PRIOR PRINTER'S NO. 907 PRINTER'S NO. 1243
No. 849 Session of 1999
INTRODUCED BY KENNEY, FARGO, CLARK, WOGAN, MICOZZIE, ORIE,
HENNESSEY, GODSHALL, HERMAN, ADOLPH, WALKO, PETRARCA,
LAUGHLIN, JAMES, DeLUCA, SAINATO, PRESTON, WILT, STABACK,
SAYLOR, GEIST, E. Z. TAYLOR, MAHER, PESCI, TIGUE, HARHAI,
MELIO, CURRY, COLAFELLA, TRELLO, WILLIAMS, ROONEY, RUBLEY,
STEELMAN AND RAMOS, MARCH 10, 1999
AS AMENDED, COMMITTEE ON JUDICIARY, HOUSE OF REPRESENTATIVES,
MARCH 23, 1999
AN ACT
1 Prohibiting false claims; imposing duties on the Attorney
2 General and on district attorneys; and providing for
3 procedures and for penalties.
4 TABLE OF CONTENTS
5 Chapter 1. Preliminary Provisions
6 Section 101. Short title.
7 Section 102. Definitions.
8 Section 103. Construction.
9 Chapter 3. False Claims
10 Section 301. Offenses defined.
11 Section 302. False claims jurisdiction.
12 Section 303. Procedure.
13 Chapter 5. Qui Tam Actions
14 Section 501. General provisions.
15 Section 502. Commonwealth funds.
16 Section 503. Political subdivision funds.
1 Section 504. Complaints relating to Commonwealth and political
2 subdivision funds.
3 Section 505. Intervention by political subdivision.
4 Section 506. Extension of time.
5 Section 507. Other actions prohibited.
6 Section 508. Exclusions.
7 Section 509. Employment-related discovery of information.
8 Section 510. Responsibility for prosecution.
9 Section 511. Dismissal of action.
10 Section 512. Settlement.
11 Section 513. Election not to proceed.
12 Section 514. Intervention.
13 Section 515. Proceeds.
14 Section 516. Reversion to General Fund.
15 Section 517. Expenses.
16 Chapter 7. General Provisions
17 Section 701. Stay of discovery.
18 Section 702. Limitations on participation.
19 Section 703. Employee protection.
20 Section 704. Limitations.
21 Section 705. Remedies.
22 Section 706. Enforcement.
23 Section 707. Civil investigative demand.
24 Section 708. Immunity.
25 Section 709. Effective date.
26 The General Assembly of the Commonwealth of Pennsylvania
27 hereby enacts as follows:
28 CHAPTER 1
29 PRELIMINARY PROVISIONS
30 Section 101. Short title.
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1 This act shall be known and may be cited as the False Claims
2 Act.
3 Section 102. Definitions.
4 The following words and phrases when used in this act shall
5 have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Claim." Any request or demand for money, property or
8 services made to any employee, officer or agent of the
9 Commonwealth or of any political subdivision thereof or to any
10 contractor, subcontractor, grantee or other recipient of the
11 Commonwealth or any political subdivision thereof, whether under <--
12 contract or not, if any portion of the money, property or
13 services requested or demanded issued from, was provided or will
14 be reimbursed by the Commonwealth, referred to as Commonwealth
15 funds, or by any political subdivision thereof, referred to as
16 political subdivision funds.
17 "False." In addition to its ordinary meaning, this term also
18 means fraudulent.
19 "Knowing" or "knowingly." A person who, with respect to
20 information, does any of the following:
21 (1) has actual knowledge of the information;
22 (2) acts in deliberate ignorance of the truth or falsity
23 of the information; or
24 (3) acts in reckless disregard of the truth or falsity
25 of the information.
26 Proof of specific intent to defraud shall not be required.
27 "Person." Any natural person, corporation, county, political
28 subdivision, firm, association, legal entity, organization,
29 partnership, business or trust.
30 "Political subdivision." Any city, county, tax or assessment
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1 district, municipal or government authority or other legally
2 authorized local governmental entity in this Commonwealth.
3 "Proceeds." The term includes civil penalties as well as
4 double or treble damages as provided in Chapter 3.
5 "Prosecuting authority." The Attorney General and where <--
6 appropriate under section 3, the district attorney of any county
7 charged with investigating, filing and conducting legal
8 proceedings.
9 "PROSECUTING AUTHORITY." THE ATTORNEY GENERAL AND WHERE <--
10 APPROPRIATE THE DISTRICT ATTORNEY OF ANY COUNTY IN WHICH THE
11 POLITICAL SUBDIVISION, INCLUDING THE COUNTY ITSELF, LIES.
12 Section 103. Construction.
13 This act shall be liberally and broadly construed to
14 effectuate its purposes. It shall be applied and interpreted to
15 promote the public interest in eliminating TO ELIMINATE fraud, <--
16 waste and abuse through the submission of false or fraudulent
17 claims in this Commonwealth or in any of its political
18 subdivisions.
19 CHAPTER 3
20 FALSE CLAIMS
21 Section 301. Offenses defined.
22 (a) Liability.--A person who commits any of the following
23 acts shall be liable to the Commonwealth or to the political
24 subdivision for three times the amount of damages which the
25 Commonwealth or the political subdivision sustains because of
26 the act of that person and shall also be liable to the
27 Commonwealth or to the political subdivision for the costs of a <--
28 civil AN action brought to recover any of those penalties or <--
29 damages and shall be liable to the Commonwealth or political
30 subdivision for a civil penalty of not less than $5,000 nor more
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1 than $10,000 for each false claim:
2 (1) Knowingly presents or causes to be presented to an
3 officer or employee of the Commonwealth or any political
4 subdivision a false claim for payment or approval.
5 (2) Knowingly makes, uses or causes to be made or used a
6 false record or statement to get a false claim paid or
7 approved by the Commonwealth or by any political subdivision.
8 (3) Conspires to defraud the Commonwealth or any
9 political subdivision by getting a false claim allowed or
10 paid by the Commonwealth or by any political subdivision.
11 (4) Has possession, custody or control of public
12 property or money used or to be used by the Commonwealth or
13 by any political subdivision and knowingly delivers or causes
14 to be delivered property or OF lesser quality, quantity or <--
15 value than for which the person receives a certificate or
16 receipt.
17 (5) Is authorized to make or deliver a document
18 certifying receipt of property used or to be used by the
19 Commonwealth or by any political subdivision and knowingly
20 makes or delivers a receipt that falsely represents the
21 quality, quantity or value of the property used or to be
22 used.
23 (6) Knowingly buys or receives as a pledge of an
24 obligation or debt public property from any person who
25 lawfully may not sell or pledge the property.
26 (7) Knowingly makes, uses or causes to be made or used a
27 false record or statement to conceal, avoid or decrease an
28 obligation to pay or transmit money or property to the
29 Commonwealth or any political subdivision.
30 (8) Is a beneficiary of an inadvertent submission of a <--
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1 false claim to the Commonwealth or a political subdivision,
2 subsequently discovers the falsity of the claim and fails to
3 disclose the false claim to the Commonwealth or the political
4 subdivision within a reasonable time, but in no event longer
5 than 90 days after discovery of the false claim.
6 (8) UNKNOWINGLY SUBMITS A FALSE CLAIM, IS A BENEFICIARY <--
7 OF PAYMENT BY THE COMMONWEALTH OR POLITICAL SUBDIVISION FOR
8 THAT CLAIM, SUBSEQUENTLY DISCOVERS OR HAS REASONABLE GROUNDS
9 TO DISCOVER THAT THE CLAIM WAS FALSE AND FAILS TO DISCLOSE
10 THAT THE CLAIM WAS FALSE. DISCLOSURE SHALL BE MADE IN WRITING
11 TO THE COMMONWEALTH OR POLITICAL SUBDIVISION WITHIN A
12 REASONABLE TIME, BUT IN NO EVENT LONGER THAN 90 DAYS AFTER
13 DISCOVERY OF THE FALSE CLAIM.
14 (b) Reduced assessment.--Notwithstanding subsection (a), the
15 court may SHALL assess not less than two times nor more than <--
16 three times the amount of damages which the Commonwealth or the
17 political subdivision sustains because of the act of the person
18 described in subsection (a)(1), and no civil penalty, if the
19 court finds all of the following:
20 (1) The person committing the violation furnished the
21 prosecuting authority with all information known to that
22 person about the violation within 60 days after the date on
23 which the person first obtained the information.
