PRINTER'S NO. 2088
No. 1671 Session of 1997
INTRODUCED BY KENNEY, LYNCH, J. TAYLOR, GEIST, WOGAN, FICHTER,
DeLUCA, CLARK, COY, GODSHALL, BUNT, MELIO, SATHER, BROWNE,
RAMOS, YOUNGBLOOD, HENNESSEY, RAYMOND, LEH, E. Z. TAYLOR,
FARGO, KELLER, TRELLO, SHANER, GIGLIOTTI, McGEEHAN, SAINATO,
COLAFELLA, CIVERA, SAYLOR, BOSCOLA, THOMAS, BENNINGHOFF AND
BARD, JUNE 16, 1997
REFERRED TO COMMITTEE ON JUDICIARY, JUNE 16, 1997
AN ACT
1 Prohibiting false claims; imposing duties on the Attorney
2 General and on district attorneys; and providing for
3 procedures and for penalties.
4 TABLE OF CONTENTS
5 Chapter 1. Preliminary Provisions
6 Section 101. Short title.
7 Section 102. Definitions.
8 Section 103. Construction.
9 Chapter 3. False Claims
10 Section 301. Offenses defined.
11 Section 302. False claims jurisdiction.
12 Section 303. Procedure.
13 Chapter 5. Qui Tam Actions
14 Section 501. Definitions.
15 Section 502. General provisions.
16 Section 503. Commonwealth funds.
1 Section 504. Political subdivision funds.
2 Section 505. Complaints relating to Commonwealth and political
3 subdivision funds.
4 Section 506. Intervention by political subdivision.
5 Section 507. Extension of time.
6 Section 508. Other actions prohibited.
7 Section 509. Exclusions.
8 Section 510. Employment-related discovery of information.
9 Section 511. Responsibility for prosecution.
10 Section 512. Dismissal of action.
11 Section 513. Settlement.
12 Section 514. Election not to proceed.
13 Section 515. Intervention.
14 Section 516. Proceeds.
15 Section 517. Reversion to General Fund.
16 Section 518. Expenses.
17 Chapter 7. General Provisions
18 Section 701. Stay of discovery.
19 Section 702. Limitations on participation.
20 Section 703. Employee protection.
21 Section 704. Limitations.
22 Section 705. Remedies.
23 Section 706. Enforcement.
24 Section 707. Civil investigative demand.
25 Section 708. Immunity.
26 Section 709. Effective date.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
29 CHAPTER 1
30 PRELIMINARY PROVISIONS
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1 Section 101. Short title.
2 This act shall be known and may be cited as the False Claims
3 Act.
4 Section 102. Definitions.
5 The following words and phrases when used in this act shall
6 have the meanings given to them in this section unless the
7 context clearly indicates otherwise:
8 "Claim." Any request or demand for money, property or
9 services made to any employee, officer or agent of the
10 Commonwealth or of any political subdivision thereof or to any
11 contractor, grantee or other recipient, whether under contract
12 or not, if any portion of the money, property or services
13 requested or demanded issued from or was provided by the
14 Commonwealth, referred to as Commonwealth funds, or by any
15 political subdivision thereof, referred to as political
16 subdivision funds.
17 "Knowing" or "knowingly." A person who, with respect to
18 information, does any of the following:
19 (1) Has actual knowledge of the information.
20 (2) Acts in deliberate ignorance of the truth or falsity
21 of the information. Proof of specific intent to defraud is
22 not required.
23 "Person." Any natural person, corporation, county, political
24 subdivision, firm, association, legal entity, organization,
25 partnership, business or trust.
26 "Political subdivision." Any city, county, tax or assessment
27 district or other legally authorized local governmental entity
28 in this Commonwealth with jurisdictional boundaries.
29 "Prosecuting authority." The Attorney General and the
30 district attorney of any county charged with investigating,
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1 filing and conducting legal proceedings.
2 Section 103. Construction.
3 This act shall be liberally and broadly construed to
4 effectuate its purposes. It shall be applied and interpreted to
5 promote the public interest in eliminating fraud, waste and
6 abuse through the submission of false or fraudulent claims in
7 this Commonwealth or in any of its political subdivisions.
8 CHAPTER 3
9 FALSE CLAIMS
10 Section 301. Offenses defined.
11 (a) Liability.--A person who commits any of the following
12 acts shall be liable to the Commonwealth or to the political
13 subdivision for three times the amount of damages which the
14 Commonwealth or the political subdivision sustains because of
15 the act of that person and shall also be liable to the
16 Commonwealth or to the political subdivision for the costs of a
17 civil action brought to recover any of those penalties or
18 damages and shall be liable to the Commonwealth or political
19 subdivision for a civil penalty of not less than $5,000 nor more
20 than $10,000 for each false claim:
21 (1) Knowingly presents or causes to be presented to an
22 officer or employee of the Commonwealth or any political
23 subdivision a false claim for payment or approval.
