Bill Text: IL HB6202 | 2011-2012 | 97th General Assembly | Introduced

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Bill Title: Amends the Illinois False Claims Act. Provides that no court has jurisdiction over a civil action relating to or involving a false claim regarding a tax Act administered by the Department unless the action is brought by the Attorney General at the request of the Department. Provides that: the Department has the sole authority to initiate an administrative or judicial action resulting from information provided by a person alleging a false claim, statement, or record pertaining to a tax Act administered by the Department; the Department shall establish a procedure for the reporting of those allegations; the Department shall diligently investigate allegations of a false claim, statement, or record and may bring an action for all applicable taxes, penalties, and interest due under the tax Act; if the Department proceeds with an administrative or judicial action based on information brought to its attention by a private person, that person shall receive an award, subject to specified limits, from the action or from a settlement in response to that action, taking into account the significance of the person's information and the role of the person and a legal representative of the person in contributing to the action; an award may not be issued if the information resulting in the initiation of the action was originally provided by the person alleging the false claim; if the Department determines that the claim for award is brought by a person who planned and initiated the actions that led to the false claim and a resulting underpayment of tax for the purpose of bringing an action, the Department may appropriately reduce the award; and a determination of the Department regarding an award may be appealed to the Court of Claims within 30 days of the determination.

Spectrum: Bipartisan Bill

Status: (Failed) 2013-01-08 - Session Sine Die [HB6202 Detail]

Download: Illinois-2011-HB6202-Introduced.html

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97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 HB6202 Introduced , by Rep. Michael J. Zalewski SYNOPSIS AS INTRODUCED:
740 ILCS 175/4 from Ch. 127, par. 4104
740 ILCS 175/4.5 new
Amends the Illinois False Claims Act. Provides that no court has jurisdiction over a civil action relating to or involving a false claim regarding a tax Act administered by the Department unless the action is brought by the Attorney General at the request of the Department. Provides that: the Department has the sole authority to initiate an administrative or judicial action resulting from information provided by a person alleging a false claim, statement, or record pertaining to a tax Act administered by the Department; the Department shall establish a procedure for the reporting of those allegations; the Department shall diligently investigate allegations of a false claim, statement, or record and may bring an action for all applicable taxes, penalties, and interest due under the tax Act; if the Department proceeds with an administrative or judicial action based on information brought to its attention by a private person, that person shall receive an award, subject to specified limits, from the action or from a settlement in response to that action, taking into account the significance of the person's information and the role of the person and a legal representative of the person in contributing to the action; an award may not be issued if the information resulting in the initiation of the action was originally provided by the person alleging the false claim; if the Department determines that the claim for award is brought by a person who planned and initiated the actions that led to the false claim and a resulting underpayment of tax for the purpose of bringing an action, the Department may appropriately reduce the award; and a determination of the Department regarding an award may be appealed to the Court of Claims within 30 days of the determination.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning civil law.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois False Claims Act is amended by
changing Section 4 and by adding Section 4.5 as follows:
(740 ILCS 175/4) (from Ch. 127, par. 4104)
Sec. 4. Civil actions for false claims.
(a) Responsibilities of the Attorney General and the
Department of State Police. The Attorney General or the
Department of State Police shall diligently investigate a civil
violation under Section 3. If the Attorney General finds that a
person violated or is violating Section 3, the Attorney General
may bring a civil action under this Section against the person.
The State shall receive an amount for reasonable expenses
that the court finds to have been necessarily incurred by the
Attorney General, including reasonable attorneys' fees and
costs. All such expenses, fees, and costs shall be awarded
against the defendant. The court may award amounts from the
proceeds of an action or settlement that it considers
appropriate to any governmental entity or program that has been
adversely affected by a defendant. The Attorney General, if
necessary, shall direct the State Treasurer to make a
disbursement of funds as provided in court orders or settlement

