Bill Text: CA AB2760 | 2009-2010 | Regular Session | Amended
Bill Title: False Claims Act: prevailing defendant: attorney's fees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-04-20 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB2760 Detail]
Download: California-2009-AB2760-Amended.html
BILL NUMBER: AB 2760 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 14, 2010
INTRODUCED BY Assembly Member Tran
FEBRUARY 19, 2010
An act to amend Section 12652 of the Government Code, relating to
false claims.
LEGISLATIVE COUNSEL'S DIGEST
AB 2760, as amended, Tran. False Claims Act: prevailing defendant:
attorney's fees.
Existing law, the False Claims Act, provides that a person who
commits any one of several enumerated acts relating to the submission
to the state or a political subdivision of the state a false claim
for money, property, or services, as specified, shall be liable to
the state or political subdivision for certain damages and may be
liable for a civil penalty. Existing law authorizes the Attorney
General, a prosecuting authority of a political subdivision of the
state, or a qui tam plaintiff to bring a civil action to enforce
these provisions. Existing law authorizes a court to award a
prevailing defendant its reasonable attorney's fees and expenses, as
prescribed.
This bill would require, in a civil action relative to a
claim certain claims arising from a public works
contract, a court to award a prevailing defendant its reasonable
attorney's fees and expenses against the state or a political
subdivision that prosecuted the action. This bill would prohibit,
except as specified, a court from awarding a prev ailing
defendant its reasonable attorney's fees and expenses against a qui
tam plaintiff who proceeded with an action without the
assistance of the Attorney General or local prosecuting authority
.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12652 of the Government Code is amended to
read:
12652. (a) (1) The Attorney General shall diligently investigate
violations under Section 12651 involving state funds. If the Attorney
General finds that a person has violated or is violating Section
12651, the Attorney General may bring a civil action under this
section against that person.
(2) If the Attorney General brings a civil action under this
subdivision on a claim involving political subdivision funds as well
as state funds, the Attorney General shall, on the same date that the
complaint is filed in this action, serve by mail with "return
receipt requested" a copy of the complaint on the appropriate
prosecuting authority.
(3) The prosecuting authority shall have the right to intervene in
an action brought by the Attorney General under this subdivision
within 60 days after receipt of the complaint pursuant to paragraph
(2). The court may permit intervention thereafter upon a showing that
all of the requirements of Section 387 of the Code of Civil
Procedure have been met.
(b) (1) The prosecuting authority of a political subdivision shall
diligently investigate violations under Section 12651 involving
political subdivision funds. If the prosecuting authority finds that
a person has violated or is violating Section 12651, the prosecuting
authority may bring a civil action under this section against that
person.
(2) If the prosecuting authority brings a civil action under this
section on a claim involving state funds as well as political
subdivision funds, the prosecuting authority shall, on the same date
that the complaint is filed in this action, serve a copy of the
complaint on the Attorney General.
(3) Within 60 days after receiving the complaint pursuant to
paragraph (2), the Attorney General shall do either of the following:
(A) Notify the court that it intends to proceed with the action,
in which case the Attorney General shall assume primary
responsibility for conducting the action and the prosecuting
authority shall have the right to continue as a party.
(B) Notify the court that it declines to proceed with the action,
in which case the prosecuting authority shall have the right to
conduct the action.
(c) (1) A person may bring a civil action for a violation of this
article for the person and either for the State of California in the
name of the state, if any state funds are involved, or for a
political subdivision in the name of the political subdivision, if
political subdivision funds are exclusively involved. The person
bringing the action shall be referred to as the qui tam plaintiff.
Once filed, the action may be dismissed only with the written consent
of the court and the Attorney General or prosecuting authority of a
political subdivision, or both, as appropriate under the allegations
of the civil action, taking into account the best interests of the
parties involved and the public purposes behind this act. No claim
for any violation of Section 12651 may be waived or released by any
private person, except if the action is part of a court approved
settlement of a false claim civil action brought under this section.
Nothing in this paragraph shall be construed to limit the ability of
the state or political subdivision to decline to pursue any claim
brought under this section.
(2) A complaint filed by a private person under this subdivision
shall be filed in superior court in camera and may remain under seal
for up to 60 days. No service shall be made on the defendant until
after the complaint is unsealed.
(3) On the same day as the complaint is filed pursuant to
paragraph (2), the qui tam plaintiff shall serve by mail with "return
receipt requested" the Attorney General with a copy of the complaint
and a written disclosure of substantially all material evidence and
information the person possesses.
(4) Within 60 days after receiving a complaint and written
disclosure of material evidence and information alleging violations
that involve state funds but not political subdivision funds, the
Attorney General may elect to intervene and proceed with the action.