24 (2) The person fully cooperated with any investigation
25 by the prosecuting authority of the violation.
26 (3) At the time the person furnished the prosecuting
27 authority with information about the violation, no criminal
28 prosecution, civil action or administrative action had
29 commenced with respect to the violation and the person did
30 not have actual knowledge OR NOTICE of the existence of an <--
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1 investigation into the violation.
2 (c) Joint and several liability.--Liability under this
3 section shall be joint and several for any act committed by two
4 or more persons.
5 (d) Limitation.--
6 (1) This section does not apply to any controversy
7 involving an aggregate amount of less than $2,500 in value or
8 to any claims involving benefits or compensation conferred
9 under the act of June 2, 1915 (P.L.736, No.338), known as the
10 Workers' Compensation Act, or the act of December 5, 1936
11 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the
12 Unemployment Compensation Law, or the act of June 13, 1967
13 (P.L.31, No.21), known as the Public Welfare Code, except
14 where the claim has not been filed by the individual
15 recipient of benefits.
16 (2) As used in this subsection, the term "controversy"
17 means any one or more false claims submitted or caused to be
18 submitted by either a person or persons who act pursuant to a
19 common plan, scheme or design in violation of this act.
20 Section 302. False claims jurisdiction.
21 An action under this act must SHALL be brought in the <--
22 Commonwealth Court if any defendant can be found, resides or
23 transacts business in this Commonwealth or if an act proscribed
24 by this act occurred within this Commonwealth.
25 Section 303. Procedure.
26 (a) Attorney General COMMONWEALTH prosecution.-- <--
27 (1) The Attorney General shall diligently investigate
28 violations under section 301 involving Commonwealth funds. If
29 the Attorney General finds that a person has violated or is
30 violating section 301, the Attorney General may bring a civil <--
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1 AN action under this section ACT against that person. <--
2 (2) If the Attorney General brings a civil AN action <--
3 under this act on a claim involving political subdivision
4 funds as well as Commonwealth funds, the Attorney General
5 shall, on the same date that the complaint is filed in this
6 action, serve by mail, return receipt requested, a copy of
7 the complaint on the appropriate prosecuting authority <--
8 DISTRICT ATTORNEY. <--
9 (3) The prosecuting authority DISTRICT ATTORNEY shall <--
10 have the right to intervene in an action brought by the
11 Attorney General DISTRICT ATTORNEY under this act within 90 <--
12 days after receipt of the complaint pursuant to paragraph
13 (2).
14 (b) Political subdivision prosecution.--
15 (1) The prosecuting authority representing a political <--
16 subdivision
17 (1) THE DISTRICT ATTORNEY shall diligently investigate <--
18 violations under section 301 involving political subdivision
19 funds. If the prosecuting authority representing the <--
20 political subdivision DISTRICT ATTORNEY finds that a person <--
21 has violated or is violating section 301, he may bring a <--
22 civil AN action under this section ACT against that person. <--
23 (2) If the prosecuting authority representing the <--
24 political subdivision brings a civil
25 (2) THE DISTRICT ATTORNEY MAY REFER A MATTER INVOLVING <--
26 POLITICAL SUBDIVISION FUNDS TO THE ATTORNEY GENERAL AT ANY
27 TIME. THE ATTORNEY GENERAL MAY DECLINE THE REFERRAL OR MAY
28 ACCEPT IT UNDER SUCH TERMS, AS THE ATTORNEY GENERAL MAY
29 DETERMINE, INCLUDING, BUT NOT LIMITED TO, TERMS REGARDING THE
30 DISTRIBUTION OF ANY RECOVERY FROM SUCH ACTION, AS BOTH THE
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1 ATTORNEY GENERAL AND THE DISTRICT ATTORNEY DEEM FIT.
2 (3) IF THE DISTRICT ATTORNEY BRINGS AN action on a claim
3 involving Commonwealth funds as well as political subdivision
4 funds, the prosecuting authority DISTRICT ATTORNEY shall, on <--
5 the same date that the complaint is filed in this action,
6 serve by mail, return receipt requested, a copy of the
7 complaint on the Attorney General.
8 (3) (4) Within 90 days after receiving the complaint <--
9 pursuant to paragraph (2), the Attorney General shall do one
10 of the following:
11 (i) Notify the court that the prosecuting authority <--
12 DISTRICT ATTORNEY intends to proceed with the action, in <--
13 which case the Attorney General shall assume primary
14 responsibility for conducting the action and the
15 prosecuting authority representing the political <--
16 subdivision DISTRICT ATTORNEY shall have the right to <--
17 continue as a party.
18 (ii) Notify the court that the prosecuting authority <--
19 DISTRICT ATTORNEY declines to prosecute the action, in <--
20 which case the prosecuting authority representing the
21 political subdivision shall have the right to conduct the
22 action on its own.
23 (iii) Proceed jointly with the prosecuting
24 authority, assuming coequal responsibility for
25 prosecution of the action.
26 CHAPTER 5
27 QUI TAM ACTIONS
28 Section 501. General provisions.
29 (a) When action may be brought.--A person may bring a civil <--
30 QUI TAM action for a violation of this act for the person and <--
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1 either for the Commonwealth in the name of the Commonwealth if
2 any Commonwealth funds are involved or for a political
3 subdivision in the name of the political subdivision if
4 political subdivision funds are exclusively involved. A qui tam
5 complaint ACTION may be brought alleging fraud involving both <--
6 Commonwealth and political subdivision funds. The person
7 bringing the QUI TAM action shall be referred to as the qui tam <--
8 plaintiff. Once filed, the qui tam action may be dismissed only
9 by the written consent of the court and the prosecuting <--
10 authority DISTRICT ATTORNEY, taking into account the best <--
11 interests of the parties involved and the public purposes of
12 this act.
13 (b) Filing.--A complaint filed by a private person QUI TAM <--
14 PLAINTIFF under this section must ACT SHALL be filed ex parte <--
15 under seal with the Clerk of the Commonwealth Court or EX PARTE <--
16 UNDER SEAL in the appropriate Federal district court if Federal
17 funds are also involved, and the complaint and all related
18 pleadings must SHALL remain under seal for 90 days from the date <--
19 of service. No service shall be made on the defendant until
20 after the complaint is unsealed by order of the court.
21 (c) Service upon Attorney General.--Within three days of the
22 complaint being filed pursuant to subsection (b), the qui tam
23 plaintiff shall serve by mail, return receipt requested, the
24 Attorney General with a copy of the complaint and a written
25 disclosure of substantially all material evidence and
26 information the person QUI TAM PLAINTIFF possesses at that time. <--
27 Section 502. Commonwealth funds.
28 Within 90 days after receiving a complaint alleging
29 violations which involve Commonwealth funds, but not political
30 subdivision funds, the Attorney General shall do either of the
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1 following:
2 (1) Notify the court that it intends to proceed with the
3 action and petition the court to have the case unsealed. If
4 the court grants the Attorney General's request, the seal may
5 be lifted. The court may, upon motion by the Attorney
6 General, order a partial unsealing where appropriate.
7 (2) Notify the court that it declines to prosecute the
8 action, in which case the complaint may be unsealed by the
9 court within 20 days after written notification is made by
10 the Attorney General to the qui tam plaintiff and counsel
11 that the Attorney General does not wish to intervene. Upon
12 such notification, the qui tam plaintiff shall have the right
13 to conduct the action.
14 Section 503. Political subdivision funds.
15 (a) Procedure.--Within 30 days after receiving a complaint
16 alleging violations which exclusively involve political
17 subdivision funds, the Attorney General shall promptly forward
18 the complaint and written disclosure to the appropriate
19 prosecuting authority DISTRICT ATTORNEY for review and <--
20 disposition and shall notify in writing the qui tam plaintiff
21 and counsel of the transfer.
