SENATE AMENDED
PRIOR PRINTER'S NOS. 907, 1243, 1798, PRINTER'S NO. 2541
2063
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, RAMOS, EVANS, FICHTER, SEYFERT AND R. MILLER,
MARCH 10, 1999
SENATOR GREENLEAF, JUDICIARY, AS AMENDED, OCTOBER 26, 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.
1 Section 503. Political subdivision funds.
2 Section 504. Complaints relating to Commonwealth and political
3 subdivision funds.
4 Section 505. Intervention by political subdivision.
5 Section 506. Extension of time.
6 Section 507. Other actions prohibited.
7 Section 508. Exclusions.
8 Section 509. Employment-related discovery of information.
9 Section 510. Responsibility for prosecution.
10 Section 511. Dismissal of action.
11 Section 512. Settlement.
12 Section 513. Election not to proceed.
13 Section 514. Intervention.
14 Section 515. Proceeds.
15 Section 516. Reversion to General Fund.
16 Section 517. Expenses.
17 Chapter 7. General Provisions
18 Section 701. Rules of civil procedure.
19 Section 702. Stay of discovery.
20 Section 703. Limitations on participation.
21 Section 704. Employee protection.
22 Section 705. Limitations.
23 Section 706. Remedies.
24 Section 707. Enforcement.
25 Section 708. Civil investigative demand.
26 Section 709. Immunity.
27 Section 710. Regulations.
28 SECTION 711. SEVERABILITY. <--
29 Section 711 712. Effective date. <--
30 The General Assembly of the Commonwealth of Pennsylvania
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1 hereby enacts as follows:
2 CHAPTER 1
3 PRELIMINARY PROVISIONS
4 Section 101. Short title.
5 This act shall be known and may be cited as the False Claims
6 Act.
7 Section 102. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Claim." Any request or demand for money, property or
12 services made to any employee, officer or agent of the
13 Commonwealth or of any political subdivision thereof or to any
14 contractor, subcontractor, grantee or other recipient of the
15 Commonwealth or any political subdivision thereof, if any
16 portion of the money, property or services requested or demanded
17 issued from, was provided or will be reimbursed by the
18 Commonwealth, referred to as Commonwealth funds, or by any
19 political subdivision thereof, referred to as political
20 subdivision funds.
21 "False." In addition to its ordinary meaning, this term also
22 means fraudulent.
23 "Knowing" or "knowingly." A person who, with respect to
24 information, does any of the following:
25 (1) has actual knowledge of the information;
26 (2) acts in deliberate ignorance of the truth or falsity
27 of the information; or
28 (3) acts in reckless disregard of the truth or falsity
29 of the information.
30 Proof of specific intent to defraud shall not be required.
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1 "Person." Any natural person, corporation, county, political
2 subdivision, firm, association, legal entity, organization,
3 partnership, business or trust.
4 "Political subdivision." Any city, county, tax or assessment
5 district, municipal or government authority or other legally
6 authorized local governmental entity in this Commonwealth.
7 "Proceeds." The term includes civil penalties as well as
8 double or treble damages as provided in Chapter 3.
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 to eliminate fraud, waste and abuse
16 through the submission of false or fraudulent claims in this
17 Commonwealth or in any of its political subdivisions.
18 CHAPTER 3
19 FALSE CLAIMS
20 Section 301. Offenses defined.
21 (a) Liability.--A person who commits any of the following
22 acts shall be liable to the Commonwealth or to the political
23 subdivision for three times the amount of damages which the
24 Commonwealth or the political subdivision sustains because of
25 the act of that person and shall also be liable to the
26 Commonwealth or to the political subdivision for the costs of an
27 action brought to recover any of those penalties or damages and
28 shall be liable to the Commonwealth or political subdivision for
29 a civil penalty of not less than $5,000 nor more than $10,000
30 for each false claim:
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1 (1) Knowingly presents or causes to be presented to an
2 officer or employee of the Commonwealth or any political
3 subdivision a false claim for payment or approval.
4 (2) Knowingly makes, uses or causes to be made or used a
5 false record or statement to get a false claim paid or
6 approved by the Commonwealth or by any political subdivision.
7 (3) Conspires to defraud the Commonwealth or any
8 political subdivision by getting a false claim allowed or
9 paid by the Commonwealth or by any political subdivision.
10 (4) Has possession, custody or control of public
11 property or money used or to be used by the Commonwealth or
12 by any political subdivision and knowingly delivers or causes
13 to be delivered property of lesser quality, quantity or value
14 than for which the person receives a certificate or receipt.
15 (5) Is authorized to make or deliver a document
16 certifying receipt of property used or to be used by the
17 Commonwealth or by any political subdivision and knowingly
18 makes or delivers a receipt that falsely represents the
19 quality, quantity or value of the property used or to be
20 used.
21 (6) Knowingly buys or receives as a pledge of an
22 obligation or debt public property from any person who
23 lawfully may not sell or pledge the property.
24 (7) Knowingly makes, uses or causes to be made or used a
25 false record or statement to conceal, avoid or decrease an
26 obligation to pay or transmit money or property to the
27 Commonwealth or any political subdivision.
28 (8) Unknowingly submits a false claim, is a beneficiary
29 of payment by the Commonwealth or political subdivision for
30 that claim, subsequently discovers or recklessly fails to
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1 discover that the claim was false and fails to disclose that
2 the claim was false. Disclosure shall be made to the
3 Commonwealth or political subdivision within a reasonable
4 time, but in no event longer than 90 days after discovery of
5 the false claim.
6 (b) Reduced assessment.--Notwithstanding subsection (a), the <--
7 court shall assess not less than two times nor more than three
8 times the amount of damages which the Commonwealth or the
9 political subdivision sustains because of the act of the person
10 described in subsection (a)(1), and no civil penalty, if the
11 person can demonstrate that:
12 (1) the person committing the violation furnished the
13 prosecuting authority with all information known to that
14 person about the violation within 60 days after the date on
15 which the person first obtained the information;
16 (2) the person fully cooperated with any investigation
17 by the prosecuting authority of the violation; and
18 (3) (i) at the time the person furnished the appropriate
19 prosecuting authority with all information about the
20 violation, no criminal prosecution, civil action or
21 administrative action had commenced with respect to the
22 violation and the person did not have knowledge or notice
23 of the existence of an investigation into the violation;
24 or
25 (ii) the person had an effective program that could
26 reasonably be expected to prevent and detect violations
27 of law, even if the program did not detect the instant
28 offense.
