5 may represent you in all phases of the investigation
6 of which this civil investigative demand is a part."
7 (iii) No such demand shall:
8 (A) contain any requirement which would be held
9 to be unreasonable if contained in a subpoena duces
10 tecum issued by any court in connection with a grand
11 jury investigation of such alleged violation; or
12 (B) require the production of any documentary
13 evidence which would be privileged from disclosure if
14 demanded by a subpoena duces tecum issued by any
15 court in connection with a grand jury investigation
16 of such alleged violation.
17 (iv) Service of any such demand or any petition
18 filed under this paragraph shall be made in the manner
19 prescribed by the Pennsylvania Rules of Civil Procedure
20 for service of writs and complaints.
21 (v) A verified return by the individual serving any
22 such demand or petition setting forth the manner of such
23 service shall be prima facie proof of such service. In
24 the case of service by registered or certified mail, such
25 return shall be accompanied by the return post office
26 receipt of delivery of such demand.
27 (vi) (A) Any party upon whom any demand issued
28 under this subsection has been duly served shall make
29 such material available for inspection and copying or
30 reproduction to the investigator designated therein
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1 at the principal place of business of such party, or
2 at such other place as such investigator and such
3 party thereafter may agree or as the court may direct
4 pursuant to this paragraph, on the return date
5 specified in such demand. Such party may upon
6 agreement of the investigator substitute copies of
7 all or any part of such material for the originals
8 thereof.
9 (B) The investigator to whom any documentary
10 material is so delivered shall take physical
11 possession thereof, and shall be responsible for the
12 use made thereof and for its return pursuant to this
13 paragraph. The investigator may cause the preparation
14 of such copies of such documentary material as may be
15 required for official use. While in the possession of
16 the investigator, no material so produced shall be
17 available for examination, without the consent of the
18 party who produced such material, by any individual
19 other than the Attorney General or investigator.
20 Under such reasonable terms and conditions as the
21 Attorney General shall prescribe, documentary
22 material while in the possession of the investigator
23 shall be available for examination by the party who
24 produced such material or any duly authorized
25 representatives of such party.
26 (C) Upon completion of the investigation for
27 which any documentary material was produced under
28 this paragraph and any case or proceeding arising
29 from such investigation, the investigator shall
30 return to the party who produced such material all
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1 such material other than copies thereof made pursuant
2 to this paragraph which have not passed into the
3 control of any court or grand jury through
4 introduction into the record of such case or
5 proceeding.
6 (D) When any documentary material has been
7 produced by any party under this paragraph for use in
8 any investigation, and no case or proceeding arising
9 therefrom has been instituted within a reasonable
10 time after completion of the examination and analysis
11 of all evidence assembled in the course of such
12 investigation, such party shall be entitled, upon
13 written demand made upon the Attorney General, to the
14 return of all documentary material, other than copies
15 thereof made pursuant to this paragraph, so produced
16 by such party.
17 (vii) Whenever any person or enterprise fails to
18 comply with any civil investigative demand duly served
19 upon him under this paragraph or whenever satisfactory
20 copying or reproduction of any such material cannot be
21 done and such party refuses to surrender such material,
22 the Attorney General may file, in the court of common
23 pleas for any county in which such party resides or
24 transacts business, and serve upon such party a petition
25 for an order of such court for the enforcement of this
26 paragraph, except that if such person transacts business
27 in more than one county such petition shall be filed in
28 the county in which party maintains the party's principal
29 place of business.
30 (viii) Within 20 days after the service of any such
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1 demand upon any person or enterprise, or at any time
2 before the return date specified in the demand, whichever
3 period is shorter, such party may file, in the court of
4 common pleas of the county within which such party
5 resides or transacts business, and serve upon the
6 Attorney General a petition for an order of such court
7 modifying or setting aside such demand. The time allowed
8 for compliance with the demand in whole or in part as
9 deemed proper and ordered by the court shall not run
10 during the pendency of such petition in the court. Such
11 petition shall specify each ground upon which the
12 petitioner relies in seeking such relief, and may be
13 based upon any failure of such demand to comply with the
14 provisions of this paragraph or upon any constitutional
15 or other legal right or privilege of such party.
16 (ix) At any time during which the Attorney General
17 is in custody or control of any documentary material
18 delivered by any party in compliance with any such
19 demand, such party may file, in the court of common pleas
20 of the county within which such documentary material was
21 delivered, and serve upon the Attorney General a petition
22 for an order of such court requiring the performance of
23 any duty imposed by this paragraph.
