PRIOR PRINTER'S NO. 1062 PRINTER'S NO. 1482
No. 898 Session of 2003
INTRODUCED BY KENNEY, BROWNE, BUNT, DALLY, JAMES, LEWIS,
McNAUGHTON, REICHLEY, WALKO, WASHINGTON, BAKER, BALDWIN,
BELARDI, BENNINGHOFF, CAWLEY, CIVERA, COY, CRAHALLA, EACHUS,
GEIST, GEORGE, GODSHALL, GOODMAN, GORDNER, HALUSKA, HARHAI,
HARPER, HARRIS, HERMAN, HERSHEY, HESS, HORSEY, KELLER,
KIRKLAND, LaGROTTA, LAUGHLIN, LEDERER, LEH, MANN, MARSICO,
McGEEHAN, R. MILLER, MUNDY, O'NEILL, PRESTON, RUBLEY,
SAINATO, SATHER, SAYLOR, SEMMEL, SHANER, B. SMITH, SOLOBAY,
STABACK, E. Z. TAYLOR, J. TAYLOR, THOMAS, TIGUE, WILT AND
YOUNGBLOOD, MARCH 18, 2003
AS REPORTED FROM COMMITTEE ON JUDICIARY, HOUSE OF
REPRESENTATIVES, AS AMENDED, APRIL 28, 2003
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.
1 Section 502. Commonwealth funds.
2 Section 503. Political subdivision funds.
3 Section 504. Complaints relating to Commonwealth and political
4 subdivision funds.
5 Section 505. Intervention by political subdivision.
6 Section 506. Extension of time.
7 Section 507. Other actions prohibited.
8 Section 508. Exclusions.
9 Section 509. Employment-related discovery of information.
10 Section 510. Responsibility for prosecution.
11 Section 511. Dismissal of action.
12 Section 512. Settlement.
13 Section 513. Election not to proceed.
14 Section 514. Intervention.
15 Section 515. Proceeds.
16 Section 516. Reversion to General Fund.
17 Section 517. Expenses.
18 Chapter 7. Miscellaneous Provisions
19 Section 701. Rules of civil procedure.
20 Section 702. Stay of discovery.
21 Section 703. Control over prosecution.
22 Section 704. Employee protection.
23 Section 705. Limitations.
24 Section 706. Remedies.
25 Section 707. Enforcement.
26 Section 708. Civil investigative demand.
27 Section 709. Immunity.
28 Section 710. Regulations.
29 Section 711. Severability.
30 Section 712. Effective date.
20030H0898B1482 - 2 -
1 The General Assembly of the Commonwealth of Pennsylvania
2 hereby enacts as follows:
3 CHAPTER 1
4 PRELIMINARY PROVISIONS
5 Section 101. Short title.
6 This act shall be known and may be cited as the Fraud Against
7 Taxpayers Act.
8 Section 102. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Claim." Any request or demand for money, property or
13 services made to any employee, officer or agent of the
14 Commonwealth or of any political subdivision thereof or to any
15 contractor, subcontractor, grantee or other recipient of the
16 Commonwealth or any political subdivision thereof, if any
17 portion of the money, property or services requested or demanded
18 issued from, was provided or will be reimbursed by the
19 Commonwealth, referred to as Commonwealth funds, or by any
20 political subdivision thereof, referred to as political
21 subdivision funds. Provided, however, that a filing with an
22 agency of the Commonwealth shall not constitute a claim under
23 this act to the extent it is not connected to any request or
24 demand for reimbursement from the Commonwealth or any political
25 subdivision thereof, or to any request or demand for a contract
26 or grant with the Commonwealth or any political subdivision
27 thereof. Services shall not include a review of a filing by an
28 agency of the Commonwealth.
29 "False." In addition to its ordinary meaning, this term also
30 means fraudulent.
20030H0898B1482 - 3 -
1 "Interest." Four percentage points greater than the prime
2 lending rate at its highest point during the period commencing
3 with the commission of the first act defined in section 301 and
4 ending with entry of judgment for all such violations. Interest
5 shall be compounded daily commencing from the commission of the
6 first act defined in section 301.
7 "Knowing" or "knowingly." A person who, with respect to
8 information, does any of the following:
9 (1) has actual knowledge of the information;
10 (2) acts in deliberate ignorance of the truth or falsity
11 of the information; or
12 (3) acts in reckless disregard of the truth or falsity
13 of the information. Proof of specific intent to defraud shall
14 not be required.
15 "Person." Any natural person, corporation, political
16 subdivision, firm, association, organization, partnership,
17 business, trust or other legal entity.
18 "Political subdivision." Any city, county, tax or assessment
19 district, TOWNSHIP, municipal or government authority or other <--
20 legally authorized local governmental entity in this
21 Commonwealth.
22 "Proceeds." The term includes civil penalties as well as
23 double or treble damages as provided in Chapter 3.
24 "Prosecuting authority." The Attorney General and where
25 appropriate the district attorney of any county in which the
26 political subdivision, including the county itself, lies.
27 Section 103. Construction.
28 This act shall be liberally and broadly construed to
29 effectuate its purposes. It shall be applied and interpreted to
30 promote the public interest to eliminate fraud, waste and abuse
20030H0898B1482 - 4 -
1 through the submission of false or fraudulent claims in this
2 Commonwealth or in any of its political subdivisions.
3 CHAPTER 3
4 FALSE CLAIMS
5 Section 301. Offenses defined.
6 (a) Liability.--
7 (1) A person shall be liable to the Commonwealth or to
8 the political subdivision for each false claim in the amount
9 specified in paragraph (2) if that person commits any of the
10 following acts:
11 (i) Knowingly presents or causes to be presented to
12 an officer or employee of the Commonwealth or any
13 political subdivision a false claim for payment or
14 approval.
15 (ii) Knowingly makes, uses or causes to be made or
16 used a false record or statement to get a false claim
17 paid or approved by the Commonwealth or by any political
18 subdivision.
19 (iii) Has possession, custody or control of public
20 property or money used or to be used by the Commonwealth
21 or by any political subdivision and knowingly delivers or
22 causes to be delivered property of lesser quality,
23 quantity or value than for which the person receives a
24 certificate or receipt.
25 (iv) Is authorized to make or deliver a document
26 certifying receipt of property used or to be used by the
27 Commonwealth or by any political subdivision and
28 knowingly makes or delivers a receipt that falsely
29 represents the quality, quantity or value of the property
30 used or to be used.
20030H0898B1482 - 5 -
1 (v) Knowingly buys or receives as a pledge of an
2 obligation or debt public property from any person who
3 lawfully may not sell or pledge the property.
4 (vi) Knowingly makes, uses or causes to be made or
5 used a false record or statement to conceal, avoid or
6 decrease an obligation to pay or transmit money or
7 property to the Commonwealth or any political
8 subdivision.
9 (vii) Conspires to commit any of the acts specified
10 in subparagraphs (i) through (vi).
11 (2) The liability imposed under paragraph (1) shall be:
12 (i) The greater of:
13 (A) three times the amount of damages which the
14 Commonwealth or political subdivision sustains
15 because of the act of that person; or
16 (B) three times the amount of the interest
17 accumulated on such damages.
18 (ii) The costs of an action brought to recover any
19 of those penalties or damages.
