PRINTER'S NO. 423
No. 329 Session of 2007
INTRODUCED BY KENNEY, OLIVER, KOTIK, ROSS, PRESTON, WATSON, REICHLEY, KAUFFMAN, GINGRICH, McILHATTAN, SONNEY, J. TAYLOR, KILLION, CALTAGIRONE, RAYMOND, PHILLIPS, GRELL, RAPP, HESS, BAKER, HENNESSEY, DALEY, GOODMAN, CAPPELLI, BELFANTI, SAYLOR, SCAVELLO, JAMES, YOUNGBLOOD, MELIO, PYLE, STERN, R. MILLER, SOLOBAY, MANN, MICOZZIE, FRANKEL AND NICKOL, FEBRUARY 13, 2007
REFERRED TO COMMITTEE ON JUDICIARY, FEBRUARY 13, 2007
AN ACT 1 Providing for liability for false claims, for treble damages, 2 costs and civil penalties, for powers of the Attorney 3 General, for qui tam actions and for adoption of legislative 4 history of the Federal False Claims Act; establishing the 5 Office of Inspector General; providing for its functions; 6 transferring functions from the Office of General Counsel to 7 the Office of Inspector General; and transferring functions, 8 personnel and resources from the Office of State Inspector 9 General to the Office of Inspector General. 10 TABLE OF CONTENTS 11 Chapter 1. Preliminary Provisions 12 Section 101. Short title. 13 Section 102. Definitions. 14 Chapter 3. False Claims 15 Section 301. Acts subjecting persons to liability for treble 16 damages, costs and civil penalties; exceptions. 17 Section 302. Attorney General investigations and prosecutions; 18 powers of prosecuting authority; civil actions by 19 individuals as qui tam plaintiff and as private
1 citizen; jurisdiction of courts. 2 Section 303. Limitation of actions; prior activities; 3 burden of proof. 4 Section 304. Remedies under other laws; severability of 5 provisions; liberality of legislative 6 construction; adoption of legislative history. 7 Section 305. Regulations. 8 Chapter 5. Office of Inspector General 9 Section 501. Office. 10 Section 502. Inspector General. 11 Section 503. Specific powers related to unemployment 12 compensation and welfare. 13 Section 504. Complaint reporting; disclosure of identity; 14 reprisals. 15 Chapter 7. Transfer 16 Section 701. Transfer. 17 Section 702. Employment status. 18 Chapter 21. Miscellaneous Provisions 19 Section 2101. Effective date. 20 The General Assembly of the Commonwealth of Pennsylvania 21 hereby enacts as follows: 22 CHAPTER 1 23 PRELIMINARY PROVISIONS 24 Section 101. Short title. 25 This act shall be known and may be cited as the False Claims 26 Act. 27 Section 102. Definitions. 28 The following words and phrases when used in this act shall 29 have the meanings given to them in this section unless the 30 context clearly indicates otherwise: 20070H0329B0423 - 2 -
1 "Claim." Any request or demand for money, property or 2 services made to any employee, officer or agent of the 3 Commonwealth, or to any contractor, grantee or other recipient, 4 whether under contract or not, if any portion of the money, 5 property or services requested or demanded, issued from or was 6 provided by the Commonwealth, hereinafter "Commonwealth funds," 7 or if the Commonwealth will reimburse such contractor, grantee 8 or other recipient for any portion of the money or property 9 which is requested or demanded. 10 "Employer." Any natural person, corporation, firm, 11 association, organization, partnership, business, trust or 12 Commonwealth-affiliated entity involved in a nongovernmental 13 function, including State universities and State hospitals. 14 "Knowing" and "knowingly." Whenever a person, with respect 15 to information, does any of the following: 16 (1) Has actual knowledge of the information. 17 (2) Acts in deliberate ignorance of the truth or falsity 18 of the information. 19 (3) Acts in reckless disregard of the truth or falsity 20 of the information. Proof of specific intent to defraud is 21 not required. 22 "Office." The Office of Inspector General established in 23 section 501. 24 "Person." Any natural person, corporation, firm, 25 association, organization, partnership, business or trust. 26 "Subjects of transfer." Personnel, allocations, 27 appropriations, equipment, supplies, records, contracts, rights 28 and obligations. 29 CHAPTER 3 30 FALSE CLAIMS 20070H0329B0423 - 3 -
1 Section 301. Acts subjecting persons to liability for treble 2 damages, costs and civil penalties; exceptions. 3 (a) Liability.--Any person who commits any of the following 4 acts shall be liable to the Commonwealth for three times the 5 amount of damages which the Commonwealth sustains because of the 6 act of that person. A person who commits any of the following 7 acts shall also be liable to the Commonwealth for the costs of a 8 civil action brought to recover any of those penalties or 9 damages and shall be liable to the Commonwealth for a civil 10 penalty of not less than $5,000 and not more than $10,000 for 11 each violation: 12 (1) Knowingly presents or causes to be presented to any 13 employee, officer or agent of the Commonwealth or to any 14 contractor, grantee or other recipient of Commonwealth funds, 15 a false or fraudulent claim for payment or approval. 16 (2) Knowingly makes, uses or causes to be made or used, 17 a false record or statement to get a false or fraudulent 18 claim paid or approved. 19 (3) Conspires to defraud the Commonwealth by getting a 20 false claim allowed or paid or conspires to defraud the 21 Commonwealth by knowingly making, using or causing to be made 22 or used, a false record or statement to conceal, avoid or 23 decrease an obligation to pay or transmit money or property 24 to the Commonwealth. 25 (4) Has possession, custody or control of public 26 property or money used or to be used by the Commonwealth and 27 knowingly delivers or causes to be delivered less property 28 that the amount for which the person receives a certificate 29 or receipt. 30 (5) Is authorized to make or deliver a document 20070H0329B0423 - 4 -