24 (x) Whenever any petition is filed in any court of
25 common pleas under this paragraph, such court shall have
26 jurisdiction to hear and determine the matter so
27 presented, and, after a hearing at which all parties are
28 represented, to enter such order or orders as may be
29 required to carry into effect the provisions of this
30 paragraph.
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1 (3) Whenever any individual refuses, on the basis of his
2 privilege against self-incrimination, to comply with a civil
3 investigative demand issued pursuant to paragraph (2), the
4 Attorney General may invoke the provisions of 42 Pa.C.S. §
5 5947 (relating to immunity of witnesses).
6 Section 303. Limitation of actions; activities antedating this
7 article; burden of proof.
8 (a) Statute of limitations.--A civil action under section
9 302 may not be brought more than ten years after the date on
10 which the violation was committed.
11 (b) Burden of proof.--In any action brought under section
12 302, the Commonwealth or the qui tam plaintiff shall be required
13 to prove all essential elements of the cause of action,
14 including damages, by a preponderance of the evidence.
15 (c) Estoppel.--Notwithstanding any other provision of law, a
16 guilty verdict rendered in a criminal proceeding charging false
17 statements or fraud, whether upon a verdict after trial or upon
18 a plea of guilty or nolo contenders, shall estop the defendant
19 from denying the essential elements of the offense in any action
20 which involves the same transaction as in the criminal
21 proceeding and which is brought under section 302(a) or (b).
22 Section 304. Remedies under other laws; severability of
23 provisions; liberality of legislative
24 construction; adoption of legislative history.
25 (a) Remedies under other laws.--The provisions of this act
26 are not exclusive and the remedies provided for in this act
27 shall be in addition to any other remedies provided for in any
28 other law or available under common law.
29 (b) Liberality of legislative construction and adoption of
30 legislative history.--This chapter shall be liberally construed
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1 and applied to promote the public interest. This chapter also
2 adopts the congressional intent behind the Federal False Claims
3 Act, (Public Law 97-258, 31 U.S.C. §§ 3729-3733), including the
4 legislative history underlying the 1986 amendments to the
5 Federal False Claims Act.
6 Section 305. Regulations.
7 (a) General rule.--The Attorney General shall have the power
8 and authority to promulgate rules and regulations which may be
9 necessary to carry out the purposes set forth in this chapter.
10 (b) Guidelines.--In order to facilitate the speedy
11 implementation of this chapter, the Attorney General shall have
12 the power and authority to promulgate, adopt and use guidelines
13 which shall be published in the Pennsylvania Bulletin. The
14 guidelines shall not be subject to review pursuant to section
15 205 of the act of July 31, 1968 (P.L.769, No.240), referred to
16 as the Commonwealth Documents Law, sections 204(b) and 301(10)
17 of the act of October 15, 1980 (P.L.950, No.164), known as the
18 Commonwealth Attorneys Act, the act of June 25, 1982 (P.L,.633,
19 No. 181), known as the Regulatory Review Act, and shall be
20 effective for a period of not more than two years from the
21 effective date of this chapter. After the expiration of the two-
22 year period, the guidelines which shall be promulgated, adopted
23 and published as provided by law.
24 CHAPTER 5
25 OFFICE OF INSPECTOR GENERAL
26 Section 501. Office.
27 (a) Establishment.--There is established an independent
28 agency to be known as the Office of Inspector General. The
29 office shall be subject to the same limitations contained in the
30 act of April 9, 1929 (P.L.177, No.175), known as The
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1 Administrative Code of 1929, and all other acts as applicable to
2 the Department of Auditor General or to the State Treasurer.
3 (b) Expenses.--Expenses of the office shall be paid from
4 funds appropriated to the office.
5 (c) Fiscal year.--The fiscal year of the office shall be the
6 same as the fiscal year of the Commonwealth.
7 (d) Cooperation.--Executive agencies shall cooperate with
8 and provide assistance to the office without financial
9 reimbursement.
10 (e) General Counsel.--The powers and duties of the Office of
11 General Counsel contained in section 208 of the act of June 13,
12 1967 (P.L.31, No.21), known as the Public Welfare Code, are
13 transferred to the office.
