Bill Text: MS HB1436 | 2013 | Regular Session | Introduced
Bill Title: Fraud; create procedure to recover false tax claims and other claims.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2013-02-05 - Died In Committee [HB1436 Detail]
Download: Mississippi-2013-HB1436-Introduced.html
MISSISSIPPI LEGISLATURE
2013 Regular Session
To: Judiciary B
By: Representative Moak
House Bill 1436
AN ACT TO PROHIBIT FALSE CLAIMS AGAINST GOVERNMENT ENTITIES; TO PROHIBIT FALSE TAX CLAIMS; TO PROVIDE REMEDIES FOR SUCH CLAIMS; TO AUTHORIZE THE ATTORNEY GENERAL OR ATTORNEYS OF LOCAL GOVERNMENTS TO INVESTIGATE REPORTS AND FILE ACTIONS UNDER THIS ACT; TO AUTHORIZE QUI TAM ACTIONS UNDER THIS ACT; TO AUTHORIZE THE ATTORNEY GENERAL TO CONVERT QUI TAM ACTIONS INTO ENFORCEMENT ACTIONS; TO BRING FORWARD SECTIONS 25-9-171, 25-9-172, 25-9-173, 25-9-175 AND 25-9-177, MISSISSIPPI CODE OF 1972, FOR PURPOSES OF AMENDMENT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) Subject to the provisions of subsection (2) of this section, any person who:
(a) Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval;
(b) Knowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim;
(c) Conspires to commit a violation of paragraph (a), (b), (d), (e), (f) or (g) of this subsection;
(d) Has possession, custody or control of property or money used, or to be used, by the state or a local government and knowingly delivers, or causes to be delivered, less than all of that money or property;
(e) Is authorized to make or deliver a document certifying receipt of property used or to be used, by the state or a local government and, intending to defraud the state or a local government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
(f) Knowingly buys or receives as a pledge of an obligation or debt, public property from an officer or employee of the state or a local government knowing that the officer or employee violates a provision of law when selling or pledging such property; or
(g) Knowingly makes, uses or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the state or a local government shall be liable to the state or a local government, as applicable, for a civil penalty of not less than Six Thousand Dollars ($6,000.00) and not more than Twelve Thousand Dollars ($12,000.00), plus three (3) times the amount of all damages, including consequential damages, which the state or local government sustains because of the act of that person.
(2) The court may assess not more than two (2) times the amount of damages sustained because of the act of the person described in subsection (1) of this section, if the court finds that:
(a) The person committing the violation of this section had furnished all information known to such person about the violation, to those officials responsible or investigating false claims violations on behalf of the state and any local government that sustained damages, within thirty (30) days after the date on which such person first obtained the information;
(b) Such person fully cooperated with any government investigation of such violation; and
(c) At the time such person furnished information about the violation, no criminal prosecution, civil action, or administrative action had commenced with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation.
(3) A person who violates this section shall also be liable for the costs, including attorney's fees, of a civil action brought to recover any such penalty or damages.
(4) (a) This section shall apply to claims, records, or statements made under the tax law only if (i) the net income or sales of the person against whom the action is brought equals or exceeds One Million Dollars ($1,000,000.00) for any taxable year subject to any action brought pursuant to this act; and (ii) the damages pleaded in such action exceed Three Hundred Fifty Thousand Dollars ($350,000.00).
(b) The Attorney General shall consult with the Commissioner of Revenue prior to filing or intervening in any action under this act that is based on the filing of false claims, records or statements made under the tax law. If the state declines to participate or to authorize participation by a local government in such an action pursuant to subsection (2) of Section 2 of this act, the qui tam plaintiff must obtain approval from the Attorney General before making any motion to compel the Department of Revenue to disclose tax records.
SECTION 2. (1) The Attorney General shall have the authority to investigate violations under Section 1 of this act. If the Attorney General believes that a person has violated or is violating such section, then the Attorney General may bring a civil action on behalf of the people of the State of Mississippi or on behalf of a local government against such person. A local government also shall have the authority to investigate violations that may have resulted in damages to such local government under Section 1 of this act, and may bring a civil action on its own behalf, or on behalf of any subsection of such local government, to recover damages sustained by such local government as a result of such violations. No action may be filed pursuant to this subsection against the federal government, the state or a local government, or any officer or employee thereof acting in his or her official capacity.
(2) (a) Any person may bring a qui tam civil action for a violation of Section 1 of this act on behalf of the person and the people of the State of Mississippi or a local government. No action may be filed pursuant to this subsection against the federal government, the state or a local government, or any officer or employee thereof acting in his or her official capacity. Any activity by a former government employee in connection with the securing of rights, protections or benefits related to preparing or filing an action under this act shall not be deemed to be an appearance or practice before any agency.