1 certifying receipt of property used or to be used by the 2 Commonwealth and knowingly makes or delivers a receipt that 3 falsely represents the property used or to be used. 4 (6) Knowingly buys or receives as a pledge of an 5 obligation or debt, public property from any person who 6 lawfully may not sell or pledge the property. 7 (7) Knowingly makes, uses or causes to be made or used, 8 a false record or statement to conceal, avoid or decrease an 9 obligation to pay or transmit money or property to the 10 Commonwealth. 11 (8) Is a beneficiary of an inadvertent submission of a 12 false claim to any employee, officer or agent of the 13 Commonwealth or to any contractor, grantee or other recipient 14 of Commonwealth funds, subsequently discovers the falsity of 15 the claim and fails to disclose the false claim to the 16 Commonwealth within a reasonable time after discovery of the 17 false claim. 18 (b) Damages limitation.--Notwithstanding subsection (a), the 19 court may assess not less than two times the amount of damages 20 which the Commonwealth sustains because of the act of the person 21 described in that subsection and no civil penalty if the court 22 finds all of the following: 23 (1) The person committing the violation furnished 24 officials of the Commonwealth who are responsible for 25 investigating false claims violations with all information 26 known to that person about the violation within 30 days after 27 the date on which the person first obtained the information. 28 (2) The person fully cooperated with any investigation 29 by the Commonwealth. 30 (3) At the time the person furnished the Commonwealth 20070H0329B0423 - 5 -
1 with information about the violation, no criminal 2 prosecution, civil action or administrative action has 3 commenced with respect to the violation, and the person did 4 not have actual knowledge of the existence of an 5 investigation into the violation. 6 (c) Exclusion.--This section does not apply to claims, 7 records or statements made pursuant to the act of March 4, 1971 8 (P.L.6, No.2), known as the Tax Reform Code of 1971. 9 Section 302. Attorney General investigations and prosecutions; 10 powers of prosecuting authority; civil actions by 11 individuals as qui tam plaintiff and as private 12 citizen; jurisdiction of courts. 13 (a) Responsibilities of the Attorney General.--The Attorney 14 General diligently shall investigate a violation under section 15 301. If the Attorney General finds that a person has violated or 16 is violating section 301, the Attorney General may bring a civil 17 action under this section against that person. 18 (b) Actions by private persons.-- 19 (1) A person may bring a civil action for a violation of 20 this act for the person and for the Commonwealth in the name 21 of the Commonwealth. The person bringing the action shall be 22 referred to as the qui tam plaintiff. Once filed, the action 23 may be dismissed only with the written consent of the court, 24 taking into account the best interest of the parties involved 25 and the public purposes behind this chapter. 26 (2) A copy of the complaint and written disclosure of 27 substantially all material evidence and information the 28 person possesses shall be served on the Attorney General. The 29 complaint shall also be filed in camera and shall remain 30 under seal for at least 60 days and shall not be served on 20070H0329B0423 - 6 -
1 the defendant until the court so orders. The Commonwealth may 2 elect to intervene and proceed with the action within 60 days 3 after it receives both the complaint and the material 4 evidence and the information. 5 (3) The Commonwealth may, for good cause shown, move the 6 court for extensions of the time during which the complaint 7 remains under seal under paragraph (2). Any such motions may 8 be supported by affidavits or other submissions in camera. 9 The defendant shall not be required to respond to any 10 complaint filed under this section until after the complaint 11 is unsealed and served upon the defendant pursuant to the 12 Pennsylvania Rules of Civil Procedure. 13 (4) Before the expiration of the 60-day period or any 14 extensions obtained under paragraph (3), the Commonwealth 15 shall: 16 (i) proceed with the action, in which case the 17 action shall be conducted by the Commonwealth; or 18 (ii) notify the court that it declines to take over 19 the action, in which case the person bringing the action 20 shall have the right to conduct the action. 21 (5) When a person brings a valid action under this 22 subsection, no person other than the Commonwealth may 23 intervene or bring a related action based on the facts 24 underlying the pending action. 25 (c) Rights of the parties to qui tam actions.-- 26 (1) If the Commonwealth proceeds with the action, it 27 shall have the primary responsibility for prosecuting the 28 action and shall not be bound by an act of the person 29 bringing the action. Such person shall have the right to 30 continue as a party to the action, subject to the limitations 20070H0329B0423 - 7 -
1 set forth in paragraph (2). 2 (2) (i) The Commonwealth may seek to dismiss the action 3 for good cause notwithstanding the objections of the qui 4 tam plaintiff if the qui tam plaintiff has been notified 5 by the Commonwealth of the filing of the motion and the 6 court has provided the qui tam plaintiff with an 7 opportunity to oppose the motion and present evidence at 8 a hearing. 9 (ii) The Commonwealth may settle the action with the 10 defendant notwithstanding the objections of the qui tam 11 plaintiff if the court determines, after a hearing 12 providing the qui tam plaintiff an opportunity to present 13 evidence, that the proposed settlement is fair, adequate 14 and reasonable under all of the circumstances. 15 (iii) Upon a showing by the Commonwealth that 16 unrestricted participation during the course of the 17 litigation by the person initiating the action would 18 interfere with or unduly delay the Commonwealth's 19 prosecution of the case or would be repetitious, 20 irrelevant or for purposes of harassment, the court may, 21 in its discretion, impose limitations on the person's 22 participation, such as: 23 (A) limiting the number of witnesses the person 24 may call; 25 (B) limiting the length of the testimony of such 26 witnesses; 27 (C) limiting the person's cross-examination of 28 witnesses; or 29 (D) otherwise limiting the participation by the 30 person in the litigation. 20070H0329B0423 - 8 -