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agreements.
(b) Actions by private persons.
(1) A person may bring a civil action for a violation
of Section 3 for the person and for the State. The action
shall be brought in the name of the State. The action may
be dismissed only if the court and the Attorney General
give written consent to the dismissal and their reasons for
consenting.
(2) A copy of the complaint and written disclosure of
substantially all material evidence and information the
person possesses shall be served on the State. The
complaint shall be filed in camera, shall remain under seal
for at least 60 days, and shall not be served on the
defendant until the court so orders. The State may elect to
intervene and proceed with the action within 60 days after
it receives both the complaint and the material evidence
and information.
(3) The State may, for good cause shown, move the court
for extensions of the time during which the complaint
remains under seal under paragraph (2). Any such motions
may be supported by affidavits or other submissions in
camera. The defendant shall not be required to respond to
any complaint filed under this Section until 20 days after
the complaint is unsealed and served upon the defendant.
(4) Before the expiration of the 60-day period or any
extensions obtained under paragraph (3), the State shall:

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(A) proceed with the action, in which case the
action shall be conducted by the State; or
(B) notify the court that it declines to take over
the action, in which case the person bringing the
action shall have the right to conduct the action.
(5) When a person brings an action under this
subsection (b), no person other than the State may
intervene or bring a related action based on the facts
underlying the pending action.
(c) Rights of the parties to Qui Tam actions.
(1) If the State proceeds with the action, it shall
have the primary responsibility for prosecuting the
action, and shall not be bound by an act of the person
bringing the action. Such person shall have the right to
continue as a party to the action, subject to the
limitations set forth in paragraph (2).
(2)(A) The State may dismiss the action
notwithstanding the objections of the person initiating
the action if the person has been notified by the State of
the filing of the motion and the court has provided the
person with an opportunity for a hearing on the motion.
(B) The State may settle the action with the defendant
notwithstanding the objections of the person initiating
the action if the court determines, after a hearing, that
the proposed settlement is fair, adequate, and reasonable
under all the circumstances. Upon a showing of good cause,

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such hearing may be held in camera.
(C) Upon a showing by the State that unrestricted
participation during the course of the litigation by the
person initiating the action would interfere with or unduly
delay the State'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, such as:
(i) limiting the number of witnesses the person may
call:
(ii) limiting the length of the testimony of such
witnesses;
(iii) limiting the person's cross-examination of
witnesses; or
(iv) otherwise limiting the participation by the
person in the litigation.
(D) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the
person initiating the action would be for purposes of
harassment or would cause the defendant undue burden or
unnecessary expense, the court may limit the participation
by the person in the litigation.
(3) If the State elects not to proceed with the action,
the person who initiated the action shall have the right to
conduct the action. If the State so requests, it shall be
served with copies of all pleadings filed in the action and

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shall be supplied with copies of all deposition transcripts
(at the State's expense). When a person proceeds with the
action, the court, without limiting the status and rights
of the person initiating the action, may nevertheless
permit the State to intervene at a later date upon a
showing of good cause.
(4) Whether or not the State proceeds with the action,
upon a showing by the State that certain actions of
discovery by the person initiating the action would
interfere with the State's investigation or prosecution of
a criminal or civil matter arising out of the same facts,
the court may stay such discovery for a period of not more
than 60 days. Such a showing shall be conducted in camera.
The court may extend the 60-day period upon a further
showing in camera that the State 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.
(5) Notwithstanding subsection (b), the State may
elect to pursue its claim through any alternate remedy
available to the State, including any administrative
proceeding to determine a civil money penalty. If any such
alternate remedy is pursued in another proceeding, the
person initiating the action shall have the same rights in
such proceeding as such person would have had if the action