29 (B) REDUCED ASSESSMENT.-- <--
30 (1) NOTWITHSTANDING SUBSECTION (A), THE COURT SHALL
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1 ASSESS TWO TIMES THE AMOUNT OF DAMAGES, AND INTEREST WHICH
2 THE COMMONWEALTH OR THE POLITICAL SUBDIVISION SUSTAINS
3 BECAUSE OF THE ACT OF THE PERSON DESCRIBED IN SUBSECTION (A),
4 AND NO CIVIL PENALTY, IF THE COURT FINDS ALL OF THE
5 FOLLOWING:
6 (I) THE PERSON COMMITTING THE VIOLATION FURNISHED
7 THE PROSECUTING AUTHORITY WITH ALL INFORMATION KNOWN TO
8 THAT PERSON ABOUT THE VIOLATION WITHIN 60 DAYS AFTER THE
9 DATE ON WHICH THE PERSON FIRST OBTAINED THE INFORMATION;
10 (II) THE PERSON FULLY COOPERATED WITH ANY
11 INVESTIGATION BY THE PROSECUTING AUTHORITY OF THE
12 VIOLATION;
13 (III) AT THE TIME THE PERSON FURNISHED THE
14 APPROPRIATE PROSECUTING AUTHORITY WITH ALL INFORMATION
15 ABOUT THE VIOLATION, NO INVESTIGATION, CRIMINAL
16 PROSECUTION, CIVIL ACTION OR ADMINISTRATIVE ACTION HAD
17 COMMENCED WITH RESPECT TO THE VIOLATION; AND
18 (IV) THE PERSON HAD AN EFFECTIVE COMPLIANCE PROGRAM
19 THAT COULD REASONABLY BE EXPECTED TO PREVENT AND DETECT
20 VIOLATIONS OF LAW, EVEN IF THE PROGRAM DID NOT DETECT THE
21 INSTANT OFFENSE.
22 (2) NOTWITHSTANDING SUBSECTION (A), THE COURT SHALL
23 ASSESS NOT LESS THAN TWO TIMES NOR MORE THAN THREE TIMES THE
24 AMOUNT OF DAMAGES WHICH THE COMMONWEALTH OR THE POLITICAL
25 SUBDIVISION SUSTAINS BECAUSE OF THE ACT OF THE PERSON
26 DESCRIBED IN SUBSECTION (A) AND A CIVIL PENALTY NOT TO EXCEED
27 $5,000 FOR EACH FALSE CLAIM, IF THE COURT FINDS ALL OF THE
28 FOLLOWING:
29 (I) THE PERSON COMMITTING THE VIOLATION FURNISHED
30 THE PROSECUTING AUTHORITY WITH ALL INFORMATION KNOWN TO
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1 THAT PERSON ABOUT THE VIOLATION WITHIN 60 DAYS AFTER THE
2 DATE ON WHICH THE PERSON FIRST OBTAINED THE INFORMATION;
3 (II) THE PERSON FULLY COOPERATED WITH ANY
4 INVESTIGATION BY THE PROSECUTING AUTHORITY OF THE
5 VIOLATION;
6 (III) AT THE TIME THE PERSON FURNISHED THE
7 APPROPRIATE PROSECUTING AUTHORITY WITH ALL INFORMATION
8 ABOUT THE VIOLATION, THE PERSON DID NOT HAVE KNOWLEDGE OR
9 NOTICE THAT AN INVESTIGATION, A CRIMINAL PROSECUTION, A
10 CIVIL ACTION OR AN ADMINISTRATIVE ACTION HAD COMMENCED
11 WITH REGARD TO THE VIOLATION; AND
12 (IV) THE PERSON HAD AN EFFECTIVE COMPLIANCE PROGRAM
13 THAT COULD REASONABLY BE EXPECTED TO PREVENT AND DETECT
14 VIOLATIONS OF LAW, EVEN IF THE PROGRAM DID NOT DETECT THE
15 INSTANT OFFENSE.
16 (c) Joint and several liability.--Liability under this
17 section shall be joint and several for any act committed by two
18 or more persons.
19 (d) Limitation.--
20 (1) This section does not apply to any controversy
21 involving an aggregate amount of less than $2,500 in value or
22 where the claim was filed by the individual recipient of
23 benefits or compensation conferred under the act of June 2,
24 1915 (P.L.736, No.338), known as the Workers' Compensation
25 Act, or the act of December 5, 1936 (2nd Sp.Sess., 1937
26 P.L.2897, No.1), known as the Unemployment Compensation Law,
27 or the act of June 13, 1967 (P.L.31, No.21), known as the
28 Public Welfare Code.
29 (2) As used in this subsection, the term "controversy"
30 means any one or more false claims submitted or caused to be
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1 submitted by either a person or persons who act pursuant to a
2 common plan, scheme or design in violation of this act.
3 Section 302. False claims jurisdiction.
4 (a) General rule.--If any defendant can be found, resides or
5 transacts business in this Commonwealth or if an act proscribed
6 by this act occurred within this Commonwealth, an action under
7 this act:
8 (1) involving Commonwealth funds or both Commonwealth
9 and political subdivision funds shall be brought in the
10 Commonwealth Court; or
11 (2) involving exclusively political subdivision funds
12 shall be brought in either the Commonwealth Court or the
13 Court of Common Pleas of the county of the political
14 subdivision, at the election of the district attorney.
15 (b) Election by prosecuting authority.--When an action is
16 filed by a qui tam plaintiff pursuant to section 501 and the
17 prosecuting authority proceeds with the action pursuant to
18 section 502, 503, 504 or 505, or intervenes in the action
19 pursuant to section 514, the prosecuting authority may elect to
20 proceed in either the Commonwealth Court or the Court of Common
21 Pleas of the county of the political subdivision.
22 Section 303. Procedure.
23 (a) Commonwealth prosecution.--
24 (1) The Attorney General shall diligently investigate
25 violations under section 301 involving Commonwealth funds. If
26 the Attorney General finds that a person has violated or is
27 violating section 301, the Attorney General may bring an
28 action under this act against that person.
29 (2) If the Attorney General brings an action under this
30 act on a claim involving political subdivision funds as well
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1 as Commonwealth funds, the Attorney General shall, on the
2 same date that the complaint is filed in this action, serve
3 by mail, return receipt requested, a copy of the complaint on
4 the appropriate district attorney.
5 (3) The district attorney shall have the right to
6 intervene in an action brought by the Attorney General under
7 this act within 90 days after receipt of the complaint
8 pursuant to paragraph (2).
9 (b) Political subdivision prosecution.--
10 (1) The district attorney shall diligently investigate
11 violations under section 301 involving political subdivision
12 funds. If the district attorney finds that a person has
13 violated or is violating section 301, he may bring an action
14 under this act against that person.
15 (2) The district attorney may refer a matter involving
16 political subdivision funds to the Attorney General at any
17 time. The Attorney General may decline or accept the
18 referral.
19 (3) If the district attorney brings an action on a claim
20 involving Commonwealth funds as well as political subdivision
21 funds, the district attorney shall, on the same date that the
22 complaint is filed in this action, serve by mail, return
23 receipt requested, a copy of the complaint on the Attorney
24 General.
25 (4) Within 90 days after receiving the complaint
26 pursuant to paragraph (2), the Attorney General shall do one
27 of the following:
28 (i) Notify the court that the Attorney General
29 intends to proceed with the action, in which case the
30 Attorney General shall assume primary responsibility for
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1 conducting the action and the district attorney shall
2 have the right to continue as a party.
3 (ii) Notify the court that the Attorney General
4 declines to prosecute the action, in which case the
5 district attorney shall have the right to conduct the
6 action on its own.
7 (iii) Proceed jointly with the district attorney,
8 assuming coequal responsibility for prosecution of the
9 action.