24 (2) Knowingly makes, uses or causes to be made or used a
25 false record or statement to collect a false claim or secure
26 approval for a claim from the Commonwealth or from any
27 political subdivision.
28 (3) Conspires to defraud the Commonwealth or any
29 political subdivision by collecting a false claim allowed or
30 paid by the Commonwealth or by any political subdivision.
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1 (4) Has possession, custody or control of public
2 property or money used or to be used by the Commonwealth or
3 by any political subdivision and knowingly delivers or causes
4 to be delivered less property than the amount for which the
5 person receives a certificate or receipt.
6 (5) Is authorized to make or deliver a document
7 certifying receipt of property used or to be used by the
8 Commonwealth or by any political subdivision and knowingly
9 makes or delivers a receipt that falsely represents the
10 property used or to be used.
11 (6) Knowingly buys or receives as a pledge of an
12 obligation or debt public property from any person who
13 lawfully may not sell or pledge the property.
14 (7) Knowingly makes, uses or causes to be made or used a
15 false record or statement to conceal, avoid or decrease an
16 obligation to pay or transmit money or property to the
17 Commonwealth or any political subdivision.
18 (8) Is a beneficiary of an inadvertent submission of a
19 false claim to the Commonwealth or a political subdivision,
20 subsequently discovers the falsity of the claim and fails to
21 disclose the false claim to the Commonwealth or the political
22 subdivision within a reasonable time, but in no event longer
23 than 90 days after discovery of the false claim.
24 (b) Reduced assessment.--Notwithstanding subsection (a), the
25 court may assess not less than two times nor more than three
26 times the amount of damages which the Commonwealth or the
27 political subdivision sustains because of the act of the person
28 described in subsection (a)(1), and no civil penalty, if the
29 court finds all of the following:
30 (1) The person committing the violation furnished
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1 officials of the Commonwealth or of the political subdivision
2 with all information known to that person about the violation
3 within 60 days after the date on which the person first
4 obtained the information.
5 (2) The person fully cooperated with any investigation
6 by the Commonwealth or a political subdivision of the
7 violation.
8 (3) At the time the person furnished the Commonwealth or
9 the political subdivision with information about the
10 violation, no criminal prosecution, civil action or
11 administrative action had commenced with respect to the
12 violation and the person did not have actual knowledge of the
13 existence of an investigation into the violation.
14 (c) Joint and severable liability.--Liability under this
15 section shall be joint and several for any act committed by two
16 or more persons.
17 (d) Limitation.--
18 (1) This section does not apply to any controversy
19 involving an amount of less than $2,500 in value.
20 (2) As used in this subsection, the term "controversy"
21 means any one or more false claims submitted by the same
22 person in violation of this act.
23 Section 302. False claims jurisdiction.
24 An action under this act must be brought in the Commonwealth
25 Court if the defendant or defendants can be found, reside or
26 transact business in this Commonwealth or if an act proscribed
27 by this act occurred in this Commonwealth.
28 Section 303. Procedure.
29 (a) Attorney General prosecution.--
30 (1) The Attorney General shall diligently investigate
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1 violations under section 301 involving Commonwealth funds. If
2 the Attorney General finds that a person has violated or is
3 violating section 301, he may bring a civil action under this
4 section against that person.
5 (2) If the Attorney General brings a civil action under
6 this act on a claim involving political subdivision funds as
7 well as Commonwealth funds, he shall, on the same date that
8 the complaint is filed in this action, serve by mail, return
9 receipt requested, a copy of the complaint on the appropriate
10 prosecuting authority.
11 (3) The prosecuting authority shall have the right to
12 intervene in an action brought by the Attorney General under
13 this act within 90 days after receipt of the complaint
14 pursuant to paragraph (2).
15 (b) Political subdivision prosecution.--
16 (1) The prosecuting authority of a political subdivision
17 shall diligently investigate violations under section 301
18 involving political subdivision funds. If the prosecuting
19 authority finds that a person has violated or is violating
20 section 301, he may bring a civil action under this section
21 against that person.
22 (2) If the prosecuting authority brings a civil action
23 on a claim involving Commonwealth funds as well as political
24 subdivision funds, he shall, on the same date that the
25 complaint is filed in this action, serve a copy of the
26 complaint on the Attorney General.
27 (3) Within 90 days after receiving the complaint
28 pursuant to paragraph (2), the Attorney General shall do one
29 of the following:
30 (i) Notify the court that he intends to proceed with
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1 the action, in which case the Attorney General shall
2 assume primary responsibility for conducting the action
3 and the prosecuting authority shall have the right to
4 continue as a party.