22 (b) Duty of prosecuting authority DISTRICT ATTORNEY.--Within <--
23 60 days after the Attorney General forwards the complaint and
24 written disclosure under subsection (a), the prosecuting <--
25 authority DISTRICT ATTORNEY shall do either of the following: <--
26 (1) Notify the court that it intends to proceed with the
27 action and petition the court to have the case unsealed. If
28 the court grants the prosecuting authority's DISTRICT <--
29 ATTORNEY'S request, the seal shall be lifted.
30 (2) Notify the court that it declines to take over the
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1 action, in which case the seal may be lifted within 20 days
2 after such notification has been made and the qui tam
3 plaintiff shall have the right to conduct the action.
4 Section 504. Complaints relating to Commonwealth and political
5 subdivision funds.
6 (a) Complaints.--Within 30 days after receiving a complaint
7 alleging violations which involve or allege both Commonwealth
8 and political subdivision funds, the Attorney General shall
9 forward copies of the complaint and written disclosure to the
10 appropriate prosecuting authority DISTRICT ATTORNEY and shall <--
11 coordinate its review and investigation with those of the
12 prosecuting authority.
13 (b) Procedure.--Within 90 days after receiving a complaint
14 alleging violations which involve or allege both Commonwealth
15 and political subdivision funds, the Attorney General shall do
16 one of the following:
17 (1) Notify the court in writing that the Attorney
18 General intends to proceed with the action, in which case the
19 seal shall be lifted and service effected on the defendant.
20 (2) Notify the court in writing that the Attorney
21 General declines to take over the action but that the
22 prosecuting authority of the political subdivision DISTRICT <--
23 ATTORNEY involved intends to proceed with the action, in
24 which case the seal shall be lifted and the action shall be
25 conducted by the prosecuting authority DISTRICT ATTORNEY. <--
26 (3) Notify the court that both the Attorney General and
27 the district attorney representing the political subdivision <--
28 decline to take over the action, in which case the seal may
29 be lifted within 20 days after notification has been made and
30 the qui tam plaintiff shall have the right to conduct the
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1 action.
2 Section 505. Intervention by political subdivision.
3 If the Attorney General proceeds with the action under
4 section 503(b)(1), the district attorney representing the <--
5 political subdivision shall be permitted to intervene in the
6 action within 60 days after the Attorney General notifies the
7 court of his intentions.
8 Section 506. Extension of time.
9 Upon a showing of good cause and reasonable diligence in his
10 investigation, the prosecuting authority or the prosecuting <--
11 authority of a political subdivision DISTRICT ATTORNEY may move <--
12 the court for reasonable extensions of time during which the
13 complaint will remain under seal. The qui tam plaintiff shall be
14 notified of any extensions requested under this section. Any
15 such motions may be supported by affidavits or other submissions
16 in camera.
17 Section 507. Other actions prohibited.
18 When a person QUI TAM PLAINTIFF brings an action under this <--
19 chapter ACT, no other person shall be permitted to bring a <--
20 related action UNDER THIS ACT based on the same or similar facts <--
21 underlying the pending action.
22 Section 508. Exclusions.
23 (a) General rule.--No court shall have jurisdiction over an
24 action brought under this chapter against a member of the ACT: <--
25 (1) AGAINST A MEMBER OF THE General Assembly, a member
26 of the State judiciary OF THE COMMONWEALTH, an elected <--
27 official in the executive branch of State government THE <--
28 GOVERNMENT OF THE COMMONWEALTH or a member of the governing
29 body or elected official of any political subdivision if the
30 action is based on evidence or information known to the
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1 Commonwealth or political subdivision when the action was
2 brought.
3 (b) Dismissal.--The court may dismiss an action under this <--
4 act upon motion of the Attorney General if it finds that
5 substantially all allegations and material facts have been
6 publicly disclosed in a criminal, civil or administrative
7 hearing, in an investigation, report, hearing or audit conducted
8 by or at the request of the General Assembly, auditor or
9 governing body of a political subdivision or by the news media,
10 unless the action is brought by the Attorney General or the
11 prosecuting authority of a political subdivision or the person
12 bringing the action is an original source of the information. No
13 court shall have jurisdiction over an action under this section
14 based upon the public disclosure of allegations or transactions
15 (2) WHICH RELIES UPON THE PUBLIC DISCLOSURE OF SPECIFIC <--
16 ALLEGATIONS OR TRANSACTIONS in a criminal, civil or
17 administrative hearing, in any A governmental report, <--
18 hearing, audit or investigation or from the news media,
19 unless the action is brought by OR INTERVENED IN BY a <--
20 prosecuting authority or the person bringing the action QUI <--
21 TAM PLAINTIFF is an original source of the information.
22 (c) (B) Definition.--As used in this section, the term <--
23 "original source" means an individual who has voluntarily
24 provided the information to the Commonwealth or political <--
25 subdivision PROSECUTING AUTHORITY before filing an action based <--
26 on that information and either has direct and independent
27 knowledge of the information on which the allegations are based
28 or directly or indirectly provided the impetus, basis or
29 catalyst for the investigation, hearing, audit or report which
30 led to the public disclosure.
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1 Section 509. Employment-related discovery of information.
2 No court shall have jurisdiction over an action brought under
3 this chapter ACT based upon information discovered by a present <--
4 or former employee of the Commonwealth or a political
5 subdivision during the course of his employment unless that
6 employee first in good faith attempts to use existing internal
7 procedures for reporting and seeking recovery of the falsely
8 claimed sums through official channels and unless the
9 Commonwealth or political subdivision PROSECUTING AUTHORITY <--
10 failed to act on the information provided within a reasonable
11 period of time. A reasonable period of time shall mean no longer
12 than six months after information has been disclosed.
13 Section 510. Responsibility for prosecution.
14 If the Commonwealth or political subdivision PROSECUTING <--
15 AUTHORITY proceeds with the action, it shall have the primary
16 responsibility for prosecuting the action. The qui tam plaintiff
17 shall have the right to continue with all rights and obligations
18 as a full party to the action.
19 Section 511. Dismissal of action.
20 The Commonwealth or political subdivision may seek to dismiss
21 the action for good cause notwithstanding the objections of the
22 qui tam plaintiff if the qui tam plaintiff has been notified by
23 the Commonwealth or political subdivision PROSECUTING AUTHORITY <--
24 of the filing of the motion and the court has provided the qui
25 tam plaintiff with an adequate opportunity to oppose the motion.
26 Section 512. Settlement.
27 The Commonwealth or political subdivision PROSECUTING <--
28 AUTHORITY may settle the action with the defendant
29 notwithstanding the objections of the qui tam plaintiff if the
30 court determines that the proposed settlement is fair, adequate
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1 and reasonable under all of the circumstances to all parties
2 involved.
3 Section 513. Election not to proceed.
4 If the Commonwealth or political subdivision PROSECUTING <--
5 AUTHORITY elects not to proceed, the qui tam plaintiff shall
6 have the right to conduct the action. If the Commonwealth or <--
7 political subdivision PROSECUTING AUTHORITY so requests, the <--
8 Commonwealth or political subdivision IT shall be served with <--
9 copies of all pleadings filed in the action and supplied with
10 copies of all deposition transcripts.
11 Section 514. Intervention.
12 Upon timely application, the court may permit the
13 Commonwealth or political subdivision PROSECUTING AUTHORITY to <--
14 intervene in an action with which it had initially declined to
15 proceed if the interest of the Commonwealth or political
16 subdivision in recovery of the property or funds involved is not
17 being adequately represented by the qui tam plaintiff.
18 Section 515. Proceeds.
19 (a) Attorney General.--If the Attorney General initiates an
20 action under section 303(a) or assumes control of an action
21 initiated by the district attorney representing the political <--
22 subdivision pursuant to section 303 303(B)(4)(II), the Attorney <--
23 General shall receive a fixed 33% of the proceeds of the action
24 or settlement of the claim, which funds shall be used to support
25 and expand its ongoing investigation and prosecution of false
26 claims violations in this Commonwealth or to support other
27 investigation and prosecution efforts.