1 (iv) Upon a showing by the defendant that 2 unrestricted participation during the course of the 3 litigation by the person initiating the action would be 4 for purposes of harassment or would cause the defendant 5 undue burden or unnecessary expense, the court may limit 6 the participation by the person in the litigation. 7 (3) If the Commonwealth elects not to proceed with the 8 action, the person who initiated the action shall have the 9 right to conduct the action. If the Commonwealth so requests, 10 it shall be served with copies of all pleadings filed in the 11 action and shall be supplied with copies of all deposition 12 transcripts at the Commonwealth's expense. When a person 13 proceeds with the action, the court, without limiting the 14 status and rights of the person initiating the action, may 15 permit the Commonwealth to intervene at a later date upon a 16 showing of good cause. 17 (4) Whether or not the Commonwealth proceeds with the 18 action, upon a showing by the Commonwealth that certain 19 actions of discovery by the person initiating the action 20 would interfere with the Commonwealth's investigation or 21 prosecution of a criminal or civil matter arising out of the 22 same facts, the court may stay such discovery for a period of 23 not more than 60 days. Such a showing shall be conducted in 24 camera. The court may extend the 60-day period upon a further 25 showing in camera that the Commonwealth has pursued the 26 criminal or civil investigation or proceedings with 27 reasonable diligence and any proposed discovery in the civil 28 action will interfere with the ongoing criminal or civil 29 investigations or proceedings. 30 (5) Notwithstanding subsection (b), the Commonwealth may 20070H0329B0423 - 9 -
1 elect to pursue its claim through any alternate remedy 2 available to the Commonwealth, including any administrative 3 proceeding to determine a civil money penalty. If any such 4 alternate remedy is pursued in another proceeding, the person 5 initiating the action shall have the same rights in such 6 proceeding as the person would have had if the action had 7 continued under this section. Any finding of fact or 8 conclusion of law made in the other proceeding that has 9 become final shall be conclusive on all parties to an action 10 under this section. For purposes of the preceding sentence, a 11 finding or conclusion is final if it has been finally 12 determined on appeal to the appropriate court of the 13 Commonwealth, if all time for filing such an appeal with 14 respect to the finding or conclusion has expired or if the 15 finding or conclusion is not subject to judicial review. 16 (d) Award to qui tam plaintiff.-- 17 (1) If the Commonwealth proceeds with an action brought 18 by a person under subsection (b), such person shall, subject 19 to the second sentence of this paragraph, receive at least 20 15% but not more than 25% of the proceeds of the action or 21 settlement of the claim, which includes damages, civil 22 penalties, payments for costs of compliance and any other 23 economic benefit realized by the government as a result of 24 the action, depending upon the extent to which either or both 25 the person and his counsel substantially contributed to the 26 prosecution of the action. Where the action is one which the 27 court finds to be based primarily on disclosures of specific 28 information, other than information provided by the person 29 bringing the action, relating to allegations or transactions 30 specifically in a criminal, civil or administrative hearing 20070H0329B0423 - 10 -
1 or in a legislative or administrative report, hearing, audit 2 or investigation or from the news media, the court may award 3 such sums as it considers appropriate but in no case more 4 than 10% of the proceeds, taking into account the 5 significance of the information and the role of the person 6 bringing the action in advancing the case to litigation. Any 7 payment to a person under the first or second sentence of 8 this paragraph shall be made from the proceeds. Any such 9 person shall also receive an amount for reasonable expenses 10 which the appropriate Commonwealth court judge finds to have 11 been necessarily incurred, plus reasonable attorney fees and 12 costs. All such expenses, fees and costs shall be awarded 13 against the defendant. 14 (2) If the Commonwealth does not proceed with an action 15 under this section, the person bringing the action or 16 settling the claim shall receive an amount which the court 17 decides is reasonable for collecting the civil penalty and 18 damages. The amount shall not be less than 25% and not more 19 than 30% of the proceeds of the action or settlement and 20 shall be paid out of the proceeds, which includes damages, 21 civil penalties, payments for costs of compliance and any 22 other economic benefit realized by the government as a result 23 of the action. The person shall also receive an amount for 24 reasonable expenses which the appropriate Commonwealth court 25 judge finds to have been necessarily incurred, plus 26 reasonable attorney fees and costs. All such expenses, fees 27 and costs shall be awarded against the defendant. 28 (3) Whether or not the Commonwealth proceeds with the 29 action, if the court finds that the action was brought by a 30 person who planned and initiated the violation of section 20070H0329B0423 - 11 -