(b) A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the state. Any complaint filed in a court of the State of Mississippi shall be filed in Supreme Court in camera, shall remain under seal for at least sixty (60) days, and shall not be served on the defendant until the court so orders. The seal shall not preclude the Attorney General, a local government or the qui tam plaintiff from serving the complaint, any other pleadings or the written disclosure of substantially all material evidence and information possessed by the person bringing the action, on relevant state or local government agencies or on law enforcement authorities of the state, a local government or other jurisdictions, so that the actions may be investigated or prosecuted, except that such seal applies to the agencies or authorities so served to the same extent as the seal applies to other parties in the action.
If the allegations in the complaint allege a violation of Section 1 of this act involving damages to a local government, then the Attorney General may at any time provide a copy of such complaint and written disclosure to the attorney for such local government. The state may elect to supersede or intervene and proceed with the action or to authorize a local government that may have sustained damages to supersede or intervene, within sixty (60) days after it receives both the complaint and the material evidence and information. The Attorney General may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal under this subsection. Any such motions may be supported by affidavits or other submissions in camera.
(c) Prior to the expiration of the sixty (60) day period or any extensions obtained under paragraph (b) of this subsection, the Attorney General shall notify the court that he or she:
(i) Intends to file a complaint against the defendant on behalf of the people of the State of Mississippi or a local government and thereby be substituted as the plaintiff in the action and convert the action in all respects from a qui tam civil action brought by a private person into a civil enforcement action by the Attorney General under subsection (1) of this section;
(ii) Intends to intervene in such action, as of right, so as to aid and assist the plaintiff in the action; or
(iii) If the action involves damages sustained by a local government, intends to grant the local government permission to: file and serve a complaint against the defendant, and thereby be substituted as the plaintiff in the action and convert the action in all respects from a qui tam civil action brought by a private person into a civil enforcement action by the local government under subsection (1) of this section; or intervene in such action, as of right, so as to aid and assist the plaintiff in the action.
The Attorney General shall provide the local government with a copy of any such notification at the same time the court is notified.
(d) If the state notifies the court that it intends to file a complaint against the defendant and thereby be substituted as the plaintiff in the action or to permit a local government to do so, such complaint must be filed within thirty (30) days after the notification to the court. For statute of limitations purposes, any such complaint filed by the state or a local government shall relate back to the filing date of the complaint of the qui tam plaintiff, to the extent that the cause of action of the state or local government arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of the qui tam plaintiff.
(e) If the state notifies the court that it intends to intervene in the action, or to permit a local government to do so, then such motion for intervention shall be filed within thirty (30) days after the notification to the court.
(f) If the state declines to participate in the action or to authorize participation by a local government, the qui tam action may proceed subject to judicial review under this section, the civil practice law and rules, and other applicable law. The qui tam plaintiff shall provide the state or any applicable local government with a copy of any document filed with the court on or about the date it is filed, or any order issued by the court on or about the date it is issued. A qui tam plaintiff shall notify the state or any applicable local government within five (5) business days of any decision, order or verdict resulting in judgment in favor of the state or local government.
(3) If the state decides to participate in a qui tam
action or to authorize the participation of a local government, the court shall order that the qui tam complaint be unsealed and served at the time of the filing of the complaint or intervention motion by the state or local government. After the complaint is unsealed, or if a complaint is filed by the state or a local government pursuant to subsection (1) of this section, the defendant shall be served with the complaint and summons pursuant to the Mississippi Rules of Civil Procedure. A copy of any complaint which alleges that damages were sustained by a local government shall also be served on such local government. The defendant shall be required to respond to the summons and complaint within the time allotted under the Mississippi Rules of Civil Procedure.
(4) When a person brings a qui tam action under this
section, no person other than the Attorney General or a local
government attorney acting pursuant to subsection (1) of this section or paragraph (b) of subsection (2) of this section, may intervene or bring a related civil action based upon the facts underlying the pending action, unless such other person has first obtained the permission of the Attorney General to intervene or to bring such related action; provided, however, that nothing in this subsection shall be deemed to deny persons the right, upon leave of court, to file briefs amicus curiae.