28 (b) District attorney.--If a district attorney representing <--
29 a political subdivision initiates and conducts an action
30 pursuant to section 303(b), the office of the district attorney
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1 shall receive a fixed 33% of the proceeds of the action or
2 settlement of the claim, which funds shall be used to support
3 and expand its ongoing investigation and prosecution of false
4 claims violations within its jurisdiction or to support other
5 investigation and prosecution efforts.
6 (c) Award of portion of recovery.--If a district attorney
7 intervenes in an action initiated by the Attorney General
8 pursuant to section 303(a)(3) or remains a party to an action
9 assumed by the Attorney General pursuant to section 303(b)(3)(i) <--
10 303(B)(4)(I), the court may award the office of the district <--
11 attorney a portion of the Attorney General's fixed 33% of the
12 recovery under subsection (a), taking into account the district
13 attorney's role in investigating and conducting the action and
14 the resources of the office expended on the prosecution.
15 (d) Qui tam recovery.--
16 (1) If the Commonwealth or political subdivision <--
17 PROSECUTING AUTHORITY proceeds with an action brought by a <--
18 qui tam plaintiff under this chapter ACT, the qui tam <--
19 plaintiff shall, subject to subsections (f) and (g), receive
20 not less than 20% nor more than 33% of the full proceeds of
21 the action or settlement of the claim, depending upon the
22 extent to which the qui tam plaintiff substantially
23 contributed to the overall prosecution of the action. IF THE <--
24 PROSECUTING AUTHORITY AND THE QUI TAM PLAINTIFF CANNOT REACH
25 AN AGREEMENT CONCERNING THE PERCENTAGE OF PROCEEDS TO BE
26 DISTRIBUTED TO THE QUI TAM PLAINTIFF THE DETERMINATION SHALL
27 BE MADE BY THE COURT.
28 (2) When it conducts the action, the Office of Attorney
29 General or the office of the prosecuting authority of the <--
30 political subdivision DISTRICT ATTORNEY shall receive a fixed <--
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1 33% of the proceeds of the action or settlement of the claim,
2 which funds shall be used to support and expand its ongoing
3 investigation and prosecution of false claims made against
4 the Commonwealth or political subdivision or otherwise to
5 investigate or prosecute consistent with the duties of those <--
6 THESE offices. <--
7 (3) When both the Attorney General and the district
8 attorney representing the political subdivision are involved
9 as coparties in a qui tam action pursuant to section 504, the
10 court in its discretion may award the district attorney a
11 portion of the Attorney General's fixed 33% of the recovery,
12 taking into account the district attorney's cooperation and
13 contribution to investigating and conducting the action.
14 (e) Decline to proceed.--If the Commonwealth or political <--
15 subdivision PROSECUTING AUTHORITY declines to proceed with an <--
16 action under subsection (c), the qui tam plaintiff shall,
17 subject to subsections (f) and (g), receive an amount which the
18 court decides is reasonable for collecting the civil penalty and
19 damages on behalf of the Commonwealth or political subdivision.
20 The amount awarded by the court shall be not less than 30% nor
21 more than 50% of the proceeds of the action or settlement and
22 shall be paid out of the proceeds.
23 (f) Present or former employee.--If the action is one <--
24 provided for under section 507, the present or former employee
25 of the Commonwealth or political subdivision shall not be
26 entitled to any minimum guaranteed recovery from the proceeds.
27 The court, however, may award the qui tam plaintiff those sums
28 from the proceeds as it considers appropriate, but in no case
29 more than 33% of the proceeds if the Commonwealth or political
30 subdivision goes forth with the action or 50% if the
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1 Commonwealth or political subdivision declines to go forth,
2 taking into account the significance of the information, the
3 role of the qui tam plaintiff in advancing the case to
4 litigation and the scope of and response to the employee's
5 attempts to report and gain recovery of the falsely claimed
6 funds through official channels.
7 (F) PRESENT OR FORMER EMPLOYEE.--IF A QUI TAM ACTION IS <--
8 BROUGHT BY A PRESENT OR FORMER EMPLOYEE OF THE COMMONWEALTH OR
9 POLITICAL SUBDIVISION, THE QUI TAM PLAINTIFF SHALL NOT BE
10 ENTITLED TO ANY MINIMUM GUARANTEED RECOVERY FROM THE PROCEEDS.
11 IF THE PROSECUTING AUTHORITY AND THE QUI TAM PLAINTIFF CANNOT
12 REACH AN AGREEMENT CONCERNING THE PERCENTAGE OF PROCEEDS TO BE
13 DISTRIBUTED TO THE QUI TAM PLAINTIFF, THE DETERMINATION SHALL BE
14 MADE BY THE COURT. THE COURT MAY AWARD THE QUI TAM PLAINTIFF
15 THOSE SUMS FROM THE PROCEEDS AS IT CONSIDERS APPROPRIATE, BUT IN
16 NO CASE MORE THAN 33% OF THE PROCEEDS IF THE PROSECUTING
17 AUTHORITY GOES FORTH WITH THE ACTION OR 50% IF IT DECLINES TO GO
18 FORTH, TAKING INTO ACCOUNT THE SIGNIFICANCE OF THE INFORMATION,
19 THE ROLE OF THE QUI TAM PLAINTIFF IN ADVANCING THE CASE TO
20 LITIGATION AND THE SCOPE OF AND RESPONSE TO THE QUI TAM
21 PLAINTIFF'S ATTEMPTS TO REPORT AND GAIN RECOVERY OF THE FALSELY
22 CLAIMED FUNDS THROUGH OFFICIAL CHANNELS.
23 (g) Fraudulent activity.--
24 (1) Where the action is one which the court finds to be <--
25 based primarily on information from a person who actively
26 participated in the fraudulent activity, the person shall not
27 be entitled to any minimum guaranteed recovery from the
28 proceeds. The court, however, in its sole discretion after a
29 full review of all of the facts and circumstances may award
30 the qui tam plaintiff such sums from the proceeds as it
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1 considers appropriate under the circumstances, but in no case
2 more than 33% of the proceeds if the Commonwealth or
3 political subdivision goes forth with the action or 50% if
4 the Commonwealth or political subdivision declines to go
5 forth, taking into account the significance of the
6 information, the role of the qui tam plaintiff in advancing
7 the case to litigation, the scope of the person's involvement
8 in the fraudulent activity, the person's attempts to avoid or
9 resist such activity and all other circumstances surrounding
10 the activity.
11 (1) WHERE THE ACTION IS ONE WHICH THE COURT FINDS TO BE <--
12 BASED PRIMARILY ON INFORMATION FROM A QUI TAM PLAINTIFF WHO
13 ACTIVELY PARTICIPATED IN THE FRAUDULENT ACTIVITY, THE QUI TAM
14 PLAINTIFF SHALL NOT BE ENTITLED TO ANY MINIMUM GUARANTEED
15 RECOVERY FROM THE PROCEEDS. IF THE PROSECUTING AUTHORITY AND
16 THE QUI TAM PLAINTIFF CANNOT REACH AN AGREEMENT CONCERNING
17 THE PERCENTAGE OF PROCEEDS TO BE DISTRIBUTED TO THE QUI TAM
18 PLAINTIFF, THE DETERMINATION SHALL BE MADE BY THE COURT. THE
19 COURT, IN ITS SOLE DISCRETION AFTER A FULL REVIEW OF ALL THE
20 FACTS AND CIRCUMSTANCES, MAY AWARD THE QUI TAM PLAINTIFF SUCH
21 SUMS FROM THE PROCEEDS AS IT CONSIDERS APPROPRIATE UNDER THE
22 CIRCUMSTANCES, BUT IN NO CASE MORE THAN 33% OF THE PROCEEDS
23 IF THE PROSECUTING AUTHORITY GOES FORTH WITH THE ACTION OR
24 50% IF IT DECLINES TO GO FORTH, TAKING INTO ACCOUNT THE
25 SIGNIFICANCE OF THE INFORMATION, THE ROLE OF THE QUI TAM
26 PLAINTIFF IN ADVANCING THE CASE TO LITIGATION, THE SCOPE OF
27 THE QUI TAM PLAINTIFF'S INVOLVEMENT IN THE FRAUDULENT
28 ACTIVITY, THE QUI TAM PLAINTIFF'S ATTEMPTS TO AVOID OR RESIST
29 SUCH ACTIVITY AND ALL OTHER CIRCUMSTANCES SURROUNDING THE
30 ACTIVITY.
19990H0849B1243 - 20 -
1 (2) A person who has been convicted of a crime, either
2 in the same or another jurisdiction, based on participation
3 in the fraudulent activity AT ISSUE IN THE ACTION UNDER THIS <--
4 ACT shall under no circumstances be permitted to participate
5 in any action under this act as a qui tam plaintiff.