5 (ii) Notify the court that he declines to take over
6 the action, in which case the prosecuting authority shall
7 have the right to conduct the action on his own.
8 (iii) Proceed jointly with the prosecuting
9 authority, assuming coequal responsibility for
10 prosecution of the action.
11 CHAPTER 5
12 QUI TAM ACTIONS
13 Section 501. Definitions.
14 The following words and phrases when used in this chapter
15 shall have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Proceeds." The term includes civil penalties as well as
18 double or treble damages as provided in Chapter 3.
19 Section 502. General provisions.
20 (a) When action may be brought.--A person may bring a civil
21 action for a violation of this act for the person and either for
22 the Commonwealth in the name of the Commonwealth if any
23 Commonwealth funds are involved or for a political subdivision
24 in the name of the political subdivision if political
25 subdivision funds are exclusively involved. A qui tam complaint
26 may be brought alleging fraud involving both Commonwealth and
27 political subdivision funds. The person bringing the action
28 shall be referred to as the qui tam plaintiff. Once filed, the
29 qui tam action may be dismissed only by the written consent of
30 the court, taking into account the best interests of the parties
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1 involved and the public purposes of this act. No dismissal shall
2 occur by the court unless an in camera hearing is held with an
3 opportunity for participation by the qui tam plaintiff and
4 counsel and the prosecuting authority. The defendant shall not
5 be present at this hearing.
6 (b) Filing.--A complaint filed by a private person under
7 this section must be filed ex parte under seal with the Clerk of
8 the Commonwealth Court, and the complaint and all related
9 pleadings must remain under seal for 90 days. No service shall
10 be made on the defendant until after the complaint is unsealed
11 by order of the court.
12 (c) Service upon Attorney General.--On the same day as the
13 complaint is filed pursuant to subsection (b), the qui tam
14 plaintiff shall serve by mail, return receipt requested, the
15 Attorney General with a copy of the complaint and a written
16 disclosure of substantially all material evidence and
17 information the person possesses at that time.
18 Section 503. Commonwealth funds.
19 Within 90 days after receiving a complaint alleging
20 violations which involve Commonwealth funds, but not political
21 subdivision funds, the Attorney General shall do either of the
22 following:
23 (1) Notify the court that it intends to proceed with the
24 action and petition the court to have the case unsealed. If
25 the court grants the Attorney General's request, the seal may
26 be lifted.
27 (2) Notify the court that it declines to take over the
28 action, in which case the complaint may be unsealed by the
29 court within 20 days after written notification is made by
30 the Attorney General to the qui tam plaintiff and counsel
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1 that the Attorney General does not wish to intervene. Upon
2 such notification, the qui tam plaintiff shall have the right
3 to conduct the action.
4 Section 504. Political subdivision funds.
5 (a) Procedure.--Within 30 days after receiving a complaint
6 alleging violations which exclusively involve political
7 subdivision funds, the Attorney General shall promptly forward
8 the complaint and written disclosure to the appropriate
9 prosecuting authority for review and disposition and shall
10 notify in writing the qui tam plaintiff and counsel of the
11 transfer.
12 (b) Duty of prosecuting authority.--Within 60 days after the
13 Attorney General forwards the complaint and written disclosure
14 under subsection (a), the prosecuting authority shall do either
15 of the following:
16 (1) Notify the court that it intends to proceed with the
17 action and petition the court to have the case unsealed. If
18 the court grants the prosecuting authority's request, the
19 seal shall be lifted.
20 (2) Notify the court that it declines to take over the
21 action, in which case the seal may be lifted within 20 days
22 after such notification has been made and the qui tam
23 plaintiff shall have the right to conduct the action.
24 Section 505. Complaints relating to Commonwealth and political
25 subdivision funds.
26 (a) Complaints.--Within 30 days after receiving a complaint
27 alleging violations which involve or allege both Commonwealth
28 and political subdivision funds, the Attorney General shall
29 forward copies of the complaint and written disclosure to the
30 appropriate prosecuting authority and shall coordinate its
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1 review and investigation with those of the prosecuting
2 authority.
3 (b) Procedure.--Within 90 days after receiving a complaint
4 alleging violations which involve or allege both Commonwealth
5 and political subdivision funds, the Attorney General shall do
6 one of the following:
7 (1) Notify the court in writing that he intends to
8 proceed with the action, in which case the seal shall be
9 lifted and service effected on the defendant.
10 (2) Notify the court in writing that he declines to take
11 over the action but that the prosecuting authority of the
12 political subdivision involved intends to proceed with the
13 action, in which case the seal shall be lifted and the action
14 shall be conducted by the prosecuting authority.
15 (3) Notify the court that both he and the prosecuting
16 authority decline to take over the action, in which case the
17 seal may be lifted within 20 days after notification has been
18 made and the qui tam plaintiff shall have the right to
19 conduct the action.
