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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
]]]] 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
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