PRINTER'S NO. 1975
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY NEUMAN, DeLUCA, FREEMAN, WHITE, KOTIK, CALTAGIRONE, CUTLER, MCNEILL, READSHAW, SCHLOSSBERG, O'BRIEN, SANTARSIERO, PASHINSKI, COHEN, GROVE, KORTZ, MOUL, M. DALEY, McGEEHAN, MUNDY, SNYDER, LONGIETTI, MILLARD, MULLERY, MIRABITO, PAINTER, HARHAI, BRIGGS, SABATINA, KULA, DERMODY, GINGRICH, D. COSTA, MILNE, HANNA AND MURT, JUNE 10, 2013
REFERRED TO COMMITEE ON JUDICIARY, JUNE 10, 2013
1Providing for liability for false claims, for adoption of
2Congressional intent of the Federal False Claims Act, for
3treble damages, costs and civil penalties, for powers of the
4Attorney General and for qui tam actions.
7TABLE OF CONTENTS
8Chapter 1. Preliminary Provisions
9Section 101. Short title.
10Section 102. Declaration of policy.
11Section 103. Definitions.
12Chapter 3. False Claims
13Section 301. Acts subjecting persons to liability.
16Section 303. Statute of limitations; burden of proof; estoppel.
17Section 304. Miscellaneous provisions.
1Section 305. Appropriation.
2Section 306. Effective date.
7Section 101. Short title.
10Section 102. Declaration of policy.
11The General Assembly declares that this act adopts the intent
12of Congress in enacting the Federal False Claims Act (Public Law
1397-258, 31 U.S.C. §§ 3729-3733) on September 13, 1982, including
14the amendments (Public Law 99-562, 100 Stat. 3153) enacted
15October 27, 1986 and all subsequent amendments.
16Section 103. Definitions.
20"Claim." As follows:
21(1) A request or demand for money or property, whether
22under contract or otherwise and regardless of whether the
23Commonwealth has title to the money or property, which meets
24any of the following:
27(ii) Is made to a contractor, grantee or other
28recipient and any portion of the money or property will
29be spent or used on the Commonwealth's behalf or to
30advance a program or interest of the Commonwealth, and
7(2) The term does not include requests or demands for
8money or property the Commonwealth has paid to an individual
9as compensation for employment or as an income subsidy with
10no restrictions on the individual's use of the money or
12(3) To the extent it is not connected to a request or
13demand for money or property, a filing with a Commonwealth
14agency pursuant to the Commonwealth's insurance laws shall
15not constitute a claim.
16"Employer." A natural person, corporation, firm,
17association, organization, partnership, business, trust or
18Commonwealth-affiliated entity involved in a nongovernmental
19function, including State universities and State hospitals.
22(i) Has actual knowledge of the information.
27(2) Proof of specific intent to defraud is not required.
30"Obligation." An established duty, whether or not fixed,
1arising from any of the following:
2(1) An express or implied contract.
3(2) A grantor-grantee relationship.
4(3) A licensor-licensee relationship.
5(4) A fee-based or similar relationship.
6(5) A statute or regulation.
7(6) The retention of an overpayment.
13(2) Communications between the Office of Attorney
14General and a Federal, State or local government agency or a
15contractor of a Federal, State or local government agency,
16undertaken in furtherance of an investigation or prosecution
17of an action.
18(3) Interviews of a qui tam plaintiff or other witness.
19(4) Oral examinations.
1"Original source." An individual who:
2(1) prior to a public disclosure in the news media or in
3a publicly disseminated governmental report, has voluntarily
4disclosed to the Commonwealth the information on which
5allegations or transactions in a claim are based; or
6(2) has knowledge that is independent of and materially
7adds to the publicly disclosed allegations or transactions
8and who has voluntarily provided the information to the
9Commonwealth before filing an action under section 302.
16Section 301. Acts subjecting persons to liability.
17(a) Liability.--A person who commits an act prohibited in
18subsection (b) shall be liable to the Commonwealth for three
19times the amount of damages which the Commonwealth sustains
20because of the act of that person.