20 Section 506. Intervention by political subdivision.
21 If the Attorney General proceeds with the action under
22 section 504(b)(1), the political subdivision shall be permitted
23 to intervene in the action within 60 days after the Attorney
24 General notifies the court of his intentions.
25 Section 507. Extension of time.
26 Upon a showing of good cause and reasonable diligence in his
27 investigation, the Attorney General or the prosecuting authority
28 of a political subdivision may move the court for reasonable
29 extensions of time during which the complaint will remain under
30 seal. The qui tam plaintiff shall be notified of any extensions
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1 requested under this section. Any such motions may be supported
2 by affidavits or other submissions in camera.
3 Section 508. Other actions prohibited.
4 When a person brings an action under this chapter, no other
5 person shall be permitted to bring a related action based on the
6 same or similar facts underlying the pending action.
7 Section 509. Exclusions.
8 (a) General rule.--No court shall have jurisdiction over an
9 action brought under this chapter against a member of the
10 General Assembly, a member of the State judiciary, an elected
11 official in the executive branch of State government or a member
12 of the governing body of any political subdivision if the action
13 is based on evidence or information known to the Commonwealth or
14 political subdivision when the action was brought.
15 (b) Dismissal.--The court may dismiss an action under this
16 act upon motion of the Attorney General if it finds that
17 substantially all allegations and material facts have been
18 publicly disclosed in a criminal, civil or administrative
19 hearing, in an investigation, report, hearing or audit conducted
20 by or at the request of the General Assembly, auditor or
21 governing body of a political subdivision or by the news media,
22 unless the action is brought by the Attorney General or the
23 prosecuting authority of a political subdivision or the person
24 bringing the action is an original source of the information.
25 (c) Definition.--As used in this section, the term "original
26 source" means an individual who has voluntarily provided the
27 information to the Commonwealth or political subdivision before
28 filing an action based on that information and either has
29 independent knowledge of the information on which the
30 allegations are based or directly or indirectly provided the
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1 impetus, basis or catalyst for the investigation, hearing, audit
2 or report which led to the public disclosure.
3 Section 510. Employment-related discovery of information.
4 No court shall have jurisdiction over an action brought under
5 this chapter based upon information discovered by a present or
6 former employee of the Commonwealth or a political subdivision
7 during the course of his employment unless that employee first
8 in good faith exhausted existing internal procedures for
9 reporting and seeking recovery of the falsely claimed sums
10 through official channels and unless the Commonwealth or
11 political subdivision failed to act on the information provided
12 within a reasonable period of time. A reasonable period of time
13 shall mean no longer than six months after information has been
14 disclosed.
15 Section 511. Responsibility for prosecution.
16 If the Commonwealth or political subdivision proceeds with
17 the action, it shall have the primary responsibility for
18 prosecuting the action. The qui tam plaintiff shall have the
19 right to continue with all rights and obligations as a full
20 party to the action.
21 Section 512. Dismissal of action.
22 The Commonwealth or political subdivision may seek to dismiss
23 the action for good cause notwithstanding the objections of the
24 qui tam plaintiff if the qui tam plaintiff has been notified by
25 the Commonwealth or political subdivision of the filing of the
26 motion and the court has provided the qui tam plaintiff with an
27 adequate opportunity to oppose the motion and present evidence
28 at an in camera hearing in opposition to the dismissal.
29 Section 513. Settlement.
30 The Commonwealth or political subdivision may settle the
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1 action with the defendant notwithstanding the objections of the
2 qui tam plaintiff if the court determines, after a full and
3 complete hearing providing the qui tam plaintiff an adequate
4 opportunity to present evidence, that the proposed settlement is
5 fair, adequate and reasonable under all of the circumstances to
6 all parties involved.
7 Section 514. Election not to proceed.
8 If the Commonwealth or political subdivision elects not to
9 proceed, the qui tam plaintiff shall have the same rights,
10 powers and obligations to conduct the action as the Attorney
11 General or prosecuting authority would have had if it had chosen
12 to proceed under this chapter. If the Commonwealth or political
13 subdivision so requests, and at its sole expense, the
14 Commonwealth or political subdivision shall be served with
15 copies of all pleadings filed in the action and supplied with
16 copies of all deposition transcripts.
17 Section 515. Intervention.
18 (a) General rule.--Upon timely application, the court may
19 permit the Commonwealth or political subdivision to intervene in
20 an action with which it had initially declined to proceed if the
21 interest of the Commonwealth or political subdivision in
22 recovery of the property or funds involved is not being
23 adequately represented by the qui tam plaintiff.