6 (h) Present or former sworn law enforcement officer or other
7 governmental investigator.--Any present or former sworn law
8 enforcement officer or other governmental investigator who
9 obtains information regarding a false claim in the course of
10 that officer's or investigator's official duties shall be
11 precluded from participating in the proceeds of a qui tam action
12 on the basis of that information.
13 (I) USE OF RECOVERIES.--PROCEEDS RECOVERED UNDER THIS ACT BY <--
14 THE PROSECUTING AUTHORITY SHALL BE PLACED IN THE OPERATING FUND
15 OF THE COMMONWEALTH, THE COUNTY OF THE DISTRICT ATTORNEY, OR
16 BOTH, AS APPROPRIATE. THE COMMONWEALTH, THE COUNTY OF THE
17 DISTRICT ATTORNEY, OR BOTH, AS APPROPRIATE, SHALL IMMEDIATELY
18 RELEASE FROM THE OPERATING FUND, WITHOUT RESTRICTION, A LIKE
19 AMOUNT FOR THE USE OF THE PROSECUTING AUTHORITY FOR THE PURPOSES
20 ELSEWHERE SPECIFIED IN THIS ACT. THE ENTITY HAVING BUDGETARY
21 CONTROL SHALL NOT ANTICIPATE FUTURE RECOVERIES IN ADOPTION AND
22 APPROVAL OF THE BUDGET FOR THE PROSECUTING AUTHORITY.
23 (J) ANNUAL AUDIT OF RECOVERIES.--IT SHALL BE THE
24 RESPONSIBILITY OF THE COMMONWEALTH, THE COUNTY OF THE DISTRICT
25 ATTORNEY, OR BOTH, AS APPROPRIATE, TO PROVIDE, THROUGH THE
26 CONTROLLER, BOARD OF AUDITORS OR OTHER APPROPRIATE AUDITOR, AN
27 ANNUAL AUDIT OF ALL RECOVERIES UNDER THIS ACT. THE AUDIT SHALL
28 NOT BE MADE PUBLIC BUT SHALL BE SUBMITTED TO THE ATTORNEY
29 GENERAL'S OFFICE BY SEPTEMBER 30 OF EACH YEAR.
30 (K) ANNUAL REPORT.--THE ATTORNEY GENERAL SHALL ANNUALLY
19990H0849B1243 - 21 -
1 SUBMIT A REPORT TO THE APPROPRIATIONS COMMITTEE AND THE
2 JUDICIARY COMMITTEE OF THE SENATE AND THE APPROPRIATIONS
3 COMMITTEE AND JUDICIARY COMMITTEE OF THE HOUSE OF
4 REPRESENTATIVES, SPECIFYING THE RECOVERIES OBTAINED UNDER THIS
5 ACT. THE REPORT SHALL GIVE AN ACCOUNTING OF ALL MONEYS RECOVERED
6 THROUGH THE SALE OF ANY PROPERTY SEIZED IN SATISFACTION OF ANY
7 JUDGMENT ARISING FROM AN ACTION UNDER THIS ACT.
8 (L) RECOVERIES AND APPROPRIATIONS.--RECOVERIES OR FUTURE
9 RECOVERIES UNDER THIS ACT SHALL BE IN ADDITION TO ANY
10 APPROPRIATION MADE TO THE OFFICE OF THE PROSECUTING AUTHORITY.
11 Section 516. Reversion to General Fund.
12 The portion of the recovery (A) GENERAL RULE.--THE PORTION <--
13 OF THE PROCEEDS not distributed under section 516 shall revert
14 to the General Fund if WHEN the underlying false claims involved <--
15 Commonwealth funds exclusively and to the political subdivision
16 if WHEN the underlying false claims involved political <--
17 subdivision funds exclusively. If WHEN petitioned to do so, the <--
18 court shall make an apportionment of the recovered proceeds
19 between the Commonwealth and political subdivision based on
20 their relative share of the funds falsely claimed.
21 (B) REIMBURSEMENT.--WHEN AN INSURER, GUARANTOR OR SURETY HAS <--
22 SUFFERED A LOSS ON AN UNDERLYING FALSE CLAIM THROUGH EITHER:
23 (1) REIMBURSING THE COMMONWEALTH OR POLITICAL
24 SUBDIVISION; OR
25 (2) DIRECTLY PAYING A CLAIMANT.
26 IT SHALL BE REIMBURSED FOR BOTH. WHEN THE REVERSION TO THE
27 GENERAL FUND IS INADEQUATE TO COMPENSATE THE COMMONWEALTH OR
28 POLITICAL SUBDIVISION FOR DAMAGES SUSTAINED AND THE INSURER,
29 GUARANTOR OR SURETY FOR ALL MONEYS REIMBURSED TO THE
30 COMMONWEALTH OR POLITICAL SUBDIVISION OR DIRECTLY PAID TO A
19990H0849B1243 - 22 -
1 CLAIMANT AS A RESULT OF THOSE DAMAGES, THE UNINSURED LOSSES OF
2 THE COMMONWEALTH OR POLITICAL SUBDIVISION SHALL BE PAID FIRST
3 AND THE INSURER, GUARANTOR OR SURETY SHALL RECOVER ITS
4 REIMBURSEMENT AND DIRECT PAYMENTS TO CLAIMANTS BEFORE FURTHER
5 DISTRIBUTION IS MADE UNDER THIS ACT.
6 Section 517. Expenses.
7 If the Commonwealth, political subdivision or qui tam
8 plaintiff prevails in or settles any action under this chapter <--
9 ACT, the qui tam plaintiff shall receive an amount for all <--
10 reasonable expenses incurred in the prosecution of the claim,
11 including expert witness fees plus reasonable litigation costs
12 and attorney fees. All expenses, costs and attorney fees shall
13 be awarded against the defendant, and under no circumstances
14 shall they be the responsibility of the Commonwealth or a <--
15 political subdivision PROSECUTING AUTHORITY. <--
16 CHAPTER 7
17 GENERAL PROVISIONS
18 SECTION 701. RULES OF CIVIL PROCEDURE. <--
19 EXCEPT WHERE THIS ACT PROVIDES OTHERWISE, ACTIONS UNDER THIS
20 ACT SHALL BE GOVERNED BY THE PENNSYLVANIA RULES OF CIVIL
21 PROCEDURE.
22 Section 701 702. Stay of discovery. <--
23 The court may stay discovery of the person initiating the <--
24 action
25 (A) GENERAL RULE.--THE COURT MAY STAY DISCOVERY for a period <--
26 of not more than 90 days if the prosecuting authority shows that
27 discovery would interfere with an investigation or a prosecution
28 of a criminal or civil matter arising out of the same OR SIMILAR <--
29 facts, regardless of whether the prosecuting authority proceeds
30 with the action. Such a showing shall be conducted in camera.
19990H0849B1243 - 23 -
1 The court may extend the 90-day period upon a further showing in
2 camera that the prosecuting authority has pursued the criminal
3 or civil investigation or proceedings with reasonable diligence
4 and that any proposed discovery in the civil action ACTION UNDER <--
5 THIS ACT would interfere with the ongoing criminal or civil
6 investigation or proceedings.
