The Shuster Project

Tobacco Industry Fraud & False Claims Issues

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An Act Concerning the Connecticut False Claims Act.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (a) This act may be cited as the "Connecticut False Claims Act."

(b) The purpose of the Connecticut False Claims Act is to deter persons from knowingly causing or assisting in causing the state or a political subdivision to pay claims that are false or to be deprived of money or funds to which it would be entitled, and to provide remedies for obtaining treble damages and civil penalties for the state or a political subdivision when moneys or funds are obtained from the state or a political subdivision by reason of a false claim or deprivation of such moneys or funds owed to the state or a political subdivision.

Sec. 2. (NEW) For purposes of this act:

(1) "Claim" includes a defective collection and any request or demand for money, property or services, whether under contract or not, made to (A) any employee, officer or agent of the state or of any political subdivision, if any portion of the money, property or services requested or demanded issued from, or was provided by, the state or any political subdivision, or (B) any contractor, grantee or other recipient if the state or a political subdivision will reimburse such contractor, grantee or other recipient for any portion of the money, property or services requested or demanded from such contractor, grantee or other recipient. Money, property or services issued from, provided by or reimbursed by the state shall be referred to as "state funds" in this act and money, property or services issued from, provided by or reimbursed by a political subdivision shall be referred to as "political subdivision funds" in this act.

(2) "Defective collection" means a collection that fails to collect money required to be collected for the state or any political subdivision.

(3) "Knowing" and "knowingly" means that a person, with respect to information, does any of the following: (A) Has actual knowledge of the information, (B) acts in deliberate ignorance of the truth or falsity of the information, or (C) acts in reckless disregard of the truth or falsity of the information. Proof of specific intent to defraud is not required. Innocent mistake shall be a defense to an action under this act.

(4) "Person" includes any natural person, corporation, limited liability company, firm, association, organization, partnership, business or trust.

(5) "Political subdivision" includes any town, city, borough, municipal corporation, school district, regional district, tax or assessment district or other legally authorized local governmental entity with jurisdictional boundaries.

(6) "State" means the State of Connecticut and any agency, department, division, institution, bureau, board, commission, district or authority of the state.

Sec. 3. (NEW) (a) Any person who commits any of the following acts or omissions shall be in violation of this act for submitting a false claim and shall be liable to the state or to the political subdivision for a civil penalty of not less than five thousand dollars nor more than ten thousand dollars plus three times the amount of damages which the state or the political subdivision sustains because of the act or omission of that person and shall also be liable to the state or to the political subdivision for the costs of a civil action brought to recover any of those penalties or damages:

(1) Knowingly presents or causes to be presented to an officer or employee of the state or of any political subdivision, a false claim for payment or approval;

(2) Knowingly makes, uses or causes to be made or used a false record or statement to get a false claim paid or approved by the state or by any political subdivision;

(3) Conspires to defraud the state or any political subdivision by getting a false claim allowed or paid by the state or by any political subdivision;

(4) Has possession, custody or control of property or money used or to be used by the state or by any political subdivision and knowingly delivers or causes to be delivered less property than the amount for which the person receives a certificate or receipt;

(5) Has possession, custody or control of property used or to be used by the state or by any political subdivision and knowingly delivers or causes to be delivered property below the quality or quantity called for by contract;

(6) Wrongly collects for and transmits to the state or any political subdivision less money than required by law;

(7) Is authorized to make or deliver a document certifying receipt of property used or to be used by the state or by any political subdivision and knowingly makes or delivers a receipt that falsely represents the property used or to be used;

(8) Knowingly buys, or receives as a pledge of an obligation or debt, public property, property owned by the state or property owned by a political subdivision from any person who lawfully may not sell or pledge the property;

(9) Knowingly makes, uses or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money, property or services to the state or to any political subdivision; or

(10) Is a beneficiary of an inadvertent submission of a false claim to the state or a political subdivision, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the state or the political subdivision within a reasonable time after discovery of the false claim.

(b) Notwithstanding subsection (a) of this section, the court may assess not less than two times and not more than three times the amount of damages which the state or the political subdivision sustains because of the act or omission of the person described in said subsection, and no civil penalty, if the court finds all of the following specific extenuating circumstances:

(1) The person committing the violation furnished officials of the state or of the political subdivision responsible for investigating false claims violations with all information known to that person about the violation within thirty days after the date on which the person first obtained the information;

(2) The person fully cooperated with any official investigation of the violation; and

(3) At the time the person furnished the state or the political subdivision with information about the violation, no criminal prosecution, civil action or administrative action had commenced under this act with respect to the violation, and the person did not have actual knowledge of the existence of an investigation into the violation.