1 301(a) upon which the action was brought, then the court may, 2 to the extent the court considers appropriate, reduce the 3 share of the proceeds of the action which the person would 4 otherwise receive under paragraph (1) or (2), taking into 5 account the role of that person in advancing the case to 6 litigation and any relevant circumstances pertaining to the 7 violation. If the person bringing the action is convicted of 8 criminal conduct arising from his or her role in the 9 violation of section 301(a), that person shall be dismissed 10 from the civil action and shall not receive any share of the 11 proceeds of the action. Such dismissal shall not prejudice 12 the right of the Commonwealth to continue the action. 13 (4) If the Commonwealth does not proceed with the action 14 and the person bringing the action conducts the action, the 15 court may award to the defendant its reasonable attorney fees 16 and expenses if the defendant prevails in the action and the 17 court finds that the claim of the person bringing the action 18 was clearly frivolous, clearly vexatious or brought primarily 19 for purposes of harassment. 20 (e) Certain actions barred.-- 21 (1) No court shall have jurisdiction over an action 22 brought under subsection (b) against a member of the 23 legislative branch, a member of the judiciary or a senior 24 executive branch official if the action is based on evidence 25 or information known to the Commonwealth when the action was 26 brought. 27 (2) In no event may a person bring an action under 28 subsection (b) which is based upon allegations or 29 transactions which are the subject of a civil suit or an 30 administrative civil money penalty proceeding in which the 20070H0329B0423 - 12 -
1 Commonwealth is already a party. 2 (3) Upon motion of the Attorney General, the court may, 3 in consideration of all the equities, dismiss a relator of 4 the elements of the actionable false claims alleged in the 5 qui tam complaint which have been publicly disclosed, 6 specifically in the news media or in a publicly disseminated 7 governmental report, at the time the complaint is filed. 8 (f) Commonwealth not liable for certain expenses.--The 9 Commonwealth is not liable for expenses which a person incurs in 10 bringing an action under this section. 11 (g) Private action for retaliation action.--Any employee who 12 is discharged, demoted, suspended, threatened, harassed or in 13 any other manner discriminated against in the terms and 14 conditions of employment by his or her employer because of 15 lawful acts done by the employee on behalf of the employee or 16 others in furtherance of an action under this section, including 17 investigation for, initiation of, testimony for or assistance in 18 an action filed or to be filed under this section, shall be 19 entitled to all relief necessary to make the employee whole. 20 Such relief shall include reinstatement with the same seniority 21 status such employee would have had but for the discrimination, 22 two times the amount of back pay, interest on the back pay and 23 compensation for any special damages sustained as a result of 24 the discrimination, including litigation costs and reasonable 25 attorney fees. An employee may bring an action in the 26 appropriate court of this Commonwealth for the relief provided 27 in this subsection. 28 (h) Civil investigative demand.-- 29 (1) (i) The Attorney General shall have the authority 30 to issue civil investigative demands pursuant to 20070H0329B0423 - 13 -
1 paragraph (2). 2 (ii) Nothing contained in this subsection shall be 3 construed to limit the regulatory or investigative 4 authority of any department or agency of the Commonwealth 5 whose functions might relate to persons, enterprises, or 6 matters falling within the scope of this chapter. 7 (2) (i) Whenever the Attorney General has reason to 8 believe that any person or enterprise may be in 9 possession, custody, or control of any documentary 10 material relevant to an investigation under this chapter, 11 the Attorney General may issue in writing, and cause to 12 be served upon such person or enterprise, a civil 13 investigative demand requiring the production of such 14 material for examination. 15 (ii) Each such demand shall: 16 (A) state the nature of the conduct constituting 17 the alleged violation which is under investigation, 18 the provision of law applicable thereto and the 19 connection between the documentary material demanded 20 and the conduct under investigation; 21 (B) describe the class or classes of documentary 22 material to be produced thereunder with such 23 definiteness and certainty as to permit such material 24 to be fairly identified; 25 (C) state that the demand is returnable 26 forthwith or prescribe a return date which will 27 provide a reasonable period of time within which the 28 material so demanded may be assembled and made 29 available for inspection and copying or reproduction; 30 (D) identify an investigator to whom such 20070H0329B0423 - 14 -
1 material shall be made available; and 2 (E) contain the following statement printed 3 conspicuously at the top of the demand: "You have the 4 right to seek the assistance of any attorney and he 5 may represent you in all phases of the investigation 6 of which this civil investigative demand is a part." 7 (iii) No such demand shall: 8 (A) contain any requirement which would be held 9 to be unreasonable if contained in a subpoena duces 10 tecum issued by any court in connection with a grand 11 jury investigation of such alleged violation; or 12 (B) require the production of any documentary 13 evidence which would be privileged from disclosure if 14 demanded by a subpoena duces tecum issued by any 15 court in connection with a grand jury investigation 16 of such alleged violation. 17 (iv) Service of any such demand or any petition 18 filed under this paragraph shall be made in the manner 19 prescribed by the Pennsylvania Rules of Civil Procedure 20 for service of writs and complaints. 21 (v) A verified return by the individual serving any 22 such demand or petition setting forth the manner of such 23 service shall be prima facie proof of such service. In 24 the case of service by registered or certified mail, such 25 return shall be accompanied by the return post office 26 receipt of delivery of such demand. 27 (vi) (A) Any party upon whom any demand issued 28 under this subsection has been duly served shall make 29 such material available for inspection and copying or 30 reproduction to the investigator designated therein 20070H0329B0423 - 15 -