(5) (a) If the Attorney General elects to convert the qui tam civil action into an enforcement action, then the state shall have the primary responsibility for prosecuting the action. If the Attorney General elects to intervene in the qui tam civil action, then the state and the person who commenced the action and any local government which sustained damages and intervenes in the action shall share primary responsibility for prosecuting the action. If the Attorney General elects to permit a local government to convert the action into a civil enforcement action, then the local government shall have primary responsibility for investigating and prosecuting the action. If the action involves damages to a local government but not the state, and the local government intervenes in the qui tam civil action, then the local
government and the person who commenced the action shall share primary responsibility for prosecuting the action. Under no circumstances shall the state or a local government be bound by an act of the person bringing the original action. Such person shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (b) of this subsection. Under no circumstances shall the state be bound by the act of a local government that intervenes in an action involving damages to the state. If neither the Attorney General nor a local government intervenes in the qui tam action then the qui tam plaintiff shall have the responsibility for prosecuting the action, subject to the Attorney General's right to intervene at a later date upon a showing of good cause.
(b) (i) The state may move to dismiss the action notwithstanding the objections of the person initiating the action if the person has been served with the motion to dismiss and the court has provided the person with an opportunity to be heard on the motion. If the action involves damages to both the state and a local government, then the state shall consult with such local government before moving to dismiss the action. If the action involves damages sustained by a local government but not the state, then the local government may move to dismiss the action
notwithstanding the objections of the person initiating the action if the person has been served with the motion to dismiss and the court has provided the person with an opportunity to be heard on the motion.
(ii) The state or a local government may settle the action with the defendant notwithstanding the objections of the person initiating the action if the court determines, after an opportunity to be heard, that the proposed settlement is fair, adequate and reasonable with respect to all parties under all the circumstances. Upon a showing of good cause, such opportunity to be heard may be held in camera.
(iii) Upon a showing by the Attorney General or a local government that the original plaintiff's unrestricted participation during the course of the litigation would interfere with or unduly delay the prosecution of the case, or would be repetitious or irrelevant, or upon a showing by the defendant that the original qui tam plaintiff's unrestricted participation during the course of the litigation would be for purposes of harassment or would cause the defendant undue burden, the court may, in its discretion, impose limitations on the original plaintiff's participation in the case, such as:
1. Limiting the number of witnesses the person may call;
2. Limiting the length of the testimony of such witnesses;
3. Limiting the person's cross-examination of witnesses; or
4. Otherwise limiting the participation by the person in the litigation.
(c) Notwithstanding any other provision of law, whether or not the Attorney General or a local government elects to supersede or intervene in a qui tam civil action, the Attorney General and such local government may elect to pursue any remedy available with respect to the criminal or civil prosecution of the presentation of false claims, including any administrative proceeding to determine a civil money penalty. If any such alternate civil 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 had continued under this section.
(d) Notwithstanding any other provision of law, whether or not the Attorney General elects to supersede or intervene in a qui tam civil action, or to permit a local government to supersede or intervene in the qui tam civil action, upon a showing by the state or local government that certain actions of discovery by the person initiating the action would interfere with the state's or a local government'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 sixty (60) days. Such a showing shall be conducted in camera. The court may extend the period of such stay upon a further showing in camera that the state or a local government 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.
(6) (a) If the Attorney General elects to convert the qui tam civil action into an enforcement action, or to permit a local government to convert the action into a civil enforcement action by such local government, or if the Attorney General or a local government elects to intervene in the qui tam civil action, then the person or persons who initiated the qui tam civil action collectively shall be entitled to receive between fifteen percent (15%) and twenty-five percent (25%) of the proceeds recovered in the action or in settlement of the action. The court shall determine the percentage of the proceeds to which a person commencing a qui tam civil action is entitled, by considering the extent to which the plaintiff substantially contributed to the prosecution of the action. Where the court finds that the action was 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 or administrative 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 ten percent (10%) of the proceeds, taking into account the significance of the information and the role of the person or persons bringing the action in advancing the case to litigation.
(b) If the Attorney General or a local government does not elect to intervene or convert the action, and the action is successful, then the person or persons who initiated the qui tam action which obtains proceeds shall be entitled to receive between twenty-five percent (25%) and thirty percent (30%) of the proceeds recovered in the action or settlement of the action. The court shall determine the percentage of the proceeds to which a person commencing a qui tam civil action is entitled, by considering the extent to which the plaintiff substantially contributed to the prosecution of the action.
(c) With the exception of a court award of costs, expenses or attorney's fees, any payment to a person pursuant to this paragraph shall be made from the proceeds.
(7) In any action brought pursuant to this act, the court may award the Attorney General, on behalf of the people of the State of Mississippi, and any local government that participates as a party in the action, and any person who is a qui tam plaintiff, an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorney's fees, plus costs. All such expenses, fees and costs shall be awarded directly against the defendant and shall not be charged from the proceeds, but shall only be awarded if the state or a local government or the qui tam civil action plaintiff prevails in the action.