20 (iii) A civil penalty of not less than $5,000 nor
21 more than $10,000 for each false claim.
22 (b) Reduced assessment.--
23 (1) Notwithstanding subsection (a), the court shall
24 assess the amount of damages which the Commonwealth or the
25 political subdivision sustains because of the act of the
26 person described in subsection (a) and the interest
27 accumulated on such damages, and no civil penalty, if the
28 court finds all of the following:
29 (i) The violation was committed by a corporation,
30 firm, association, organization, partnership, business,
20030H0898B1482 - 6 -
1 trust or other legal entity and promulgated by an
2 employee or other agent of the entity who did not act in
3 a managerial role within the entity.
4 (ii) The person committing the violation furnished
5 the appropriate prosecuting authority with such
6 information known to that person about the violation
7 within 90 days after the date on which the person first
8 obtained the information.
9 (iii) The person fully cooperated with any
10 investigation by the prosecuting authority of the
11 violation.
12 (iv) At the time the person furnished the
13 appropriate prosecuting authority with such information
14 about the violation, no investigation, criminal
15 prosecution, civil action or administrative action had
16 commenced with respect to the violation.
17 (v) The person has a compliance program that could
18 reasonably be expected to prevent and detect violations
19 of law, even if the program did not detect the instant
20 offense.
21 (2) Notwithstanding subsection (a), the court shall <--
22 assess the amount of damages which the Commonwealth or the
23 political subdivision sustains because of the act of the
24 person described in subsection (a) and two times the amount
25 of the interest accumulated on such damages and no civil
26 penalty, if the court finds all of the following:
27 (i) The person committing the violation furnished
28 the prosecuting authority with such information known to
29 the person about the violation within 90 days after the
30 date on which the person first obtained the information.
20030H0898B1482 - 7 -
1 (ii) The person fully cooperated with any
2 investigation by the prosecuting authority of the
3 investigation.
4 (iii) At the time the person furnished the
5 appropriate prosecuting authority with such information
6 about the violation, no investigation, criminal
7 prosecution, civil action or administrative action had
8 commenced with respect to the violation.
9 (iv) The person had a compliance program that could
10 reasonably be expected to prevent and detect violations
11 of law, even if the program did not detect the instant
12 offense.
13 (3) Notwithstanding subsection (a), the court shall
14 assess a civil penalty not to exceed $5,000 for each false
15 claim and the greater of:
16 (i) two times the amount of damages which the
17 Commonwealth or the political subdivision sustains
18 because of the act of the person described in subsection
19 (a); or
20 (ii) three times the interest accumulated on such
21 damages, if the court finds all of the following:
22 (A) The person committing the violation
23 furnished the prosecuting authority with such
24 information known to the person about the violation
25 within 90 days after the date on which the person
26 first obtained the information.
27 (B) The person fully cooperated with any
28 investigation by the prosecuting authority of the
29 violation.
30 (C) At the time the person furnished the
20030H0898B1482 - 8 -
1 appropriate prosecuting authority with such
2 information about the violation, the person did not
3 have knowledge or notice that an investigation,
4 criminal prosecution, civil action or administrative
5 action had commenced with regard to the violation.
6 (D) The person had a compliance program that
7 could reasonably be expected to prevent and detect
8 violations of law, even if the program did not detect
9 the instant violation.
10 (2) NOTWITHSTANDING SUBSECTION (A), THE COURT SHALL <--
11 ASSESS FOR EACH FALSE CLAIM TWO TIMES THE AMOUNT OF DAMAGES
12 WHICH THE COMMONWEALTH OR THE POLITICAL SUBDIVISION SUSTAINS
13 BECAUSE OF THE ACT OF THE PERSON DESCRIBED IN SUBSECTION (A),
14 IF THE COURT FINDS ALL OF THE FOLLOWING:
15 (I) THE PERSON COMMITTING THE VIOLATION FURNISHED
16 THE PROSECUTING AUTHORITY WITH SUCH INFORMATION KNOWN TO
17 THE PERSON ABOUT THE VIOLATION WITHIN 90 DAYS AFTER THE
18 DATE ON WHICH THE PERSON FIRST OBTAINED THE INFORMATION.
19 (II) THE PERSON FULLY COOPERATED WITH ANY
20 INVESTIGATION BY THE PROSECUTING AUTHORITY OF THE
21 VIOLATION.
22 (III) AT THE TIME THE PERSON FURNISHED THE
23 APPROPRIATE PROSECUTING AUTHORITY WITH SUCH INFORMATION
24 ABOUT THE VIOLATION, NO CRIMINAL PROSECUTION, CIVIL
25 ACTION OR ADMINISTRATIVE ACTION HAD COMMENCED, AND THE
26 PERSON DID NOT HAVE KNOWLEDGE OR NOTICE THAT AN
27 INVESTIGATION HAD COMMENCED WITH REGARD TO THE VIOLATION.
28 (IV) THE PERSON HAD A COMPLIANCE PROGRAM THAT COULD
29 REASONABLY BE EXPECTED TO PREVENT AND DETECT VIOLATIONS
30 OF LAW, EVEN IF THE PROGRAM DID NOT DETECT THE INSTANT
20030H0898B1482 - 9 -
1 VIOLATION.
2 (C) COSTS.--IF IT IS DETERMINED THAT A PERSON IS ELIGIBLE
3 FOR A REDUCED ASSESSMENT PURSUANT TO SUBSECTION (B)(1) OR (2),
4 THE PERSON SHALL ALSO BE LIABLE TO THE PROSECUTING AUTHORITY FOR
5 THE COST OF A CIVIL ACTION BROUGHT TO RECOVER ANY PENALTY OR
6 DAMAGES. THE COSTS SHALL BE AWARDED AGAINST THE DEFENDANT.
7 (c) (D) Joint and several liability.--Notwithstanding the <--
8 provisions of 42 Pa.C.S. § 7102 (relating to comparative
9 negligence), liability under this section shall be joint and
10 several for any act committed by two or more persons.
11 (d) (E) Limitation.-- <--
12 (1) This section does not apply to any controversy
13 involving an aggregate amount of less than $2,500 in value or
14 where the claim was filed by the individual recipient of
15 benefits or compensation conferred under the act of June 2,
16 1915 (P.L.736, No.338), known as the Workers' Compensation
17 Act, or the act of December 5, 1936 (2nd Sp.Sess., 1937
18 P.L.2897, No.1), known as the Unemployment Compensation Law,
19 or the act of June 13, 1967 (P.L.31, No.21), known as the
20 Public Welfare Code.
21 (2) As used in this subsection, the term "controversy"
22 means any one or more false claims submitted or caused to be
23 submitted by either a person or persons who act pursuant to a
24 common plan, scheme or design in violation of this act.
25 Section 302. False claims jurisdiction.
26 If any defendant can be found, resides or transacts business
27 in this Commonwealth or if an act proscribed by this act
28 occurred within this Commonwealth, an action under this act
29 shall be brought in the Commonwealth Court exclusively.
30 Section 303. Procedure.
20030H0898B1482 - 10 -
1 (a) Commonwealth prosecution.--
2 (1) The Attorney General shall diligently investigate
3 violations under section 301 involving Commonwealth funds. If
4 the Attorney General finds that a person has violated or is
5 violating section 301, the Attorney General may bring an
6 action under this act against that person.
