STATE OF CONNECTICUT
Raised Bill No. HB5602
Referred to Committee on JUDICIARY
LCO No. 1644
Introduced by (JUD)
General Assembly
February Session, A.D., 1998
AN ACT CONCERNING QUI TAM ACTIONS.
Be it enacted by the Senate and House of Representatives in
General Assembly convened:
Section 1. (NEW) For purposes of this act: (1) "Claim"
includes any request or demand for money, property or services
made to any employee, officer or agent of the state or of any
political subdivision, or to any contractor, grantee or other
recipient, whether under contract or not, if any portion of the
money, property or services requested or demanded issued from, or
was provided by, the state, hereinafter "state funds", or by any
political subdivision thereof, hereinafter "political subdivision
funds".
(2) "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.
(3) "Political subdivision" includes any town, city, borough,
municipal corporation, school district, regional district or
other legally authorized local governmental entity with
jurisdictional boundaries.
(4) "Prosecuting authority" refers to the town attorney, or
other local government official charged with investigating,
filing and conducting civil legal proceedings on behalf of, or in
the name of, a particular political subdivision.
(5) "Person" includes any natural person, corporation,
limited liability company, firm, association, organization,
partnership, business or trust.
Sec. 2. (NEW) (a) Any person who commits any of the following
acts shall be liable to the state or to the political subdivision
for three times the amount of damages which the state or the
political subdivision sustains because of the act of that person.
A person who commits any of the following acts 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, and may be liable to the state or political subdivision
for a civil penalty of not more than ten thousand dollars for
each false claim:
(1) Knowingly presents or causes to be presented to an
officer or employee of the state or of any political subdivision
thereof, 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 public 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) 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;
(6) Knowingly buys, or receives as a pledge of an obligation
or debt, public property from any person who lawfully may not
sell or pledge the property;
(7) 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 or property to the state or
to any political subdivision;
(8) 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 of the person described
in said subsection, and no civil penalty, if the court finds all
of the following:
(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 investigation of the
violation by the state or a political subdivision;
(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 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 act committed by two or more persons.
(d) This section does not apply to any controversy involving
an amount of less than five hundred dollars in value. For
purposes of this subsection, "controversy" means any one or more
false claims submitted by the same person in violation of this
act.
(e) This section does not apply to workers' compensation
claims.
(f) This section does not apply to claims, records or
statements made under title 12 of the general statutes.
Sec. 3. (NEW) (a) (1) The Attorney General shall diligently
investigate violations under section 2 of this act involving
state funds. If the Attorney General finds that a person has
violated or is violating section 2 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
prosecuting authority.
(3) The prosecuting authority 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
requirements of the rules of court have been met.
(b) (1) The prosecuting authority of a political subdivision
shall diligently investigate violations under section 2 of this
act involving political subdivision funds. If the prosecuting
authority finds that a person has violated or is violating
section 2 of this act, the prosecuting authority may bring a
civil action under this section against that person.
(2) If the prosecuting authority brings a civil action under
this section on a claim involving state funds as well as
political subdivision funds, the prosecuting authority shall, on
the same date that the complaint is filed in this action, serve 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 prosecuting authority 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 prosecuting authority 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 either for the state of Connecticut
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 exclusively involved. 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 prosecuting
authority 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 prosecuting authority
shall do either 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, 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
prosecuting authority, and shall coordinate his review and
investigation with those of the prosecuting authority.
(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 prosecuting
authority of 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 prosecuting authority;
or (iii) notify the court that both he and the prosecuting
authority 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 the requirements of the rules of court
concerning intervention have been met.
(7) Upon a showing of good cause and reasonable diligence in
his investigation, the Attorney General or the prosecuting
authority of a 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.
(d) (1) No court shall have jurisdiction over an action
brought under subsection (c) against a member of the General
Assembly, a judge of the Superior, Appellate or Supreme Court, an
elected official in the executive branch of the state or a member
of the governing body of any political subdivision if the action
is based on evidence or information known to the state or
political subdivision when the action was brought.
(2) In no event may a person bring an action under subsection
(c) of this section, which is based upon allegations or
transactions which are the subject of a civil suit or an
administrative civil money penalty proceeding in which the state
or political subdivision is already a party.
(3) (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 the prosecuting authority of 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 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.
