2004 Legislation
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SENATE BILL NO. 1332 – Idaho False Claims Act

SENATE BILL NO. 1332

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S1332................................................by JUDICIARY AND RULES
IDAHO FALSE CLAIMS ACT - Adds to existing law to set forth provisions of
the Idaho False Claims Act; to provide a short title; to define terms; to
provide for liability; to provide for limitation of damages and waiver of
penalty for cooperation; to provide for joint and several liability; to
provide for investigation and action; to provide for the maintenance of
actions by private plaintiffs; to limit actions; to provide for
intervention; to provide for extensions; to provide for the unsealing of
complaints; to provide for the dismissal of actions; to permit settlements;
to set forth provisions applicable to the declination to intervene; to
provide for the effect of intervention; to allow for subsequent
intervention; to set forth a timeline for the response of defendants; to
provide for stay of discovery; to provide for the limitation upon
participation by private plaintiffs; to set forth other limitation of
actions; to provide for a standard of proof; to provide for the effect of
findings in criminal proceedings; to provide for the award of expenses and
attorney's fees; to provide for recovery; to set forth prohibitions; and to
provide for employer liability.
                                                                        
02/16    Senate intro - 1st rdg - to printing
02/17    Rpt prt - to Jud

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1332
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO FALSE CLAIMS ACT; AMENDING TITLE 6, IDAHO CODE,  BY  THE
  3        ADDITION  OF  A  NEW  CHAPTER  26, TITLE 6, IDAHO CODE, TO PROVIDE A SHORT
  4        TITLE, TO DEFINE TERMS, TO PROVIDE FOR LIABILITY, TO PROVIDE  FOR  LIMITA-
  5        TION  OF  DAMAGES  AND  WAIVER  OF PENALTY FOR COOPERATION, TO PROVIDE FOR
  6        JOINT AND SEVERAL LIABILITY, TO PROVIDE FOR INVESTIGATION AND  ACTION,  TO
  7        PROVIDE  FOR  THE  MAINTENANCE  OF ACTIONS BY PRIVATE PLAINTIFFS, TO LIMIT
  8        ACTIONS, TO PROVIDE FOR INTERVENTION, TO PROVIDE FOR EXTENSIONS,  TO  PRO-
  9        VIDE  FOR  THE  UNSEALING  OF  COMPLAINTS, TO PROVIDE FOR THE DISMISSAL OF
 10        ACTIONS, TO PERMIT SETTLEMENTS, TO SET FORTH PROVISIONS APPLICABLE TO  THE
 11        DECLINATION  TO  INTERVENE,  TO PROVIDE FOR THE EFFECT OF INTERVENTION, TO
 12        ALLOW FOR SUBSEQUENT  INTERVENTION,  TO  SET  FORTH  A  TIMELINE  FOR  THE
 13        RESPONSE  OF  DEFENDANTS, TO PROVIDE FOR STAY OF DISCOVERY, TO PROVIDE FOR
 14        THE LIMITATION UPON PARTICIPATION BY  PRIVATE  PLAINTIFFS,  TO  SET  FORTH
 15        OTHER  LIMITATION  OF ACTIONS, TO PROVIDE FOR A STANDARD OF PROOF, TO PRO-
 16        VIDE FOR THE EFFECT OF FINDINGS IN CRIMINAL PROCEEDINGS,  TO  PROVIDE  FOR
 17        THE AWARD OF EXPENSES AND ATTORNEY'S FEES, TO PROVIDE FOR RECOVERY, TO SET
 18        FORTH PROHIBITIONS AND TO PROVIDE FOR EMPLOYER LIABILITY.
                                                                        
 19    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 20        SECTION  1.  That  Title 6, Idaho Code, be, and the same is hereby amended
 21    by the addition thereto of a NEW CHAPTER, to be known and designated as  Chap-
 22    ter 26, Title 6, Idaho Code, and to read as follows:
                                                                        
 23                                      CHAPTER 26
 24                                IDAHO FALSE CLAIMS ACT
                                                                        
 25        6-2601.  SHORT  TITLE. This chapter shall be known and may be cited as the
 26    "Idaho False Claims Act."
                                                                        