21(b) Prohibited acts.--A person who commits any of the
22following acts shall also be liable to the Commonwealth for a
23civil penalty of not less than $5,500 and not more than $11,000
24for each violation:
30(3) Has possession, custody or control of public
4(4) Is authorized to make or deliver a document
5certifying receipt of property used or to be used by the
6Commonwealth and knowingly makes or delivers a receipt that
7falsely represents the property used or to be used.
11(6) Knowingly makes, uses or causes to be made or used,
12a false record or statement material to an obligation to pay
13or transmit money or property to the Commonwealth or
14knowingly conceals, or knowingly and improperly avoids or
15decreases an obligation to pay or transmit money or property
16to the Commonwealth.
20(8) Is a beneficiary of an inadvertent submission of a
21false claim, subsequently discovers the falsity of the claim
22and fails to disclose the false claim to the Commonwealth
23within a reasonable time after discovery of the false claim.
26(c) Damages limitation.--Notwithstanding subsection (a), the
27court may assess not less than two times the amount of damages
28which the Commonwealth sustains because of the act of the person
29described in that subsection and no civil penalty if the court
30finds all of the following:
1(1) The person committing the violation furnished the
2Commonwealth officials who are responsible for investigating
3false claims violations with all information known to that
4person about the violation within 30 days after the date on
5which the person first obtained the information.
8(3) At the time the person furnished the Commonwealth
9with information about the violation, no criminal
10prosecution, civil action or administrative action had
11commenced with respect to the violation, and the person did
12not have actual knowledge of the existence of an
13investigation into the violation.
17(e) Actions to recover damages and adjustment of
18penalties.--A person who is liable for the damages or penalties
19assessed under subsections (a) and (b) shall also be liable to
20the Commonwealth for the costs of a civil action, including
21reasonable outside and in house attorneys' fees of the Attorney
22General, brought to recover any of those damages or penalties.
23The civil penalties payable under subsection (b) shall be
24adjusted from time to time as provided in the Federal Civil
25Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note;
26Public Law 104-410).
5(b) Actions by qui tam plaintiffs.--
6(1) A qui tam plaintiff may bring a civil action in
7Commonwealth Court for a violation of this act for the qui
8tam plaintiff and for the Commonwealth in the name of the
9Commonwealth. Once filed, the action shall be dismissed only
10with the written consent of the court, taking into account
11the best interest of the parties involved and the policy of
13(2) A copy of the complaint and written disclosure of
14substantially all material evidence and information the qui
15tam plaintiff possesses shall be served on the Attorney
16General. The complaint shall be filed in camera and shall
17remain under seal for at least 60 days and shall not be
18served on the defendant until the court orders the service.
19The Commonwealth may elect to intervene and proceed with the
20action within 60 days after it receives the complaint and the
21material evidence and information.
22(3) The Commonwealth may, for good cause shown, move the
23court for extensions of the time during which the complaint
24remains under seal under paragraph (2). The motions may be
25supported by affidavits or other submissions in camera. The
26defendant shall not be required to respond to any complaint
27filed under this section until the complaint is unsealed and
28served upon the defendant under the Pennsylvania Rules of
30(4) Before the expiration of the 60-day period or any
8(c) Intervention.--When a qui tam plaintiff brings a valid
9action under this subsection, no person other than the
10Commonwealth may intervene or bring a related action based on
11the facts underlying the pending action.
12(d) Rights of the parties to qui tam actions.--
13(1) If the Commonwealth proceeds with the action, it
14shall have the primary responsibility for prosecuting the
15action and shall not be bound by an act of the qui tam
16plaintiff. The qui tam plaintiff shall have the right to
17continue as a party to the action, subject to the limitations
18set forth in paragraph (2).
