HBA-NMO H.B. 101 76(R) BILL ANALYSIS
Office of House Bill AnalysisH.B. 101
By: Alvarado
Civil Practices
2/8/1999
Introduced
BACKGROUND AND PURPOSE
Currently, there is no statutory provision under which a state or local
governmental entity can find relief when a false claim for money, property,
or services is brought against that entity. In 1998, the House Committee
on Civil Practices appointed the Subcommittee on False Claims to address
the committee's second interim charge, the evaluation of the potential of a
state "false claims" law. H.B. 101 creates an offense for presenting a
false claim to a governmental entity or its agent, and provides remedies
for exposing and prosecuting individuals who present such claims.
RULEMAKING AUTHORITY
It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subtitle F, Title 10, Government Code, by adding Chapter
2259, as follows:
CHAPTER 2259. FALSE CLAIMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2259.001. DEFINITIONS. Defines "claim," "government contractor,"
"governmental entity," "local governmental entity," "managing official,"
and "prosecuting authority."
Sec. 2259.002. PROHIBITED ACTS. Prohibits a person from:
(1) presenting to an officer, employee, or agent of a governmental entity
or government contractor a false claim for payment or approval;
(2) making or using a false record or statement to obtain payment or
approval of a false claim;
(3) conspiring to defraud a governmental entity or government contractor by
obtaining payment or approval of a false claim;
(4) delivering to a governmental entity or government contractor less
property than the amount on the received receipt.
(5) making or delivering a receipt that falsely represents the amount of
property delivered that is to be used by a governmental entity or
government contractor;
(6) buying or accepting as a pledge of an obligation or debt public
property from a person who may not sell or pledge the property;
(7) making or using a false record or statement to conceal, avoid, or
decrease an obligation to pay or transmit money or property to a
governmental entity or government contractor;
(8) accepting the benefits from a false claim made by any person; or
(9) causing an act described by the eight previous subdivisions to be
committed by another person.
SUBCHAPTER B. LIABILITY FOR VIOLATIONS
Sec. 2259.011. LIABILITY FOR KNOWING VIOLATION. Requires a court that
finds that a person knowingly violated Section 2259.002 to award the
affected governmental entity actual damages, exemplary damages equal to two
times the amount of actual damages, and attorney's fees and costs incurred
to recover the damages and penalty. Authorizes the court to reduce the
exemplary damages to an amount not less than the amount of the actual
damages if the person who knowingly violated Section 2259.002 furnished all
requested information within 30 days of a request to and fully cooperated
with any investigation by the governmental agency responsible for
investigating false claims violations. Provides that a person knowingly
violates Section 2259.002 if the person acts with knowledge of the facts
that constitute the violation, acts in deliberate ignorance or reckless
disregard of those facts or their validity, acts without actual knowledge
of the facts and, after the violation, learns the facts and fails to take
action to mitigate or rectify the violation.
Sec. 2259.012. CIVIL PENALTY. Authorizes a court, in addition to amounts
awarded under Section 2259.011, to award to the affected governmental
entity a civil penalty of not more than $10,000 for each false claim unless
the person who knowingly violated Section 2259.002 cooperated in the
investigation as described in Section 2259.011.
Sec. 2259.013. LIABILITY JOINT AND SEVERAL; PROPORTIONATE RESPONSIBILITY
INAPPLICABLE. Provides that liability under this subchapter is joint and
several for a violation committed by more than one person. Provides that
Chapter 33, Civil Practice and Remedies Code (Proportionate
Responsibility), does not apply to an action brought under this chapter.
Sec. 2259.014. EXCEPTIONS. Prohibits a court from awarding exemplary
damages and attorney's fees and costs under Section 2259.011 or a civil
penalty under Section 2259.012 against a person if the total actual damages
being assessed against the person in the case is less than $500. Provides
that this chapter does not apply to a claim made under a workers'
compensation law of this state.