7 (2) If the Attorney General brings an action under this
8 act on a claim involving political subdivision funds as well
9 as Commonwealth funds, the Attorney General shall, on the
10 same date that the complaint is filed in this action, serve
11 by mail, return receipt requested, a copy of the complaint on
12 the appropriate district attorney.
13 (3) The district attorney shall have the right to
14 intervene in an action brought by the Attorney General under
15 this act within 90 days after receipt of the complaint
16 pursuant to paragraph (2).
17 (b) Political subdivision prosecution.--
18 (1) The district attorney shall diligently investigate
19 violations under section 301 involving political subdivision
20 funds. If the district attorney finds that a person has
21 violated or is violating section 301, the district attorney
22 may bring an action under this act against that person.
23 (2) The district attorney may refer a matter involving
24 political subdivision funds to the Attorney General at any
25 time. The Attorney General may decline or accept the
26 referral.
27 (3) If the district attorney brings an action on a claim
28 involving Commonwealth funds as well as political subdivision
29 funds, the district attorney shall, on the same date that the
30 complaint is filed in this action, serve by mail, return
20030H0898B1482 - 11 -
1 receipt requested, a copy of the complaint on the Attorney
2 General.
3 (4) Within 90 days after receiving the complaint
4 pursuant to paragraph (2), the Attorney General shall do one
5 of the following:
6 (i) Notify the court that the Attorney General
7 intends to proceed with the action, in which case the
8 Attorney General shall assume primary responsibility for
9 conducting the action and the district attorney shall
10 have the right to continue as a party.
11 (ii) Notify the court that the Attorney General
12 declines to prosecute the action, in which case the
13 district attorney shall have the right to conduct the
14 action on its own.
15 (iii) Proceed jointly with the district attorney,
16 assuming coequal responsibility for prosecution of the
17 action.
18 CHAPTER 5
19 QUI TAM ACTIONS
20 Section 501. General provisions.
21 (a) When action may be brought and dismissed.--
22 (1) A person may bring a qui tam action for a violation
23 of this act for the person and either for the Commonwealth in
24 the name of the Commonwealth if any Commonwealth funds are
25 involved or for a political subdivision in the name of the
26 political subdivision if political subdivision funds are
27 exclusively involved. A qui tam action may be brought
28 alleging fraud involving both Commonwealth and political
29 subdivision funds. The person bringing the qui tam action
30 shall be referred to as the qui tam plaintiff.
20030H0898B1482 - 12 -
1 (2) The prosecuting authority may seek dismissal of the
2 qui tam action notwithstanding the objection of the qui tam
3 plaintiff if the qui tam plaintiff has been notified by the
4 prosecuting authority of the filing of the motion to dismiss
5 and the court has provided the qui tam plaintiff with an
6 opportunity for a hearing on the motion.
7 (b) Filing and service on defendant.--
8 (1) A complaint filed by a qui tam plaintiff under this <--
9 act shall be filed ex parte under seal with the Clerk of the
10 Commonwealth Court or ex parte under seal in the appropriate
11 Federal district court if Federal funds are also involved,
12 and the complaint and all related pleadings shall remain
13 under seal for 90 days from the date of service. Except as <--
14 provided in paragraph (2), no NO service shall be made on the <--
15 defendant until after the complaint is unsealed by order of
16 the court.
17 (2) If the defendant can prove by a preponderance of the <--
18 evidence that a qui tam action has been brought against him,
19 that the bringing of the qui tam action has been disclosed to
20 the public, and that the defendant neither made the
21 disclosure nor caused it to be made, the defendant may obtain
22 from the court a copy of the complaint. The defendant may not
23 disclose or cause to be disclosed to any other person the
24 fact that a qui tam action has been brought, the complaint or
25 any of the information contained in the complaint.
26 (c) Service on Commonwealth.--Within three days of the
27 complaint being filed pursuant to subsection (b), the qui tam
28 plaintiff shall serve by mail, return receipt requested, the
29 Attorney General and the General Counsel with a copy of the
30 complaint and a written disclosure of substantially all material
20030H0898B1482 - 13 -
1 evidence and information the qui tam plaintiff possesses at that
2 time.
3 Section 502. Commonwealth funds.
4 Within 90 days after receiving a complaint alleging
5 violations which involve Commonwealth funds, but not political
6 subdivision funds, the Attorney General shall do either of the
7 following:
8 (1) Notify the court that it intends to proceed with the
9 action and petition the court to have the case unsealed. If
10 the court grants the Attorney General's request, the seal may
11 be lifted. The court may, upon motion by the Attorney
12 General, order a partial unsealing where appropriate.
13 (2) Notify the court that it declines to prosecute the
14 action, in which case the complaint may be unsealed by the
15 court within 20 days after written notification is made by
16 the Attorney General to the qui tam plaintiff and counsel
17 that the Attorney General does not wish to intervene. Upon
18 such notification, the qui tam plaintiff shall have the right
19 to conduct the action.
20 Section 503. Political subdivision funds.
21 (a) Procedure.--Within 30 days after receiving a complaint
22 alleging violations which exclusively involve political
23 subdivision funds, the Attorney General shall promptly forward
24 the complaint and written disclosure to the appropriate district
25 attorney for review and disposition and shall notify in writing
26 the qui tam plaintiff and counsel of the transfer.
27 (b) Duty of district attorney.--Within 60 days after the
28 Attorney General forwards the complaint and written disclosure
29 under subsection (a), the district attorney shall do either of
30 the following:
20030H0898B1482 - 14 -
1 (1) Notify the court that the district attorney intends
2 to proceed with the action and petition the court to have the
3 case unsealed. If the court grants the district attorney's
4 request, the seal shall be lifted.
5 (2) Notify the court that the district attorney declines
6 to take over the action, in which case the seal may be lifted
7 within 20 days after such notification has been made and the
8 qui tam plaintiff shall have the right to conduct the action.
9 Section 504. Complaints relating to Commonwealth and political
10 subdivision funds.
11 (a) Complaints.--Within 30 days after receiving a complaint
12 alleging violations which involve or allege both Commonwealth
13 and political subdivision funds, the Attorney General shall
14 forward copies of the complaint and written disclosure to the
15 appropriate district attorney and shall coordinate the review
16 and investigation with those of the district attorney.
17 (b) Procedure.--Within 90 days after receiving a complaint
18 alleging violations which involve or allege both Commonwealth
19 and political subdivision funds, the Attorney General shall do
20 one of the following:
21 (1) Notify the court in writing that the Attorney
22 General intends to proceed with the action, in which case the
23 seal shall be lifted and service effected on the defendant.
24 (2) Notify the court in writing that the Attorney
25 General declines to take over the action but that the
26 district attorney involved intends to proceed with the
27 action, in which case the seal shall be lifted and the action
28 shall be conducted by the district attorney.
29 (3) Notify the court that both the Attorney General and
30 the district attorney decline to take over the action, in
20030H0898B1482 - 15 -
1 which case the seal may be lifted within 20 days after
2 notification has been made and the qui tam plaintiff shall
3 have the right to conduct the action.