19(2) (i) The Commonwealth may move to dismiss the action
20for good cause despite the objections of the qui tam
21plaintiff if the qui tam plaintiff has been notified by
22the Commonwealth of the filing of the motion and the
23court has provided the qui tam plaintiff with an
24opportunity to oppose the motion and present evidence at
26(ii) The Commonwealth may settle the action with the
27defendant despite the objections of the qui tam plaintiff
28if the court determines, after a hearing providing the
29qui tam plaintiff an opportunity to present evidence, the
30proposed settlement is fair, adequate and reasonable
1under the circumstances.
2(iii) Upon a showing by the Commonwealth that
3unrestricted participation during the course of the
4action by the qui tam plaintiff would interfere with or
5unduly delay the Commonwealth's prosecution of the case
6or would be repetitious, irrelevant or harassment, the
7court may, in its discretion, impose limitations on the
8qui tam plaintiff's participation by:
17(iv) Upon a showing by the defendant that
18unrestricted participation during the action by the qui
19tam plaintiff would be for purposes of harassment or
20would cause the defendant undue burden or unnecessary
21expense, the court may limit the participation by the qui
22tam plaintiff in the action.
23(3) If the Commonwealth elects not to proceed with the
24action, the qui tam plaintiff shall have the right to conduct
25the action. If the Commonwealth requests, it shall be served
26with copies of all pleadings filed in the action and shall be
27supplied with copies of all deposition transcripts at the
28Commonwealth's expense. The court, without limiting the
29status and rights of the qui tam plaintiff, may permit the
30Commonwealth to intervene at a later date upon a showing of
2(4) Whether or not the Commonwealth proceeds with the
3action, upon a showing by the Commonwealth that certain
4actions of discovery by the qui tam plaintiff would interfere
5with the Commonwealth's investigation or prosecution of a
6criminal or civil matter arising out of the same facts, the
7court may stay the discovery for a period of not more than 60
8days. The showing shall be conducted in camera. The court may
9extend the 60-day period upon a further showing in camera
10that the Commonwealth has pursued the criminal or civil
11investigation or proceedings with reasonable diligence and
12the discovery proposed in the civil action will interfere
13with the ongoing criminal or civil investigations or
15(5) Notwithstanding subsection (b), the Commonwealth may
16elect to pursue its claim through an alternate remedy
17available to the Commonwealth, including an administrative
18proceeding to determine a civil money penalty. If the
19alternate remedy is pursued in another proceeding, the qui
20tam plaintiff shall have the same rights in the proceeding as
21if the action continued under this section. A finding of fact
22or conclusion of law made in the other proceeding that has
23become final shall be conclusive on all parties to an action
24under this section. A finding or conclusion is final if it
25has been finally determined on appeal to the appropriate
26court of the Commonwealth, if the time for filing the appeal
27regarding the finding or conclusion has expired without an
28appeal having been filed or if the finding or conclusion is
29not subject to judicial review.
30(e) Award to qui tam plaintiff.--
1(1) If the Commonwealth proceeds with an action brought
2by a qui tam plaintiff, the qui tam plaintiff shall, subject
3to the provisions of this paragraph, receive at least 15% but
4not more than 25% of the proceeds of the action or settlement
5of the claim, depending upon the extent to which either or
6both the qui tam plaintiff and counsel for the qui tam
7plaintiff substantially contributed to the prosecution of the
8action. Where the court finds the action is based primarily
9on disclosures of specific information, other than
10information provided by the qui tam plaintiff, relating to
11allegations or transactions specifically in a criminal, civil
12or administrative hearing or in a legislative or
13administrative report, hearing, audit or investigation or
14from the news media, the court may award a sum it considers
15appropriate, but in no case more than 10% of the proceeds,
16taking into account the significance of the information and
17the role of the qui tam plaintiff in advancing the action. A
18payment to a qui tam plaintiff under the first or second
19sentence of this paragraph shall be made from the proceeds.
20The qui tam plaintiff shall also receive an amount for
21reasonable expenses which the court finds was necessarily
22incurred, plus reasonable attorney fees and costs. The
23expenses, fees and costs shall be awarded against the
25(2) If the Commonwealth does not proceed with an action
26under this section, the qui tam plaintiff shall receive at
27least 25% but not more than 30% of the proceeds of the action
28or settlement of the claim, as the court deems reasonable.