 27        6-2602.  DEFINITIONS. As used in this chapter:
 28        (1)  "Claim" means a request or demand for  money,  property  or  services
 29    made to:
 30        (a)  An officer, employee or agent of the state or a political subdivision
 31        of the state; or
 32        (b)  A contractor, grantee or other recipient of money from the state or a
 33        political  subdivision  of the state if any part of the money, property or
 34        services was provided by the state or political subdivision.
 35        (2)  "Political subdivision" means any county,  city,  municipal  corpora-
 36    tion,  health  district,  school  district,  irrigation district, an operating
 37    agent of irrigation districts whose board consists of directors of its  member
 38    districts, special improvement or taxing district, or any other political sub-
 39    division  or  public  corporation. As used in this chapter, the terms "county"
 40    and "city" also mean state  licensed  hospitals  and  attached  nursing  homes
 41    established  by  counties  pursuant  to  chapter  36, title 31, Idaho Code, or
                                                                        
                                           2
                                                                        
  1    jointly by cities and counties pursuant to chapter 37, title 31, Idaho Code.
                                                                        
  2        6-2603.  LIABILITY. (1) Except as otherwise provided  in  section  6-2605,
  3    Idaho  Code,  a  person who does any of the following listed acts is liable to
  4    the state or political subdivision, whichever is affected, or both, for  three
  5    (3)  times  the amount of damages sustained by the state or political subdivi-
  6    sion due to the act of that person, for the costs of a civil action brought to
  7    recover those damages, and for a civil penalty of not less than  two  thousand
  8    dollars ($2,000) nor more than ten thousand dollars ($10,000) for each act:
  9        (a)  Knowingly  presenting  or  causing  to be presented a false claim for
 10        payment or approval;
 11        (b)  Knowingly making or using, or causing to be made  or  used,  a  false
 12        record or statement to obtain payment or approval of a false claim;
 13        (c)  Conspiring  to  defraud  by obtaining allowance or payment of a false
 14        claim;
 15        (d)  Having possession, custody or control of public property or money and
 16        knowingly delivering or causing to be delivered to the state or a  politi-
 17        cal subdivision less money or property than the amount for which that per-
 18        son receives a receipt;
 19        (e)  Being  authorized  to prepare or deliver a receipt for money or prop-
 20        erty to be used by the state or a political subdivision and knowingly pre-
 21        paring or delivering a receipt that falsely represents the money or  prop-
 22        erty;
 23        (f)  Knowingly  buying  or  receiving as security for an obligation public
 24        property from a person who is not authorized to sell or pledge  the  prop-
 25        erty;
 26        (g)  Knowingly  making  or  using,  or causing to be made or used, a false
 27        record or statement to conceal, avoid or decrease an obligation to pay  or
 28        transmit  money  or transfer property to the state or a political subdivi-
 29        sion;
 30        (h)  Being a beneficiary of an inadvertent submission of a false claim and
 31        after discovering the falsity of the claim failing to disclose the falsity
 32        to the state or political subdivision within a reasonable time.
 33        (2)  As used in this section, a person  acts  knowingly  with  respect  to
 34    information if such person:
 35        (a)  Has knowledge of the information;
 36        (b)  Acts  in  deliberate  ignorance of whether the information is true or
 37        false; or
 38        (c)  Acts in reckless disregard with respect to the truth  or  falsity  of
 39        the information.
                                                                        
 40        6-2604.  LIMITATION OF DAMAGES AND WAIVER OF PENALTY FOR COOPERATION. In a
 41    civil  action  pursuant  to  this chapter, the court may give judgment for not
 42    less than twice nor more than three (3) times the amount of damages  sustained
 43    and no civil penalty if the court finds that the person against whom the judg-
 44    ment is entered:
 45        (1)  Furnished to the attorney general or political subdivision all infor-
 46    mation  known  to such person concerning the act within thirty (30) days after
 47    becoming fully aware of the information;
 48        (2)  Fully cooperated with any investigation of the act by  the  state  or
 49    political subdivision; and
 50        (3)  At  the time the information was furnished to the attorney general or
 51    political subdivision, no criminal prosecution or civil  proceeding  had  been
 52    instituted  with  respect  to  the  act and the person had no knowledge of the
 53    existence of any investigation with respect to the act.
                                                                        