Sec. 2259.015. DEPOSIT OF MONEY. Requires that money collected on behalf
of a governmental entity be deposited to the credit of the general revenue
fund of the state or local governmental entity, as appropriate. Requires
the court, if the action is brought in the names of both the state and one
or more local governmental entities, to apportion the award of damages and
civil penalties among the state and the local entities on the basis of the
loss incurred. Requires attorney's fees and costs to be awarded to the
entity that incurred the fees and costs.
Sec. 2259.016. LIMITATIONS. Provides that an action under this
subchapter must be brought not later than the third anniversary of the date
on which the violation was discovered by the attorney general, prosecuting
authority, or a managing official of the affected governmental entity,
other than a managing official who participated in the violation. Prohibits
an action under this subchapter from being brought after the 10th
anniversary of the date on which the violation was committed.
Sec. 2259.017. APPLICATION OF LAW GOVERNING EXEMPLARY DAMAGES. Provides
that Chapter 41, Civil Practice and Remedies Code (Exemplary Damages), does
not apply to exemplary damages awarded under Section 2259.011 or to the
civil penalty awarded under Section 2259.012.
SUBCHAPTER C. ATTORNEY GENERAL ACTION
Sec. 2259.021. ATTORNEY GENERAL INVESTIGATION. Requires the attorney
general to investigate alleged violations of Section 2259.002 involving
state funds. Authorizes the attorney general to bring an action under
Subchapter B against a person if the person has violated Section 2259.002.
Sec. 2259.022. AFFECTED LOCAL GOVERNMENTAL ENTITY. Requires the attorney
general to provide a copy of the complaint to the appropriate prosecuting
authority if the attorney general brings an action under Subchapter B on a
claim that involves local government funds as well as state funds.
Requires the attorney general to mail the complaint to the prosecuting
authority by certified mail not later than the date on which the complaint
is filed. Authorizes the prosecuting authority to intervene in an action
not later than 60 days after receiving the copy of the complaint.
Authorizes the court to permit the prosecuting authority to intervene after
that date for good cause.
SUBCHAPTER D. ACTION BROUGHT BY PROSECUTING AUTHORITY
Sec. 2259.031. PROSECUTING AUTHORITY INVESTIGATION. Requires a
prosecuting authority to investigate alleged violations of Section 2259.002
involving funds belonging to a local governmental entity. Authorizes the
prosecuting authority to bring an action under Subchapter B against a
person if the person has violated Section 2259.002.
Sec. 2259.032. ATTORNEY GENERAL. Requires the prosecuting authority to
provide a copy of the complaint to the attorney general if bringing an
action under Subchapter B on a claim that involves state funds as well as
local government funds. Requires the prosecuting authority to mail the
complaint to the attorney general by certified mail not later than the date
on which the complaint is filed. Requires the attorney general, not later
than 60 days after receiving the copy of the complaint, to notify the court
of intent to proceed with the action and assume primary responsibility for
conducting the action, or to notify the court that the attorney general
declines to assume primary responsibility for conducting the action.
Authorizes the prosecuting authority, if the attorney general assumes
primary responsibility for conducting the action, to continue as a party in
the action. Authorizes the prosecuting attorney, if the attorney general
declines to assume primary responsibility, to continue to conduct the
action.
SUBCHAPTER E. PRIVATE CAUSE OF ACTION
Sec. 2259.041. PRIVATE ACTION. Authorizes a person to bring a civil
action in a district court for a violation of Section 2259.002 in the name
of the person on behalf of the state, the prosecuting authority, or both,
as appropriate.
Sec. 2259.042. SERVICE OF PETITION. Requires a person who brings an
action under this subchapter to serve a copy of the petition in the action
on the attorney general, if the claim involves state funds, and the
prosecuting authority of the local government, if the claim involves local
government funds. Requires service to be made in the manner provided by
Rule 21a, Texas Rules of Civil Procedure (Notice).