14 Section 502. Inspector General.
15 (a) Appointment and confirmation.--The Governor shall
16 appoint, with the advice and consent of a majority of the
17 members elected to the Senate, an individual as the Inspector
18 General. The Inspector General shall be the head officer of the
19 office and shall exercise leadership and control over all deputy
20 inspector generals in designated executive agencies to insure a
21 coordinated and efficient administration of duties and use of
22 staff. All deputy inspector generals shall report to and follow
23 the direction of the Inspector General.
24 (b) Qualification.--No individual shall be nominated as
25 Inspector General unless the individual has served at least ten
26 years at a management level capacity in law enforcement.
27 (c) Vacancy in office.--In the event of a vacancy in the
28 position of Inspector General, the Governor shall nominate, with
29 the advice and consent of a majority of the members elected to
30 the Senate, an individual to fill the position for the balance
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1 of the unexpired term of the Inspector General, the first deputy
2 shall exercise the powers and perform the duties of the
3 Inspector General until the vacancy is filled.
4 (d) Powers and duties.--The Inspector General has the
5 following powers and duties:
6 (1) Initiate, supervise and coordinate investigative
7 activities relating to fraud, waste, misconduct or abuse in
8 executive agencies and government programs.
9 (2) Recommend policies for and conduct, supervise and
10 coordinate activities designed to deter, detect, prevent and
11 eradicate fraud, waste, misconduct and abuse in executive
12 agencies and government programs.
13 (3) If the Inspector General has reasonable grounds to
14 believe there has been a violation of criminal law or that a
15 civil action should be initiated by the Commonwealth, refer
16 the matter to the Attorney General.
17 (4) Refer matters to the heads of executive agencies,
18 except qui tam actions, if the Inspector General determines
19 that disciplinary or other administrative action is
20 appropriate.
21 (5) Make investigations and reports relating to the
22 administration of programs and operations of an executive
23 agency as are, in the judgment of the Inspector General,
24 necessary or desirable. If the Inspector General determines
25 that a report should be issued, copies of the report shall be
26 presented to the Attorney General to insure against an
27 adverse impact on a grand jury proceeding, false claims
28 action or any investigation being conducted by a law
29 enforcement agency.
30 (6) Request information or assistance necessary for
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1 carrying out the duties and responsibilities provided by this
2 chapter from a Federal, State or local government agency.
3 (7) Require and obtain immediately by written notice
4 from officers and employees of executive agencies
5 information, documents, reports, answers, records, accounts,
6 papers and other necessary data and documentary evidence.
7 (8) Have direct and prompt access to the heads of
8 executive agencies when necessary for the purpose of
9 performing the powers and duties provided for under this
10 chapter.
11 (9) Appoint deputy and assistant inspectors general and
12 select and employ officers and employees necessary for
13 carrying out the functions, powers and duties of the office.
14 The officers and employees shall be employed in accordance
15 with current procedures of the Office of Administration and
16 may be assigned by the Inspector General to designated
17 executive agencies.
18 (10) Have the right to access at all times the books and
19 papers of any Commonwealth agency necessary to carry out
20 functions under this chapter. Upon request of the Inspector
21 General for information or assistance, executive agencies
22 shall immediately furnish the information and assistance to
23 the Inspector General or an authorized designee.
24 (11) If information or assistance requested is, in the
25 judgment of the Inspector General, unreasonably refused or
26 not provided, the Inspector General may report the
27 circumstances to the head of the agency, the General Counsel
28 and the Governor for appropriate action.
29 (12) (i) The Inspector General shall have the authority
30 to issue civil investigative demands pursuant to
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1 paragraph (13).
2 (ii) Nothing contained in this paragraph or
3 paragraph (3) shall be construed to limit the regulatory
4 or investigative authority of any department or agency of
5 the Commonwealth whose functions might relate to persons,
6 enterprises, or matters falling within the scope of this
7 chapter.
8 (13) (i) Whenever the Inspector General has reason to
9 believe that any person or enterprise may be in
10 possession, custody, or control of any documentary
11 material relevant to an investigation under this chapter,
12 the Inspector General may issue in writing, and cause to
13 be served upon such person or enterprise, a civil
14 investigative demand requiring the production of such
15 material for examination.