1 at the principal place of business of such party, or 2 at such other place as such investigator and such 3 party thereafter may agree or as the court may direct 4 pursuant to this paragraph, on the return date 5 specified in such demand. Such party may upon 6 agreement of the investigator substitute copies of 7 all or any part of such material for the originals 8 thereof. 9 (B) The investigator to whom any documentary 10 material is so delivered shall take physical 11 possession thereof, and shall be responsible for the 12 use made thereof and for its return pursuant to this 13 paragraph. The investigator may cause the preparation 14 of such copies of such documentary material as may be 15 required for official use. While in the possession of 16 the investigator, no material so produced shall be 17 available for examination, without the consent of the 18 party who produced such material, by any individual 19 other than the Attorney General or investigator. 20 Under such reasonable terms and conditions as the 21 Attorney General shall prescribe, documentary 22 material while in the possession of the investigator 23 shall be available for examination by the party who 24 produced such material or any duly authorized 25 representatives of such party. 26 (C) Upon completion of the investigation for 27 which any documentary material was produced under 28 this paragraph and any case or proceeding arising 29 from such investigation, the investigator shall 30 return to the party who produced such material all 20070H0329B0423 - 16 -
1 such material other than copies thereof made pursuant 2 to this paragraph which have not passed into the 3 control of any court or grand jury through 4 introduction into the record of such case or 5 proceeding. 6 (D) When any documentary material has been 7 produced by any party under this paragraph for use in 8 any investigation, and no case or proceeding arising 9 therefrom has been instituted within a reasonable 10 time after completion of the examination and analysis 11 of all evidence assembled in the course of such 12 investigation, such party shall be entitled, upon 13 written demand made upon the Attorney General, to the 14 return of all documentary material, other than copies 15 thereof made pursuant to this paragraph, so produced 16 by such party. 17 (vii) Whenever any person or enterprise fails to 18 comply with any civil investigative demand duly served 19 upon him under this paragraph or whenever satisfactory 20 copying or reproduction of any such material cannot be 21 done and such party refuses to surrender such material, 22 the Attorney General may file, in the court of common 23 pleas for any county in which such party resides or 24 transacts business, and serve upon such party a petition 25 for an order of such court for the enforcement of this 26 paragraph, except that if such person transacts business 27 in more than one county such petition shall be filed in 28 the county in which party maintains the party's principal 29 place of business. 30 (viii) Within 20 days after the service of any such 20070H0329B0423 - 17 -
1 demand upon any person or enterprise, or at any time 2 before the return date specified in the demand, whichever 3 period is shorter, such party may file, in the court of 4 common pleas of the county within which such party 5 resides or transacts business, and serve upon the 6 Attorney General a petition for an order of such court 7 modifying or setting aside such demand. The time allowed 8 for compliance with the demand in whole or in part as 9 deemed proper and ordered by the court shall not run 10 during the pendency of such petition in the court. Such 11 petition shall specify each ground upon which the 12 petitioner relies in seeking such relief, and may be 13 based upon any failure of such demand to comply with the 14 provisions of this paragraph or upon any constitutional 15 or other legal right or privilege of such party. 16 (ix) At any time during which the Attorney General 17 is in custody or control of any documentary material 18 delivered by any party in compliance with any such 19 demand, such party may file, in the court of common pleas 20 of the county within which such documentary material was 21 delivered, and serve upon the Attorney General a petition 22 for an order of such court requiring the performance of 23 any duty imposed by this paragraph. 24 (x) Whenever any petition is filed in any court of 25 common pleas under this paragraph, such court shall have 26 jurisdiction to hear and determine the matter so 27 presented, and, after a hearing at which all parties are 28 represented, to enter such order or orders as may be 29 required to carry into effect the provisions of this 30 paragraph. 20070H0329B0423 - 18 -
1 (3) Whenever any individual refuses, on the basis of his 2 privilege against self-incrimination, to comply with a civil 3 investigative demand issued pursuant to paragraph (2), the 4 Attorney General may invoke the provisions of 42 Pa.C.S. § 5 5947 (relating to immunity of witnesses). 6 Section 303. Limitation of actions; prior activities; burden of 7 proof. 8 (a) Statute of limitations.--A civil action under section 9 302 may not be brought more than ten years after the date on 10 which the violation was committed. 11 (b) Burden of proof.--In any action brought under section 12 302, the Commonwealth or the qui tam plaintiff shall be required 13 to prove all essential elements of the cause of action, 14 including damages, by a preponderance of the evidence. 15 (c) Estoppel.--Notwithstanding any other provision of law, a 16 guilty verdict rendered in a criminal proceeding charging false 17 statements or fraud, whether upon a verdict after trial or upon 18 a plea of guilty or nolo contendere, shall estop the defendant 19 from denying the essential elements of the offense in any action 20 which involves the same transaction as in the criminal 21 proceeding and which is brought under section 302(a) or (b). 22 Section 304. Remedies under other laws; severability of 23 provisions; liberality of legislative 24 construction; adoption of legislative history. 25 (a) Remedies under other laws.--The provisions of this act 26 are not exclusive and the remedies provided for in this act 27 shall be in addition to any other remedies provided for in any 28 other law or available under common law. 29 (b) Liberality of legislative construction and adoption of 30 legislative history.--This chapter shall be liberally construed 20070H0329B0423 - 19 -