29The amount shall be paid from the proceeds. The qui tam
30plaintiff shall also receive an amount for reasonable
5(3) Whether or not the Commonwealth proceeds with the
6action, if the court finds the qui tam plaintiff planned and
7initiated the violation of section 301 upon which the action
8was filed, then the court may, to the extent the court
9considers appropriate, reduce the share of the proceeds of
10the action which the qui tam plaintiff would otherwise
11receive under paragraph (1) or (2), taking into account the
12role of the qui tam plaintiff in advancing the action and any
13relevant circumstances pertaining to the violation. If the
14qui tam plaintiff is convicted of criminal conduct arising
15from his or her role in the violation, the qui tam plaintiff
16shall be dismissed from the civil action and shall not
17receive a share of the proceeds of the action. The dismissal
18shall not prejudice the right of the Commonwealth to continue
20(4) If the Commonwealth does not proceed with the action
21and the qui tam plaintiff conducts the action, the court may
22award to the defendant its reasonable attorney fees and
23expenses if the defendant prevails in the action and the
24court finds the claim of the qui tam plaintiff was clearly
25frivolous, clearly vexatious or brought primarily for
26purposes of harassment.
27(5) Fifteen percent of the Commonwealth's share of
28proceeds of an action or settlement of a claim under this
29section shall be deposited into the False Claims Prosecution
30Fund established in subsection (k).
1(f) Limitations on actions.--
2(1) An action may not be filed under this section
3against the Commonwealth or an officer or employee thereof,
4including a member of the General Assembly or the judiciary,
5acting in the officer's, employee's or member's official
7(2) Unless opposed by the Attorney General or unless the
8qui tam plaintiff is the original source of the information,
9the court shall dismiss an action brought under subsection
10(b) if substantially the same allegations or transactions
11alleged in the action were publicly disclosed in:
12(i) the news media;
20(h) Private action for retaliation.--An employee, contractor
21or agent who is discharged, demoted, suspended, threatened,
22harassed or in any other manner discriminated against in the
23terms and conditions of employment, contract or agency because
24of lawful acts by the employee, contractor or agent on behalf of
25the employee, contractor or agent or associated others in
26furtherance of an action under this section or efforts to stop
27one or more violations of this act, including investigation for,
28initiation of, testimony for or assistance in an action filed or
29to be filed under this section, shall be entitled to all relief
30necessary to make the employee, contractor or agent whole. The
1relief shall include reinstatement with the same seniority
2status the employee, contractor or agent would have had but for
3the discrimination, two times the amount of back pay, interest
4on the back pay, and compensation for any special damages
5sustained as a result of the discrimination, including
6litigation costs and reasonable attorney fees. The Commonwealth
7Court shall have exclusive jurisdiction for all actions seeking
8relief under this subsection.
9(i) Civil investigative demand.--
12(ii) Nothing in this subsection shall be construed
13to limit the regulatory or investigative authority of any
14department or agency of the Commonwealth whose functions
15may relate to persons, enterprises or matters falling
16within the scope of this chapter.
17(2) (i) Whenever the Attorney General has reason to
18believe that any person may be in possession, custody or
19control of documentary material relevant to an
20investigation under this chapter, the Attorney General
21may issue in writing, and cause to be served upon the
22person, a civil investigative demand requiring the
23production of the material for examination.
24(ii) Each demand shall:
25(A) state the nature of the conduct constituting
26the alleged violation which is under investigation,
27the applicable provision of law and the connection
28between the documentary material demanded and the
29conduct under investigation;
30(B) describe the class or classes of documentary
4(C) state the demand is returnable or prescribe
5a return date which will provide a reasonable time
6period within which the material demanded may be
7assembled and made available for inspection and
8copying or reproduction;
11(E) contain the following statement printed
12conspicuously at the top of the demand: "You have the
13right to seek the assistance of an attorney and he
14may represent you in all phases of the investigation
15of which this civil investigative demand is a part."