                                           3
                                                                        
  1        6-2605.  JOINT AND SEVERAL LIABILITY. Liability pursuant to  this  chapter
  2    shall be joint and several for any act done by two (2) or more persons.
                                                                        
  3        6-2606.  INVESTIGATION  AND ACTION. The attorney general or political sub-
  4    division may investigate any alleged liability pursuant to  this  chapter  and
  5    may bring a civil action pursuant to this chapter against the liable person.
                                                                        
  6        6-2607.  MAINTENANCE OF ACTION BY PRIVATE PLAINTIFF -- LIMITATIONS -- COM-
  7    PLAINT  UNDER  SEAL -- COPIES TO BE SENT TO ATTORNEY GENERAL -- INFORMATION TO
  8    BE FURNISHED. (1) Except as otherwise provided in this section and in  section
  9    6-2608,  Idaho  Code,  a  private plaintiff may maintain an action pursuant to
 10    this chapter on his own behalf and that of the state or political  subdivision
 11    if  money, property or services provided by the state or political subdivision
 12    are involved, or on his own behalf and that of the state and a political  sub-
 13    division  if  both  are involved. After such an action is commenced, it may be
 14    dismissed only with leave of the court, taking into account  the  public  pur-
 15    poses of this chapter and the best interests of the parties.
 16        (2)  If  a private plaintiff brings an action pursuant to this chapter, no
 17    other person or entity may bring another action pursuant to this chapter based
 18    upon the same facts.
 19        (3)  An action may not be maintained by a private  plaintiff  pursuant  to
 20    this chapter:
 21        (a)  Against  a  member  of  the  legislature or the judiciary, an elected
 22        officer of the executive department of the state government or a member of
 23        the governing body of a political subdivision if the action is based  upon
 24        evidence or information known to the state or political subdivision at the
 25        time the action was instituted.
 26        (b)  If  the action is based upon allegations or transactions that are the
 27        subject of a civil action for a monetary penalty to  which  the  state  or
 28        political subdivision is already a party.
 29        (4)  A complaint filed pursuant to this chapter shall be placed under seal
 30    and  shall  remain under seal until the attorney general or political subdivi-
 31    sion elects whether or not to intervene. No  service  may  be  made  upon  the
 32    defendant until the complaint is unsealed.
 33        (5)  On  the  date the private plaintiff files a complaint, such plaintiff
 34    shall send a copy of the complaint to the attorney general by mail with return
 35    receipt requested if money, property or services provided  by  the  state  are
 36    involved  and such plaintiff shall also send with each copy of the complaint a
 37    written disclosure of all material evidence and information the private plain-
 38    tiff possesses. If money, property or services provided by a political  subdi-
 39    vision are involved, such information shall be furnished to the political sub-
 40    division.
                                                                        
 41        6-2608.  LIMITATION  OF ACTIONS. (1)  No action shall be maintained pursu-
 42    ant to section 6-2607, Idaho Code, by a private plaintiff who is a present  or
 43    former employee of the state or a political subdivision based upon information
 44    discovered  during  his  or  her  employment unless the employee first in good
 45    faith exhausted internal procedures for reporting and seeking recovery of  the
 46    proceeds  of  the  fraudulent  activity and the state or political subdivision
 47    failed to act on the information provided for  at  least  one  hundred  eighty
 48    (180) days.
 49        (2)  No  action shall be maintained pursuant to this chapter that is based
 50    upon the public disclosure of allegations or transactions  in  a  criminal  or
 51    civil  hearing,  in an investigation, report, hearing or audit conducted by or
 52    at the request of the legislature, an auditor, or  the  governing  body  of  a
                                                                        
                                           4
                                                                        
  1    political  subdivision or from the news media, unless the action is brought by
  2    the attorney general, political subdivision  or  an  original  source  of  the
  3    information.
  4        (3)  As used in this section, "original source" means a person or entity:
  5        (a)  Who  has  direct  and  independent  knowledge of the information upon
  6        which the allegations were made;
  7        (b)  Who voluntarily provided the information to the  state  or  political
  8        subdivision before bringing an action based upon the information; and
  9        (c)  Whose  information  provided  the  basis  or caused the making of the
 10        investigation, hearing, audit or report that led to the public disclosure.
                                                                        