10 CHAPTER 5
11 QUI TAM ACTIONS
12 Section 501. General provisions.
13 (a) When action may be brought.--A person may bring a qui
14 tam action for a violation of this act for the person and either
15 for the Commonwealth in the name of the Commonwealth if any
16 Commonwealth funds are involved or for a political subdivision
17 in the name of the political subdivision if political
18 subdivision funds are exclusively involved. A qui tam action may
19 be brought alleging fraud involving both Commonwealth and
20 political subdivision funds. The person bringing the qui tam
21 action shall be referred to as the qui tam plaintiff. Once
22 filed, the qui tam action may be dismissed only by the written
23 consent of the court and the prosecuting authority, taking into
24 account the best interests of the parties involved and the
25 public purposes of this act.
26 (b) Filing.--A complaint filed by a qui tam plaintiff under
27 this act shall be filed ex parte under seal with the Clerk of
28 the Commonwealth Court or ex parte under seal in the appropriate
29 Federal district court if Federal funds are also involved, and
30 the complaint and all related pleadings shall remain under seal
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1 for 90 days from the date of service. No service shall be made
2 on the defendant until after the complaint is unsealed by order
3 of the court.
4 (c) Service.--
5 (1) Within three days of the complaint being filed
6 pursuant to subsection (b), the qui tam plaintiff shall serve
7 by mail, return receipt requested, the Attorney General and
8 the General Counsel with a copy of the complaint and a
9 written disclosure of substantially all material evidence and
10 information the qui tam plaintiff possesses at that time.
11 (2) Where the complaint involves both Commonwealth and
12 political subdivision funds, or exclusively political
13 subdivision funds, the prosecuting authority shall serve a
14 copy of the complaint, return receipt requested, to counsel
15 for the political subdivision.
16 Section 502. Commonwealth funds.
17 Within 90 days after receiving a complaint alleging
18 violations which involve Commonwealth funds, but not political
19 subdivision funds, the Attorney General shall do either of the
20 following:
21 (1) Notify the court that it intends to proceed with the
22 action and petition the court to have the case unsealed. If
23 the court grants the Attorney General's request, the seal may
24 be lifted. The court may, upon motion by the Attorney
25 General, order a partial unsealing where appropriate.
26 (2) Notify the court that it declines to prosecute the
27 action, in which case the complaint may be unsealed by the
28 court within 20 days after written notification is made by
29 the Attorney General to the qui tam plaintiff and counsel
30 that the Attorney General does not wish to intervene. Upon
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1 such notification, the qui tam plaintiff shall have the right
2 to conduct the action.
3 Section 503. Political subdivision funds.
4 (a) Procedure.--Within 30 days after receiving a complaint
5 alleging violations which exclusively involve political
6 subdivision funds, the Attorney General shall promptly forward
7 the complaint and written disclosure to the appropriate district
8 attorney for review and disposition and shall notify in writing
9 the qui tam plaintiff and counsel of the transfer.
10 (b) Duty of district attorney.--Within 60 days after the
11 Attorney General forwards the complaint and written disclosure
12 under subsection (a), the district attorney shall do either of
13 the following:
14 (1) Notify the court that it intends to proceed with the
15 action and petition the court to have the case unsealed. If
16 the court grants the district attorney's request, the seal
17 shall be lifted.
18 (2) Notify the court that it declines to take over the
19 action, in which case the seal may be lifted within 20 days
20 after such notification has been made and the qui tam
21 plaintiff shall have the right to conduct the action.
22 Section 504. Complaints relating to Commonwealth and political
23 subdivision funds.
24 (a) Complaints.--Within 30 days after receiving a complaint
25 alleging violations which involve or allege both Commonwealth
26 and political subdivision funds, the Attorney General shall
27 forward copies of the complaint and written disclosure to the
28 appropriate district attorney and shall coordinate its review
29 and investigation with those of the district attorney.
30 (b) Procedure.--Within 90 days after receiving a complaint
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1 alleging violations which involve or allege both Commonwealth
2 and political subdivision funds, the Attorney General shall do
3 one of the following:
4 (1) Notify the court in writing that the Attorney
5 General intends to proceed with the action, in which case the
6 seal shall be lifted and service effected on the defendant.
7 (2) Notify the court in writing that the Attorney
8 General declines to take over the action but that the
9 district attorney involved intends to proceed with the
10 action, in which case the seal shall be lifted and the action
11 shall be conducted by the district attorney.
12 (3) Notify the court that both the Attorney General and
13 the district attorney decline to take over the action, in
14 which case the seal may be lifted within 20 days after
15 notification has been made and the qui tam plaintiff shall
16 have the right to conduct the action.
17 Section 505. Intervention by political subdivision.
18 If the Attorney General proceeds with the action under
19 section 503(b)(1), the district attorney shall be permitted to
20 intervene in the action within 60 days after the Attorney
21 General notifies the court of his intentions.
22 Section 506. Extension of time.
23 Upon a showing of good cause and reasonable diligence in his
24 investigation, the prosecuting authority may move the court for
25 reasonable extensions of time during which the complaint will
26 remain under seal. The qui tam plaintiff shall be notified of
27 any extensions requested under this section. Any such motions
28 may be supported by affidavits or other submissions in camera.
29 Section 507. Other actions prohibited.
30 When a qui tam plaintiff brings an action under this act, no
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1 other person shall be permitted to bring a related action under
2 this act based on the same or similar facts underlying the
3 pending action.
4 Section 508. Exclusions.
5 (a) General rule.--No court shall have jurisdiction over an
6 action brought under this chapter:
7 (1) against an official or employee of the Commonwealth
8 or a political subdivision if the action is not based on
9 actual knowledge of the official or employee.
10 (2) Which relies upon the public disclosure of specific
11 allegations or transactions in a criminal, civil or
12 administrative hearing, in a governmental report, hearing,
13 audit or investigation or from the news media, unless the
14 action is brought by or intervened in by a prosecuting
15 authority or the qui tam plaintiff is an original source of
16 the information.
17 (3) By a prisoner against any official or employee of
18 the Commonwealth or a political subdivision for acts relating
19 to the operations and expenditures of a correctional agency
20 or facility.
21 (4) Based upon allegations or transactions which are the
22 subject of an investigation, settlement discussion, a
23 settlement agreement, or any civil or administrative
24 proceeding, in which the Commonwealth or political
25 subdivision is already a party.
26 (b) Definition.--As used in this section, the term "original
27 source" means an individual who has voluntarily provided the
28 information to the prosecuting authority before filing an action
29 based on that information and either has direct and independent
30 knowledge of the information on which the allegations are based
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1 or directly or indirectly provided the impetus, basis or
2 catalyst for the investigation, hearing, audit or report which
3 led to the public disclosure.
4 Section 509. Employment-related discovery of information.
5 No court shall have jurisdiction over an action brought under <--
6 this act by any present or former:
7 (1) employee of the Commonwealth or political
8 subdivision;
9 (2) investigator, auditor or inspector not employed by
10 the Commonwealth or political subdivision but who is
11 otherwise contracted or engaged to review any actions taken
12 by the Commonwealth or the political subdivisions; or
13 (3) investigator, auditor or inspector employed,
14 contracted or otherwise engaged by the person submitting the
15 false claim;
16 based upon information discovered during the course of his
17 employment unless that employee, investigator, auditor or
18 inspector first in good faith attempts to use existing internal
19 procedures for reporting, auditing and seeking recovery of the
20 falsely claimed funds through official channels and unless the
21 Commonwealth, the political subdivision or the person submitting
22 the false claim, as appropriate, failed to act on the
23 information within a reasonable period of time.