4 Section 505. Intervention by political subdivision.
5 If the Attorney General proceeds with the action under
6 section 503, the district attorney shall be permitted to
7 intervene in the action within 60 days after the Attorney
8 General notifies the court of his intentions.
9 Section 506. Extension of time.
10 Upon a showing of good cause and reasonable diligence in his
11 investigation, the prosecuting authority may move the court for
12 reasonable extensions of time during which the complaint will
13 remain under seal. The qui tam plaintiff shall be notified of
14 any extensions requested under this section. Any such motions
15 may be supported by affidavits or other submissions in camera.
16 Section 507. Other actions prohibited.
17 When a qui tam plaintiff brings an action under this act, no
18 other person shall be permitted to bring a related action under
19 this act based on the same or similar facts underlying the
20 pending action.
21 Section 508. Exclusions.
22 (a) General rule.--No court shall have jurisdiction over an
23 action brought under this chapter:
24 (1) Against the Commonwealth, a political subdivision <--
25 ANY COUNTY OR MUNICIPALITY or a prosecuting authority. <--
26 (2) Against an official or employee of the Commonwealth
27 or a political subdivision if the official or employee did
28 not act with actual knowledge.
29 (3) Which relies upon the public disclosure of specific
30 allegations or transactions in a criminal, civil or
20030H0898B1482 - 16 -
1 administrative hearing, in a governmental report, hearing,
2 audit or investigation or from the news media, unless the
3 action is brought by or intervened in by a prosecuting
4 authority or the qui tam plaintiff is an original source of
5 the information.
6 (4) By a prisoner.
7 (5) By a former prisoner against any official or
8 employee of the Commonwealth or a political subdivision for
9 acts relating to the operations and expenditures of a
10 correctional agency or facility.
11 (6) Based upon allegations or transactions which are the <--
12 subject of an investigation, settlement discussion, a
13 settlement agreement, or any civil or administrative
14 proceeding, in which the Commonwealth or political
15 subdivision is already a party.
16 (b) Definition.--As used in this section, the term "original
17 source" means an individual who has voluntarily provided the
18 information to the prosecuting authority before filing an action
19 based on that information and either has direct and independent
20 knowledge of the information on which the allegations are based
21 or directly or indirectly provided the impetus, basis or
22 catalyst for the investigation, hearing, audit or report which
23 led to the public disclosure.
24 Section 509. Employment-related discovery of information.
25 No court shall have jurisdiction over an action brought under
26 this act by a present or former employee of the Commonwealth, of
27 a political subdivision or of the person if that employee's
28 primary EXCLUSIVE responsibility is the investigation or <--
29 prosecution of fraud, unless such employee first makes a good
30 faith attempt to use existing internal procedures for reporting,
20030H0898B1482 - 17 -
1 auditing and seeking recovery of the falsely claimed funds
2 before filing an action. The Commonwealth, political subdivision
3 or the person shall have promulgated internal procedures for
4 reporting, auditing and seeking recovery of falsely claimed
5 funds and must act on the information reported by the employee
6 within 60 days of receipt of the information.
7 Section 510. Responsibility for prosecution.
8 If the prosecuting authority proceeds with the action, it
9 shall have the primary responsibility for prosecuting the
10 action. The qui tam plaintiff shall have the right to continue
11 with all rights and obligations as a full party to the action.
12 Section 511. Dismissal of action.
13 The Commonwealth or political subdivision may seek to dismiss
14 the action at any time notwithstanding the objections of the qui
15 tam plaintiff if the qui tam plaintiff has been notified by the
16 prosecuting authority of the filing of the motion and the court
17 has provided the qui tam plaintiff with an opportunity for a
18 hearing on the motion.
19 Section 512. Settlement.
20 (a) General rule.--The prosecuting authority may settle the <--
21 action with the defendant notwithstanding the objections of the
22 qui tam plaintiff if the court determines, after a hearing, that
23 the proposed settlement is fair, adequate and reasonable under
24 all circumstances. Upon a showing of good cause, the hearing may
25 be held in camera.
26 (b) Consultation with political subdivision.--The district <--
27 attorney shall consult with the political subdivision regarding
28 any proposed settlement.
29 Section 513. Election not to proceed.
30 If the prosecuting authority elects not to proceed, the qui
20030H0898B1482 - 18 -
1 tam plaintiff shall have the right to conduct the action and
2 shall apprise the prosecuting authority of all developments
3 during the course of the action. If the prosecuting authority so
4 requests, it shall be served with copies of all pleadings filed
5 in the action and supplied with copies of all deposition
6 transcripts.
7 Section 514. Intervention.
8 Upon application, the court shall permit the prosecuting
9 authority to intervene in an action with which it had initially
10 declined to proceed.
11 Section 515. Proceeds.
12 (a) Attorney General.--If the Attorney General initiates an
13 action under section 303(a) or assumes control of an action
14 initiated by the district attorney pursuant to section
15 303(b)(4)(i), the Attorney General shall receive a fixed 33% of
16 the proceeds of the action or settlement of the claim, which
17 funds shall be used to support and expand its ongoing
18 investigation and prosecution of false claims violations.
19 (b) District attorney.--If a district attorney initiates and
20 conducts an action pursuant to section 303(b), the office of the
21 district attorney shall receive a fixed 33% of the proceeds of
22 the action or settlement of the claim, which funds shall be used
23 to support and expand its ongoing investigation and prosecution
24 of false claims violations.
25 (c) Award of portion of recovery.--If a district attorney
26 intervenes in an action initiated by the Attorney General
27 pursuant to section 303(a)(3) or remains a party to an action
28 assumed by the Attorney General pursuant to section 303(b)(4)(i)
29 and (iii), the court may award the office of the district
30 attorney a portion of the Attorney General's fixed 33% of the
20030H0898B1482 - 19 -
1 recovery under subsection (a), taking into account the district
2 attorney's role in investigating and conducting the action and
3 the resources of the office expended on the prosecution.
4 (d) Qui tam recovery.--
5 (1) If the prosecuting authority proceeds with an action
6 brought by a qui tam plaintiff under this act, the qui tam
7 plaintiff shall, subject to subsections (h) and (i), receive
8 not less than 20% nor more than 33% of the full proceeds of
9 the action or settlement of the claim, depending upon the
10 extent to which the qui tam plaintiff substantially
11 contributed to the overall prosecution of the action. If the
12 prosecuting authority and the qui tam plaintiff cannot reach
13 an agreement concerning the percentage of proceeds to be
14 distributed to the qui tam plaintiff, the determination shall
15 be made by the court.
16 (2) When it conducts the action, the Attorney General or
17 the district attorney shall receive a fixed 33% of the
18 proceeds of the action or settlement of the claim, which
19 funds shall be used to support and expand its ongoing
20 investigation and prosecution of false claims.
21 (3) When both the Attorney General and the district
22 attorney are involved as coparties in a qui tam action
23 pursuant to section 504, the court in its discretion may
24 award the district attorney a portion of the Attorney
25 General's fixed 33% of the recovery, taking into account the
26 district attorney's cooperation and contribution to
27 investigating and conducting the action.
28 (e) Decline to proceed.--If the prosecuting authority
29 declines to proceed with an action, the qui tam plaintiff shall,
30 subject to subsections (h) and (i), receive an amount which the
20030H0898B1482 - 20 -
1 court decides is reasonable for collecting the civil penalty and
2 damages on behalf of the Commonwealth or political subdivision.
3 The amount awarded by the court shall be not less than 30% nor
4 more than 50% of the full proceeds of the action or settlement
5 and shall be paid out of the proceeds.