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had continued under this Section. Any finding of fact or
conclusion of law made in such other proceeding that has
become final shall be conclusive on all parties to an
action under this Section. For purposes of the preceding
sentence, a finding or conclusion is final if it has been
finally determined on appeal to the appropriate court, if
all time for filing such an appeal with respect to the
finding or conclusion has expired, or if the finding or
conclusion is not subject to judicial review.
(d) Award to Qui Tam plaintiff.
(1) If the State proceeds with an action brought by a
person under subsection (b), such person shall, subject to
the second sentence of this paragraph, receive at least 15%
but not more than 25% of the proceeds of the action or
settlement of the claim, depending upon the extent to which
the person substantially contributed to the prosecution of
the action. Where the action is one which the court finds
to be based primarily on disclosures of specific
information (other than information provided by the person
bringing the action) relating to allegations or
transactions in a criminal, civil, or administrative
hearing, in a legislative, administrative, or Auditor
General's report, hearing, audit, or investigation, or
from the news media, the court may award such sums as it
considers appropriate, but in no case more than 10% of the
proceeds, taking into account the significance of the

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information and the role of the person bringing the action
in advancing the case to litigation. Any payment to a
person under the first or second sentence of this paragraph
(1) shall be made from the proceeds. Any such person shall
also receive an amount for reasonable expenses which the
court finds to have been necessarily incurred, plus
reasonable attorneys' fees and costs. The State shall also
receive an amount for reasonable expenses which the court
finds to have been necessarily incurred by the Attorney
General, including reasonable attorneys' fees and costs.
All such expenses, fees, and costs shall be awarded against
the defendant. The court may award amounts from the
proceeds of an action or settlement that it considers
appropriate to any governmental entity or program that has
been adversely affected by a defendant. The Attorney
General, if necessary, shall direct the State Treasurer to
make a disbursement of funds as provided in court orders or
settlement agreements.
(2) If the State does not proceed with an action under
this Section, the person bringing the action or settling
the claim shall receive an amount which the court decides
is reasonable for collecting the civil penalty and damages.
The amount shall be not less than 25% and not more than 30%
of the proceeds of the action or settlement and shall be
paid out of such proceeds. Such person shall also receive
an amount for reasonable expenses which the court finds to

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have been necessarily incurred, plus reasonable attorneys'
fees and costs. All such expenses, fees, and costs shall be
awarded against the defendant. The court may award amounts
from the proceeds of an action or settlement that it
considers appropriate to any governmental entity or
program that has been adversely affected by a defendant.
The Attorney General, if necessary, shall direct the State
Treasurer to make a disbursement of funds as provided in
court orders or settlement agreements.
(3) Whether or not the State proceeds with the action,
if the court finds that the action was brought by a person
who planned and initiated the violation of Section 3 upon
which the action was brought, then the court may, to the
extent the court considers appropriate, reduce the share of
the proceeds of the action which the person would otherwise
receive under paragraph (1) or (2) of this subsection (d),
taking into account the role of that person in advancing
the case to litigation and any relevant circumstances
pertaining to the violation. If the person bringing the
action is convicted of criminal conduct arising from his or
her role in the violation of Section 3, that person shall
be dismissed from the civil action and shall not receive
any share of the proceeds of the action. Such dismissal
shall not prejudice the right of the State to continue the
action, represented by the Attorney General.
(4) If the State does not proceed with the action and

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the person bringing the action conducts the action, the
court may award to the defendant its reasonable attorneys'
fees and expenses if the defendant prevails in the action
and the court finds that the claim of the person bringing
the action was clearly frivolous, clearly vexatious, or
brought primarily for purposes of harassment.
(e) Certain actions barred.
(1) No court shall have jurisdiction over an action
brought by a former or present member of the Guard under
subsection (b) of this Section against a member of the
Guard arising out of such person's service in the Guard.
(2)(A) No court shall have jurisdiction over an action
brought under subsection (b) against a member of the
General Assembly, a member of the judiciary, or an exempt
official if the action is based on evidence or information
known to the State when the action was brought.
(B) For purposes of this paragraph (2), "exempt
official" means any of the following officials in State
service: directors of departments established under the
Civil Administrative Code of Illinois, the Adjutant
General, the Assistant Adjutant General, the Director of
the State Emergency Services and Disaster Agency, members
of the boards and commissions, and all other positions
appointed by the Governor by and with the consent of the
Senate.
(3) In no event may a person bring an action under