16(iii) The demand shall not:
17(A) contain a requirement which would be held to
18be unreasonable if contained in a subpoena duces
19tecum issued by any court in connection with a grand
20jury investigation of such alleged violation; or
21(B) require the production of documentary
22evidence which would be privileged from disclosure if
23demanded by a subpoena duces tecum issued by a court
24in connection with a grand jury investigation of the
26(iv) Service of any such demand or any petition
27filed under this paragraph shall be made in the manner
28prescribed by the Pennsylvania Rules of Civil Procedure
29for service of writs and complaints.
30(v) A verified return by the individual serving a
1demand or petition setting forth the manner of the
2service shall be prima facie proof of the service. In the
3case of service by registered or certified mail, the
4return shall be accompanied by the return post office
5receipt of delivery of the demand.
6(vi) (A) Any person upon whom any demand issued
7under this subsection has been duly served shall make
8the material available for inspection and copying or
9reproduction to the investigator designated at the
10principal place of business of the person, or at any
11other place as the investigator and person may agree
12or as the court may direct under this paragraph, on
13the return date specified in the demand. The person
14may upon agreement of the investigator substitute
15copies of all or any part of the material for the
17(B) The investigator to whom documentary
18material is delivered shall take physical possession
19of it and shall be responsible for the use for which
20it is made and for its return under this paragraph.
21The investigator may cause the preparation of copies
22of the documentary material as may be required for
23official use. While in the possession of the
24investigator, no material produced shall be available
25for examination without the consent of the person who
26produced the material by an individual other than the
27Attorney General or investigator. Under reasonable
28terms and conditions as the Attorney General shall
29prescribe, documentary material while in the
30possession of the investigator shall be available for
3(C) Upon completion of the investigation for
4which documentary material was produced under this
5paragraph and any case or proceeding arising from the
6investigation, the investigator shall return to the
7person who produced the material all the material
8other than copies made under this paragraph which
9have not passed into the control of any court or
10grand jury through introduction into the record of
11the case or proceeding.
12(D) When documentary material has been produced
13by a person under this paragraph for use in an
14investigation and no case or proceeding arising
15therefrom has been instituted within a reasonable
16time after completion of the examination and analysis
17of all evidence assembled in the course of the
18investigation, the person shall be entitled, upon
19written demand made upon the Attorney General, to the
20return of all documentary material, other than copies
21made under this paragraph, produced by the person.
22(vii) Whenever a person fails to comply with a civil
23investigative demand duly served upon the person under
24this paragraph or whenever satisfactory copying or
25reproduction of the material cannot be done and the
26person refuses to surrender the material, the Attorney
27General may file, in Commonwealth Court, and serve upon
28the person a petition for an order of the court for the
29enforcement of this paragraph.
30(viii) Within 20 days after the service of the
1demand upon a person, or at any time before the return
2date specified in the demand, whichever period is
3shorter, the person may file, in Commonwealth Court, and
4serve upon the Attorney General a petition for an order
5of the court modifying or setting aside the demand. The
6time allowed for compliance with the demand in whole or
7in part as deemed proper and ordered by the court shall
8not run during the pendency of the petition in the court.
9The petition shall specify each ground upon which the
10petitioner relies in seeking the relief, and may be based
11upon a failure of the demand to comply with the
12provisions of this paragraph or upon a constitutional or
13other legal right or privilege of the person.
14(ix) When the Attorney General is in custody or
15control of documentary material delivered by a person in
16compliance with a demand, the person may file, in
17Commonwealth Court, and serve upon the Attorney General a
18petition for an order of the court requiring the
19performance of a duty imposed by this paragraph.