(8) If the court finds that the qui tam civil action was brought by a person who planned or initiated the violation of Section 1 of this act 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 be entitled to receive under subsection (6) of this section, taking into account the role of such person in advancing
the case to litigation and any relevant circumstances pertaining to the violation. If the person bringing the qui tam civil action is convicted of criminal conduct arising from his or her role in the violation of Section 1 of this act, that person shall be dismissed from the qui tam civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the Attorney General to supersede or intervene in such action and to civilly prosecute the same on behalf of the state or a local government.
(9) (a) The court shall dismiss a qui tam action under this act if:
(i) It is based on allegations or transactions which are the subject of a pending civil action or an administrative action in which the state or a local government is already a party;
(ii) The state or local government has reached a binding settlement or other agreement with the person who violated Section 1 of this act resolving the matter and such agreement has
been approved in writing by the Attorney General or by the applicable local government attorney; or
(iii) It is against a member of the Legislature, a member of the judiciary or a senior executive branch official if the action is based on evidence or information known to the state when the action was brought.
(b) The court shall dismiss a qui tam action under this act, unless opposed by the state or an applicable local government, or unless the qui tam plaintiff is an original source of the information, if substantially the same allegations or transactions as alleged in the action were publicly disclosed:
(i) In a state or local government criminal, civil or administrative hearing in which the state or a local government or its agent is a party;
(ii) In a federal, state or local government report, hearing, audit or investigation that is made on the public record or disseminated broadly to the general public; provided that such information shall not be deemed "publicly disclosed" in a report or investigation because it was disclosed or provided pursuant to any other federal, state or local law, rule or program enabling the public to request, receive or view documents or information in the possession of public officials or public agencies;
(iii) In the news media, provided that such allegations or transactions are not "publicly disclosed" in the "news media" merely because information of allegations or transactions have been posted on the internet or on a computer network.
(10) Neither the state nor any local government shall be
liable for any expenses which any person incurs in bringing a qui tam civil action under this article.
SECTION 3. Section 25-9-171, Mississippi Code of 1972, is brought forward as follows:
25-9-171. For purposes of Sections 25-9-171 through
25-9-177, the following terms shall have the meanings ascribed to them herein:
(a) "Abuse" means acting in an arbitrary and capricious manner that adversely affects the accomplishment of a function of any governmental entity.
(b) "Governmental entity" means a board, commission, department, office or other agency of the state or a political subsection of the state.
(c) "Employee" means any individual employed or holding office in any department or agency of state or local government.
(d) "Improper governmental action" means any action by an employee which is undertaken in the performance of the employee's official duties, whether or not the action is within the scope of the employee's employment:
(i) Which is in violation of any federal or state law or regulation, is an abuse of authority, results in substantial abuse, misuse, destruction, waste, or loss of public funds or public resources; or
(ii) Which is of substantial and specific danger to the public health or safety; or
(iii) Which is discrimination based on race or gender.
"Improper governmental action" does not include personnel actions for which other remedies exist, including, but not limited to, employee grievances, complaints, appointments, promotions, transfers, assignments, reassignments, reinstatements, restorations, reemployments, performance evaluations, reductions in pay, dismissals, suspensions, demotions, violations of the state personnel system or local personnel policies, alleged labor agreement violations, reprimands, claims of discriminatory treatment, or any personnel action which may be taken under federal or state law.
(e) "Misuse" means an illegal or unauthorized use.
(f) "Personnel action" means an action that affects an employee's promotion, demotion, transfer, work assignment or performance evaluation.
(g) "State investigative body" shall mean the Attorney General of the State of Mississippi, the State Auditor, the Mississippi Ethics Commission, the Joint Legislative Committee on Performance Evaluation and Expenditure Review or any other standing committee of the Legislature, or any district attorney of the State of Mississippi.
(h) "Use of official authority or influence" includes taking, directing others to take, recommending, processing or approving any personnel action such as an appointment, promotion, transfer, assignment, reassignment, reinstatement, restoration, reemployment, performance evaluation or other disciplinary action.
(i) "Waste" means an unnecessary or unreasonable expenditure or use.
(j) "Whistleblower" means an employee who in good faith reports an alleged improper governmental action to a state investigative body, initiating an investigation. For purposes of the provisions of Sections 25-9-171 through 25-7-177, the term "whistleblower" also means an employee who in good faith provides information to a state investigative body, or an employee who is believed to have reported alleged improper governmental action to a state investigative body or to have provided information to a state investigative body but who, in fact, has not reported such action or provided such information.