 11        6-2609.  INTERVENTION -- MOTION FOR EXTENSION -- UNSEALING  OF  COMPLAINT.
 12    (1)  Within one hundred twenty (120) days after receiving a complaint and dis-
 13    closure, the attorney general or political subdivision may intervene and  pro-
 14    ceed  with  the  action or may, for good cause shown, move the court to extend
 15    the time for election of whether or not to proceed. The  motion  may  be  sup-
 16    ported by affidavits or other submissions under seal.
 17        (2)  If the attorney general or political subdivision elects to intervene,
 18    the complaint shall be unsealed. If the attorney general or political subdivi-
 19    sion  elects  not to intervene, the private plaintiff may proceed and the com-
 20    plaint shall be unsealed.
                                                                        
 21        6-2610.  EFFECT OF INTERVENTION -- MOTION TO DISMISS -- SETTLEMENT. (1) If
 22    the attorney general or political subdivision intervenes, the  private  plain-
 23    tiff shall remain a party to an action pursuant to section 6-2607, Idaho Code.
 24        (2)  The attorney general or political subdivision may move to dismiss the
 25    action  brought  pursuant  to section 6-2607, Idaho Code, for good cause, pro-
 26    vided that the private plaintiff shall be notified of the filing of the motion
 27    and shall be entitled to oppose it and present evidence at the hearing.
 28        (3)  Except as otherwise provided in this section, the attorney general or
 29    political subdivision may settle an action brought pursuant to section 6-2607,
 30    Idaho Code. If the attorney general or political subdivision intends to settle
 31    the action, the private plaintiff shall be notified and, upon the  request  of
 32    the  private  plaintiff,  the  court shall determine whether settlement of the
 33    action is consistent with the  public  purposes  of  this  chapter  and  shall
 34    approve  the  settlement only if it determines that such settlement is consis-
 35    tent with such purposes.
                                                                        
 36        6-2611.  EFFECT OF DECLINATION TO INTERVENE  --  SUBSEQUENT  INTERVENTION.
 37    (1)  If  the attorney general or political subdivision elects not to intervene
 38    in an action, the private plaintiff has the  same  rights  in  conducting  the
 39    action as the attorney general or political subdivision would have had. A copy
 40    of  each  pleading or other paper filed in the action, and a copy of the tran-
 41    script of each deposition taken, shall be mailed to the  attorney  general  or
 42    political  subdivision  if  the  attorney  general or political subdivision so
 43    requests and pays the cost for any such copying and mailing.
 44        (2)  Upon timely application, the attorney general or  political  subdivi-
 45    sion  may intervene in an action in which it has previously declined to inter-
 46    vene if the interest of the state or the political subdivision in recovery  of
 47    the money or property involved is not being adequately represented by the pri-
 48    vate plaintiff.
 49        (3)  If  the  attorney general or political subdivision so intervenes, the
 50    private party retains primary responsibility for conducting the action and any
 51    recovery shall be apportioned as if the attorney general or political subdivi-
 52    sion had not intervened.
                                                                        
                                           5
                                                                        
  1        6-2612.  RESPONSE BY DEFENDANT. Notwithstanding  any  other  provision  of
  2    law, a defendant in any action brought pursuant to this chapter shall be enti-
  3    tled  to  thirty  (30)  days in which to respond after a complaint filed under
  4    section 6-2607, Idaho Code, is unsealed and served upon the defendant.
                                                                        
  5        6-2613.  STAY OF DISCOVERY BY PRIVATE  PLAINTIFF  --  EXTENSION.  (1)  The
  6    court  may  stay discovery by a private plaintiff for not more than sixty (60)
  7    days if the attorney general or political subdivision shows that the  proposed
  8    discovery  would  interfere with the investigation or a prosecution of a civil
  9    or criminal matter arising out of the same facts, whether or not the  attorney
 10    general or political subdivision participates in the action.
 11        (2)  The  court may extend the stay upon a further showing that the attor-
 12    ney general or political subdivision has pursued the civil or criminal  inves-
 13    tigation  or  proceeding  with reasonable diligence and the proposed discovery
 14    would interfere with its continuation. Discovery shall not be stayed for  more
 15    than  six  (6)  months  over the objection of the private plaintiff except for
 16    good cause shown by the attorney general or political subdivision.
 17        (3)  A showing made pursuant to this section shall be made under seal.
                                                                        