24 (b) Untimely intervention.--If the Commonwealth or political
25 subdivision is allowed the opportunity for untimely intervention
26 under subsection (a), the qui tam plaintiff may retain principal
27 responsibility for the action and the recovery of the parties
28 shall be determined as if the Commonwealth or political
29 subdivision had elected not to proceed.
30 Section 516. Proceeds.
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1 (a) Office of Attorney General.--If the Attorney General
2 initiates an action under section 303(a) or assumes control of
3 an action initiated by a prosecuting authority pursuant to
4 section 303, the Office of Attorney General shall receive a
5 fixed 33% of the proceeds of the action or settlement of the
6 claim, which funds shall be used to support and expand its
7 ongoing investigation and prosecution of false claims violations
8 in this Commonwealth.
9 (b) Prosecuting authority.--If a prosecuting authority
10 initiates and conducts an action pursuant to section 303(b), the
11 office of the prosecuting authority shall receive a fixed 33% of
12 the proceeds of the action or settlement of the claim, which
13 funds shall be used to support and expand its ongoing
14 investigation and prosecution of false claims violations within
15 its jurisdiction.
16 (c) Award of portion of recovery.--If a prosecuting
17 authority intervenes in an action initiated by the Attorney
18 General pursuant to section 303(a)(3) or remains a party to an
19 action assumed by the Attorney General pursuant to section
20 303(b)(3)(i), the court may award the office of the prosecuting
21 authority a portion of the Attorney General's fixed 33% of the
22 recovery under subsection (a), taking into account the
23 prosecuting authority's role in investigating and conducting the
24 action and the resources of the office expended on the
25 prosecution.
26 (d) Qui tam recovery.--
27 (1) If the Commonwealth or political subdivision
28 proceeds with an action brought by a qui tam plaintiff under
29 this chapter, the qui tam plaintiff shall, subject to
30 subsections (f) and (g), receive not less than 20% nor more
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1 than 33% of the full proceeds of the action or settlement of
2 the claim, depending upon the extent to which the qui tam
3 plaintiff substantially contributed to the overall
4 prosecution of the action.
5 (2) When it conducts the action, the Office of Attorney
6 General or the office of the prosecuting authority of the
7 political subdivision shall receive a fixed 33% of the
8 proceeds of the action or settlement of the claim, which
9 funds shall be used to support and expand its ongoing
10 investigation and prosecution of false claims made against
11 the Commonwealth or political subdivision. Upon good cause
12 shown, the Office of Attorney General or the office of the
13 prosecuting authority may use a portion of the recovered
14 funds to expand its investigation and prosecution of violent
15 crimes and public corruption in this Commonwealth.
16 (3) When both the Attorney General and a prosecuting
17 authority are involved as coparties in a qui tam action
18 pursuant to section 504, the court in its discretion may
19 award the prosecuting authority a portion of the Attorney
20 General's fixed 33% of the recovery, taking into account the
21 prosecuting authority's cooperation and contribution to
22 investigating and conducting the action.
23 (e) Decline to proceed.--If the Commonwealth or political
24 subdivision declines to proceed with an action under subsection
25 (c), the qui tam plaintiff shall, subject to subsections (f) and
26 (g), receive an amount which the court decides is reasonable for
27 collecting the civil penalty and damages on behalf of the
28 Commonwealth or political subdivision. The amount awarded by the
29 court shall be not less than 30% nor more than 50% of the
30 proceeds of the action or settlement and shall be paid out of
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1 the proceeds.
2 (f) Present or former employee.--If the action is one
3 provided for under section 508, the present or former employee
4 of the Commonwealth or political subdivision shall not be
5 entitled to any minimum guaranteed recovery from the proceeds.
6 The court, however, may award the qui tam plaintiff those sums
7 from the proceeds as it considers appropriate, but in no case
8 more than 33% of the proceeds if the Commonwealth or political
9 subdivision goes forth with the action or 50% if the
10 Commonwealth or political subdivision declines to go forth,
11 taking into account the significance of the information, the
12 role of the qui tam plaintiff in advancing the case to
13 litigation and the scope of and response to the employee's
14 attempts to report and gain recovery of the falsely claimed
15 funds through official channels.
16 (g) Fraudulent activity.--If the action is one which the
17 court finds to be based primarily on information from a present
18 or former employee who actively participated in the fraudulent
19 activity, the employee shall not be entitled to any minimum
20 guaranteed recovery from the proceeds. The court, however, in
21 its sole discretion after a full review of all of the facts and
22 circumstances may award the qui tam plaintiff such sums from the
23 proceeds as it considers appropriate under the circumstances,
24 but in no case more than 33% of the proceeds if the Commonwealth
25 or political subdivision goes forth with the action or 50% if
26 the Commonwealth or political subdivision declines to go forth,
27 taking into account the significance of the information, the
28 role of the qui tam plaintiff in advancing the case to
29 litigation, the scope of the present or past employee's
30 involvement in the fraudulent activity, the employee's attempts
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1 to avoid or resist such activity and all other circumstances
2 surrounding the activity.