SECTION 4. Section 25-9-172, Mississippi Code of 1972, is brought forward as follows:
25-9-172. (1) Upon receipt of a signed written complaint of alleged improper governmental action, a state investigative body shall keep a record of the complaint and shall have the authority to investigate the complaint in accordance with its powers and duties provided by the laws of the State of Mississippi.
(2) Each state investigative body shall develop and maintain a standard form for use by the whistleblower when reporting alleged improper governmental action. Such form shall require as a minimum the name, address and telephone number of the whistleblower, and a description of the alleged improper governmental action.
(3) If any state investigative body receives a complaint that contains allegations outside its expertise, then the state investigative body may refer the complaint to another state investigative body unless contrary to the laws of the State of Mississippi.
(4) In any case to which this section applies, the identity of the whistleblower shall be kept confidential unless the state investigative body determines that the information has been provided other than in good faith, or unless the confidentiality requirement conflicts with Article 1, Chapter 4 of this title, Mississippi Code of 1972.
SECTION 5. Section 25-9-173, Mississippi Code of 1972, is brought forward as follows:
25-9-173. (1) No agency shall dismiss or otherwise adversely affect the compensation or employment status of any public employee because the public employee testified or provided information to a state investigative body whether or not the testimony or information is provided under oath.
(2) Any person who is a whistleblower, as defined in Section 25-9-171, and who as a result of being a whistleblower has been subjected to workplace reprisal or retaliatory action, is entitled to the remedies provided under Section 25-9-175. For the purpose of this section, "reprisal or retaliatory action" means, but is not limited to:
(a) Unwarranted and unsubstantiated letters of reprimand or unsatisfactory performance evaluations;
(b) Demotion;
(c) Reduction in pay;
(d) Denial of promotion;
(e) Suspension;
(f) Dismissal; and
(g) Denial of employment.
(3) An employee who has filed a valid whistleblower complaint may not recover the damages and other remedies provided under Section 25-9-175 unless the dismissal or adverse action taken against him was the direct result of providing information to a state investigative body.
(4) Nothing in this section prohibits a governmental entity from making any decision exercising its authority to terminate, suspend or discipline an employee who engages in workplace reprisal or retaliatory action against a whistleblower.
(5) A governmental entity is not precluded from taking any action in accordance with established personnel policies against an employee who knowingly and intentionally provides false information to a state investigative body.
SECTION 6. Section 25-9-175, Mississippi Code of 1972, is brought forward as follows:
25-9-175. Any agency which violates the provisions of Section 25-9-173 shall be liable to the public employee for back pay and reinstatement. In addition, an employee whose employment is suspended or terminated or who is subjected to adverse personnel action in violation of Section 25-9-173 is entitled to sue for injunctive relief, compensatory damages, court costs and reasonable attorney's fees; provided, however, that an employee may not recover an amount that exceeds the limitations provided in Section 11-46-15. Additionally, each member of any agency's governing board or authority may be found individually liable for a civil fine of up to Ten Thousand Dollars ($10,000.00) for each violation of Section 25-9-173. In any instance where the agency in violation of Section 25-9-173 has no governing board or authority, the agency's executive director may be found individually liable for a civil fine not to exceed Ten Thousand Dollars ($10,000.00). If the court determines that any action filed under this section by an employee is frivolous and unwarrantable, the court may award to the employer court costs and reasonable expenses, including attorney's fees, incurred in defense of actions brought by the employee under this section.
SECTION 7. Section 25-9-177, Mississippi Code of 1972, is brought forward as follows:
25-9-177. Actions to recover civil fines and other remedies provided for under Section 25-9-175 may be instituted in the Circuit Court for the First Judicial District of Hinds County or in the circuit court of the public employee's residence. In such actions, the public employee shall prove by a preponderance of the evidence that, but for his providing information or testimony to a state investigative body prior to occurrence of the dismissal or any adverse action, his dismissal or any adverse action taken against him would not have occurred. Remedies provided for herein shall be supplemental to any other remedies, judicial or administrative, provided for under law. Any administrative remedies provided for state-service employees under Sections
25-9-127 through 25-9-131, Mississippi Code of 1972, or any remedies under a grievance or appeal process of the employing governmental entity relating to suspension or termination of employment or adverse personnel action, shall not be exhausted or diminished as a result of any action taken by the employee under Section 25-9-175 and this section, and the employee shall be required to exhaust such remedies prior to instituting an action authorized under Section 25-9-175 and this section.
SECTION 8. This act shall take effect and be in force from and after July 1, 2013.