(c) Liability under this section shall be joint and several for any violation of this act committed by two or more persons.

Sec. 4. (NEW) (a) (1) The Attorney General shall diligently investigate violations under section 3 of this act involving state funds. If the Attorney General finds that a person has violated or is violating section 3 of this act, the Attorney General may bring a civil action under this section against that person.

(2) If the Attorney General brings a civil action under this section on a claim involving political subdivision funds as well as state funds, the Attorney General shall, on the same date that the complaint is filed in this action, serve by mail, return receipt requested, a copy of the complaint on the appropriate political subdivision.

(3) The political subdivision shall have the right to intervene in an action brought by the Attorney General under this subsection within sixty days after receipt of the complaint pursuant to subdivision (2) of this subsection. The court may permit intervention thereafter upon a showing that all of the applicable statutory and practice book requirements regarding intervention have been met.

(b) (1) The political subdivision shall diligently investigate violations under section 3 of this act involving political subdivision funds. If the political subdivision finds that a person has violated or is violating section 3 of this act, the political subdivision may bring a civil action under this section against that person.

(2) If the political subdivision brings a civil action under this section on a claim involving state funds as well as political subdivision funds, the political subdivision shall, on the same date that the complaint is filed in this action, serve by mail, return receipt requested, a copy of the complaint on the Attorney General.

(3) Within sixty days after receiving the complaint pursuant to subdivision (2) of this subsection, the Attorney General shall do either of the following: (A) Notify the court that he intends to proceed with the action, in which case the Attorney General shall assume primary responsibility for conducting the action and the political subdivision shall have the right to continue as a party; or (B) notify the court that he declines to take over the action, in which case the political subdivision shall have the right to conduct the action.

(c) (1) A person may bring a civil action for a violation of this act for the person and for the state in the name of the state, if any state funds are involved, or for a political subdivision in the name of the political subdivision, if political subdivision funds are involved, or both. The person bringing the action shall be referred to as the qui tam plaintiff. Once filed, the action may be dismissed only with the written consent of the court, taking into account the best interest of the parties involved and the public purposes behind this act.

(2) A complaint filed by a private person under this subsection shall be filed in Superior Court in camera and may remain under seal for not more than sixty days. No service shall be made on the defendant until after the complaint is unsealed.

(3) On the same day as the complaint is filed pursuant to subdivision (2) of this subsection, the qui tam plaintiff shall serve by mail, return receipt requested, the Attorney General with a copy of the complaint and a written disclosure of substantially all material evidence and information the person possesses.

(4) Within sixty days after receiving a complaint alleging violations which involve state funds but not political subdivision funds, the Attorney General shall do either of the following: (A) Notify the court that he intends to proceed with the action, in which case the seal shall be lifted; or (B) notify the court that he declines to take over the action, in which case the seal shall be lifted and the qui tam plaintiff shall have the right to conduct the action.

(5) (A) Within fifteen days after receiving a complaint alleging violations which exclusively involve political subdivision funds, the Attorney General shall forward the complaint and written disclosure to the appropriate political subdivision for disposition and shall notify the qui tam plaintiff of the transfer.

(B) Within forty-five days after the Attorney General forwards the complaint and written disclosure pursuant to subparagraph (A) of this subdivision, the political subdivision shall do either of the following: (i) Notify the court that it intends to proceed with the action, in which case the seal shall be lifted; or (ii) notify the court that it declines to take over the action, in which case the seal shall be lifted and the qui tam plaintiff shall have the right to conduct the action.

(6) (A) Within fifteen days after receiving a complaint alleging violations which involve both state and political subdivision funds, the Attorney General shall forward copies of the complaint and written disclosure to the appropriate political subdivision, and shall coordinate his review and investigation with those of the political subdivision.

(B) Within sixty days after receiving a complaint alleging violations which involve both state and political subdivision funds, the Attorney General shall do one of the following: (i) Notify the court that he intends to proceed with the action, in which case the seal shall be lifted; or (ii) notify the court that he declines to take over the action but that the political subdivision involved intends to proceed with the action, in which case the seal shall be lifted and the action shall be conducted by the political subdivision; or (iii) notify the court that both he and the political subdivision decline to take over the action, in which case the seal shall be lifted and the qui tam plaintiff shall have the right to conduct the action.

(C) If the Attorney General proceeds with the action pursuant to subparagraph (B)(i) of this subdivision, the political subdivision shall be permitted to intervene in the action within sixty days after the Attorney General notifies the court of his intentions. The court may authorize intervention thereafter upon a showing that all applicable statutory and practice book requirements concerning intervention have been met.