6 (f) Attorney fees and expenses.--If the prosecuting
7 authority does not proceed with the action and the person
8 bringing the action conducts the action, the court may award to
9 the defendant its reasonable attorney fees and expenses if the
10 defendant prevails in the action and the court finds that the
11 claim of the person bringing the action was clearly frivolous,
12 clearly vexatious or brought primarily for purposes of
13 harassment.
14 (g) Allocation of proceeds for costs of annual audit.--The
15 controller, board of auditors or other government auditor
16 performing the annual audit of recoveries as provided under
17 subsection (l) shall receive a fixed 1% of the proceeds of the
18 action or settlement of the claim, which funds shall be used to
19 defray the costs of the annual audit.
20 (h) Present or former employee.--If a qui tam action is
21 brought by a present or former employee of the Commonwealth or
22 political subdivision, the qui tam plaintiff shall not be
23 entitled to any minimum guaranteed recovery from the proceeds.
24 If the prosecuting authority and the qui tam plaintiff cannot
25 reach an agreement concerning the percentage of proceeds to be
26 distributed to the qui tam plaintiff, the determination shall be
27 made by the court. The court may award the qui tam plaintiff
28 those sums from the proceeds as it considers appropriate, but in
29 no case more than 33% of the proceeds if the prosecuting
30 authority goes forth with the action or 50% if it declines to go
20030H0898B1482 - 21 -
1 forth, taking into account the significance of the information,
2 the role of the qui tam plaintiff in advancing the case to
3 litigation and the scope of and response to the qui tam
4 plaintiff's attempts to report and gain recovery of the falsely
5 claimed funds through official channels.
6 (i) Fraudulent activity.--
7 (1) Where the action is one which the court finds to be
8 based primarily on information from a qui tam plaintiff who
9 substantially participated in the fraudulent activity, the
10 qui tam plaintiff shall not be entitled to any minimum
11 guaranteed recovery from the proceeds. If the prosecuting
12 authority and the qui tam plaintiff cannot reach an agreement
13 concerning the percentage of proceeds to be distributed to
14 the qui tam plaintiff, the determination shall be made by the
15 court. The court, in its sole discretion after a full review
16 of all the facts and circumstances, may award the qui tam
17 plaintiff such sums from the proceeds as it considers
18 appropriate under the circumstances, but in no case more than
19 33% of the proceeds if the prosecuting authority goes forth
20 with the action or 50% if it declines to go forth, taking
21 into account the significance of the information, the role of
22 the qui tam plaintiff in advancing the case to litigation,
23 the scope of the qui tam plaintiff's involvement in the
24 fraudulent activity, the qui tam plaintiff's attempts to
25 avoid or resist such activity and all other circumstances
26 surrounding the activity.
27 (2) A person who has been convicted of a crime, either <--
28 in the same or another jurisdiction, based on participation
29 in the fraudulent activity at issue in the action under this
30 act or whom the defendant has shown by a preponderance of the <--
20030H0898B1482 - 22 -
1 evidence to have led, directed or received substantial
2 proceeds from the fraudulent activity, even if that person
3 has not been convicted of a crime, shall under no
4 circumstances be permitted to participate in any action under
5 this act as a qui tam plaintiff. SUCH DISMISSAL SHALL NOT <--
6 PREJUDICE THE RIGHT OF THE PROSECUTING AUTHORITY TO CONTINUE
7 THE ACTION.
8 (j) Use of recoveries.--
9 (1) Proceeds recovered under this act by the prosecuting
10 authority or awarded to the government auditor pursuant to
11 subsection (g) shall be placed in the General Fund of the
12 Commonwealth, the operating fund of the county of the
13 district attorney or the operating fund of the county of the
14 government auditor, as appropriate.
15 (2) Notwithstanding any other provision of law to the
16 contrary, the Commonwealth, county of the district attorney
17 or the county of the government auditor, as appropriate,
18 shall immediately make such funds available for expenditure,
19 without restriction, by the prosecuting authority or
20 government auditor for the purposes specified elsewhere in
21 this act. The entity having budgetary control over such funds
22 may not anticipate future recoveries in the adoption or
23 approval of the budget for the prosecuting authority.
24 (k) Annual audit of recoveries.--It shall be the
25 responsibility of the Commonwealth, the county of the district
26 attorney, or both, as appropriate, to provide, through the
27 controller, board of auditors or other appropriate auditor, an
28 annual audit of all recoveries under this act. The audit shall
29 be made public, subject to the right of the prosecuting
30 authority to redact portions of the audit which it reasonably
20030H0898B1482 - 23 -
1 believes will compromise investigations or criminal proceedings,
2 and shall be submitted to the Attorney General's office by
3 September 30 of each year.
4 (l) Annual report.--The Attorney General shall annually
5 submit a report to the Appropriations Committee and the
6 Judiciary Committee of the Senate and the Appropriations
7 Committee and Judiciary Committee of the House of
8 Representatives, specifying the recoveries obtained under this
9 act. The report shall give an accounting of all moneys recovered
10 through the sale of any property seized in satisfaction of any
11 judgment arising from an action under this act.
12 (m) Recoveries and appropriations.--Recoveries or future
13 recoveries under this act shall be in addition to any
14 appropriation made to the office of the prosecuting authority.
15 Section 516. Reversion to General Fund.
16 (a) General rule.--The portion of the proceeds not
17 distributed under section 515 shall revert to the General Fund
18 when the underlying false claims involved Commonwealth funds
19 exclusively and to the political subdivision when the underlying
20 false claims involved political subdivision funds exclusively.
21 When petitioned to do so, the court shall make an apportionment
22 of the recovered proceeds between the Commonwealth and political
23 subdivision based on their relative share of the funds falsely
24 claimed.
25 (b) Reimbursement.--When an insurer, guarantor or surety has
26 suffered a loss on an underlying false claim through either:
27 (1) reimbursing the Commonwealth or political
28 subdivision; or
29 (2) directly paying a claimant;
30 the insurer, guarantor or surety shall be reimbursed for its
20030H0898B1482 - 24 -
1 losses to the extent that proceeds reverting to the General Fund
2 or to the political subdivision under this section exceed any
3 uninsured loss to the Commonwealth or the political subdivision.
4 Section 517. Expenses.
5 If the Commonwealth, political subdivision or qui tam
6 plaintiff prevails in or settles any action under this act, the
7 qui tam plaintiff shall receive an amount for all reasonable
8 expenses incurred in the prosecution of the claim, including
9 expert witness fees plus reasonable litigation costs and
10 attorney fees; all expenses, costs and attorney fees shall be
11 awarded against the defendant, and under no circumstances shall
12 they be the responsibility of the prosecuting authority.
13 CHAPTER 7
14 MISCELLANEOUS PROVISIONS
15 Section 701. Rules of civil procedure.
16 Except where this act provides otherwise, actions under this
17 act shall be governed by the Pennsylvania Rules of Civil
18 Procedure.
19 Section 702. Stay of discovery.
20 (a) General rule.--The court may stay discovery for a period
21 of not more than 90 days if the prosecuting authority or the
22 General Counsel shows that discovery would interfere with an
23 investigation or a prosecution of a criminal or civil matter
24 arising out of the same or similar facts, regardless of whether
25 the prosecuting authority proceeds with the action. Such a
26 showing shall be conducted in camera. The court may extend the
27 90-day period upon a further showing in camera that the
28 prosecuting authority or the General Counsel has pursued the
29 criminal or civil investigation or proceedings with reasonable
30 diligence and that any proposed discovery in the action under
20030H0898B1482 - 25 -
1 this act would interfere with the ongoing criminal or civil
2 investigation or proceedings.