20(x) Whenever a petition is filed under this
21paragraph, the court shall have jurisdiction to hear and
22determine the matter so presented, and, after a hearing
23at which all parties are represented, to enter an order
24as may be required to carry into effect the provisions of
26(3) Whenever an individual refuses, on the basis of the
27individual's Fifth Amendment privilege against self-
28incrimination, to comply with a civil investigative demand
29issued under paragraph (2), the Attorney General may invoke
30the provisions of 42 Pa.C.S. § 5947 (relating to immunity of
2(4) The Attorney General may delegate the authority to
3issue civil investigative demands under this subsection. If a
4civil investigative demand is an express demand for the
5production of discovery, the Attorney General or the Attorney
6General's designee shall cause to be served, in any manner
7authorized under this subsection, a copy of the demand upon
8the person from whom the discovery was obtained and shall
9notify the person to whom the demand is issued of the date on
10which the copy was served. Any information obtained by the
11Attorney General or the Attorney General's designee under
12this subsection may be shared with a qui tam plaintiff if the
13Attorney General or the Attorney General's designee
14determines it is necessary as part of an investigation of a
16(j) Cooperation by agencies.--Commonwealth agencies shall
17cooperate in the investigation and prosecution of false claims
18under this section, whether the claims are brought by the
19Attorney General or a qui tam plaintiff.
20(k) False Claims Prosecution Fund.--There is hereby
21established in the State Treasury a special fund to be known as
22the False Claims Prosecution Fund. The money deposited into the
23fund shall be utilized by the Attorney General for the exclusive
24purpose of investigating and prosecuting false claims under this
25act. The money in the fund may not lapse and is continuously
26appropriated for the purposes set forth in this subsection.
27Section 303. Statute of limitations; burden of proof; estoppel.
28(a) Statute of limitations.--
5(2) (i) If the Commonwealth elects to intervene and
6proceed with an action brought under section 302(b), the
7Commonwealth may file its own complaint or amend the
8complaint of the qui tam plaintiff who brought the action
9in order to clarify or add detail to the claims and to
10add any additional claims with respect to which the
11Commonwealth contends it is entitled to relief.
12(ii) If the Commonwealth makes an election under
13subparagraph (i), any such Commonwealth pleading shall
14relate back to the filing date of the complaint of the
15qui tam plaintiff to the extent that the claim of the
16Commonwealth arises out of the conduct, transactions or
17occurrences set forth, or attempted to be set forth, in
18the qui tam plaintiff's complaint.
19(b) Burden of proof.--In any action brought under section
20302, the Commonwealth or the qui tam plaintiff shall be required
21to prove all essential elements of the cause of action,
22including damages, by a preponderance of the evidence.
23(c) Estoppel.--Notwithstanding any other provision of law, a
24guilty verdict rendered in a criminal proceeding charging false
25statements or fraud, whether upon a verdict after trial or upon
26a plea of guilty or nolo contendere, shall estop the defendant
27from denying the essential elements of the offense in any action
28which involves the same transaction as in the criminal
29proceeding and which is brought under section 302(a) or (b).
30Section 304. Miscellaneous provisions.
1(a) Remedies under other laws.--The provisions of this act
2are not exclusive and the remedies provided for in this act
3shall be in addition to any other remedies provided for in any
4other law or available under common law.
11(d) Guidelines.--In order to facilitate the speedy
12implementation of this act, the Attorney General shall have the
13power and authority to promulgate, adopt and use guidelines
14which shall be published in the Pennsylvania Bulletin as
15notices. The guidelines are not subject to review under section
16205 of the act of July 31, 1968 (P.L.769, No.240), referred to
17as the Commonwealth Documents Law; sections 204(b) and 301(10)
18of the act of October 15, 1980 (P.L.950, No.164), known as the
19Commonwealth Attorneys Act; or the act of June 25, 1982
20(P.L.633, No.181), known as the Regulatory Review Act. The
21guidelines shall be effective for two years from the effective
22date of this chapter. After the expiration of the two-year
23period, the guidelines shall be promulgated as regulations.
24Section 305. Appropriation.
25The sum of $3,000,000 is hereby appropriated to the Office of
26Attorney General for the fiscal period July 1, 2013, to June 30,
272015, to be used by the Office of Attorney General to implement
28and administer the provisions of this act. This appropriation is
29a two-year appropriation that may not lapse until June 30, 2015.
30Section 306. Effective date.
1This act shall take effect immediately.