(7) Upon a showing of good cause and reasonable diligence in his or its investigation, the Attorney General or the political subdivision may move the court for extensions of the time during which the complaint remains under seal, but in no event may the complaint remain under seal for longer than ninety days.

(8) When a person brings an action under this subsection, no other person may bring a related action based on the facts underlying the pending action.

(9) In no event may a person bring an action under this subsection which is based on allegations or transactions which are the subject of a civil action or administrative civil money penalty proceeding in which the state or political subdivision is already a party.

(d) (1) (A) No court shall have jurisdiction over an action under this act based upon the public disclosure of allegations or transactions in a criminal, civil or administrative hearing, in an investigation, report, hearing or audit conducted by or at the request of the General Assembly, the Auditors of Public Accounts or the governing body of a political subdivision, or from the news media, unless the action is brought by the Attorney General or a political subdivision, or the person bringing the action is an original source of the information.

(B) For purposes of subparagraph (A) of this subdivision, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based, who voluntarily provided the information to the state or political subdivision before filing an action under this section based on that information, and whose information provided the basis or catalyst for the investigation, hearing, audit or report which led to the public disclosure as described in subparagraph (A) of this subdivision.

(2) No court shall have jurisdiction over an action brought under subsection (c) of this section, based upon information discovered by a present or former employee of the state or a political subdivision during the course of his or her employment, unless that employee first in good faith exhausted existing internal procedures for reporting and seeking recovery of such falsely claimed sums through official channels and unless the state or political subdivision failed to act on the information provided within a reasonable period of time.

(e) (1) If the state or political subdivision proceeds with the action, it shall have the primary responsibility for prosecuting the action. The qui tam plaintiff shall have the right to continue as a full party to the action.

(2) (A) The state or political subdivision may seek to dismiss the action for good cause notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff has been notified by the state or political subdivision of the filing of the motion and the court has provided the qui tam plaintiff with an opportunity to oppose the motion and present evidence at a hearing.

(B) The state or political subdivision may settle the action with the defendant notwithstanding the objections of the qui tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an opportunity to present evidence, that the proposed settlement is fair, adequate and reasonable under all of the circumstances.

(f) (1) If the state or political subdivision elects not to proceed, the qui tam plaintiff shall have the same right to conduct the action as the Attorney General or political subdivision would have had if he or it had chosen to proceed under subsection (e) of this section. If the state or political subdivision so requests, and at its expense, the state or political subdivision shall be served with copies of all pleadings filed in the action and supplied with copies of all deposition transcripts.

(2) (A) Upon timely application, the court shall permit the state or political subdivision to intervene in an action with which it had initially declined to proceed if the interest of the state or political subdivision in recovery of the property, money or funds involved is not being adequately represented by the qui tam plaintiff.

(B) If the state or political subdivision is allowed to intervene under subparagraph (A) of this subdivision, the qui tam plaintiff shall retain principal responsibility for the action and the recovery of the parties shall be determined as if the state or political subdivision had elected not to proceed.

(g) (1) (A) If the Attorney General initiates an action pursuant to subsection (a) of this section or assumes control of an action initiated by a political subdivision pursuant to subparagraph (A) of subdivision (3) of subsection (b) of this section, the Office of the Attorney General shall receive a fixed thirty-three per cent of the proceeds of the action or settlement of the claim, which funds shall be used to support its ongoing investigation and prosecution of false claims.

(B) If a political subdivision initiates and conducts an action pursuant to subsection (b) of this section, the political subdivision shall receive a fixed thirty-three per cent of the proceeds of the action or settlement of the claim, which funds shall be used to support its ongoing investigation and prosecution of false claims.

(C) If a political subdivision intervenes in an action initiated by the Attorney General pursuant to subdivision (3) of subsection (a) of this section, or remains a party to an action assumed by the Attorney General pursuant to subparagraph (A) of subdivision (3) of subsection (b) of this section, the court may award the political subdivision a portion of the Attorney General's fixed thirty-three per cent of the recovery under subparagraph (A) of this subdivision, taking into account the political subdivision's role in investigating and conducting the action.

(2) If the state or a political subdivision proceeds with an action brought by a qui tam plaintiff under subsection (c) of this section, the qui tam plaintiff shall receive at least fifteen per cent but not more than thirty-three per cent of the proceeds of the action or settlement of the claim, depending upon the extent to which the qui tam plaintiff substantially contributed to the prosecution of the action. When it conducts the action, the Office of the Attorney General or the political subdivision shall receive a fixed thirty-three per cent of the proceeds of the action or settlement of the claim, which funds shall be used to support its ongoing investigation and prosecution of false claims made against the state or political subdivision. When both the Attorney General and a political subdivision are involved in a qui tam action pursuant to subparagraph (B)(i) of subdivision (6) of subsection (c) of this section, the court at its discretion may award the political subdivision a portion of the Attorney General's fixed thirty-three per cent of the recovery, taking into account the political subdivision's contribution to investigating and conducting the action.