3 (b) Criminal action.--When a criminal action has commenced
4 based upon the same or similar facts underlying the pending
5 action under this act, discovery by the defendant in the pending
6 action under this act shall be confined to that available to a
7 criminal defendant under the Rules of Criminal Procedure and the
8 Constitutions of the United States and of the Commonwealth of
9 Pennsylvania. The defendant in the pending action under this act
10 may petition the court for a stay of proceedings pending the
11 conclusion of the criminal action.
12 Section 703. Control over prosecution.
13 When the prosecuting authority has intervened in an action
14 brought under section 501, the prosecuting authority shall have
15 full authority as to the manner in which the prosecution is
16 conducted.
17 Section 704. Employee protection.
18 (a) Disclosing information.--No employer shall solicit,
19 attempt or conspire to prevent, make, adopt or enforce any rule,
20 regulation or policy preventing an employee from disclosing
21 information to a Federal, State or local law enforcement agency
22 or from acting in furtherance of the investigation of,
23 initiation of, testimony in or assistance in filing an action
24 under this act.
25 (b) Discrimination.--No employer shall discharge, demote,
26 suspend, threaten, harass, deny promotion to or in any other
27 manner discriminate, or solicit, attempt or conspire to
28 discriminate against an employee in the terms of and conditions
29 of employment because of lawful acts done by the employee on
30 behalf of the employee or others in disclosing information to a
20030H0898B1482 - 26 -
1 Federal, State or local government or law enforcement agency or
2 in furthering false claims action, including investigation for,
3 initiation of, testimony for or assistance in an action filed or
4 to be filed under this act.
5 (c) Good faith reporting to employer.--No employer may
6 discharge, threaten or otherwise discriminate or retaliate
7 against an employee regarding the employee's compensation,
8 terms, conditions, location or privileges of employment because
9 the employee made or is about to make a good faith report to the
10 employer regarding a false claim under this act, regardless of
11 whether the report is made or to be made orally or in writing.
12 (d) Penalty.--
13 (1) An employer who violates subsection (a), (b) or (c)
14 shall be liable for all relief necessary to make the employee
15 whole, including reinstatement with the same seniority status
16 that the employee would have had but for the discrimination,
17 three times the amount of back pay, prevailing interest on
18 the back pay, compensation for any special damage sustained
19 as a result of the discrimination and, where appropriate,
20 punitive damages. Except in cases alleging intentional
21 misconduct, punitive damages against a person shall not
22 exceed 200% of the compensatory damages awarded. In addition,
23 the employer shall be required to pay all litigation costs
24 and attorney fees.
25 (2) An employee may bring an action in the Commonwealth
26 Court for the relief provided in this subsection.
27 Section 705. Limitations.
28 (a) Time of filing.--An action under this act may not be
29 filed more than six years after the date on which the violation
30 of this act is completed or more than three years after the date
20030H0898B1482 - 27 -
1 of discovery by the prosecuting authority, but in any event no
2 more than ten years after the date on which the violation of
3 section 301 is completed.
4 (b) Prior acts.--An action under this act may be brought
5 regarding false claims made prior to the effective date of this
6 act if the limitations period set forth in subsection (a) has
7 not elapsed.
8 (c) Proof.--In any action brought under this act, the
9 Commonwealth, the political subdivision or the qui tam plaintiff
10 shall be required to prove all essential elements of the cause
11 of action, including damages, by a preponderance of the
12 evidence.
13 (d) Estoppel.--Notwithstanding any other provision of law, a
14 guilty verdict, guilty plea or nolo contendere plea rendered in
15 a criminal proceeding which alleged a scheme to obtain funds
16 fraudulently from the Commonwealth or a political subdivision
17 shall estop the defendant from denying the essential elements of
18 the offense in any action which involves the same transaction as
19 in the criminal proceeding and which is brought under this act.
20 Section 706. Remedies.
21 (a) Civil remedies.-- <--
22 (1) The Commonwealth Court shall have jurisdiction to
23 prevent and restrain violations of section 301 by issuing
24 appropriate orders, including, but not limited to:
25 (i) Ordering any person to divest himself of any
26 interest, direct or indirect, in any business or entity,
27 imposing reasonable restrictions on the future activities
28 or investments of any person, including, but not limited
29 to, prohibiting any person from engaging in the same type
30 of endeavor or freezing a person's assets.
20030H0898B1482 - 28 -
1 (ii) Making due provisions for the rights of
2 innocent persons, ordering the dissolution of any
3 business or entity, ordering the denial, suspension or
4 revocation of charters of domestic corporations,
5 certificates of authority authorizing foreign
6 corporations to do business in this Commonwealth,
7 licenses, permits or prior approval granted to any
8 business or entity by any department or agency of the
9 Commonwealth or any of its political subdivisions; or
10 prohibiting any business or entity from engaging in any
11 business.
12 (2) Injunctions against false claims:
13 (i) If a person violates or is about to violate this
14 act, the prosecuting authority may commence an action in
15 Commonwealth Court to enjoin such violation.
16 (ii) If a person alienates or disposes of property,
17 or intends to alienate or dispose of property obtained as
18 a result of a violation of this act or property which is
19 traceable to such violation, the prosecuting authority
20 may commence an action in Commonwealth Court to enjoin
21 such alienation or disposition of property, or for a
22 restraining order to prohibit any person from
23 withdrawing, transferring, removing, dissipating or
24 disposing of any such property or property of equivalent
25 value and appoint a temporary receiver to administer such
26 restraining order.
27 (3) In any proceeding under this section, the court
28 shall proceed as soon as practicable to the hearing and
29 determination thereof. Pending final determination, the court
30 may enter preliminary or special injunctions or take such
20030H0898B1482 - 29 -
1 other actions, including the acceptance of satisfactory
2 performance bonds, as it may deem proper.
3 (A) CIVIL REMEDIES.--THE COMMONWEALTH COURT SHALL HAVE THE <--
4 JURISDICTION TO ISSUE ANY ORDER TO PREVENT AND RESTRAIN
5 VIOLATIONS OF THIS CHAPTER.
6 (b) Remedies cumulative.--
7 (1) The provisions of this act are not exclusive and
8 shall be in addition to any other remedies provided for in
9 any other law or available under common law.
10 (2) Election by the prosecuting authority or a qui tam
11 plaintiff to bring an action under this act shall neither
12 preclude the Commonwealth or political subdivision from
13 bringing any other appropriate action nor moot any such
14 action filed prior to commencement of an action under this
15 act.
16 (3) Election by the prosecuting authority or a qui tam
17 plaintiff to bring an action under this act shall not
18 preclude the Commonwealth or prosecuting authority from
19 bringing criminal charges against the defendant, nor shall it
20 moot any pending criminal charges.
21 (4) Judgment for a defendant in any action brought under
22 this act shall have no res judicata effect in any other
23 action brought by the Commonwealth or political subdivision.