16 (ii) Each such demand shall:
17 (A) state the nature of the conduct constituting
18 the alleged violation which is under investigation,
19 the provision of law applicable thereto and the
20 connection between the documentary material demanded
21 and the conduct under investigation;
22 (B) describe the class or classes of documentary
23 material to be produced thereunder with such
24 definiteness and certainty as to permit such material
25 to be fairly identified;
26 (C) state that the demand is returnable
27 forthwith or prescribe a return date which will
28 provide a reasonable period of time within which the
29 material so demanded may be assembled and made
30 available for inspection and copying or reproduction;
20060H2994B4730 - 24 -
1 (D) identify an investigator to whom such
2 material shall be made available; and
3 (E) contain the following statement printed
4 conspicuously at the top of the demand: "You have the
5 right to seek the assistance of any attorney and he
6 may represent you in all phases of the investigation
7 of which this civil investigative demand is a part."
8 (iii) No such demand shall:
9 (A) contain any requirement which would be held
10 to be unreasonable if contained in a subpoena duces
11 tecum issued by any court in connection with a grand
12 jury investigation of such alleged violation; or
13 (B) require the production of any documentary
14 evidence which would be privileged from disclosure if
15 demanded by a subpoena duces tecum issued by any
16 court in connection with a grand jury investigation
17 of such alleged violation.
18 (iv) Service of any such demand or any petition
19 filed under this paragraph shall be made in the manner
20 prescribed by the Pennsylvania Rules of Civil Procedure
21 for service of writs and complaints.
22 (v) A verified return by the individual serving any
23 such demand or petition setting forth the manner of such
24 service shall be prima facie proof of such service. In
25 the case of service by registered or certified mail, such
26 return shall be accompanied by the return post office
27 receipt of delivery of such demand.
28 (vi) (A) Any party upon whom any demand issued
29 under this subsection has been duly served shall make
30 such material available for inspection and copying or
20060H2994B4730 - 25 -
1 reproduction to the investigator designated therein
2 at the principal place of business of such party, or
3 at such other place as such investigator and such
4 party thereafter may agree or as the court may direct
5 pursuant to this paragraph, on the return date
6 specified in such demand. Such party may upon
7 agreement of the investigator substitute copies of
8 all or any part of such material for the originals
9 thereof.
10 (B) The investigator to whom any documentary
11 material is so delivered shall take physical
12 possession thereof, and shall be responsible for the
13 use made thereof and for its return pursuant to this
14 paragraph. The investigator may cause the preparation
15 of such copies of such documentary material as may be
16 required for official use. While in the possession of
17 the investigator, no material so produced shall be
18 available for examination, without the consent of the
19 party who produced such material, by any individual
20 other than the Inspector General or investigator.
21 Under such reasonable terms and conditions as the
22 Inspector General shall prescribe, documentary
23 material while in the possession of the investigator
24 shall be available for examination by the party who
25 produced such material or any duly authorized
26 representatives of such party.
27 (C) Upon completion of the investigation for
28 which any documentary material was produced under
29 this paragraph and any case or proceeding arising
30 from such investigation, the investigator shall
20060H2994B4730 - 26 -
1 return to the party who produced such material all
2 such material other than copies thereof made pursuant
3 to this paragraph which have not passed into the
4 control of any court or grand jury through
5 introduction into the record of such case or
6 proceeding.
7 (D) When any documentary material has been
8 produced by any party under this paragraph for use in
9 any investigation, and no case or proceeding arising
10 therefrom has been instituted within a reasonable
11 time after completion of the examination and analysis
12 of all evidence assembled in the course of such
13 investigation, such party shall be entitled, upon
14 written demand made upon the Inspector General, to
15 the return of all documentary material, other than
16 copies thereof made pursuant to this paragraph, so
17 produced by such party.
18 (vii) Whenever any person or enterprise fails to
19 comply with any civil investigative demand duly served
20 upon him under this paragraph or whenever satisfactory
21 copying or reproduction of any such material cannot be
22 done and such party refuses to surrender such material,
23 the Inspector General may file, in the court of common
24 pleas for any county in which such party resides or
25 transacts business, and serve upon such party a petition
26 for an order of such court for the enforcement of this
27 paragraph, except that if such person transacts business
28 in more than one county such petition shall be filed in
29 the county in which party maintains the party's principal
30 place of business.
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1 (viii) Within 20 days after the service of any such
2 demand upon any person or enterprise, or at any time
3 before the return date specified in the demand, whichever
4 period is shorter, such party may file, in the court of
5 common pleas of the county within which such party
6 resides or transacts business, and serve upon the
7 Inspector General a petition for an order of such court
8 modifying or setting aside such demand. The time allowed
9 for compliance with the demand in whole or in part as
10 deemed proper and ordered by the court shall not run
11 during the pendency of such petition in the court. Such
12 petition shall specify each ground upon which the
13 petitioner relies in seeking such relief, and may be
14 based upon any failure of such demand to comply with the
15 provisions of this paragraph or upon any constitutional
16 or other legal right or privilege of such party.