24 NO COURT SHALL HAVE JURISDICTION OVER AN ACTION BROUGHT UNDER <--
25 THIS ACT BY A PRESENT OR FORMER EMPLOYEE OF THE COMMONWEALTH, OF
26 A POLITICAL SUBDIVISION OR OF THE PERSON IF THAT EMPLOYEE'S
27 EXCLUSIVE RESPONSIBILITY IS THE INVESTIGATION OR PROSECUTION OF
28 FRAUD, UNLESS SUCH EMPLOYEE FIRST MAKES A GOOD FAITH ATTEMPT TO
29 USE EXISTING INTERNAL PROCEDURES FOR REPORTING, AUDITING AND
30 SEEKING RECOVERY OF THE FALSELY CLAIMED FUNDS BEFORE FILING AN
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1 ACTION. THE COMMONWEALTH, POLITICAL SUBDIVISION OR THE PERSON
2 SHALL HAVE PROMULGATED INTERNAL PROCEDURES FOR REPORTING,
3 AUDITING AND SEEKING RECOVERY OF FALSELY CLAIMED FUNDS AND MUST
4 ACT ON THE INFORMATION REPORTED BY THE EMPLOYEE WITHIN 60 DAYS
5 OF RECEIPT OF THE INFORMATION.
6 Section 510. Responsibility for prosecution.
7 If the prosecuting authority proceeds with the action, it
8 shall have the primary responsibility for prosecuting the
9 action. The qui tam plaintiff shall have the right to continue
10 with all rights and obligations as a full party to the action.
11 Section 511. Dismissal of action.
12 The Commonwealth or political subdivision may seek to dismiss
13 the action for good cause notwithstanding the objections of the
14 qui tam plaintiff if the qui tam plaintiff has been notified by
15 the prosecuting authority of the filing of the motion and the
16 court has provided the qui tam plaintiff with an adequate
17 opportunity to oppose the motion.
18 Section 512. Settlement.
19 (a) General rule.--The prosecuting authority may settle the
20 action with the defendant notwithstanding the objections of the
21 qui tam plaintiff if the court determines that the proposed
22 settlement is fair, adequate and reasonable under all of the
23 circumstances to all parties involved.
24 (b) Consultation with political subdivision.--The district
25 attorney shall consult with the political subdivision regarding
26 any proposed settlement.
27 Section 513. Election not to proceed.
28 If the prosecuting authority elects not to proceed, the qui
29 tam plaintiff shall have the right to conduct the action. If the
30 prosecuting authority so requests, it shall be served with
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1 copies of all pleadings filed in the action and supplied with
2 copies of all deposition transcripts.
3 Section 514. Intervention.
4 Upon timely application, the court may permit the prosecuting
5 authority to intervene in an action with which it had initially
6 declined to proceed if the interest of the Commonwealth or
7 political subdivision in recovery of the property or funds
8 involved is not being adequately represented by the qui tam
9 plaintiff.
10 Section 515. Proceeds.
11 (a) Attorney General.--If the Attorney General initiates an
12 action under section 303(a) or assumes control of an action
13 initiated by the district attorney pursuant to section
14 303(b)(4)(ii), the Attorney General shall receive a fixed 33% of
15 the proceeds of the action or settlement of the claim, which
16 funds shall be used to support and expand its ongoing
17 investigation and prosecution of false claims violations in this
18 Commonwealth or to support other investigation and prosecution
19 efforts.
20 (b) District attorney.--If a district attorney initiates and
21 conducts an action pursuant to section 303(b), the office of the
22 district attorney shall receive a fixed 33% of the proceeds of
23 the action or settlement of the claim, which funds shall be used
24 to support and expand its ongoing investigation and prosecution
25 of false claims violations within its jurisdiction or to support
26 other investigation and prosecution efforts.
27 (c) Award of portion of recovery.--If a district attorney
28 intervenes in an action initiated by the Attorney General
29 pursuant to section 303(a)(3) or remains a party to an action
30 assumed by the Attorney General pursuant to section 303(b)(4)(i)
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1 and (iii), the court may award the office of the district
2 attorney a portion of the Attorney General's fixed 33% of the
3 recovery under subsection (a), taking into account the district
4 attorney's role in investigating and conducting the action and
5 the resources of the office expended on the prosecution.
6 (d) Qui tam recovery.--
7 (1) If the prosecuting authority proceeds with an action
8 brought by a qui tam plaintiff under this act, the qui tam
9 plaintiff shall, subject to subsections (g) and (h), receive
10 not less than 20% nor more than 33% of the full proceeds of
11 the action or settlement of the claim, depending upon the
12 extent to which the qui tam plaintiff substantially
13 contributed to the overall prosecution of the action. If the
14 prosecuting authority and the qui tam plaintiff cannot reach
15 an agreement concerning the percentage of proceeds to be
16 distributed to the qui tam plaintiff, the determination shall
17 be made by the court.
18 (2) When it conducts the action, the Attorney General or
19 the district attorney shall receive a fixed 33% of the
20 proceeds of the action or settlement of the claim, which
21 funds shall be used to support and expand its ongoing
22 investigation and prosecution of false claims made against
23 the Commonwealth or political subdivision or otherwise to
24 investigate or prosecute consistent with the duties of these
25 offices.
26 (3) When both the Attorney General and the district
27 attorney are involved as coparties in a qui tam action
28 pursuant to section 504, the court in its discretion may
29 award the district attorney a portion of the Attorney
30 General's fixed 33% of the recovery, taking into account the
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1 district attorney's cooperation and contribution to
2 investigating and conducting the action.
3 (e) Decline to proceed.--If the prosecuting authority
4 declines to proceed with an action, the qui tam plaintiff shall,
5 subject to subsections (g) and (h), receive an amount which the
6 court decides is reasonable for collecting the civil penalty and
7 damages on behalf of the Commonwealth or political subdivision.
8 The amount awarded by the court shall be not less than 30% nor
9 more than 50% of the proceeds of the action or settlement and
10 shall be paid out of the proceeds.
11 (f) Allocation of proceeds for costs of annual audit.--The
12 controller, board of auditors or other government auditor
13 performing the annual audit of recoveries as provided under
14 subsection (k) shall receive a fixed 1% of the proceeds of the
15 action or settlement of the claim, which funds shall be used to
16 defray the costs of the annual audit.
17 (g) Present or former employee.--If a qui tam action is
18 brought by a present or former employee of the Commonwealth or
19 political subdivision, the qui tam plaintiff shall not be
20 entitled to any minimum guaranteed recovery from the proceeds.
21 If the prosecuting authority and the qui tam plaintiff cannot
22 reach an agreement concerning the percentage of proceeds to be
23 distributed to the qui tam plaintiff, the determination shall be
24 made by the court. The court may award the qui tam plaintiff
25 those sums from the proceeds as it considers appropriate, but in
26 no case more than 33% of the proceeds if the prosecuting
27 authority goes forth with the action or 50% if it declines to go
28 forth, taking into account the significance of the information,
29 the role of the qui tam plaintiff in advancing the case to
30 litigation and the scope of and response to the qui tam
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1 plaintiff's attempts to report and gain recovery of the falsely
2 claimed funds through official channels.