24 Section 707. Enforcement.
25 (a) Prosecuting authority.--The prosecuting authority shall
26 have the power and duty to enforce this act, including the
27 authority to issue civil investigative demands pursuant to this
28 act, to institute proceedings under this act and to take such
29 actions as may be necessary to ascertain and investigate alleged
30 violations of this act. The prosecuting authority may delegate
20030H0898B1482 - 30 -
1 its powers to investigate and prosecute actions under this act
2 to appropriate Deputy Attorneys General or deputy or assistant
3 district attorneys.
4 (b) Construction.--Nothing contained in this act shall be
5 construed to limit the regulatory or investigative authority of
6 any department or agency of the Commonwealth or political
7 subdivision whose functions might relate to persons, enterprises
8 or matters falling within the scope of this act.
9 Section 708. Civil investigative demand.
10 (a) General rule.--Whenever the prosecuting authority has
11 reason to believe that any person may be in possession, custody
12 or control of any documentary material or information relevant
13 to a false claim investigation, the prosecuting authority may
14 issue in writing and cause to be served upon the person a civil
15 investigative demand requiring such person to:
16 (1) produce such documentary material for inspection and
17 copying;
18 (2) answer in written interrogatories with respect to
19 such documentary material or information;
20 (3) give oral testimony concerning such documentary
21 material or information; or
22 (4) furnish any combination of such material, answers
23 and testimony.
24 (b) Content.--Each demand under this section shall:
25 (1) State the nature of the conduct constituting the
26 alleged false claim violation which is under investigation
27 and the provision of law applicable thereto.
28 (2) If the demand is for the production of documentary
29 material:
30 (i) describe the class or classes of documentary
20030H0898B1482 - 31 -
1 material to be produced thereunder with such definiteness
2 and certainty as to permit the material to be fairly
3 identified;
4 (ii) state that the demand is returnable forthwith
5 or prescribe a return date which will provide a
6 reasonable period of time within which the material so
7 demanded may be assembled and made available for
8 inspection and copying or reproduction; and
9 (iii) identify an investigator to whom the material
10 shall be made available.
11 (3) If the demand is for written interrogatories:
12 (i) set forth with specificity the written
13 interrogatories to be answered;
14 (ii) prescribe dates at which time answers to
15 written interrogatories shall be submitted; and
16 (iii) identify the investigator to whom such answers
17 shall be submitted.
18 (4) If such demand is for the giving of oral testimony:
19 (i) prescribe a date, time and place at which oral
20 testimony should be commenced;
21 (ii) identify the investigator who shall conduct the
22 examination and the person to whom the transcript of such
23 investigation shall be submitted;
24 (iii) specify that such attendance and testimony are
25 necessary to the conduct of the investigation; and
26 (iv) describe the general purpose for which the
27 demand is being issued and the general nature of the
28 testimony, including the primary areas of inquiry, which
29 will be taken pursuant to the demand.
30 (5) Contain the following statement printed
20030H0898B1482 - 32 -
1 conspicuously at the top of the demand:
2 You have the right to seek the assistance of any
3 attorney, and he may represent you in all phases of
4 the false claim investigation of which this civil
5 investigative demand is a part.
6 (c) Limitation.--No demand under this section shall:
7 (1) contain any requirement which would be held to be
8 unreasonable if contained in a subpoena duces tecum issued by
9 any court in connection with a grand jury investigation of
10 the alleged violation; or
11 (2) require the production of any documentary evidence
12 which would be privileged from disclosure if demanded by a
13 subpoena duces tecum issued by any court in connection with a
14 grand jury investigation of the alleged violation.
15 (d) Service.--Service of any demand or any petition filed
16 under this section shall be made in the manner prescribed by the
17 Pennsylvania Rules of Civil Procedure for service of writs and
18 complaints unless otherwise agreed to by the prosecuting
19 authority and the person.
20 (e) Return.--A verified return by the individual serving any
21 demand or petition under this section setting forth the manner
22 of service shall be prima facie proof of such service. In the
23 case of service by registered or certified mail, the return
24 shall be accompanied by the return post office receipt of
25 delivery of the demand.
26 (f) Procedure.--
27 (1) A person upon whom a demand issued under this
28 section has been duly served shall make the demanded material
29 available for inspection and copying or reproduction to an
30 investigator designated in the demand at the principal place
20030H0898B1482 - 33 -
1 of business of the person or at such other place as the
2 investigator and the person thereafter may agree or as the
3 court may direct pursuant to this section on the return date
4 specified in the demand. The person may, upon agreement of
5 the investigator, substitute copies of all or any part of the
6 demanded material for the originals of the demanded material.
7 (2) The investigator to whom any documentary material is
8 so delivered shall take physical possession of the material
9 and shall be responsible for the use made of the material and
10 for its return pursuant to this section. The investigator may
11 cause the preparation of the copies of the documentary
12 material as may be required for official use. While in the
13 possession of the investigator, no material so produced shall
14 be available for examination by any individual other than the
15 prosecuting authority or any investigator without the consent
16 of the person who produced the material. Under such
17 reasonable terms and conditions as the prosecuting authority
18 shall prescribe, documentary material while in the possession
19 of the investigator shall be available for examination by the
20 person who produced the material or any duly authorized
21 representatives of that person.
22 (3) The production of documentary material in response
23 to a civil investigative demand served under this section
24 shall be made under a sworn certificate, in such form as the
25 demand designates, by:
26 (i) in the case of a natural person, the person to
27 whom the demand is directed; or
28 (ii) in the case of a person other than a natural
29 person, a person having knowledge of the facts and
30 circumstances relating to such production and authorized
20030H0898B1482 - 34 -
1 to act on behalf of such person.
2 The certificate shall state that all of the documentary
3 material required by the demand and in the possession,
4 custody or control of the person to whom the demand is
5 directed has been produced and made available to the
6 investigator identified in the demand.
7 (4) Each interrogatory in a civil demand served under
8 this section shall be answered separately and fully in
9 writing under oath and shall be submitted under a sworn
10 certificate, in such form as the demand designates, by:
11 (i) in the case of a natural person, the person to
12 whom the demand is directed; or
13 (ii) in the case of a person other than a natural
14 person, a person or persons responsible for answering
15 each interrogatory.
16 (5) If any interrogatory is objected to, the reasons for
17 the objection shall be stated in the certificate instead of
18 an answer. The certificate shall state that all information
19 required by the demand and in the possession, custody,
20 control or knowledge of the person to whom the demand is
21 directed has been submitted. To the extent that any
22 information is not furnished, the information shall be
23 identified and reasons set forth with particularity regarding
24 the reasons why the information was not furnished.
25 (6) (i) The examination of any person pursuant to a
26 civil investigative demand for oral testimony served
27 under this section shall be deemed an "official
28 proceeding" within the meaning of 18 Pa.C.S. § 4902(a)
29 (relating to perjury). The examination shall be taken
30 before an officer authorized to administer oaths and
20030H0898B1482 - 35 -
1 affirmations by the laws of this Commonwealth. The
2 officer before whom the testimony is to be taken shall
3 put the witness on oath or affirmation and shall,
4 personally or by someone acting under the direction of
5 the officer and in the officer's presence, record the
6 testimony of the witness. The testimony shall be taken
7 accurately and shall be transcribed. When the testimony
8 is fully transcribed, a copy of the transcript shall be
9 promptly forwarded to the designated person. This
10 subsection shall not preclude the taking of testimony by
11 any means authorized by, and in a manner consistent with,
12 the Pennsylvania Rules of Civil Procedure.