17 (ix) At any time during which the Inspector General
18 is in custody or control of any documentary material
19 delivered by any party in compliance with any such
20 demand, such party may file, in the court of common pleas
21 of the county within which such documentary material was
22 delivered, and serve upon the Inspector General a
23 petition for an order of such court requiring the
24 performance of any duty imposed by this paragraph.
25 (x) Whenever any petition is filed in any court of
26 common pleas under this paragraph, such court shall have
27 jurisdiction to hear and determine the matter so
28 presented, and, after a hearing at which all parties are
29 represented, to enter such order or orders as may be
30 required to carry into effect the provisions of this
20060H2994B4730 - 28 -
1 paragraph.
2 (14) Whenever any individual refuses, on the basis of
3 his privilege against self-incrimination, to comply with a
4 civil investigative demand issued pursuant to paragraph (13),
5 the Inspector General may request the Attorney General to
6 invoke the provisions of 42 Pa.C.S. § 5947 (relating to
7 immunity of witnesses).
8 (e) Status.--The office shall be considered an independent
9 agency under the act of October 15, 1980 (P.L.950, No.164),
10 known as the Commonwealth Attorneys Act.
11 Section 503. Specific powers related to unemployment
12 compensation and welfare.
13 (a) Unemployment compensation.--The office shall detect and
14 investigate waste, fraud and abuse in unemployment compensation
15 claims by randomly and annually auditing at least 20% of the
16 claims in the Department of Labor and Industry. The office has
17 the authority to contact both the unemployment compensation
18 claimant and the employer for purposes of obtaining necessary
19 information to carry out the functions of the agency.
20 (b) Welfare.--The office shall detect and investigate waste,
21 fraud and abuse in welfare claims, including Medicaid, by
22 randomly and annually auditing at least 20% of the claims in the
23 Department of Welfare. The office has the authority to contact
24 the welfare claimant for purposes of obtaining necessary
25 information to carry out the functions of the agency.
26 (c) Access.--The office shall maintain a single Statewide
27 toll-free telephone number which all persons, whether mandated
28 by law or not, may use to report information or complaints as
29 provided for in section 504.
30 Section 504. Complaint reporting; disclosure of identity;
20060H2994B4730 - 29 -
1 reprisals.
2 (a) Complaints.--The office may receive and investigate
3 complaints or information concerning the possible existence of
4 an activity in an executive agency constituting a violation of
5 law, mismanagement, fraud, waste, abuse of authority,
6 malfeasance, misfeasance, nonfeasance or a substantial and
7 specific danger to the public health and safety.
8 (b) Reprisals.--
9 (1) No person may take or threaten to take action
10 against an employee as a reprisal for making a complaint or
11 disclosing information to the office, unless the complaint
12 was made or the information disclosed with the knowledge that
13 it was false or misleading.
14 (2) The protections in this subsection for employees who
15 report, in good faith, fraud, waste, misconduct, malfeasance,
16 misfeasance, nonfeasance or abuse are in addition and
17 supplementary to protections provided for in the act of
18 December 12, 1986 (P.L.1559, No.169), known as the
19 Whistleblower Law.
20 CHAPTER 7
21 TRANSFER
22 Section 701. Transfer.
23 The following are transferred from the Office of State
24 Inspector General to the office:
25 (1) Functions formerly performed by the Office of State
26 Inspector General under 4 Pa. Code Ch. 1 Subch. X (relating
27 to Inspector General) and now performed by the office under
28 Chapter 5.
29 (2) Subjects of transfer of the Office of State
30 Inspector General employed, expended or used in connection
20060H2994B4730 - 30 -
1 with the functions transferred to the office under paragraph
2 (1). The transfer under this paragraph has the same effect as
3 if the subjects of transfer had originally been those of the
4 office.
5 Section 702. Employment status.
6 Personnel transferred under section 701(2) shall retain the
7 same employment status held prior to transfer. This section
8 includes:
9 (1) Civil service classification.
10 (2) Seniority.
11 (3) Benefits.
12 (4) Perquisites.
13 CHAPTER 21
14 MISCELLANEOUS PROVISIONS
15 Section 2101. Effective date.
16 This act shall take effect in 60 days.
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