1 and applied to promote the public interest. This chapter also 2 adopts the congressional intent behind the Federal False Claims 3 Act, (Public Law 97-258, 31 U.S.C. §§ 3729-3733), including the 4 legislative history underlying the 1986 amendments to the 5 Federal False Claims Act. 6 Section 305. Regulations. 7 (a) General rule.--The Attorney General shall have the power 8 and authority to promulgate rules and regulations which may be 9 necessary to carry out the purposes set forth in this chapter. 10 (b) Guidelines.--In order to facilitate the speedy 11 implementation of this chapter, the Attorney General shall have 12 the power and authority to promulgate, adopt and use guidelines 13 which shall be published in the Pennsylvania Bulletin. The 14 guidelines shall not be subject to review under section 205 of 15 the act of July 31, 1968 (P.L.769, No.240), referred to as the 16 Commonwealth Documents Law; sections 204(b) and 301(10) of the 17 act of October 15, 1980 (P.L.950, No.164), known as the 18 Commonwealth Attorneys Act; or the act of June 25, 1982 19 (P.L.633, No.181), known as the Regulatory Review Act. The 20 guidelines shall be effective for a period of not more than two 21 years from the effective date of this chapter. After the 22 expiration of the two-year period, the guidelines shall be 23 promulgated as regulations. 24 CHAPTER 5 25 OFFICE OF INSPECTOR GENERAL 26 Section 501. Office. 27 (a) Establishment.--There is established an independent 28 agency to be known as the Office of Inspector General. The 29 office shall be subject to the same limitations contained in the 30 act of April 9, 1929 (P.L.177, No.175), known as The 20070H0329B0423 - 20 -
1 Administrative Code of 1929, and all other acts as applicable to 2 the Department of the Auditor General or to the State Treasurer. 3 (b) Expenses.--Expenses of the office shall be paid from 4 funds appropriated to the office. 5 (c) Fiscal year.--The fiscal year of the office shall be the 6 same as the fiscal year of the Commonwealth. 7 (d) Cooperation.--Executive agencies shall cooperate with 8 and provide assistance to the office without financial 9 reimbursement. 10 (e) General Counsel.--The powers and duties of the Office of 11 General Counsel contained in section 208 of the act of June 13, 12 1967 (P.L.31, No.21), known as the Public Welfare Code, are 13 transferred to the office. 14 Section 502. Inspector General. 15 (a) Appointment and confirmation.--The Governor shall 16 appoint, with the advice and consent of a majority of the 17 members elected to the Senate, an individual as the Inspector 18 General. The Inspector General shall be the head officer of the 19 office and shall exercise leadership and control over all deputy 20 inspector generals in designated executive agencies to insure a 21 coordinated and efficient administration of duties and use of 22 staff. All deputy inspector generals shall report to and follow 23 the direction of the Inspector General. 24 (b) Qualification.--No individual shall be nominated as 25 Inspector General unless the individual has served at least ten 26 years at a management level capacity in law enforcement. 27 (c) Vacancy in office.--In the event of a vacancy in the 28 position of Inspector General, the Governor shall nominate, with 29 the advice and consent of a majority of the members elected to 30 the Senate, an individual to fill the position for the balance 20070H0329B0423 - 21 -
1 of the unexpired term of the Inspector General. The first deputy 2 shall exercise the powers and perform the duties of the 3 Inspector General until the vacancy is filled. 4 (d) Powers and duties.--The Inspector General has the 5 following powers and duties: 6 (1) Initiate, supervise and coordinate investigative 7 activities relating to fraud, waste, misconduct or abuse in 8 executive agencies and government programs. 9 (2) Recommend policies for and conduct, supervise and 10 coordinate activities designed to deter, detect, prevent and 11 eradicate fraud, waste, misconduct and abuse in executive 12 agencies and government programs. 13 (3) If the Inspector General has reasonable grounds to 14 believe there has been a violation of criminal law or that a 15 civil action should be initiated by the Commonwealth, refer 16 the matter to the Attorney General. 17 (4) Refer matters to the heads of executive agencies, 18 except qui tam actions, if the Inspector General determines 19 that disciplinary or other administrative action is 20 appropriate. 21 (5) Make investigations and reports relating to the 22 administration of programs and operations of an executive 23 agency as are, in the judgment of the Inspector General, 24 necessary or desirable. If the Inspector General determines 25 that a report should be issued, copies of the report shall be 26 presented to the Attorney General to insure against an 27 adverse impact on a grand jury proceeding, false claims 28 action or any investigation being conducted by a law 29 enforcement agency. 30 (6) Request information or assistance necessary for 20070H0329B0423 - 22 -
1 carrying out the duties and responsibilities provided by this 2 chapter from a Federal, State or local government agency. 3 (7) Require and obtain immediately by written notice 4 from officers and employees of executive agencies 5 information, documents, reports, answers, records, accounts, 6 papers and other necessary data and documentary evidence. 7 (8) Have direct and prompt access to the heads of 8 executive agencies when necessary for the purpose of 9 performing the powers and duties provided for under this 10 chapter. 11 (9) Appoint deputy and assistant inspectors general and 12 select and employ officers and employees necessary for 13 carrying out the functions, powers and duties of the office. 14 The officers and employees shall be employed in accordance 15 with current procedures of the Office of Administration and 16 may be assigned by the Inspector General to designated 17 executive agencies. 18 (10) Have the right to access at all times the books and 19 papers of any Commonwealth agency necessary to carry out 20 functions under this chapter. Upon request of the Inspector 21 General for information or assistance, executive agencies 22 shall immediately furnish the information and assistance to 23 the Inspector General or an authorized designee. 24 (11) If information or assistance requested is, in the 25 judgment of the Inspector General, unreasonably refused or 26 not provided, the Inspector General may report the 27 circumstances to the head of the agency, the General Counsel 28 and the Governor for appropriate action. 29 (12) (i) The Inspector General shall have the authority 30 to issue civil investigative demands pursuant to 20070H0329B0423 - 23 -