13 (ii) The investigator conducting the examination
14 shall exclude from the place where the examination is
15 held all persons except the person giving the testimony,
16 the attorney for and any other representative of the
17 person giving the testimony, the prosecuting authority,
18 any person who may be agreed upon by the prosecuting
19 authority and the person giving the testimony, and any
20 stenographer taking such testimony.
21 (iii) The oral testimony of any person taken
22 pursuant to a civil investigative demand served under
23 this section shall be taken in the county where the
24 office of the investigator conducting the examination is
25 situated, or in such other place as may be agreed upon by
26 the investigator and such person.
27 (iv) When the testimony is fully transcribed, the
28 investigator shall afford the witness, who may be
29 accompanied by counsel, a reasonable opportunity to
30 examine and read the transcript, unless such examination
20030H0898B1482 - 36 -
1 and reading are waived by the witness. Any changes in
2 form or substance which the witness desires to make shall
3 be entered and identified upon the transcript by the
4 officer or the investigator, with a statement of the
5 reasons given by the witness for making such changes. The
6 transcript shall then be signed by the witness, unless
7 the witness in writing waives the signing, is ill, cannot
8 be found or refuses to sign. If the transcript is not
9 signed by the witness within 30 days after being afforded
10 a reasonable opportunity to examine it, the officer or
11 the investigator shall sign it and state on the record
12 the fact of the waiver, illness, absence of the witness
13 or the refusal to sign, together with the reasons, if
14 any, given therefor.
15 (v) Upon payment of reasonable charges therefor, the
16 investigator shall furnish a copy of the transcript to
17 the witness only, except that the prosecuting authority
18 may, for good cause, limit such witness to inspection of
19 the official transcript of the witness' testimony.
20 (vi) Any person compelled to appear for oral
21 testimony under a civil investigative demand may be
22 accompanied, represented and advised by counsel. Counsel
23 may advise the person, in confidence, with respect to any
24 question asked of that person. The person or counsel may
25 object on the record to any question, in whole or in
26 part, and shall briefly state for the record the reason
27 for the objection. An objection may be made, received and
28 entered upon the record when it is claimed that such
29 person is entitled to refuse to answer the question on
30 the grounds of any constitutional or other legal right or
20030H0898B1482 - 37 -
1 privilege, including the privilege against self-
2 incrimination. The person may not otherwise object to or
3 refuse to answer any question, and may not directly or
4 through counsel otherwise interrupt the oral examination.
5 If the person refuses to answer any question, a petition
6 may be filed in the Commonwealth Court under section
7 708(g) for an order compelling the person to answer the
8 question.
9 (7) Upon completion of:
10 (i) the false claims investigation for which any
11 documentary material was produced under this section; and
12 (ii) any case or proceeding arising from such
13 investigation;
14 the investigator shall return to the person who produced the
15 material all of the material other than copies of the
16 material made pursuant to this section which have not passed
17 into the control of any court or grand jury through
18 introduction into the record of such case or proceeding.
19 (8) When documentary material has been produced by a
20 person under this section for use in a false claims
21 investigation and no case or proceeding arising from the
22 investigation has been instituted within a reasonable time
23 after completion of the examination and analysis of all
24 evidence assembled in the course of the investigation, the
25 person shall be entitled, upon written demand made upon the
26 prosecuting authority, to the return of all documentary
27 material, other than copies of the material made pursuant to
28 this section, so produced by that person.
29 (g) Failure to comply.--Whenever a person fails to comply
30 with a civil investigative demand that is served upon him under
20030H0898B1482 - 38 -
1 this section or whenever satisfactory copying or reproduction of
2 any of the material cannot be done and the person refuses to
3 surrender the material, the prosecuting authority may file in
4 the Commonwealth Court and serve upon the person a petition for
5 an order of the court for the enforcement of this section.
6 (h) Petition for relief.--
7 (1) Within 20 days after the service of any demand under
8 this section upon any person or at any time before the return
9 date specified in the demand, whichever period is shorter,
10 the person may file in the Commonwealth Court and serve upon
11 the prosecuting authority a petition for an order of the
12 court modifying or setting aside this demand. The time
13 allowed for compliance with the demand, in whole or in part,
14 as deemed proper and ordered by the court shall not run
15 during the pendency of the petition in the court. The
16 petition shall specify each ground upon which the petitioner
17 relies in seeking the relief and may be based on any failure
18 of the demand to comply with the provisions of this section
19 or on any constitutional or other legal right or privilege of
20 the person.
21 (2) At any time during which the prosecuting authority
22 is in custody or control of documentary material delivered by
23 a person in compliance with a demand under this section, the
24 person may file in the Commonwealth Court and serve upon the
25 prosecuting authority a petition for an order of the court
26 requiring the performance of any duty imposed by this
27 section.
28 (3) Whenever a petition is filed in the Commonwealth
29 Court, the court shall have jurisdiction to hear and
30 determine the matter so presented and, after a hearing at
20030H0898B1482 - 39 -
1 which all parties are represented, to enter such order or
2 orders as may be required to carry into effect the provisions
3 of this section.
4 (i) Definition.--As used in this section, the term
5 "documentary material" includes, but is not limited to, any
6 book, paper, record, recording, tape, report, memorandum, data,
7 written or electronic communication or other document relating
8 to the business affairs of any person, enterprise or matter
9 falling within the purview of this act.
10 Section 709. Immunity.
11 Whenever any individual refuses on the basis of his privilege
12 against self-incrimination to comply with a civil investigative
13 demand issued pursuant to this act or to testify or produce
14 other information in a proceeding under this act, the
15 prosecuting authority may invoke the provisions of 42 Pa.C.S. §
16 5947 (relating to immunity of witnesses).
17 Section 710. Regulations.
18 (a) General rule.--The Attorney General shall have the power
19 and authority to promulgate rules and regulations which may be
20 necessary to carry out the purposes set forth in this act.
21 (b) Guidelines.--In order to facilitate the speedy
22 implementation of this act, the Attorney General shall have the
23 power and authority to promulgate, adopt and use guidelines
24 which shall be published in the Pennsylvania Bulletin. The
25 guidelines shall not be subject to review pursuant to section
26 205 of the act of July 31, 1968 (P.L.769, No.240), referred to
27 as the Commonwealth Documents Law, sections 204(b) and 301(10)
28 of the act of October 15, 1980 (P.L.950, No.164), known as the
29 Commonwealth Attorneys Act, the act of June 25, 1982 (P.L.633,
30 No.181), known as the Regulatory Review Act, and shall be
20030H0898B1482 - 40 -
1 effective for a period of not more than two years from the
2 effective date of this act. After the expiration of the two-year
3 period, the guidelines shall expire and be replaced by
4 regulations which shall be promulgated, adopted and published as
5 provided by law.
6 Section 711. Severability.
7 The provisions of this act are severable. If any provision of
8 this act or its application to any person or circumstance is
9 held invalid, the invalidity shall not affect other provisions
10 or applications of this act which can be given effect without
11 the invalid provision or application.
12 Section 712. Effective date.
13 This act shall take effect in 60 days.
A28L44BIL/20030H0898B1482 - 41 -