3 Section 517. Reversion to General Fund.
4 The portion of the recovery not distributed under section 516
5 shall revert to the General Fund if the underlying false claims
6 involved Commonwealth funds exclusively and to the political
7 subdivision if the underlying false claims involved political
8 subdivision funds exclusively. If petitioned to do so, the court
9 shall make an apportionment of the recovered proceeds between
10 the Commonwealth and political subdivision based on their
11 relative share of the funds falsely claimed.
12 Section 518. Expenses.
13 If the Commonwealth, political subdivision or qui tam
14 plaintiff prevails in or settles any action under this chapter,
15 the qui tam plaintiff shall receive an amount for all reasonable
16 expenses incurred in the prosecution of the claim, including
17 expert witness fees plus reasonable litigation costs and
18 attorney fees. All expenses, costs and attorney fees shall be
19 awarded against the defendant, and under no circumstances shall
20 they be the responsibility of the Commonwealth, a political
21 subdivision or a qui tam plaintiff.
22 CHAPTER 7
23 GENERAL PROVISIONS
24 Section 701. Stay of discovery.
25 The court may stay an act of discovery of the person
26 initiating the action for a period of not more than 90 days if
27 the Attorney General or local prosecuting authority shows by a
28 preponderance of the evidence that the act of discovery would
29 interfere with an investigation or a prosecution of a criminal
30 or civil matter arising out of the same facts, regardless of
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1 whether the Attorney General or local prosecuting authority
2 proceeds with the action. Such a showing shall be conducted in
3 camera. The court may extend the 90-day period upon a further
4 showing in camera that the Attorney General or local prosecuting
5 authority has pursued the criminal or civil investigation or
6 proceedings with reasonable diligence and that any proposed
7 discovery in the civil action would interfere with the ongoing
8 criminal or civil investigation or proceedings.
9 Section 702. Limitations on participation.
10 Upon a showing by the Attorney General or local prosecuting
11 authority by a preponderance of the evidence that unrestricted
12 participation during the course of the litigation by the person
13 initiating the action would interfere with or unduly delay the
14 Attorney General's or local prosecuting authority's prosecution
15 of the case or would be repetitious, irrelevant or for purposes
16 of harassment, the court may, in its discretion, impose
17 limitations on the person's participation, including the
18 following:
19 (1) Limiting the number of witnesses the person may
20 call.
21 (2) Limiting the length of the testimony of these
22 witnesses.
23 (3) Limiting the person's cross-examination of
24 witnesses.
25 (4) Otherwise limiting the participation by the person
26 in the litigation.
27 Section 703. Employee protection.
28 (a) Disclosing information.--No employer shall make, adopt
29 or enforce any rule, regulation or policy preventing an employee
30 from disclosing information to a State or local law enforcement
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1 agency or from acting in furtherance of a false claims action,
2 including investigating, initiating, testifying or assisting in
3 an action filed or to be filed under this act.
4 (b) Discrimination.--No employer shall discharge, demote,
5 suspend, threaten, harass, deny promotion to or in any other
6 manner discriminate against an employee in the terms of and
7 conditions of employment because of lawful acts done by the
8 employee on behalf of the employee or others in disclosing
9 information to a State or local government or law enforcement
10 agency or in furthering false claims action, including
11 investigation for, initiation of, testimony for or assistance in
12 an action filed or to be filed under this act.
13 (c) Penalty.--An employer who violates subsection (b) shall
14 be liable for all relief necessary to make the employee whole,
15 including reinstatement with the same seniority status that the
16 employee would have had but for the discrimination, three times
17 the amount of back pay, prevailing interest on the back pay,
18 compensation for any special damage sustained as a result of the
19 discrimination and, where appropriate, punitive damages. In
20 addition, the defendant shall be required to pay all litigation
21 costs and reasonable attorney fees. An employee may bring an
22 action in the Commonwealth Court for the relief provided in this
23 subsection.
24 (d) Limitations.--An employee who is discharged, demoted,
25 suspended, harassed, denied promotion or in any other manner
26 discriminated against in the terms and conditions of employment
27 by his employer because of participation in conduct which
28 directly or indirectly resulted in a false claim being submitted
29 to the Commonwealth or a political subdivision shall be entitled
30 to the remedies under subsection (c) if, and only if, both of
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1 the following occur:
2 (1) The employee voluntarily discloses information to a
3 State or local government or law enforcement agency or acted
4 in furtherance of a false claims action, including
5 investigation for, initiation of, testimony for or assistance
6 in an action filed or to be filed.