1 paragraph (13). 2 (ii) Nothing contained in this paragraph or 3 paragraph (3) shall be construed to limit the regulatory 4 or investigative authority of any department or agency of 5 the Commonwealth whose functions might relate to persons, 6 enterprises or matters falling within the scope of this 7 chapter. 8 (13) (i) Whenever the Inspector General has reason to 9 believe that any person or enterprise may be in 10 possession, custody or control of any documentary 11 material relevant to an investigation under this chapter, 12 the Inspector General may issue in writing, and cause to 13 be served upon such person or enterprise, a civil 14 investigative demand requiring the production of such 15 material for examination. 16 (ii) Each such demand shall: 17 (A) state the nature of the conduct constituting 18 the alleged violation which is under investigation, 19 the provision of law applicable thereto and the 20 connection between the documentary material demanded 21 and the conduct under investigation; 22 (B) describe the class or classes of documentary 23 material to be produced thereunder with such 24 definiteness and certainty as to permit such material 25 to be fairly identified; 26 (C) state that the demand is returnable 27 forthwith or prescribe a return date which will 28 provide a reasonable period of time within which the 29 material so demanded may be assembled and made 30 available for inspection and copying or reproduction; 20070H0329B0423 - 24 -
1 (D) identify an investigator to whom such 2 material shall be made available; and 3 (E) contain the following statement printed 4 conspicuously at the top of the demand: "You have the 5 right to seek the assistance of any attorney and he 6 may represent you in all phases of the investigation 7 of which this civil investigative demand is a part." 8 (iii) No such demand shall: 9 (A) contain any requirement which would be held 10 to be unreasonable if contained in a subpoena duces 11 tecum issued by any court in connection with a grand 12 jury investigation of such alleged violation; or 13 (B) require the production of any documentary 14 evidence which would be privileged from disclosure if 15 demanded by a subpoena duces tecum issued by any 16 court in connection with a grand jury investigation 17 of such alleged violation. 18 (iv) Service of any such demand or any petition 19 filed under this paragraph shall be made in the manner 20 prescribed by the Pennsylvania Rules of Civil Procedure 21 for service of writs and complaints. 22 (v) A verified return by the individual serving any 23 such demand or petition setting forth the manner of such 24 service shall be prima facie proof of such service. In 25 the case of service by registered or certified mail, such 26 return shall be accompanied by the return post office 27 receipt of delivery of such demand. 28 (vi) (A) Any party upon whom any demand issued 29 under this subsection has been duly served shall make 30 such material available for inspection and copying or 20070H0329B0423 - 25 -
1 reproduction to the investigator designated therein 2 at the principal place of business of such party, or 3 at such other place as such investigator and such 4 party thereafter may agree or as the court may direct 5 pursuant to this paragraph, on the return date 6 specified in such demand. Such party may upon 7 agreement of the investigator substitute copies of 8 all or any part of such material for the originals 9 thereof. 10 (B) The investigator to whom any documentary 11 material is so delivered shall take physical 12 possession thereof, and shall be responsible for the 13 use made thereof and for its return pursuant to this 14 paragraph. The investigator may cause the preparation 15 of such copies of such documentary material as may be 16 required for official use. While in the possession of 17 the investigator, no material so produced shall be 18 available for examination, without the consent of the 19 party who produced such material, by any individual 20 other than the Inspector General or investigator. 21 Under such reasonable terms and conditions as the 22 Inspector General shall prescribe, documentary 23 material while in the possession of the investigator 24 shall be available for examination by the party who 25 produced such material or any duly authorized 26 representatives of such party. 27 (C) Upon completion of the investigation for 28 which any documentary material was produced under 29 this paragraph and any case or proceeding arising 30 from such investigation, the investigator shall 20070H0329B0423 - 26 -
1 return to the party who produced such material all 2 such material other than copies thereof made pursuant 3 to this paragraph which have not passed into the 4 control of any court or grand jury through 5 introduction into the record of such case or 6 proceeding. 7 (D) When any documentary material has been 8 produced by any party under this paragraph for use in 9 any investigation, and no case or proceeding arising 10 therefrom has been instituted within a reasonable 11 time after completion of the examination and analysis 12 of all evidence assembled in the course of such 13 investigation, such party shall be entitled, upon 14 written demand made upon the Inspector General, to 15 the return of all documentary material, other than 16 copies thereof made pursuant to this paragraph, so 17 produced by such party. 18 (vii) Whenever any person or enterprise fails to 19 comply with any civil investigative demand duly served 20 upon him under this paragraph or whenever satisfactory 21 copying or reproduction of any such material cannot be 22 done and such party refuses to surrender such material, 23 the Inspector General may file, in the court of common 24 pleas for any county in which such party resides or 25 transacts business, and serve upon such party a petition 26 for an order of such court for the enforcement of this 27 paragraph, except that if such person transacts business 28 in more than one county such petition shall be filed in 29 the county in which party maintains the party's principal 30 place of business. 20070H0329B0423 - 27 -