Sec. 2259.043. INTERVENTION. (a) Authorizes the attorney general, in an
action involving only state funds, to assume responsibility for prosecution
of the action by entering an appearance not later than 60 days after
receiving service of the petition under Section 2259.042.
(b) Authorizes the prosecuting authority, in an action involving only local
government funds, to assume responsibility for prosecution of the action
by entering an appearance not later than 60 days after receiving service of
the petition under Section 2259.042.
(c) Authorizes the attorney general, in an action involving state and local
government funds, to assume primary responsibility for prosecution of the
action by entering an appearance not later than 60 days after receiving
service of the petition under Section 2259.042.
(d) Authorizes the prosecuting authority, if the attorney general assumes
primary responsibility for prosecution under Subsection (c), to enter an
appearance and proceed as a party in the action not later than 60 days
after receiving service of the petition under Section 2259.042.
(e) Authorizes the prosecuting authority, if the attorney general does not
assume primary responsibility for the action under Subsection (c), to
assume responsibility for prosecution of the action not later than the 30th
day after the last date the attorney general may enter an appearance under
this section.
Sec. 2259.044. AWARD TO PRIVATE PARTY IF GOVERNMENT PROSECUTES ACTION.
Requires the court, if the attorney general or prosecuting authority
assumes responsibility for the action under Section 2259.043 and the action
is settled or a judgment is entered for the state or local government, to
award a reasonable portion of the settlement or judgment to the person who
commenced the action under this subchapter. Requires the court, in
determining the amount to award a person, to consider the value of any
information or evidence disclosed by the person. Provides that an award of
10 percent of the settlement or judgment is presumed to be reasonable.
Sec. 2259.045. AWARD TO PRIVATE PARTY IF GOVERNMENT DOES NOT PROSECUTE
ACTION. Requires the court, if the attorney general or prosecuting
authority does not assume responsibility for prosecution of the action
under Section 2259.043 and the action is settled or a judgment is entered
for the state or local government, to award a reasonable portion of the
settlement or judgment to the person who prosecuted the action. Requires
the court, in determining the amount to award a person, to consider the
value of the person's prosecution of the action. Provides that an award of
25 percent of the settlement or judgment is presumed to be reasonable.
Authorizes the court to award the person who prosecuted the action
reasonable expenses in prosecuting the action.
SUBCHAPTER F. INTERFERENCE WITH DISCLOSURE BY EMPLOYEES
Sec. 2259.051. RIGHT TO DISCLOSE INFORMATION AND PARTICIPATE IN ACTION.
Entitles a person to:
(1) disclose information relevant to an alleged violation of Section
2259.002 to a governmental entity, prosecuting authority, the attorney
general, or a law enforcement agency;
(2) assist, at the request of the attorney general or prosecuting
authority, in the investigation of an alleged violation of Section
2259.002; or
(3) testify or otherwise participate, at the request of the attorney
general or prosecuting authority, in the furtherance of an action under
this chapter.
Sec. 2259.052. PROHIBITED CONDUCT BY EMPLOYER. (a) Prohibits an employer
from adopting or enforcing a rule or policy that prevents an employee from
exercising the employee's rights under Section 2259.051; or discriminating
against an employee who has exercised those rights.
(b) Provides that an employer who violates Subsection (a) is liable to the
employee for actual damages including lost wages, reinstatement to
employment with any applicable seniority status, exemplary damages equal to
not less than two times the amount of lost wages; and attorney's fees and
costs.
(c) Prohibits an employee from recovering under Subsection (b) unless the
employee's rights under Section 2259.051 were exercised; and to the extent
the employee participated in the violation of Section 2259.002, the
participation was in response to harassment, threats of termination or
demotion, or other coercion by the employer.
SECTION 2. Effective date: September 1, 1999.
Makes application of this Act prospective.
SECTION 3. Emergency clause.