3 (h) Fraudulent activity.--
4 (1) Where the action is one which the court finds to be
5 based primarily on information from a qui tam plaintiff who
6 actively participated in the fraudulent activity, the qui tam
7 plaintiff shall not be entitled to any minimum guaranteed
8 recovery from the proceeds. If the prosecuting authority and
9 the qui tam plaintiff cannot reach an agreement concerning
10 the percentage of proceeds to be distributed to the qui tam
11 plaintiff, the determination shall be made by the court. The
12 court, in its sole discretion after a full review of all the
13 facts and circumstances, may award the qui tam plaintiff such
14 sums from the proceeds as it considers appropriate under the
15 circumstances, but in no case more than 33% of the proceeds
16 if the prosecuting authority goes forth with the action or
17 50% if it declines to go forth, taking into account the
18 significance of the information, the role of the qui tam
19 plaintiff in advancing the case to litigation, the scope of
20 the qui tam plaintiff's involvement in the fraudulent
21 activity, the qui tam plaintiff's attempts to avoid or resist
22 such activity and all other circumstances surrounding the
23 activity.
24 (2) A person who has been convicted of a crime, either
25 in the same or another jurisdiction, based on participation
26 in the fraudulent activity at issue in the action under this
27 act shall under no circumstances be permitted to participate
28 in any action under this act as a qui tam plaintiff.
29 (i) Present or former investigators.--Notwithstanding any <--
30 other provision of this act, any present or former sworn law
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1 enforcement officer, city controller, other government
2 investigator, auditor or inspector general or other auditor or
3 investigator of a person, who obtains information regarding a
4 false claim in the course of his duties, whether or not as an
5 employee or a contractor, shall be precluded from participating
6 in the proceeds of a qui tam action on the basis of that
7 information unless that officer, city controller, government
8 investigator, auditor or inspector general or other auditor or
9 investigator has presented such information to the person and
10 the person fails to take appropriate action within a reasonable
11 time.
12 (j) (I) Use of recoveries.-- <--
13 (1) Proceeds recovered under this act by the prosecuting
14 authority or awarded to the government auditor pursuant to
15 subsection (f) shall be placed in the General Fund of the
16 Commonwealth, the operating fund of the county of the
17 district attorney or the operating fund of the county of the
18 government auditor, as appropriate.
19 (2) Notwithstanding any other provision of law to the
20 contrary, the Commonwealth, county of the district attorney
21 or the county of the government auditor, as appropriate,
22 shall immediately make such funds available for expenditure,
23 without restriction, by the prosecuting authority or
24 government auditor for the purposes specified elsewhere in
25 this act. The entity having budgetary control over such funds
26 may not anticipate future recoveries in the adoption or
27 approval of the budget for the prosecuting authority.
28 (k) (J) Annual audit of recoveries.--It shall be the <--
29 responsibility of the Commonwealth, the county of the district
30 attorney, or both, as appropriate, to provide, through the
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1 controller, board of auditors or other appropriate auditor, an
2 annual audit of all recoveries under this act. The audit shall
3 be made public, subject to the right of the prosecuting
4 authority to redact portions of the audit which it reasonably
5 believes will compromise investigations or criminal proceedings,
6 and shall be submitted to the Attorney General's office by
7 September 30 of each year.
8 (l) (K) Annual report.--The Attorney General shall annually <--
9 submit a report to the Appropriations Committee and the
10 Judiciary Committee of the Senate and the Appropriations
11 Committee and Judiciary Committee of the House of
12 Representatives, specifying the recoveries obtained under this
13 act. The report shall give an accounting of all moneys recovered
14 through the sale of any property seized in satisfaction of any
15 judgment arising from an action under this act.
16 (m) (L) Recoveries and appropriations.--Recoveries or future <--
17 recoveries under this act shall be in addition to any
18 appropriation made to the office of the prosecuting authority.
19 Section 516. Reversion to General Fund.
20 (a) General rule.--The portion of the proceeds not
21 distributed under section 515 shall revert to the General Fund
22 when the underlying false claims involved Commonwealth funds
23 exclusively and to the political subdivision when the underlying
24 false claims involved political subdivision funds exclusively.
25 When petitioned to do so, the court shall make an apportionment
26 of the recovered proceeds between the Commonwealth and political
27 subdivision based on their relative share of the funds falsely
28 claimed.
29 (b) Reimbursement.--When an insurer, guarantor or surety has <--
30 suffered a loss on an underlying false claim through:
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1 (1) reimbursing the Commonwealth or political
2 subdivision; or
3 (2) directly paying a claimant; and
4 (3) when the proceeds reverting to the operating fund
5 under this section exceed any uninsured loss to the
6 Commonwealth or the political subdivision;
7 the insurer, guarantor or surety shall be reimbursed for its
8 loss before further distribution is made under this act.
9 (B) REIMBURSEMENT.--WHEN AN INSURER, GUARANTOR OR SURETY HAS <--
10 SUFFERED A LOSS ON AN UNDERLYING FALSE CLAIM THROUGH EITHER:
11 (1) REIMBURSING THE COMMONWEALTH OR POLITICAL
12 SUBDIVISION; OR
13 (2) DIRECTLY PAYING A CLAIMANT;
14 THE INSURER, GUARANTOR OR SURETY SHALL BE REIMBURSED FOR ITS
15 LOSSES TO THE EXTENT THAT PROCEEDS REVERTING TO THE GENERAL FUND
16 UNDER THIS SECTION EXCEED ANY UNINSURED LOSS TO THE COMMONWEALTH
17 OR THE POLITICAL SUBDIVISION.
18 Section 517. Expenses.
19 If the Commonwealth, political subdivision or qui tam
20 plaintiff prevails in or settles any action under this act, the
21 qui tam plaintiff shall receive an amount for all reasonable
22 expenses incurred in the prosecution of the claim, including
23 expert witness fees plus reasonable litigation costs and
24 attorney fees. All expenses, costs and attorney fees shall be
25 awarded against the defendant, and under no circumstances shall
26 they be the responsibility of the prosecuting authority.
27 CHAPTER 7
28 GENERAL PROVISIONS
29 Section 701. Rules of civil procedure.
30 Except where this act provides otherwise, actions under this
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1 act shall be governed by the Pennsylvania Rules of Civil
2 Procedure.
3 Section 702. Stay of discovery.
4 (a) General rule.--The court may stay discovery for a period
5 of not more than 90 days if the prosecuting authority or the
6 General Counsel shows that discovery would interfere with an
7 investigation or a prosecution of a criminal or civil matter
8 arising out of the same or similar facts, regardless of whether
9 the prosecuting authority proceeds with the action. Such a
10 showing shall be conducted in camera. The court may extend the
11 90-day period upon a further showing in camera that the
12 prosecuting authority or the General Counsel has pursued the
13 criminal or civil investigation or proceedings with reasonable
14 diligence and that any proposed discovery in the action under
15 this act would interfere with the ongoing criminal or civil
16 investigation or proceedings.