 18        6-2614.  LIMITATION UPON PARTICIPATION BY PRIVATE PLAINTIFF. Upon a  show-
 19    ing by the attorney general or political subdivision that unrestricted partic-
 20    ipation  by  a private plaintiff would interfere with or unduly delay the con-
 21    duct of an action, or would be repetitious, irrelevant or solely  for  harass-
 22    ment,  the  court  may  limit  the private plaintiff's participation by, among
 23    other measures, limiting:
 24        (1)  The number of witnesses that may be called;
 25        (2)  The length of the testimony of the witnesses; or
 26        (3)  Cross-examination of witnesses.
                                                                        
 27        6-2615.  LIMITATION OF ACTIONS -- STANDARD OF PROOF -- EFFECT OF  FINDINGS
 28    IN  CRIMINAL PROCEEDINGS. (1) An action brought pursuant to this chapter shall
 29    be brought within six (6) years after the false  claim  is  discovered  or  by
 30    exercise  of  reasonable  diligence  should  have  been discovered and, in any
 31    event, not more than ten (10) years after the date on  which  the  act  giving
 32    rise to liability under section 6-2603, Idaho Code, is committed.
 33        (2)  In  an action brought pursuant to this chapter, the standard of proof
 34    is a preponderance of the evidence.
 35        (3)  A finding of guilt in a criminal proceeding estops the  person  found
 36    guilty  from denying an essential element of that offense in an action brought
 37    pursuant to this chapter that is based upon the same transaction as the crimi-
 38    nal proceeding.
                                                                        
 39        6-2616.  AWARD OF EXPENSES AND ATTORNEY'S FEES. (1) If a private plaintiff
 40    prevails in or settles an action brought pursuant  to  section  6-2607,  Idaho
 41    Code,  the  private  plaintiff is entitled to a reasonable amount for expenses
 42    that the court finds were necessarily incurred,  including  reasonable  costs,
 43    attorney's  fees and the fees of expert consultants and expert witnesses. Such
 44    expenses shall be awarded against the  defendant  and  shall  not  be  allowed
 45    against the state or a political subdivision.
 46        (2)  If  the defendant prevails in the action, the court may award reason-
 47    able expenses and attorney's fees against the party or  parties  who  partici-
 48    pated  in  the action if the court finds that the action was clearly frivolous
 49    or brought solely for purposes of harassment.
                                                                        
 50        6-2617.  RECOVERY. (1) As used in this section, "recovery"  includes  dam-
                                                                        