7 (B) CRIMINAL ACTION.--WHEN A CRIMINAL ACTION HAS COMMENCED <--
8 BASED UPON THE SAME OR SIMILAR FACTS UNDERLYING THE PENDING
9 ACTION UNDER THIS ACT, DISCOVERY BY THE DEFENDANT IN THE PENDING
10 ACTION UNDER THIS ACT SHALL BE CONFINED TO THAT AVAILABLE TO A
11 CRIMINAL DEFENDANT UNDER THE RULES OF CRIMINAL PROCEDURE AND THE
12 UNITED STATES AND THE CONSTITUTION OF THE COMMONWEALTH OF
13 PENNSYLVANIA. THE DEFENDANT IN THE PENDING ACTION UNDER THIS ACT
14 MAY PETITION THE COURT FOR A STAY OF PROCEEDINGS PENDING THE
15 CONCLUSION OF THE CRIMINAL ACTION ON THE GROUND THAT RESTRICTION
16 OF DISCOVERY HAS SUBSTANTIALLY IMPAIRED THE DEFENDANT IN
17 PRESENTING A DEFENSE IN THE PENDING ACTION UNDER THIS ACT.
18 Section 702 703. Limitations on participation. <--
19 Upon a showing by the prosecuting authority by a
20 preponderance of the evidence that unrestricted participation
21 during the course of the litigation by the person initiating the
22 action would interfere with or unduly delay the prosecuting
23 authority's prosecution of the case or would be repetitious,
24 irrelevant or for purposes of harassment, the court may, in its
25 discretion, impose limitations on the person's participation,
26 including, BUT NOT LIMITED TO, the following: <--
27 (1) limiting the number of witnesses the person may
28 call;
29 (2) limiting the length of the testimony of these
30 witnesses;
19990H0849B1243 - 24 -
1 (3) limiting the person's cross-examination of
2 witnesses; or
3 (4) otherwise limiting the participation by the person
4 in the litigation.
5 Section 703 704. Employee protection. <--
6 (a) Disclosing information.--No employer shall solicit,
7 attempt or conspire to prevent, make, adopt or enforce any rule,
8 regulation or policy preventing an employee from disclosing
9 information to a FEDERAL, State or local law enforcement agency <--
10 or from acting in furtherance of a false claims action, <--
11 including investigating, initiating, testifying or assisting in
12 an action filed or to be filed under this act. THE INVESTIGATION <--
13 OF, INITIATION OF, TESTIMONY IN OR ASSISTANCE IN FILING AN
14 ACTION UNDER THIS ACT.
15 (b) Discrimination.--No employer shall discharge, demote,
16 suspend, threaten, harass, deny promotion to or in any other
17 manner discriminate, or solicit, attempt or conspire to
18 discriminate against an employee in the terms of and conditions
19 of employment because of lawful acts done by the employee on
20 behalf of the employee or others in disclosing information to a
21 FEDERAL, State or local government or law enforcement agency or <--
22 in furthering false claims action, including investigation for,
23 initiation of, testimony for or assistance in an action filed or
24 to be filed under this act.
25 (c) Penalty.--An employer who violates subsection (a) or (b)
26 shall be liable for all relief necessary to make the employee
27 whole, including reinstatement with the same seniority status
28 that the employee would have had but for the discrimination,
29 three times the amount of back pay, prevailing interest on the
30 back pay, compensation for any special damage sustained as a
19990H0849B1243 - 25 -
1 result of the discrimination and, where appropriate, punitive
2 damages. In addition, the defendant EMPLOYER shall be required <--
3 to pay all litigation costs and reasonable attorney fees. An
4 employee may bring an action in the Commonwealth Court for the
5 relief provided in this subsection.
6 (d) Limitations.--An employee who is discharged, demoted,
7 suspended, harassed, denied promotion, threatened with
8 termination or in any other manner discriminated against in the
9 terms and conditions of employment by his employer because of
10 participation in conduct which directly or indirectly resulted
11 in a false claim being submitted to the Commonwealth or a
12 political subdivision shall be entitled to the remedies under
13 subsection (c) if the employee voluntarily discloses information
14 to a FEDERAL, State or local government or law enforcement <--
15 agency or acted in furtherance of a false claims action,
16 including investigation for, initiation of, testimony for or
17 assistance in an action filed or to be filed.
18 Section 704 705. Limitations. <--
19 (a) Time of filing.--A civil AN action under this act may <--
20 not be filed more than six years after the date on which the
21 violation of this act is completed or more than three years
22 after the date of discovery by the official of the Commonwealth <--
23 or political subdivision charged with responsibility to act in
24 the circumstances PROSECUTING AUTHORITY, but in any event no <--
25 more than ten years after the date on which the violation of
26 section 301 is completed.
27 (b) Prior acts.--A civil AN action under this act may be <--
28 brought for activity REGARDING FALSE CLAIMS MADE prior to the <--
29 effective date of this act if the limitations period set FORTH <--
30 in subsection (a) has not elapsed.
19990H0849B1243 - 26 -
1 (c) Proof.--In any action brought under this act, the
2 Commonwealth, the political subdivision or the qui tam plaintiff
3 shall be required to prove all essential elements of the cause
4 of action, including damages, by a preponderance of the
5 evidence.
6 (d) Estoppel.--Notwithstanding any other provision of law, a
7 guilty verdict, guilty plea or nolo contendere plea rendered in
8 a criminal proceeding which alleged a scheme to obtain funds
9 fraudulently from the Commonwealth or a political subdivision
10 shall estop the defendant from denying the essential elements of
11 the offense in any action which involves the same transaction as
12 in the criminal proceeding and which is brought under this act.
13 Section 705 706. Remedies. <--
14 (a) Civil remedies.--
15 (1) The Commonwealth Court shall have jurisdiction to <--
16 prevent and restrain violations of section 301 by issuing
17 appropriate orders, including, but not limited to, orders
18 relating to ordering any person to divest himself of any
19 financial interest in any business or entity; imposing
20 reasonable restrictions on the future activities or
21 investments of any person, including, but not limited to,
22 prohibiting any person from engaging in the same type of
23 endeavor or freezing the person's assets, making due
24 provisions for the rights of innocent persons; ordering the
25 dissolution of any business or entity; ordering the denial,
26 suspension or revocation of charters of domestic
27 corporations, certificates of authority authorizing foreign
28 corporations to do business in this Commonwealth, licenses,
29 permits or prior approval granted to any business or entity
30 by any department or agency of the Commonwealth or any of its
19990H0849B1243 - 27 -
1 political subdivisions; or prohibiting any business or entity
2 from engaging in any business.
3 (1) THE COMMONWEALTH COURT SHALL HAVE JURISDICTION TO <--
4 PREVENT AND RESTRAIN VIOLATIONS OF SECTION 301 BY ISSUING
5 APPROPRIATE ORDERS, INCLUDING, BUT NOT LIMITED TO:
6 (I) ORDERING ANY PERSON TO DIVEST HIMSELF OF ANY
7 INTEREST, DIRECT OR INDIRECT, IN ANY BUSINESS OR ENTITY;
8 IMPOSING REASONABLE RESTRICTIONS ON THE FUTURE ACTIVITIES
9 OR INVESTMENTS OF ANY PERSON, INCLUDING, BUT NOT LIMITED
10 TO, PROHIBITING ANY PERSON FROM ENGAGING IN THE SAME TYPE
11 OF ENDEAVOR OR FREEZING THE PERSON'S ASSETS.
12 (II) MAKING DUE PROVISIONS FOR THE RIGHTS OF
13 INNOCENT PERSONS, ORDERING THE DISSOLUTION OF ANY
14 BUSINESS OR ENTITY, ORDERING THE DENIAL, SUSPENSION OR
15 REVOCATION OF CHARTERS OF DOMESTIC CORPORATIONS,
16 CERTIFICATES OF AUTHORITY AUTHORIZING FOREIGN
17 CORPORATIONS TO DO BUSINESS IN THIS COMMONWEALTH,
18 LICENSES, PERMITS OR PRIOR APPROVAL GRANTED TO ANY
19 BUSINESS OR ENTITY BY ANY DEPARTMENT OR AGENCY OF THE
20 COMMONWEALTH OR ANY OF ITS POLITICAL SUBDIVISIONS; OR
21 PROHIBITING ANY BUSINESS OR ENTITY FROM ENGAGING IN ANY
22 BUSINESS.
23 (2) Injunctions against false claims:
24 (i) If a person violates or is about to violate this
25 act, the prosecuting authority may commence an action in
26 Commonwealth Court to enjoin such violation.
27 (ii) If a person alienates or disposes of property,
28 or intends to alienate or dispose of property obtained as
29 a result of a violation of this act or property which is
30 traceable to such violation, the prosecuting authority
19990H0849B1243 - 28 -
1 may commence an action in Commonwealth Court to enjoin
2 such alienation of OR disposition of property, or for a <--
3 restraining order to prohibit any person from
4 withdrawing, transferring, removing, dissipating or
5 disposing of any such property or property of equivalent
6 value and appoint a temporary receiver to administer such
7 restraining order.