17 (b) Criminal action.--When a criminal action has commenced
18 based upon the same or similar facts underlying the pending
19 action under this act, discovery by the defendant in the pending
20 action under this act shall be confined to that available to a
21 criminal defendant under the Rules of Criminal Procedure and the
22 United States and the Constitution of the Commonwealth of
23 Pennsylvania. The defendant in the pending action under this act
24 may petition the court for a stay of proceedings pending the
25 conclusion of the criminal action.
26 Section 703. Limitations on participation.
27 Upon a showing by the prosecuting authority by a
28 preponderance of the evidence that unrestricted participation
29 during the course of the litigation by the person initiating the
30 action would interfere with or unduly delay the prosecuting
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1 authority's prosecution of the case or would be repetitious,
2 irrelevant or for purposes of harassment, the court may, in its
3 discretion, impose limitations on the person's participation,
4 including, but not limited to, the following:
5 (1) limiting the number of witnesses the person may
6 call;
7 (2) limiting the length of the testimony of these
8 witnesses;
9 (3) limiting the person's cross-examination of
10 witnesses; or
11 (4) otherwise limiting the participation by the person
12 in the litigation.
13 Section 704. Employee protection.
14 (a) Disclosing information.--No employer shall solicit,
15 attempt or conspire to prevent, make, adopt or enforce any rule,
16 regulation or policy preventing an employee from disclosing
17 information to a Federal, State or local law enforcement agency
18 or from acting in furtherance of the investigation of,
19 initiation of, testimony in or assistance in filing an action
20 under this act.
21 (b) Discrimination.--No employer shall discharge, demote,
22 suspend, threaten, harass, deny promotion to or in any other
23 manner discriminate, or solicit, attempt or conspire to
24 discriminate against an employee in the terms of and conditions
25 of employment because of lawful acts done by the employee on
26 behalf of the employee or others in disclosing information to a
27 Federal, State or local government or law enforcement agency or
28 in furthering false claims action, including investigation for,
29 initiation of, testimony for or assistance in an action filed or
30 to be filed under this act.
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1 (c) Good faith reporting to employer.--No employer may
2 discharge, threaten or otherwise discriminate or retaliate
3 against an employee regarding the employee's compensation,
4 terms, conditions, location or privileges of employment because
5 the employee made or is about to make a good faith report to the
6 employer regarding a false claim under this act, regardless of
7 whether the report is made or to be made orally or in writing.
8 (d) Penalty.--An employer who violates subsection (a), (b)
9 or (c) shall be liable for all relief necessary to make the
10 employee whole, including reinstatement with the same seniority
11 status that the employee would have had but for the
12 discrimination, three times the amount of back pay, prevailing
13 interest on the back pay, compensation for any special damage
14 sustained as a result of the discrimination and, where
15 appropriate, punitive damages. Except in cases alleging
16 intentional misconduct, punitive damages against a person shall
17 not exceed 200% of the compensatory damages awarded. In
18 addition, the employer shall be required to pay all litigation
19 costs and reasonable attorney fees. An employee may bring an
20 action in the Commonwealth Court for the relief provided in this
21 subsection.
22 (e) Limitations.--An employee who is discharged, demoted, <--
23 suspended, harassed, denied promotion, threatened with
24 termination or in any other manner discriminated against in the
25 terms and conditions of employment by his employer because of
26 participation in conduct which directly or indirectly resulted
27 in a false claim being submitted to the Commonwealth or a
28 political subdivision shall be entitled to the remedies under
29 subsection (d) if the employee voluntarily discloses information
30 to a Federal, State or local government or law enforcement
19990H0849B2541 - 27 -
1 agency or acted in furtherance of a false claims action,
2 including investigation for, initiation of, testimony for or
3 assistance in an action filed or to be filed.
4 Section 705. Limitations.
5 (a) Time of filing.--An action under this act may not be
6 filed more than six years after the date on which the violation
7 of this act is completed or more than three years after the date
8 of discovery by the prosecuting authority, but in any event no
9 more than ten years after the date on which the violation of
10 section 301 is completed.
11 (b) Prior acts.--An action under this act may be brought
12 regarding false claims made prior to the effective date of this
13 act if the limitations period set forth in subsection (a) has
14 not elapsed.
15 (c) Proof.--In any action brought under this act, the
16 Commonwealth, the political subdivision or the qui tam plaintiff
17 shall be required to prove all essential elements of the cause
18 of action, including damages, by a preponderance of the
19 evidence.
20 (d) Estoppel.--Notwithstanding any other provision of law, a
21 guilty verdict, guilty plea or nolo contendere plea rendered in
22 a criminal proceeding which alleged a scheme to obtain funds
23 fraudulently from the Commonwealth or a political subdivision
24 shall estop the defendant from denying the essential elements of
25 the offense in any action which involves the same transaction as
26 in the criminal proceeding and which is brought under this act.
27 Section 706. Remedies.
28 (a) Civil remedies.--
29 (1) The Commonwealth Court shall have jurisdiction to
30 prevent and restrain violations of section 301 by issuing
19990H0849B2541 - 28 -
1 appropriate orders, including, but not limited to:
2 (i) Ordering any person to divest himself of any
3 interest, direct or indirect, in any business or entity;
4 imposing reasonable restrictions on the future activities
5 or investments of any person, including, but not limited
6 to, prohibiting any person from engaging in the same type
7 of endeavor or freezing the person's assets.
8 (ii) Making due provisions for the rights of
9 innocent persons, ordering the dissolution of any
10 business or entity, ordering the denial, suspension or
11 revocation of charters of domestic corporations,
12 certificates of authority authorizing foreign
13 corporations to do business in this Commonwealth,
14 licenses, permits or prior approval granted to any
15 business or entity by any department or agency of the
16 Commonwealth or any of its political subdivisions; or
17 prohibiting any business or entity from engaging in any
18 business.
19 (2) Injunctions against false claims:
20 (i) If a person violates or is about to violate this
21 act, the prosecuting authority may commence an action in
22 Commonwealth Court to enjoin such violation.
23 (ii) If a person alienates or disposes of property,
24 or intends to alienate or dispose of property obtained as
25 a result of a violation of this act or property which is
26 traceable to such violation, the prosecuting authority
27 may commence an action in Commonwealth Court to enjoin
28 such alienation or disposition of property, or for a
29 restraining order to prohibit any person from
30 withdrawing, transferring, removing, dissipating or
19990H0849B2541 - 29 -
1 disposing of any such property or property of equivalent
2 value and appoint a temporary receiver to administer such
3 restraining order.
4 (3) In any proceeding under this section, the court
5 shall proceed as soon as practicable to the hearing and
6 determination thereof. Pending final determination, the court
7 may enter preliminary or special injunctions or take such
8 other actions, including the acceptance of satisfactory
9 performance bonds, as it may deem proper.
10 (b) Remedies cumulative.--The provisions of this act are not
11 exclusive, and the remedies provided for in this act shall be in
12 addition to any other remedies provided for in any other law or
13 available under common law.
14 Section 707. Enforcement.
15 (a) Prosecuting authority.--The prosecuting authority shall
16 have the power and duty to enforce this act, including the
17 authority to issue civil investigative demands pursuant to this
18 act, to institute proceedings under this act and to take such
19 actions as may be necessary to ascertain and investigate alleged
20 violations of this act. The prosecuting authority may delegate
21 its powers to investigate and prosecute actions under this act
22 to appropriate Deputy Attorneys General or deputy or assistant
23 district attorneys.