7 (2) The employee has been harassed, threatened with
8 termination or demotion or otherwise coerced by the employer
9 or its management into engaging in the fraudulent activity in
10 the first place.
11 Section 704. Limitations.
12 (a) Time of filing.--A civil action under this act may not
13 be filed more than six years after the date on which the
14 violation of this act is committed or more than three years
15 after the date of discovery by the official of the Commonwealth
16 or political subdivision charged with responsibility to act in
17 the circumstances, but in any event no more than ten years after
18 the date on which the violation of section 301 is committed.
19 (b) Prior acts.--A civil action under this act may be
20 brought for activity prior to the effective date of this act if
21 the limitations period set in subsection (a) has not elapsed.
22 (c) Proof.--In any action brought under this act, the
23 Commonwealth, the political subdivision or the qui tam plaintiff
24 shall be required to prove all essential elements of the cause
25 of action, including damages, by a preponderance of the
26 evidence.
27 (d) Estoppel.--Notwithstanding any other provision of law, a
28 guilty verdict, guilty plea or nolo contendere plea rendered in
29 a criminal proceeding which alleged a scheme to obtain funds
30 fraudulently from the Commonwealth or a political subdivision
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1 shall estop the defendant from denying the essential elements of
2 the offense in any action which involves the same transaction as
3 in the criminal proceeding and which is brought under this act.
4 Section 705. Remedies.
5 (a) Civil remedies.--
6 (1) The Commonwealth Court shall have jurisdiction to
7 prevent and restrain violations of section 301 by issuing
8 appropriate orders, including, but not limited to, orders
9 relating to any of the following:
10 (i) Ordering any person to divest himself of any
11 financial interest in any business or entity.
12 (ii) Imposing reasonable restrictions on the future
13 activities or investments of any person, including, but
14 not limited to, prohibiting any person from engaging in
15 the same type of endeavor and/or freezing the person's
16 assets.
17 (iii) Making due provision for:
18 (A) The rights of innocent persons.
19 (B) Ordering the dissolution of any business or
20 entity.
21 (C) Ordering the denial, suspension or
22 revocation of charters of domestic corporations.
23 (D) Certificates of authority authorizing
24 foreign corporations to do business in this
25 Commonwealth.
26 (E) Licenses, permits or prior approval granted
27 to any business or entity by any department or agency
28 of the Commonwealth or any of its political
29 subdivisions.
30 (F) Prohibiting any business or entity from
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1 engaging in any business.
2 (2) In any proceeding under this section, the court
3 shall proceed as soon as practicable to the hearing and
4 determination thereof. Pending final determination, the court
5 may enter preliminary or special injunctions or take such
6 other actions, including the acceptance of satisfactory
7 performance bonds, as it may deem proper.
8 (b) Remedies cumulative.--The provisions of this act are not
9 exclusive, and the remedies provided for in this act shall be in
10 addition to any other remedies provided for in any other law or
11 available under common law.
12 Section 706. Enforcement.
13 (a) Attorney General.--The Attorney General shall have the
14 power and duty to enforce this act, including the authority to
15 issue civil investigative demands pursuant to this act, to
16 institute proceedings under this act and to take such actions as
17 may be necessary to ascertain and investigate alleged violations
18 of this act.
19 (b) Construction.--Nothing contained in this act shall be
20 construed to limit the regulatory or investigative authority of
21 any department or agency of the Commonwealth whose functions
22 might relate to persons, enterprises or matters falling within
23 the scope of this act.
24 Section 707. Civil investigative demand.
25 (a) General rule.--Whenever the Attorney General has reason
26 to believe that any person may be in possession, custody or
27 control of any documentary material relevant to a false claim
28 investigation, he may issue in writing and cause to be served
29 upon the person a civil investigative demand requiring the
30 production of the material for examination.
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1 (b) Content.--Each demand under this section shall:
2 (1) State the nature of the conduct constituting the
3 alleged false claim violation which is under investigation,
4 the provision of law applicable thereto and the connection
5 between the documentary material demanded and the conduct
6 under investigation.
7 (2) Describe the class or classes of documentary
8 material to be produced thereunder with such definiteness and
9 certainty as to permit the material to be fairly identified.
10 (3) State that the demand is returnable forthwith or
11 prescribe a return date which will provide a reasonable
12 period of time within which the material so demanded may be
13 assembled and made available for inspection and copying or
14 reproduction.
15 (4) Identify a false claims investigator to whom the
16 material shall be made available.
17 (5) Contain the following statement printed
18 conspicuously at the top of the demand:
19 You have the right to seek the assistance of any
20 attorney, and he may represent you in all phases of
21 the false claim investigation of which this civil
22 investigative demand is a part.