8 (3) In any proceeding under this section, the court
9 shall proceed as soon as practicable to the hearing and
10 determination thereof. Pending final determination, the court
11 may enter preliminary or special injunctions or take such
12 other actions, including the acceptance of satisfactory
13 performance bonds, as it may deem proper.
14 (b) Remedies cumulative.--The provisions of this act are not
15 exclusive, and the remedies provided for in this act shall be in
16 addition to any other remedies provided for in any other law or
17 available under common law.
18 Section 706 707. Enforcement. <--
19 (a) Prosecuting authority.--The prosecuting authority shall
20 have the power and duty to enforce this act, including the
21 authority to issue civil investigative demands pursuant to this
22 act, to institute proceedings under this act and to take such
23 actions as may be necessary to ascertain and investigate alleged
24 violations of this act. The prosecuting authority may delegate
25 its powers to investigate and prosecute actions under this act
26 to appropriate Deputy Attorneys General or deputy or assistant
27 district attorneys.
28 (b) Construction.--Nothing contained in this act shall be
29 construed to limit the regulatory or investigative authority of
30 any department or agency of the Commonwealth OR POLITICAL <--
19990H0849B1243 - 29 -
1 SUBDIVISION whose functions might relate to persons, enterprises
2 or matters falling within the scope of this act.
3 Section 707 708. Civil investigative demand. <--
4 (a) General rule.--Whenever the prosecuting authority has
5 reason to believe that any person may be in possession, custody
6 or control of any documentary material or information relevant
7 to a false claim investigation, the prosecuting authority may
8 issue in writing and cause to be served upon the person a civil
9 investigative demand requiring such person to:
10 (1) produce such documentary material for inspection and
11 copying;
12 (2) answer in written interrogatories with respect to
13 such documentary material or information;
14 (3) give oral testimony concerning such documentary
15 material or information; or
16 (4) furnish any combination of such material, answers
17 and testimony.
18 (b) Content.--Each demand under this section shall:
19 (1) State the nature of the conduct constituting the
20 alleged false claim violation which is under investigation
21 and the provision of law applicable thereto.
22 (2) If the demand is for the production of documentary
23 material:
24 (i) describe the class or classes of documentary
25 material to be produced thereunder with such definiteness
26 and certainty as to permit the material to be fairly
27 identified;
28 (ii) state that the demand is returnable forthwith
29 or prescribe a return date which will provide a
30 reasonable period of time within which the material so
19990H0849B1243 - 30 -
1 demanded may be assembled and made available for
2 inspection and copying or reproduction; and
3 (iii) identify an investigator to whom the material
4 shall be made available.
5 (3) If the demand is for written interrogatories:
6 (i) set forth with specificity the written
7 interrogatories to be answered;
8 (ii) prescribe dates at which time answers to
9 written interrogatories shall be submitted; and
10 (iii) identify the investigator to whom such answers
11 shall be submitted.
12 (4) If such demand is for the giving of oral testimony:
13 (i) prescribe a date, time and place at which oral
14 testimony should be commenced;
15 (ii) identify the investigator who shall conduct the
16 examination and the person to whom the transcript of such
17 investigation shall be submitted;
18 (iii) specify that such attendance and testimony are
19 necessary to the conduct of the investigation; and
20 (iv) describe the general purpose for which the
21 demand is being issued and the general nature of the
22 testimony, including the primary areas of inquiry, which
23 will be taken pursuant to the demand.
24 (5) Contain the following statement printed
25 conspicuously at the top of the demand:
26 You have the right to seek the assistance of any
27 attorney, and he may represent you in all phases of
28 the false claim investigation of which this civil
29 investigative demand is a part.
30 (c) Limitation.--No demand under this section shall:
19990H0849B1243 - 31 -
1 (1) contain any requirement which would be held to be
2 unreasonable if contained in a subpoena duces tecum issued by
3 any court in connection with a grand jury investigation of
4 the alleged fraud violation; or
5 (2) require the production of any documentary evidence
6 which would be privileged from disclosure if demanded by a
7 subpoena duces tecum issued by any court in connection with a
8 grand jury investigation of the alleged false claim
9 violation.
10 (d) Service.--Service of any demand or any petition filed
11 under this section shall be made in the manner prescribed by the
12 Pennsylvania Rules of Civil Procedure for service of writs and
13 complaints unless otherwise agreed to by the prosecuting
14 authority and the person.
15 (e) Return.--A verified return by the individual serving any
16 demand or petition under this section setting forth the manner
17 of service shall be prima facie proof of such service. In the
18 case of service by registered or certified mail, the return
19 shall be accompanied by the return post office receipt of
20 delivery of the demand.
21 (f) Procedure.--
22 (1) A person upon whom a demand issued under this
23 section has been duly served shall make the demanded material
24 available for inspection and copying or reproduction to an
25 investigator designated in the demand at the principal place
26 of business of the person or at such other place as the
27 investigator and the person thereafter may agree or as the
28 court may direct pursuant to this section on the return date
29 specified in the demand. The person may, upon agreement of
30 the investigator, substitute copies of all or any part of the
19990H0849B1243 - 32 -
1 demanded material for the originals of the demanded material.
2 (2) The investigator to whom any documentary material is
3 so delivered shall take physical possession of the material
4 and shall be responsible for the use made of the material and
5 for its return pursuant to this section. The investigator may
6 cause the preparation of the copies of the documentary
7 material as may be required for official use. While in the
8 possession of the investigator, no material so produced shall
9 be available for examination by any individual other than the
10 prosecuting authority or any investigator without the consent
11 of the person who produced the material. Under such
12 reasonable terms and conditions as the prosecuting authority
13 shall prescribe, documentary material while in the possession
14 of the investigator shall be available for examination by the
15 person who produced the material or any duly authorized
16 representatives of that person.
17 (3) The production of documentary material in response
18 to a civil investigative demand served under this section
19 shall be made under a sworn certificate, in such form as the
20 demand designates, by:
21 (i) in the case of a natural person, the person to
22 whom the demand is directed; or
23 (ii) in the case of a person other than a natural
24 person, a person having knowledge of the facts and
25 circumstances relating to such production and authorized
26 to act on behalf of such person.
27 The certificate shall state that all of the documentary
28 material required by the demand and in the possession,
29 custody or control of the person to whom the demand is
30 directed has been produced and made available to the
19990H0849B1243 - 33 -
1 investigator identified in the demand.
2 (4) Each interrogatory in a civil demand served under
3 this section shall be answered separately and fully in
4 writing under oath and shall be submitted under a sworn
5 certificate, in such form as the demand designates, by:
6 (i) in the case of a natural person, the person to
7 whom the demand is directed; or
8 (ii) in the case of a person other than a natural
9 person, a person or persons responsible for answering
10 each interrogatory. If any interrogatory is objected to,
11 the reasons for the objection shall be stated in the
12 certificate instead of an answer. The certificate shall
13 state that all information required by the demand and in
14 the possession, custody, control or knowledge of the
15 person to whom the demand is directed has been submitted.
16 To the extent that any information is not furnished, the
17 information shall be identified and reasons set forth
18 with particularity regarding the reasons why the
19 information was not furnished.
20 (5) (i) The examination of any person pursuant to a
21 civil investigative demand for oral testimony served
22 under this section shall be deemed an "official
23 proceeding" within the meaning of 18 Pa.C.S. Ch. 49 <--
24 Subch. A (relating to perjury and falsification in
25 official matters). § 4902(A) (RELATING TO PERJURY). The <--
26 examination shall be taken before an officer authorized
27 to administer oaths and affirmations by the laws of this
28 Commonwealth. The officer before whom the testimony is to
29 be taken shall put the witness on oath or affirmation and
30 shall, personally or by someone acting under the
19990H0849B1243 - 34 -
1 direction of the officer and in the officer's presence,
2 record the testimony of the witness. The testimony shall
3 be taken accurately and shall be transcribed. When the
4 testimony is fully transcribed, a copy of the transcript
5 shall be promptly forwarded to the designated person.