24 (b) Construction.--Nothing contained in this act shall be
25 construed to limit the regulatory or investigative authority of
26 any department or agency of the Commonwealth or political
27 subdivision whose functions might relate to persons, enterprises
28 or matters falling within the scope of this act.
29 Section 708. Civil investigative demand.
30 (a) General rule.--Whenever the prosecuting authority has
19990H0849B2541 - 30 -
1 reason to believe that any person may be in possession, custody
2 or control of any documentary material or information relevant
3 to a false claim investigation, the prosecuting authority may
4 issue in writing and cause to be served upon the person a civil
5 investigative demand requiring such person to:
6 (1) produce such documentary material for inspection and
7 copying;
8 (2) answer in written interrogatories with respect to
9 such documentary material or information;
10 (3) give oral testimony concerning such documentary
11 material or information; or
12 (4) furnish any combination of such material, answers
13 and testimony.
14 (b) Content.--Each demand under this section shall:
15 (1) State the nature of the conduct constituting the
16 alleged false claim violation which is under investigation
17 and the provision of law applicable thereto.
18 (2) If the demand is for the production of documentary
19 material:
20 (i) describe the class or classes of documentary
21 material to be produced thereunder with such definiteness
22 and certainty as to permit the material to be fairly
23 identified;
24 (ii) state that the demand is returnable forthwith
25 or prescribe a return date which will provide a
26 reasonable period of time within which the material so
27 demanded may be assembled and made available for
28 inspection and copying or reproduction; and
29 (iii) identify an investigator to whom the material
30 shall be made available.
19990H0849B2541 - 31 -
1 (3) If the demand is for written interrogatories:
2 (i) set forth with specificity the written
3 interrogatories to be answered;
4 (ii) prescribe dates at which time answers to
5 written interrogatories shall be submitted; and
6 (iii) identify the investigator to whom such answers
7 shall be submitted.
8 (4) If such demand is for the giving of oral testimony:
9 (i) prescribe a date, time and place at which oral
10 testimony should be commenced;
11 (ii) identify the investigator who shall conduct the
12 examination and the person to whom the transcript of such
13 investigation shall be submitted;
14 (iii) specify that such attendance and testimony are
15 necessary to the conduct of the investigation; and
16 (iv) describe the general purpose for which the
17 demand is being issued and the general nature of the
18 testimony, including the primary areas of inquiry, which
19 will be taken pursuant to the demand.
20 (5) Contain the following statement printed
21 conspicuously at the top of the demand:
22 You have the right to seek the assistance of any
23 attorney, and he may represent you in all phases of
24 the false claim investigation of which this civil
25 investigative demand is a part.
26 (c) Limitation.--No demand under this section shall:
27 (1) contain any requirement which would be held to be
28 unreasonable if contained in a subpoena duces tecum issued by
29 any court in connection with a grand jury investigation of
30 the alleged fraud violation; or
19990H0849B2541 - 32 -
1 (2) require the production of any documentary evidence
2 which would be privileged from disclosure if demanded by a
3 subpoena duces tecum issued by any court in connection with a
4 grand jury investigation of the alleged false claim
5 violation.
6 (d) Service.--Service of any demand or any petition filed
7 under this section shall be made in the manner prescribed by the
8 Pennsylvania Rules of Civil Procedure for service of writs and
9 complaints unless otherwise agreed to by the prosecuting
10 authority and the person.
11 (e) Return.--A verified return by the individual serving any
12 demand or petition under this section setting forth the manner
13 of service shall be prima facie proof of such service. In the
14 case of service by registered or certified mail, the return
15 shall be accompanied by the return post office receipt of
16 delivery of the demand.
17 (f) Procedure.--
18 (1) A person upon whom a demand issued under this
19 section has been duly served shall make the demanded material
20 available for inspection and copying or reproduction to an
21 investigator designated in the demand at the principal place
22 of business of the person or at such other place as the
23 investigator and the person thereafter may agree or as the
24 court may direct pursuant to this section on the return date
25 specified in the demand. The person may, upon agreement of
26 the investigator, substitute copies of all or any part of the
27 demanded material for the originals of the demanded material.
28 (2) The investigator to whom any documentary material is
29 so delivered shall take physical possession of the material
30 and shall be responsible for the use made of the material and
19990H0849B2541 - 33 -
1 for its return pursuant to this section. The investigator may
2 cause the preparation of the copies of the documentary
3 material as may be required for official use. While in the
4 possession of the investigator, no material so produced shall
5 be available for examination by any individual other than the
6 prosecuting authority or any investigator without the consent
7 of the person who produced the material. Under such
8 reasonable terms and conditions as the prosecuting authority
9 shall prescribe, documentary material while in the possession
10 of the investigator shall be available for examination by the
11 person who produced the material or any duly authorized
12 representatives of that person.
13 (3) The production of documentary material in response
14 to a civil investigative demand served under this section
15 shall be made under a sworn certificate, in such form as the
16 demand designates, by:
17 (i) in the case of a natural person, the person to
18 whom the demand is directed; or
19 (ii) in the case of a person other than a natural
20 person, a person having knowledge of the facts and
21 circumstances relating to such production and authorized
22 to act on behalf of such person.
23 The certificate shall state that all of the documentary
24 material required by the demand and in the possession,
25 custody or control of the person to whom the demand is
26 directed has been produced and made available to the
27 investigator identified in the demand.
28 (4) Each interrogatory in a civil demand served under
29 this section shall be answered separately and fully in
30 writing under oath and shall be submitted under a sworn
19990H0849B2541 - 34 -
1 certificate, in such form as the demand designates, by:
2 (i) in the case of a natural person, the person to
3 whom the demand is directed; or
4 (ii) in the case of a person other than a natural
5 person, a person or persons responsible for answering
6 each interrogatory.
7 (5) If any interrogatory is objected to, the reasons for
8 the objection shall be stated in the certificate instead of
9 an answer. The certificate shall state that all information
10 required by the demand and in the possession, custody,
11 control or knowledge of the person to whom the demand is
12 directed has been submitted. To the extent that any
13 information is not furnished, the information shall be
14 identified and reasons set forth with particularity regarding
15 the reasons why the information was not furnished.
16 (6) (i) The examination of any person pursuant to a
17 civil investigative demand for oral testimony served
18 under this section shall be deemed an "official
19 proceeding" within the meaning of 18 Pa.C.S. § 4902(a)
20 (relating to perjury). The examination shall be taken
21 before an officer authorized to administer oaths and
22 affirmations by the laws of this Commonwealth. The
23 officer before whom the testimony is to be taken shall
24 put the witness on oath or affirmation and shall,
25 personally or by someone acting under the direction of
26 the officer and in the officer's presence, record the
27 testimony of the witness. The testimony shall be taken
28 accurately and shall be transcribed. When the testimony
29 is fully transcribed, a copy of the transcript shall be
30 promptly forwarded to the designated person. This
19990H0849B2541 - 35 -
1 subsection shall not preclude the taking of testimony by
2 any means authorized by, and in a manner consistent with,
3 the Pennsylvania Rules of Civil Procedure.