23 (c) Limitation.--No demand under this section shall:
24 (1) contain any requirement which would be held to be
25 unreasonable if contained in a subpoena duces tecum issued by
26 any court in connection with a grand jury investigation of
27 the alleged fraud violation; or
28 (2) require the production of any documentary evidence
29 which would be privileged from disclosure if demanded by a
30 subpoena duces tecum issued by any court in connection with a
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1 grand jury investigation of the alleged false claim
2 violation.
3 (d) Service.--Service of any demand or any petition filed
4 under this section shall be made in the manner prescribed by the
5 Pennsylvania Rules of Civil Procedure for service of writs and
6 complaints.
7 (e) Return.--A verified return by the individual serving any
8 demand or petition under this section setting forth the manner
9 of service shall be prima facie proof of such service. In the
10 case of service by registered or certified mail, the return
11 shall be accompanied by the return post office receipt of
12 delivery of the demand.
13 (f) Procedure.--
14 (1) A party upon whom a demand issued under this section
15 has been duly served shall make the demanded material
16 available for inspection and copying or reproduction to a
17 false claims investigator designated in the demand at the
18 principal place of business of the party or at such other
19 place as the investigator and the party thereafter may agree
20 or as the court may direct pursuant to this section on the
21 return date specified in the demand. The party may, upon
22 agreement of the investigator, substitute copies of all or
23 any part of the demanded material for the originals of the
24 demanded material.
25 (2) The false claims investigator to whom any
26 documentary material is so delivered shall take physical
27 possession of the material and shall be responsible for the
28 use made of the material and for its return pursuant to this
29 section. The investigator may cause the preparation of the
30 copies of the documentary material as may be required for
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1 official use. While in the possession of the investigator, no
2 material so produced shall be available for examination by
3 any individual other than the Attorney General or any false
4 claims investigator without the consent of the party who
5 produced the material. Under such reasonable terms and
6 conditions as the Attorney General shall prescribe,
7 documentary material while in the possession of the
8 investigator shall be available for examination by the party
9 who produced the material or any duly authorized
10 representatives of that party.
11 (3) Upon completion of:
12 (i) the false claims investigation for which any
13 documentary material was produced under this section; and
14 (ii) any case or proceeding arising from such
15 investigation;
16 the investigator shall return to the party who produced the
17 material all of the material other than copies of the
18 material made pursuant to this section which have not passed
19 into the control of any court or grand jury through
20 introduction into the record of such case or proceeding.
21 (4) When documentary material has been produced by a
22 party under this section for use in a false claims
23 investigation and no case or proceeding arising from the
24 investigation has been instituted within a reasonable time
25 after completion of the examination and analysis of all
26 evidence assembled in the course of the investigation, the
27 party shall be entitled, upon written demand made upon the
28 Attorney General, to the return of all documentary material,
29 other than copies of the material made pursuant to this
30 section, so produced by that party.
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1 (g) Failure to comply.--Whenever a person fails to comply
2 with a civil investigative demand that is served upon him under
3 this section or whenever satisfactory copying or reproduction of
4 any of the material cannot be done and the party refuses to
5 surrender the material, the Attorney General may file in the
6 Commonwealth Court and serve upon the party a petition for an
7 order of the court for the enforcement of this section.
8 (h) Petition for relief.--
9 (1) Within 20 days after the service of any demand under
10 this section upon any person or at any time before the return
11 date specified in the demand, whichever period is shorter,
12 the party may file in the Commonwealth Court and serve upon
13 the Attorney General a petition for an order of the court
14 modifying or setting aside this demand. The time allowed for
15 compliance with the demand, in whole or in part, as deemed
16 proper and ordered by the court shall not run during the
17 pendency of the petition in the court. The petition shall
18 specify each ground upon which the petitioner relies in
19 seeking the relief and may be based on any failure of the
20 demand to comply with the provisions of this section or on
21 any constitutional or other legal right or privilege of the
22 party.
23 (2) At any time during which the Attorney General is in
24 custody or control of documentary material delivered by a
25 party in compliance with a demand under this section, the
26 party may file in the Commonwealth Court and serve upon the
27 Attorney General a petition for an order of the court
28 requiring the performance of any duty imposed by this
29 section.
30 (3) Whenever a petition is filed in the Commonwealth
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1 Court, the court shall have jurisdiction to hear and
2 determine the matter so presented and, after a hearing at
3 which all parties are represented, to enter such order or
4 orders as may be required to carry into effect the provisions
5 of this section.
6 Section 708. Immunity.
7 Whenever any individual refuses on the basis of his privilege
8 against self-incrimination to comply with a civil investigative
9 demand issued pursuant to this act or to testify or produce
10 other information in a proceeding under this act, the Attorney
11 General may invoke the provisions of 42 Pa.C.S. § 5947 (relating
12 to immunity of witnesses).
13 Section 709. Effective date.
14 This act shall take effect in 60 days.
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