(5) The Attorney General may, for good cause shown, move the court
for extensions of the time during which the complaint remains under
seal pursuant to paragraph (2). The motion may be supported by
affidavits or other submissions in camera.
(6) Before the expiration of the 60-day period or any extensions
obtained under paragraph (5), the Attorney General shall do either of
the following:
(A) Notify the court that it intends to proceed with the action,
in which case the action shall be conducted by the Attorney General
and the seal shall be lifted.
(B) Notify the court that it declines to proceed with the action,
in which case the seal shall be lifted and the qui tam plaintiff
shall have the right to conduct the action.
(7) (A) Within 15 days after receiving a complaint alleging
violations that exclusively involve political subdivision funds, the
Attorney General shall forward copies of the complaint and written
disclosure of material evidence and information to the appropriate
prosecuting authority for disposition, and shall notify the qui tam
plaintiff of the transfer.
(B) Within 45 days after the Attorney General forwards the
complaint and written disclosure pursuant to subparagraph (A), the
prosecuting authority may elect to intervene and proceed with the
action.
(C) The prosecuting authority may, for good cause shown, move for
extensions of the time during which the complaint remains under seal.
The motion may be supported by affidavits or other submissions in
camera.
(D) Before the expiration of the 45-day period or any extensions
obtained under subparagraph (C), the prosecuting authority shall do
either of the following:
(i) Notify the court that it intends to proceed with the action,
in which case the action shall be conducted by the prosecuting
authority and the seal shall be lifted.
(ii) Notify the court that it declines to proceed with the action,
in which case the seal shall be lifted and the qui tam plaintiff
shall have the right to conduct the action.
(8) (A) Within 15 days after receiving a complaint alleging
violations that involve both state and political subdivision funds,
the Attorney General shall forward copies of the complaint and
written disclosure to the appropriate prosecuting authority, and
shall coordinate its review and investigation with those of the
prosecuting authority.
(B) Within 60 days after receiving a complaint and written
disclosure of material evidence and information alleging violations
that involve both state and political subdivision funds, the Attorney
General or the prosecuting authority, or both, may elect to
intervene and proceed with the action.
(C) The Attorney General or the prosecuting authority, or both,
may, for good cause shown, move the court for extensions of the time
during which the complaint remains under seal under paragraph (2).
The motion may be supported by affidavits or other submissions in
camera.
(D) Before the expiration of the 60-day period or any extensions
obtained under subparagraph (C), the Attorney General shall do one of
the following:
(i) Notify the court that it intends to proceed with the action,
in which case the action shall be conducted by the Attorney General
and the seal shall be lifted.
(ii) Notify the court that it declines to proceed with the action
but that the prosecuting authority of the political subdivision
involved intends to proceed with the action, in which case the seal
shall be lifted and the action shall be conducted by the prosecuting
authority.
(iii) Notify the court that both it and the prosecuting authority
decline to proceed with the action, in which case the seal shall be
lifted and the qui tam plaintiff shall have the right to conduct the
action.
(E) If the Attorney General proceeds with the action pursuant to
clause (i) of subparagraph (D), the prosecuting authority of the
political subdivision shall be permitted to intervene in the action
within 60 days after the Attorney General notifies the court of its
intentions. The court may authorize intervention thereafter upon a
showing that all the requirements of Section 387 of the Code of Civil
Procedure have been met.
(9) The defendant shall not be required to respond to any
complaint filed under this section until 30 days after the complaint
is unsealed and served upon the defendant pursuant to Section 583.210
of the Code of Civil Procedure.
(10) When a person brings an action under this subdivision, no
other person may bring a related action based on the facts underlying
the pending action.
(d) (1) No court shall have jurisdiction over an action brought
under subdivision (c) against a Member of the State Senate or
Assembly, a member of the state judiciary, an elected official in the
executive branch of the state, or a member of the governing body of
any political subdivision if the action is based on evidence or
information known to the state or political subdivision when the
action was brought.
(2) A person may not bring an action under subdivision (c) that is
based upon allegations or transactions that are the subject of a
civil suit or an administrative civil money penalty proceeding in
which the state or political subdivision is already a party.
(3) (A) No court shall have jurisdiction over an action under this
article based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing, in an
investigation, report, hearing, or audit conducted by or at the
request of the Senate, Assembly, auditor, or governing body of a
political subdivision, or by the news media, unless the action is
brought by the Attorney General or the prosecuting authority of a
political subdivision, or the person bringing the action is an
original source of the information.