4 (ii) The investigator conducting the examination
5 shall exclude from the place where the examination is
6 held all persons except the person giving the testimony,
7 the attorney for and any other representative of the
8 person giving the testimony, the prosecuting authority,
9 any person who may be agreed upon by the prosecuting
10 authority and the person giving the testimony, and any
11 stenographer taking such testimony.
12 (iii) The oral testimony of any person taken
13 pursuant to a civil investigative demand served under
14 this section shall be taken in the county where the
15 office of the investigator conducting the examination is
16 situated, or in such other place as may be agreed upon by
17 the investigator and such person.
18 (iv) When the testimony is fully transcribed, the
19 investigator shall afford the witness, who may be
20 accompanied by counsel, a reasonable opportunity to
21 examine and read the transcript, unless such examination
22 and reading are waived by the witness. Any changes in
23 form or substance which the witness desires to make shall
24 be entered and identified upon the transcript by the
25 officer or the investigator, with a statement of the
26 reasons given by the witness for making such changes. The
27 transcript shall then be signed by the witness, unless
28 the witness in writing waives the signing, is ill, cannot
29 be found or refuses to sign. If the transcript is not
30 signed by the witness within 30 days after being afforded
19990H0849B2541 - 36 -
1 a reasonable opportunity to examine it, the officer or
2 the investigator shall sign it and state on the record
3 the fact of the waiver, illness, absence of the witness
4 or the refusal to sign, together with the reasons, if
5 any, given therefor.
6 (v) Upon payment of reasonable charges therefor, the
7 investigator shall furnish a copy of the transcript to
8 the witness only, except that the prosecuting authority
9 may, for good cause, limit such witness to inspection of
10 the official transcript of the witness' testimony.
11 (vi) Any person compelled to appear for oral
12 testimony under a civil investigative demand may be
13 accompanied, represented and advised by counsel. Counsel
14 may advise the person, in confidence, with respect to any
15 question asked of that person. The person or counsel may
16 object on the record to any question, in whole or in
17 part, and shall briefly state for the record the reason
18 for the objection. An objection may be made, received and
19 entered upon the record when it is claimed that such
20 person is entitled to refuse to answer the question on
21 the grounds of any constitutional or other legal right or
22 privilege, including the privilege against self-
23 incrimination. The person may not otherwise object to or
24 refuse to answer any question, and may not directly or
25 through counsel otherwise interrupt the oral examination.
26 If the person refuses to answer any question, a petition
27 may be filed in the Commonwealth Court under section
28 708(g) for an order compelling the person to answer the
29 question.
30 (7) Upon completion of:
19990H0849B2541 - 37 -
1 (i) the false claims investigation for which any
2 documentary material was produced under this section; and
3 (ii) any case or proceeding arising from such
4 investigation;
5 the investigator shall return to the person who produced the
6 material all of the material other than copies of the
7 material made pursuant to this section which have not passed
8 into the control of any court or grand jury through
9 introduction into the record of such case or proceeding.
10 (8) When documentary material has been produced by a
11 person under this section for use in a false claims
12 investigation and no case or proceeding arising from the
13 investigation has been instituted within a reasonable time
14 after completion of the examination and analysis of all
15 evidence assembled in the course of the investigation, the
16 person shall be entitled, upon written demand made upon the
17 prosecuting authority, to the return of all documentary
18 material, other than copies of the material made pursuant to
19 this section, so produced by that person.
20 (g) Failure to comply.--Whenever a person fails to comply
21 with a civil investigative demand that is served upon him under
22 this section or whenever satisfactory copying or reproduction of
23 any of the material cannot be done and the person refuses to
24 surrender the material, the prosecuting authority may file in
25 the Commonwealth Court and serve upon the person a petition for
26 an order of the court for the enforcement of this section.
27 (h) Petition for relief.--
28 (1) Within 20 days after the service of any demand under
29 this section upon any person or at any time before the return
30 date specified in the demand, whichever period is shorter,
19990H0849B2541 - 38 -
1 the person may file in the Commonwealth Court and serve upon
2 the prosecuting authority a petition for an order of the
3 court modifying or setting aside this demand. The time
4 allowed for compliance with the demand, in whole or in part,
5 as deemed proper and ordered by the court shall not run
6 during the pendency of the petition in the court. The
7 petition shall specify each ground upon which the petitioner
8 relies in seeking the relief and may be based on any failure
9 of the demand to comply with the provisions of this section
10 or on any constitutional or other legal right or privilege of
11 the person.
12 (2) At any time during which the prosecuting authority
13 is in custody or control of documentary material delivered by
14 a person in compliance with a demand under this section, the
15 person may file in the Commonwealth Court and serve upon the
16 prosecuting authority a petition for an order of the court
17 requiring the performance of any duty imposed by this
18 section.
19 (3) Whenever a petition is filed in the Commonwealth
20 Court, the court shall have jurisdiction to hear and
21 determine the matter so presented and, after a hearing at
22 which all parties are represented, to enter such order or
23 orders as may be required to carry into effect the provisions
24 of this section.
25 (i) Definition.--As used in this section, the term
26 "documentary material" includes, but is not limited to, any
27 book, paper, record, recording, tape, report, memorandum, data,
28 written or electronic communication or other document relating
29 to the business affairs of any person, enterprise or matter
30 falling within the purview of this act.
19990H0849B2541 - 39 -
1 Section 709. Immunity.
2 Whenever any individual refuses on the basis of his privilege
3 against self-incrimination to comply with a civil investigative
4 demand issued pursuant to this act or to testify or produce
5 other information in a proceeding under this act, the
6 prosecuting authority may invoke the provisions of 42 Pa.C.S. §
7 5947 (relating to immunity of witnesses).
8 Section 710. Regulations.
9 (a) General rule.--The Attorney General shall have the power
10 and authority to promulgate rules and regulations which may be
11 necessary to carry out the purposes set forth in this act.
12 (b) Guidelines.--In order to facilitate the speedy
13 implementation of this act, the Attorney General shall have the
14 power and authority to promulgate, adopt and use guidelines
15 which shall be published in the Pennsylvania Bulletin. The
16 guidelines shall not be subject to review pursuant to section
17 205 of the act of July 31, 1968 (P.L.769, No.240), referred to
18 as the Commonwealth Documents Law, sections 204(b) and 301(10)
19 of the act of October 15, 1980 (P.L.950, No.164), known as the
20 Commonwealth Attorneys Act, the act of June 25, 1982 (P.L.633,
21 No.181), known as the Regulatory Review Act, and shall be
22 effective for a period of not more than two years from the
23 effective date of this act. After the expiration of the two-year
24 period, the guidelines shall expire and be replaced by
25 regulations which shall be promulgated, adopted and published as
26 provided by law.
27 SECTION 711. SEVERABILITY. <--
28 THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF ANY PROVISION OF
29 THIS ACT OR ITS APPLICATION TO ANY PERSON OR CIRCUMSTANCE IS
30 HELD INVALID, THE INVALIDITY SHALL NOT AFFECT OTHER PROVISIONS
19990H0849B2541 - 40 -
1 OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN EFFECT WITHOUT
2 THE INVALID PROVISION OR APPLICATION.
3 Section 711 712. Effective date. <--
4 This act shall take effect in 60 days.
A28L44DMS/19990H0849B2541 - 41 -