(4) 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 prosecuting
authority would have had if he had chosen to proceed under
subsection (c) 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 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 prosecuting authority 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 prosecuting authority initiates and conducts an
action pursuant to subsection (b) of this section, the office of
the prosecuting authority 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 prosecuting authority 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 office of the prosecuting authority 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 prosecuting authority's role in investigating and conducting
the action.
(2) If the state or political subdivision proceeds with an
action brought by a qui tam plaintiff under subsection (c) of
this section, the qui tam plaintiff shall, subject to
subdivisions (4) and (5) of this subsection, 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 he conducts
the action, the Office of the Attorney General or the office of
the prosecuting authority of 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 prosecuting authority are involved in a
qui tam action pursuant to subparagraph (C) of subdivision (6) of
subsection (c) of this section, the court at its discretion may
award the prosecuting authority a portion of the Attorney
General's fixed thirty-three per cent of the recovery, taking
into account the prosecuting authority'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, subject to subdivisions (4) and (5) of this
subsection, receive an amount which the court decides is
reasonable for collecting the civil penalty and damages on behalf
of the government. 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) Where the action is one provided for under subdivision
(4) of subsection (d) of this section, the present or former
employee of the state or political subdivision shall not be
entitled to any minimum guaranteed recovery from the proceeds.
The court, however, may award the qui tam plaintiff those sums
from the proceeds as it considers appropriate, but in no case
more than thirty-three per cent of the proceeds if the state or
political subdivision goes forth with the action or fifty per
cent of the proceeds if the state or political subdivision
declines to go forth, taking into account the significance of the
information, the role of the qui tam plaintiff in advancing the
case to litigation, and the scope of, and response to, the
employee's attempts to report and gain recovery of such falsely
claimed funds through official channels.
(5) Where the action is one which the court finds to be based
primarily on information from a present or former employee who
actively participated in the fraudulent activity, the employee
shall not be entitled to any minimum guaranteed recovery from the
proceeds. The court, however, may award the qui tam plaintiff
such sums from the proceeds as it considers appropriate, but in
no case more than thirty-three per cent of the proceeds if the
state or political subdivision goes forth with the action or
fifty per cent of the proceeds if the state or political
subdivision declines to go forth, taking into account the
significance of the information, the role of the qui tam
plaintiff in advancing the case to litigation, the scope of the
present or past employee's involvement in the fraudulent
activity, such employee's attempts to avoid or resist such
activity and all other circumstances surrounding the activity.
(6) The portion of the recovery not distributed pursuant to
subdivisions (1) to (5), 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 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.
(7) For purposes of this section, "proceeds" includes civil
penalties as well as double or treble damages as provided in
section 2 of this act.
(8) 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.
(9) If the state or political subdivision does not proceed
with the action and the qui tam plaintiff conducts the action,
the court may award to the defendant its reasonable attorneys'
fees and expenses if the defendant prevails in the action and the
court finds that the claim of the qui tam plaintiff was clearly
frivolous, clearly vexatious or brought solely for purposes of
harassment.
(h) The court may stay an act of discovery of the person
initiating the action for a period of not more than sixty days if
the Attorney General or prosecuting authority shows that the act
of discovery would interfere with an investigation or a
prosecution of a criminal or civil matter arising out of the same
facts, regardless of whether the Attorney General or prosecuting
authority proceeds with the action. Such a showing shall be
conducted in camera. The court may extend the sixty-day period
upon a further showing in camera that the Attorney General or
prosecuting authority has pursued the criminal or civil
investigation or proceedings with reasonable diligence and any
proposed discovery in the civil action will interfere with the
ongoing criminal or civil investigation or proceedings.
(i) Upon a showing by the Attorney General or prosecuting
authority 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
prosecuting's authority prosecution of the case, or would be
repetitious, irrelevant or for purposes of harassment, the court
may, in its discretion, impose limitations on the person'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. 4. (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 section 3 of 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 section 3 of
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
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 subsection.
(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. 5. (NEW) (a) A civil action under section 3 of this act
may be filed not more than three years after the date of
discovery by the official of the state or political subdivision
charged with responsibility to act in the circumstances or, in
any event, not more than ten years after the date on which the
violation of section 2 of this act is committed.
(b) A civil action under section 3 of this act may be brought
for activity prior to the effective date of this act if the
limitations period established in subsection (a) of this section
has not lapsed.
(c) In any action brought under section 3 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.
(d) 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, 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 3 of
this act.
Sec. 6. (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 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 all capitalized or underlined where appropriate,
except that when the entire text of a bill or resolution or a
section thereof is new, it is not capitalized or underlined.]