(B) For purposes of subparagraph (A), "original source" means an
individual who has direct and independent knowledge of the
information on which the allegations are based, who voluntarily
provided the information to the state or political subdivision before
filing an action based on that information, and whose information
provided the basis or catalyst for the investigation, hearing, audit,
or report that led to the public disclosure as described in
subparagraph (A).
(4) No court shall have jurisdiction over an action brought under
subdivision (c) based upon information discovered by a present or
former employee of the state or a political subdivision during the
course of his or her employment unless that employee first, in good
faith, exhausted existing internal procedures for reporting and
seeking recovery of the falsely claimed sums through official
channels and unless the state or political subdivision failed to act
on the information provided within a reasonable period of time.
(e) (1) If the state or political subdivision proceeds with the
action, it shall have the primary responsibility for prosecuting the
action. The qui tam plaintiff shall have the right to continue as a
full party to the action.
(2) (A) The state or political subdivision may seek to dismiss the
action for good cause notwithstanding the objections of the qui tam
plaintiff if the qui tam plaintiff has been notified by the state or
political subdivision of the filing of the motion and the court has
provided the qui tam plaintiff with an opportunity to oppose the
motion and present evidence at a hearing.
(B) The state or political subdivision may settle the action with
the defendant notwithstanding the objections of the qui tam plaintiff
if the court determines, after a hearing providing the qui tam
plaintiff an opportunity to present evidence, that the proposed
settlement is fair, adequate, and reasonable under all of the
circumstances.
(f) (1) If the state or political subdivision elects not to
proceed, the qui tam plaintiff shall have the same right to conduct
the action as the Attorney General or prosecuting authority would
have had if it had chosen to proceed under subdivision (c). If the
state or political subdivision so requests, and at its expense, the
state or political subdivision shall be served with copies of all
pleadings filed in the action and supplied with copies of all
deposition transcripts.
(2) (A) Upon timely application, the court shall permit the state
or political subdivision to intervene in an action with which it had
initially declined to proceed if the interest of the state or
political subdivision in recovery of the property or funds involved
is not being adequately represented by the qui tam plaintiff.
(B) If the state or political subdivision is allowed to intervene
under paragraph (A), the qui tam plaintiff shall retain principal
responsibility for the action and the recovery of the parties shall
be determined as if the state or political subdivision had elected
not to proceed.
(g) (1) (A) If the Attorney General initiates an action pursuant
to subdivision (a) or assumes control of an action initiated by a
prosecuting authority pursuant to subparagraph (A) of paragraph (3)
of subdivision (b), the office of the Attorney General shall receive
a fixed 33 percent of the proceeds of the action or settlement of the
claim, which shall be used to support its ongoing investigation and
prosecution of false claims.
(B) If a prosecuting authority initiates and conducts an action
pursuant to subdivision (b), the office of the prosecuting authority
shall receive a fixed 33 percent of the proceeds of the action or
settlement of the claim, which shall be used to support its ongoing
investigation and prosecution of false claims.
(C) If a prosecuting authority intervenes in an action initiated
by the Attorney General pursuant to paragraph (3) of subdivision (a)
or remains a party to an action assumed by the Attorney General
pursuant to subparagraph (A) of paragraph (3) of subdivision (b), the
court may award the office of the prosecuting authority a portion of
the Attorney General's fixed 33 percent of the recovery under
subparagraph (A), taking into account the prosecuting authority's
role in investigating and conducting the action.
(2) If the state or political subdivision proceeds with an action
brought by a qui tam plaintiff under subdivision (c), the qui tam
plaintiff shall, subject to paragraphs (4) and (5), receive at least
15 percent but not more than 33 percent of the proceeds of the action
or settlement of the claim, depending upon the extent to which the
qui tam plaintiff substantially contributed to the prosecution of the
action. When it conducts the action, the Attorney General's office
or the office of the prosecuting authority of the political
subdivision shall receive a fixed 33 percent of the proceeds of the
action or settlement of the claim, which shall be used to support its
ongoing investigation and prosecution of false claims made against
the state or political subdivision. When both the Attorney General
and a prosecuting authority are involved in a qui tam action pursuant
to subparagraph (E) of paragraph (8) of subdivision (c), the court
at its discretion may award the prosecuting authority a portion of
the Attorney General's fixed 33 percent of the recovery, taking into
account the prosecuting authority's contribution to investigating and
conducting the action.
(3) If the state or political subdivision does not proceed with an
action under subdivision (c), the qui tam plaintiff shall, subject
to paragraphs (4) and (5), receive an amount that the court decides
is reasonable for collecting the civil penalty and damages on behalf
of the government. The amount shall be not less than 25 percent and
not more than 50 percent of the proceeds of the action or settlement
and shall be paid out of these proceeds.