                                           6
                                                                        
  1    ages  awarded  and  civil  penalties  but  does  not  include any allowance of
  2    expenses or attorney's fees.
  3        (2)  If the attorney general initiates an action pursuant to this  chapter
  4    wherein  money,  property or services were provided solely by the state, thir-
  5    ty-three percent (33%) of any recovery shall be paid into  the  state  general
  6    fund  to  the  credit  of a special account for use by the attorney general as
  7    appropriated or authorized by the legislature in the investigation and  prose-
  8    cution of false claims.
  9        (3)  If  the  action involved money, property or services provided both by
 10    the state and a political subdivision and the attorney general or the  politi-
 11    cal  subdivision  initiates action, the court shall apportion an amount of any
 12    recovery between the special account specified in subsection (2) of this  sec-
 13    tion  and  the political subdivision according to the respective values of the
 14    money, property or services provided by each.
 15        (4)  If the attorney general or political subdivision intervenes  pursuant
 16    to  this  chapter, the private plaintiff is entitled, except as otherwise pro-
 17    vided in subsection (6) of this section, to receive not less than fifteen per-
 18    cent (15%) nor more than thirty-three percent (33%) of any recovery  according
 19    to  the  extent  of the private plaintiff's contribution to the conduct of the
 20    action.
 21        (5)  If the attorney general or political subdivision does  not  intervene
 22    in the action, the private plaintiff is entitled, except as otherwise provided
 23    in  subsection  (6) of this section, to receive not less than twenty-five per-
 24    cent (25%) nor more than fifty percent (50%) of any  recovery,  as  the  court
 25    determines to be reasonable.
 26        (6)  If  the action is brought pursuant to section 6-2607, Idaho Code, and
 27    in accordance with section  6-2608(1),  Idaho  Code,  the  present  or  former
 28    employee  of the state or political subdivision is not entitled to any minimum
 29    percentage of any recovery, provided the court may  award  such  employee  not
 30    more  than  thirty-three percent (33%) of the recovery if the attorney general
 31    or political subdivision intervenes in the action at the outset  or  not  more
 32    than fifty percent (50%) if the attorney general or political subdivision does
 33    not  intervene,  according  to the significance of the employee's information,
 34    the extent of the employee's contribution to the conduct of  the  action,  and
 35    the  response  of  the  employee's efforts to report the false claims and gain
 36    recovery through other official channels.
 37        (7)  The portion of any recovery not apportioned pursuant  to  subsections
 38    (4),  (5) and (6) of this section shall be paid into the state general fund if
 39    the money, property or services were provided only by the state, or  into  the
 40    general  fund of the political subdivision if such money, property or services
 41    were provided only by the political subdivision. If the action  involved  both
 42    the  attorney general and political subdivision, the court shall apportion the
 43    remaining portion of any recovery between the state and the political subdivi-
 44    sion according to the respective values of the  money,  property  or  services
 45    provided by each.
                                                                        
 46        6-2618.  PROHIBITION. (1) An employer shall not adopt nor enforce any rule
 47    or  policy  forbidding  an  employee  to  disclose information to the state, a
 48    political subdivision or a law enforcement agency or to act in furtherance  of
 49    an  action  pursuant to this chapter, including investigating or bringing such
 50    an action or testifying in such an action.
 51        (2)  An employer shall not discharge, demote, suspend,  threaten,  harass,
 52    deny  promotion  to or otherwise discriminate against an employee in the terms
 53    or conditions of his employment because of lawful acts done by the employee or
 54    on the employee's behalf or on behalf of others in disclosing  information  to
                                                                        
                                           7
                                                                        
  1    the  state, a political subdivision or a law enforcement agency in furtherance
  2    of an action pursuant to this chapter,  including  investigating  or  bringing
  3    such an action or testifying in such an action.
                                                                        
  4        6-2619.  LIABILITY  OF  EMPLOYER.  (1)  An  employer  who violates section
  5    6-2618, Idaho Code, shall be guilty of a misdemeanor.
  6        (2)  An employer who violates subsection  (2)  of  section  6-2618,  Idaho
  7    Code,  shall be liable to the affected employee in a civil action for expenses
  8    recoverable pursuant to section 6-2616, Idaho Code,  costs,  attorney's  fees,
  9    and  all  other relief necessary to make the employee whole including, but not
 10    limited to:
 11        (a)  Reinstatement with the same seniority as if  the  discrimination  had
 12        not occurred, or damages in lieu of reinstatement, if appropriate;
 13        (b)  Twice the amount of lost compensation;
 14        (c)  Interest on the lost compensation;
 15        (d)  Any special damages sustained as a result of the discrimination; and
 16        (e)  Punitive damages, if appropriate.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                            RS 13708C1

Fraud against the government can take multiple forms; among the
most significant are procurement fraud, false claims, and
Medicare/Medicaid fraud. The purpose of this legislation is to
allow private citizens to initiate an action which may be joined
by the state Attorney General or a political subdivision seeking
recovery of government monies that have been wrongfully paid. The
private citizen exposing fraud will share in any money recovered.

                         Fiscal Impact

The sponsors believe there will be a positive fiscal impact since
this legislation will encourage individuals who are aware of
fraud against the state or political subdivisions to bring the
information forward and allow recovery by the state. 

Contact:
Senator Mike Burkett  
Phone: 332-1000
                                        
Senator Ron McWilliams
Phone: 332-1000
                                                               
                                          
                                        
                                        
                                        
                                        
STATEMENT OF PURPOSE/FISCAL NOTE                     S 1332