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subsection (b) which is based upon allegations or
transactions which are the subject of a civil suit or an
administrative civil money penalty proceeding in which the
State is already a party.
(4)(A) No court shall have jurisdiction over an action
under this Section based upon the public disclosure of
allegations or transactions in a criminal, civil, or
administrative hearing, in a legislative, administrative,
or Auditor General's report, hearing, audit, or
investigation, or from the news media, unless the action is
brought by the Attorney General or the person bringing the
action is an original source of the information.
(B) For purposes of this paragraph (4), "original
source" means an individual who has direct and independent
knowledge of the information on which the allegations are
based and has voluntarily provided the information to the
State before filing an action under this Section which is
based on the information.
(5) No court shall have jurisdiction over a civil
action brought under subsection (b) that relates to or
involves a false claim regarding a tax Act administered by
the Department of Revenue unless the action is brought by
the Attorney General at the request of the Department of
Revenue pursuant to Section 4.5 of this Act.
(f) State not liable for certain expenses. The State is not
liable for expenses which a person incurs in bringing an action

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under this Section.
(g) Relief from retaliatory actions.
(1) In general, any employee, contractor, or agent is
entitled to all relief necessary to make that employee,
contractor, or agent whole, if that employee, contractor,
or agent is discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in
the terms and conditions of employment because of lawful
acts done by the employee, contractor, or agent on behalf
of the employee, contractor, or agent or associated others
in furtherance of other efforts to stop one or more
violations of this Act.
(2) Relief under paragraph (1) shall include
reinstatement with the seniority status that the employee,
contractor, or agent would have had but for the
discrimination, 2 times the amount of back pay, interest on
the back pay, and compensation for any special damages
sustained as a result of the discrimination, including
litigation costs and reasonable attorneys' fees. An action
under this subsection (g) may be brought in the appropriate
circuit court for the relief provided in this subsection
(g).
(Source: P.A. 96-1304, eff. 7-27-10.)
(740 ILCS 175/4.5 new)
Sec. 4.5. Actions for false claims relating to tax Acts

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administered by the Department of Revenue.
(a) The Department of Revenue shall have the sole authority
to initiate an administrative or judicial action resulting from
information provided by any person alleging a false claim,
statement, or record, as set forth in Section 3 of this Act,
pertaining to any tax Act administered by the Department of
Revenue.
(b) The Department of Revenue shall establish, by rule, a
procedure for the reporting of any allegation of a false claim,
statement, or record to the Department.
(c) The Department of Revenue shall diligently investigate
all allegations of a false claim, statement, or record and may
bring an action under this Act for all applicable taxes,
penalties, and interest it determines is due under the
appropriate tax Act.
(d) If the Department of Revenue proceeds with an
administrative or judicial action based on information brought
to its attention by a private person, that person shall,
subject to subsection (e), receive as an award an amount equal
to at least 15% but not more than 30% of the collected proceeds
(including any additional penalties and interest that may be
assessed on the underlying liability) from the action or from
any settlement in response to that action, taking into account
the significance of the person's information and the role of
the person and any legal representative of the person in
contributing to the action.

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(e) In the event the action is one which the Department of
Revenue determines to be based principally on disclosures of
specific allegations resulting from a judicial or
administrative hearing, from a governmental report, hearing,
audit, or investigation, or from the news media, the Department
may award such sums as it considers appropriate, but in no case
may it award more than 10% of the collected proceeds (including
all penalties and interest) resulting from the action or from
any settlement in response to the action, taking into account
the significance of the person's information and the role of
the person and any legal representative of the person in
contributing to the action.
(f) No award shall be issued if the information resulting
in the initiation of the action was originally provided by the
person alleging the false claim.
(g) If the Department of Revenue determines that the claim
for award is brought by a person who planned and initiated the
actions that led to the false claim and any resulting
underpayment of tax for the purpose of bringing an action under
this Act, the Department may appropriately reduce the award.
(h) Any determination of the Department of Revenue
regarding an award under this Section may be appealed to the
Court of Claims within 30 days of the determination.