(4) If the action is one provided for under paragraph (4) of
subdivision (d), the present or former employee of the state or
political subdivision is not entitled to any minimum guaranteed
recovery from the proceeds. The court, however, may award the qui tam
plaintiff those sums from the proceeds as it considers appropriate,
but in no case more than 33 percent of the proceeds if the state or
political subdivision goes forth with the action or 50 percent if the
state or political subdivision declines to go forth, taking into
account the significance of the information, the role of the qui tam
plaintiff in advancing the case to litigation, and the scope of, and
response to, the employee's attempts to report and gain recovery of
the falsely claimed funds through official channels.
(5) If the action is one that the court finds to be based
primarily on information from a present or former employee who
actively participated in the fraudulent activity, the employee is not
entitled to any minimum guaranteed recovery from the proceeds. The
court, however, may award the qui tam plaintiff any sums from the
proceeds that it considers appropriate, but in no case more than 33
percent of the proceeds if the state or political subdivision goes
forth with the action or 50 percent if the state or political
subdivision declines to go forth, taking into account the
significance of the information, the role of the qui tam plaintiff in
advancing the case to litigation, the scope of the present or past
employee's involvement in the fraudulent activity, the employee's
attempts to avoid or resist the activity, and all other circumstances
surrounding the activity.
(6) The portion of the recovery not distributed pursuant to
paragraphs (1) to (5), inclusive, shall revert to the state if the
underlying false claims involved state funds exclusively and to the
political subdivision if the underlying false claims involved
political subdivision funds exclusively. If the violation involved
both state and political subdivision funds, the court shall make an
apportionment between the state and political subdivision based on
their relative share of the funds falsely claimed.
(7) For purposes of this section, "proceeds" include civil
penalties as well as double or treble damages as provided in Section
12651.
(8) If the state, political subdivision, or the qui tam plaintiff
prevails in or settles any action under subdivision (c), the qui tam
plaintiff shall receive an amount for reasonable expenses that the
court finds to have been necessarily incurred, plus reasonable costs
and attorney's fees. All expenses, costs, and fees shall be awarded
against the defendant and under no circumstances shall they be the
responsibility of the state or political subdivision.
(9) If the state, a political subdivision, or the qui tam
plaintiff proceeds with the action, the court may award to the
defendant its reasonable attorney's fees and expenses against the
party that proceeded with the action if the defendant prevails in the
action and the court finds that the claim was clearly frivolous,
clearly vexatious, or brought primarily for purposes of harassment.
(10) If the state, a political subdivision, or the qui tam
plaintiff
(10) Except as provided in paragraph (9), a court shall not award
to the defendant reasonable attorney's fees and expenses against a
qui tam plaintiff who proceeds with the action pursuant to
subdivision (f) if the defendant prevails in the action.
(11) If the state or a political
subdivision proceeds with an action pursuant to
subdivision (c), relative to a claim arising from a public
works contract, as defined by Section 1101 of the Public Contracts
Code, except a claim that pertains to a prevailing wage dispute,
the court shall award to the defendant its reasonable attorney'
s fees and expenses against the party that proceeded with the action
if the defendant prevails in the action.
(h) The court may stay an act of discovery of the person
initiating the action for a period of not more than 60 days if the
Attorney General or local prosecuting authority show that the act of
discovery would interfere with an investigation or a prosecution of a
criminal or civil matter arising out of the same facts, regardless
of whether the Attorney General or local prosecuting authority
proceeds with the action. This showing shall be conducted in camera.
The court may extend the 60-day period upon a further showing in
camera that the Attorney General or local prosecuting authority has
pursued the criminal or civil investigation or proceedings with
reasonable diligence and any proposed discovery in the civil action
will interfere with the ongoing criminal or civil investigation or
proceedings.
(i) Upon a showing by the Attorney General or local prosecuting
authority that unrestricted participation during the course of the
litigation by the person initiating the action would interfere with
or unduly delay the Attorney General's or local prosecuting authority'
s prosecution of the case, or would be repetitious, irrelevant, or
for purposes of harassment, the court may, in its discretion, impose
limitations on the person's participation, including the following:
(1) Limiting the number of witnesses the person may call.
(2) Limiting the length of the testimony of the witnesses.
(3) Limiting the person's cross-examination of witnesses.
(4) Otherwise limiting the participation by the person in the
litigation.
(j) The False Claims Act Fund is hereby created in the State
Treasury. Proceeds from the action or settlement of the claim by the
Attorney General pursuant to this article shall be deposited into
this fund. Moneys in this fund, upon appropriation by the
Legislature, shall be used by the Attorney General to support the
ongoing investigation and prosecution of false claims in furtherance
of this article.