1 (viii) Within 20 days after the service of any such 2 demand upon any person or enterprise, or at any time 3 before the return date specified in the demand, whichever 4 period is shorter, such party may file, in the court of 5 common pleas of the county within which such party 6 resides or transacts business, and serve upon the 7 Inspector General a petition for an order of such court 8 modifying or setting aside such demand. The time allowed 9 for compliance with the demand in whole or in part as 10 deemed proper and ordered by the court shall not run 11 during the pendency of such petition in the court. Such 12 petition shall specify each ground upon which the 13 petitioner relies in seeking such relief, and may be 14 based upon any failure of such demand to comply with the 15 provisions of this paragraph or upon any constitutional 16 or other legal right or privilege of such party. 17 (ix) At any time during which the Inspector General 18 is in custody or control of any documentary material 19 delivered by any party in compliance with any such 20 demand, such party may file, in the court of common pleas 21 of the county within which such documentary material was 22 delivered, and serve upon the Inspector General a 23 petition for an order of such court requiring the 24 performance of any duty imposed by this paragraph. 25 (x) Whenever any petition is filed in any court of 26 common pleas under this paragraph, such court shall have 27 jurisdiction to hear and determine the matter so 28 presented, and, after a hearing at which all parties are 29 represented, to enter such order or orders as may be 30 required to carry into effect the provisions of this 20070H0329B0423 - 28 -
1 paragraph. 2 (14) Whenever any individual refuses, on the basis of 3 his privilege against self-incrimination, to comply with a 4 civil investigative demand issued pursuant to paragraph (13), 5 the Inspector General may request the Attorney General to 6 invoke the provisions of 42 Pa.C.S. § 5947 (relating to 7 immunity of witnesses). 8 (e) Status.--The office shall be considered an independent 9 agency under the act of October 15, 1980 (P.L.950, No.164), 10 known as the Commonwealth Attorneys Act. 11 Section 503. Specific powers related to unemployment 12 compensation and welfare. 13 (a) Unemployment compensation.--The office shall detect and 14 investigate waste, fraud and abuse in unemployment compensation 15 claims by randomly and annually auditing at least 20% of the 16 claims in the Department of Labor and Industry. The office has 17 the authority to contact both the unemployment compensation 18 claimant and the employer for purposes of obtaining necessary 19 information to carry out the functions of the agency. 20 (b) Welfare.--The office shall detect and investigate waste, 21 fraud and abuse in welfare claims, including Medicaid, by 22 randomly and annually auditing at least 20% of the claims in the 23 Department of Welfare. The office has the authority to contact 24 the welfare claimant for purposes of obtaining necessary 25 information to carry out the functions of the agency. 26 (c) Access.--The office shall maintain a single Statewide 27 toll-free telephone number which all persons, whether mandated 28 by law or not, may use to report information or complaints as 29 provided for in section 504. 30 Section 504. Complaint reporting; disclosure of identity; 20070H0329B0423 - 29 -
1 reprisals. 2 (a) Complaints.--The office may receive and investigate 3 complaints or information concerning the possible existence of 4 an activity in an executive agency constituting a violation of 5 law, mismanagement, fraud, waste, abuse of authority, 6 malfeasance, misfeasance, nonfeasance or a substantial and 7 specific danger to the public health and safety. 8 (b) Reprisals.-- 9 (1) No person may take or threaten to take action 10 against an employee as a reprisal for making a complaint or 11 disclosing information to the office, unless the complaint 12 was made or the information disclosed with the knowledge that 13 it was false or misleading. 14 (2) The protections in this subsection for employees who 15 report, in good faith, fraud, waste, misconduct, malfeasance, 16 misfeasance, nonfeasance or abuse are in addition and 17 supplementary to protections provided for in the act of 18 December 12, 1986 (P.L.1559, No.169), known as the 19 Whistleblower Law. 20 CHAPTER 7 21 TRANSFER 22 Section 701. Transfer. 23 The following are transferred from the Office of State 24 Inspector General to the office: 25 (1) Functions formerly performed by the Office of State 26 Inspector General under 4 Pa. Code Ch. 1 Subch. X (relating 27 to Inspector General) and now performed by the office under 28 Chapter 5. 29 (2) Subjects of transfer of the Office of State 30 Inspector General employed, expended or used in connection 20070H0329B0423 - 30 -
1 with the functions transferred to the office under paragraph 2 (1). The transfer under this paragraph has the same effect as 3 if the subjects of transfer had originally been those of the 4 office. 5 Section 702. Employment status. 6 Personnel transferred under section 701(2) shall retain the 7 same employment status held prior to transfer. This section 8 includes: 9 (1) Civil service classification. 10 (2) Seniority. 11 (3) Benefits. 12 (4) Perquisites. 13 CHAPTER 21 14 MISCELLANEOUS PROVISIONS 15 Section 2101. Effective date. 16 This act shall take effect in 60 days. A19L71VDL/20070H0329B0423 - 31 -