6 This subsection shall not preclude the taking of
7 testimony by any means authorized by, and in a manner
8 consistent with, the Pennsylvania Rules of Civil
9 Procedure.
10 (ii) The investigator conducting the examination
11 shall exclude from the place where the examination is
12 held all persons except the person giving the testimony,
13 the attorney for and any other representative of the
14 person giving the testimony, the prosecuting authority,
15 any person who may be agreed upon by the prosecuting
16 authority and the person giving the testimony, and any
17 stenographer taking such testimony.
18 (iii) The oral testimony of any person taken
19 pursuant to a civil investigative demand served under
20 this section shall be taken in the county where the
21 office of the investigator conducting the examination is
22 situated, or in such other place as may be agreed upon by
23 the investigator and such person.
24 (iv) When the testimony is fully transcribed, the
25 investigator shall afford the witness, who may be
26 accompanied by counsel, a reasonable opportunity to
27 examine and read the transcript, unless such examination
28 and reading are waived by the witness. Any changes in
29 form or substance which the witness desires to make shall
30 be entered and identified upon the transcript by the
19990H0849B1243 - 35 -
1 officer or the investigator, with a statement of the
2 reasons given by the witness for making such changes. The
3 transcript shall then be signed by the witness, unless
4 the witness in writing waives the signing, is ill, cannot
5 be found or refuses to sign. If the transcript is not
6 signed by the witness within 30 days after being afforded
7 a reasonable opportunity to examine it, the officer or
8 the investigator shall sign it and state on the record
9 the fact of the waiver, illness, absence of the witness
10 or the refusal to sign, together with the reasons, if
11 any, given therefor.
12 (v) Upon payment of reasonable charges therefor, the
13 investigator shall furnish a copy of the transcript to
14 the witness only, except that the prosecuting authority
15 may, for good cause, limit such witness to inspection of
16 the official transcript of the witness' testimony.
17 (vi) Any person compelled to appear for oral
18 testimony under a civil investigative demand may be
19 accompanied, represented and advised by counsel. Counsel
20 may advise the person, in confidence, with respect to any
21 question asked of that person. The person or counsel may
22 object on the record to any question, in whole or in
23 part, and shall briefly state for the record the reason
24 for the objection. An objection may be made, received and
25 entered upon the record when it is claimed that such
26 person is entitled to refuse to answer the question on
27 the grounds of any constitutional or other legal right or
28 privilege, including the privilege against self-
29 incrimination. The person may not otherwise object to or
30 refuse to answer any question, and may not directly or
19990H0849B1243 - 36 -
1 through counsel otherwise interrupt the oral examination.
2 If the person refuses to answer any question, a petition
3 may be filed in the Commonwealth Court under section <--
4 706(g) SECTION 708(G) for an order compelling the person <--
5 to answer the question.
6 (6) Upon completion of:
7 (i) the false claims investigation for which any
8 documentary material was produced under this section; and
9 (ii) any case or proceeding arising from such
10 investigation;
11 the investigator shall return to the person who produced the
12 material all of the material other than copies of the
13 material made pursuant to this section which have not passed
14 into the control of any court or grand jury through
15 introduction into the record of such case or proceeding.
16 (7) When documentary material has been produced by a
17 person under this section for use in a false claims
18 investigation and no case or proceeding arising from the
19 investigation has been instituted within a reasonable time
20 after completion of the examination and analysis of all
21 evidence assembled in the course of the investigation, the
22 person shall be entitled, upon written demand made upon the
23 prosecuting authority, to the return of all documentary
24 material, other than copies of the material made pursuant to
25 this section, so produced by that person.
26 (g) Failure to comply.--Whenever a person fails to comply
27 with a civil investigative demand that is served upon him under
28 this section or whenever satisfactory copying or reproduction of
29 any of the material cannot be done and the person refuses to
30 surrender the material, the prosecuting authority may file in
19990H0849B1243 - 37 -
1 the Commonwealth Court and serve upon the person a petition for
2 an order of the court for the enforcement of this section.
3 (h) Petition for relief.--
4 (1) Within 20 days after the service of any demand under
5 this section upon any person or at any time before the return
6 date specified in the demand, whichever period is shorter,
7 the person may file in the Commonwealth Court and serve upon
8 the prosecuting authority a petition for an order of the
9 court modifying or setting aside this demand. The time
10 allowed for compliance with the demand, in whole or in part,
11 as deemed proper and ordered by the court shall not run
12 during the pendency of the petition in the court. The
13 petition shall specify each ground upon which the petitioner
14 relies in seeking the relief and may be based on any failure
15 of the demand to comply with the provisions of this section
16 or on any constitutional or other legal right or privilege of
17 the person.
18 (2) At any time during which the prosecuting authority
19 is in custody or control of documentary material delivered by
20 a person in compliance with a demand under this section, the
21 person may file in the Commonwealth Court and serve upon the
22 prosecuting authority a petition for an order of the court
23 requiring the performance of any duty imposed by this
24 section.
25 (3) Whenever a petition is filed in the Commonwealth
26 Court, the court shall have jurisdiction to hear and
27 determine the matter so presented and, after a hearing at
28 which all parties are represented, to enter such order or
29 orders as may be required to carry into effect the provisions
30 of this section.
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1 (i) Definition.--As used in this section, the term
2 "documentary material" includes, but is not limited to, any
3 book, paper, record, recording, tape, report, memorandum, DATA, <--
4 written OR ELECTRONIC communication or other document relating <--
5 to the business affairs of any person, enterprise or matter
6 falling within the purview of this act.
7 Section 708 709. Immunity. <--
8 Whenever any individual refuses on the basis of his privilege
9 against self-incrimination to comply with a civil investigative
10 demand issued pursuant to this act or to testify or produce
11 other information in a proceeding under this act, the
12 prosecuting authority may invoke the provisions of 42 Pa.C.S. §
13 5947 (relating to immunity of witnesses).
14 SECTION 710. REGULATIONS. <--
15 (A) GENERAL RULE.--THE ATTORNEY GENERAL SHALL HAVE THE POWER
16 AND AUTHORITY TO PROMULGATE RULES AND REGULATIONS WHICH MAY BE
17 NECESSARY TO CARRY OUT THE PURPOSES SET FORTH IN THIS ACT.
18 (B) GUIDELINES.--IN ORDER TO FACILITATE THE SPEEDY
19 IMPLEMENTATION OF THIS ACT, THE ATTORNEY GENERAL SHALL HAVE THE
20 POWER AND AUTHORITY TO PROMULGATE, ADOPT AND USE GUIDELINES
21 WHICH SHALL BE PUBLISHED IN THE PENNSYLVANIA BULLETIN. THE
22 GUIDELINES SHALL NOT BE SUBJECT TO REVIEW PURSUANT TO SECTION
23 205 OF THE ACT OF JULY 31, 1968 (P.L.769, NO.240), REFERRED TO
24 AS THE COMMONWEALTH DOCUMENTS LAW, SECTIONS 204(B) AND 301(10)
25 OF THE ACT OF OCTOBER 15, 1980 (P.L.950, NO.164), KNOWN AS THE
26 COMMONWEALTH ATTORNEYS ACT, THE ACT OF JUNE 25, 1982 (P.L.633,
27 NO.181), KNOWN AS THE REGULATORY REVIEW ACT, AND SHALL BE
28 EFFECTIVE FOR A PERIOD OF NOT MORE THAN TWO YEARS FROM THE
29 EFFECTIVE DATE OF THIS ACT. AFTER THE EXPIRATION OF THE TWO-YEAR
30 PERIOD, THE GUIDELINES SHALL EXPIRE AND BE REPLACED BY
19990H0849B1243 - 39 -
1 REGULATIONS WHICH SHALL BE PROMULGATED, ADOPTED AND PUBLISHED AS
2 PROVIDED BY LAW.
3 Section 709 711. Effective date. <--
4 This act shall take effect in 60 days.
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