(3) If the state or political subdivision does not proceed with an action under subsection (c) of this section, the qui tam plaintiff shall receive an amount which the court decides is reasonable for collecting the civil penalty and damages on behalf of the state or political subdivision. The amount shall be not less than twenty-five per cent and not more than fifty per cent of the proceeds of the action or settlement and shall be paid out of such proceeds.

(4) The portion of the recovery not distributed pursuant to subdivisions (1) to (3), inclusive, of this subsection, shall revert to the state if the underlying false claims involved state funds exclusively and to the political subdivision if the underlying false claims involved political subdivision funds exclusively. If the violation involved both state funds and political subdivision funds, the court shall make an apportionment between the state and political subdivision based on their relative share of the funds falsely claimed.

(5) For purposes of this section, "proceeds" includes civil penalties as well as double or treble damages as provided in section 3 of this act.

(6) If the state, political subdivision or qui tam plaintiff prevails in or settles any action under subsection (c) of this section, the qui tam plaintiff shall receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable costs and attorneys' fees. All expenses, costs and fees shall be awarded against the defendant and under no circumstances shall they be the responsibility of the state or political subdivision.

(h) Upon a showing by the Attorney General or political subdivision that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the Attorney General's or political subdivision's prosecution of the case, or would be repetitious, irrelevant or for purposes of harassment, the court may, in its discretion, impose limitations on the qui tam plaintiff's participation, including the following: (1) Limiting the number of witnesses the person may call; (2) limiting the length of the testimony of such witnesses; (3) limiting the person's cross-examination of witnesses; and (4) otherwise limiting the participation by the person in the litigation.

Sec. 5. (NEW) (a) No employer shall make, adopt or enforce any rule, regulation or policy preventing an employee from disclosing information to a government or law enforcement agency or from acting in furtherance of a false claims action, including investigating, initiating, testifying or assisting in an action filed or to be filed under this act.

(b) No employer shall discharge, demote, suspend, threaten, harass, deny promotion to or in any other manner discriminate against an employee in the terms and conditions of employment because of lawful acts done by the employee on behalf of the employee or others in disclosing information to a government or law enforcement agency or in furthering a false claims action, including investigation for, initiation of, testimony for or assistance in an action filed or to be filed under this act.

(c) An employer who violates subsection (b) of this section shall be liable for all relief necessary to make the employee whole, including reinstatement with the same seniority status that the employee would have had but for the discrimination, two times the amount of back pay, interest on the back pay, compensation for any special damage sustained as a result of the discrimination and, where appropriate, punitive damages in an amount to be determined by the trier of fact. In addition, the defendant shall be required to pay litigation costs and reasonable attorneys' fees. An employee may bring an action in the Superior Court for the relief provided in this section.

(d) An employee who is discharged, demoted, suspended, harassed, denied promotion or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of participation in conduct which directly or indirectly resulted in a false claim being submitted to the state or a political subdivision shall be entitled to the remedies under subsection (c) of this section if, and only if, both of the following occur: (1) The employee voluntarily disclosed information to a government or law enforcement agency or acted in furtherance of a false claims action, including investigation for, initiation of, testimony for or assistance in an action filed or to be filed; and (2) the employee had been harassed, threatened with termination or demotion, or otherwise coerced by the employer or its management into engaging in the fraudulent activity in the first place.

Sec. 6. (NEW) (a) No civil action may be brought under this act more than fifteen years after the date on which the last violation of section 3 of this act is committed.

(b) In any action brought under section 4 of this act, the state, the political subdivision or the qui tam plaintiff shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.

(c) Notwithstanding any other provision of law, a guilty verdict rendered in a criminal proceeding charging false statements or fraud, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, except a plea of nolo contendere made prior to the effective date of this act, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under subsection (a), (b) or (c) of section 4 of this act.

Sec. 7. (NEW) (a) The provisions of this act are not exclusive, and the remedies provided for in this act shall be in addition to any other remedies provided for in any other provision of the general statutes or federal law or available under common law.

(b) This act shall be liberally construed and applied to promote the public interest.

Statement of Purpose: To deter persons from submitting false claims for payment to the state or a political subdivision by authorizing a private individual to bring an action on behalf of the state or a political subdivision, as well as for himself, for the recovery of civil damages and authorizing such individual to share in any recovery with the state or political subdivision.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]

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