HB 347: "An Act relating to the limitation period to commence a false claims action; relating to recovery for false claims for state or municipal funds; and amending Rules 4, 24, and 46, Alaska Rules of Civil Procedure."
00 HOUSE BILL NO. 347 01 "An Act relating to the limitation period to commence a false claims action; relating to 02 recovery for false claims for state or municipal funds; and amending Rules 4, 24, and 46, 03 Alaska Rules of Civil Procedure." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 09.10 is amended by adding a new section to read: 06 Sec. 09.10.051. Action for false claims. A person may not bring a claim under 07 AS 37.10.110 - 37.10.195 (Alaska False Claims Act) unless commenced within 10 08 years after the commission of the violation. 09 * Sec. 2. AS 37.10 is amended by adding new sections to read: 10 Article 4A. Alaska False Claims Act. 11 Sec. 37.10.110. False claims for state or municipal funds; civil penalty. (a) 12 A person may not 13 (1) knowingly present or cause to be presented a false or fraudulent 14 claim to the state or a municipality for payment or approval;
01 (2) knowingly make, use, or cause to be made or used a false record or 02 statement to get a false or fraudulent claim paid or approved by the state or a 03 municipality; 04 (3) conspire to defraud the state or a municipality by getting a false 05 claim allowed or paid, or conspire to defraud the state or a municipality by knowingly 06 making, using, or causing to be made or used, a false record or statement to conceal, 07 avoid, or decrease an obligation to pay or transmit money or property to the state or a 08 municipality; 09 (4) possess or control public property or money used or to be used by 10 the state or a municipality and knowingly deliver or cause to be delivered less property 11 than the amount for which the person receives a certificate or receipt; 12 (5) knowingly make or deliver a receipt that falsely represents the 13 property used or to be used if the person is authorized to make or deliver a document 14 certifying receipt of property used or to be used by the state or a municipality; 15 (6) knowingly buy or receive as a pledge of an obligation or debt 16 public property from a person who may not lawfully sell or pledge the property; 17 (7) knowingly make, use, or cause to be made or used a false record or 18 statement to conceal, avoid, or decrease an obligation to pay or transmit money or 19 property to the state or a municipality; 20 (8) fail to disclose a false claim to the state or a municipality within a 21 reasonable time after discovery of the false claim if the person is a beneficiary of an 22 inadvertent submission of a false claim to an employee, officer, or agent of the state or 23 a municipality or to a contractor, grantee, or other recipient of state or municipal 24 funds. 25 (b) This section applies to claims, records, or statements made under AS 43 if 26 (1) the net income or sales of the person against whom the action is 27 brought is equal to or exceeds $1,000,000 for a taxable year subject to an action 28 brought under AS 37.10.110 - 37.10.195; 29 (2) the damages sought in an action under AS 37.10.110 - 37.10.195 30 exceed $350,000; and 31 (3) the person is alleged to have violated (a) of this section; nothing in
01 this paragraph shall be considered to modify or restrict the application of (a) of this 02 section only to an act relating to a violation of AS 43. 03 (c) A violation under (a) of this section is punishable by a civil penalty of not 04 less than $6,000 and not more than $12,000 in addition to the costs and fees associated 05 with an enforcement action brought under AS 37.10.110 - 37.10.195. 06 Sec. 37.10.115. Damages. (a) In addition to a civil penalty and costs assessed 07 under AS 37.10.110(c), and except as provided under (b) of this section, a court shall 08 award damages in an amount that is three times the actual damages sustained by the 09 state or municipality for a violation of AS 37.10.110. 10 (b) A court may reduce the damages assessed for a violation of AS 37.10.110 11 to two times the amount of actual damages sustained by the state or a municipality and 12 waive the civil penalty allowed under AS 37.10.110(c) if the court finds, by a 13 preponderance of the evidence, that 14 (1) the person committing the violation furnished a state or municipal 15 official who is investigating the violation with all information known to that person 16 about the violation within 30 days after receiving the information; 17 (2) the person fully cooperated with the investigation; and 18 (3) at the time the person furnished the information about the violation, 19 a criminal prosecution, civil action, or administrative action had not commenced with 20 respect to the violation, and the person did not have actual knowledge of the existence 21 of an investigation into the violation. 22 Sec. 37.10.120. Attorney general and municipal investigations and 23 prosecutions of false claims. (a) The attorney general shall investigate a violation 24 under AS 37.10.110. If the attorney general finds that a person has violated 25 AS 37.10.110, the attorney general may bring a civil action under this section against 26 that person. A municipality may also investigate a violation under AS 37.10.110 that 27 may have resulted in damages to the municipality and may bring a civil action under 28 this section against the person. An action may not be filed under this section against 29 the federal government, the state, or a municipality, or any officer or employee of the 30 federal government, the state, or a municipality acting in the person's official capacity. 31 (b) The attorney general shall consult with the Department of Health and
01 Social Services before filing or intervening in an action under this section related to 02 the medical assistance program under AS 47.05 or 47.07. 03 (c) The attorney general shall consult with the commissioner of revenue 04 before filing or intervening in an action under AS 37.10.110(b). If the state declines to 05 participate in or to authorize participation by a municipality in an action under 06 AS 37.10.110(b), a qui tam plaintiff under AS 37.10.125(a) must obtain approval from 07 the attorney general before making a motion to compel the Department of Revenue to 08 disclose tax records. 09 Sec. 37.10.125. False claims actions by private persons, qui tam; 10 notification of and participation by attorney general. (a) If the state or municipality 11 fails to file an action under AS 37.10.120 or another applicable law, a person may 12 bring a qui tam civil action for a violation of AS 37.10.110 in the name of the person 13 and the state and receive an award under AS 37.10.135. The person bringing the action 14 shall be referred to as the qui tam plaintiff. 15 (b) A copy of the complaint and written disclosure of substantially all material 16 evidence and information the person possesses shall be served on the attorney general. 17 The complaint shall be filed with the court in camera, shall remain under seal for at 18 least 60 days, and may not be served on the defendant until the court so orders. The 19 state may elect to intervene or proceed with the action within 60 days after the state 20 receives both the complaint and the material evidence and the information. 21 (c) If a complaint filed under this section alleges a violation of AS 37.10.110 22 involving damages to a municipality, the attorney general may provide a copy of the 23 complaint and written disclosure to the municipality. The state may elect to intervene 24 or proceed with the action, or to authorize the municipality that may have sustained 25 damages to intervene or proceed with the action, within 60 days after the state receives 26 both the complaint and the material evidence and information. 27 (d) The state may, for good cause shown, move the court for extension of the 28 time during which the complaint remains under seal under (b) of this section. A 29 motion may be supported by affidavits or other submissions in camera. 30 (e) Before the expiration of the 60-day period or an extension obtained under 31 (d) of this section, the attorney general shall
01 (1) proceed with the action, in which case the action shall be 02 conducted by the state; 03 (2) intervene in the action, as of right, so as to assist the plaintiff in the 04 action; 05 (3) authorize a municipality to proceed with the action, in which case 06 the action shall be conducted by the municipality; 07 (4) authorize a municipality to intervene, as of right, so as to aid and 08 assist the plaintiff; or 09 (5) notify the court that the attorney general declines to take over or 10 authorize a municipality to take over the action, in which case the person bringing the 11 action may conduct the action. 12 (f) An action may not be filed under this section against the federal 13 government, the state, or a municipality, or any officer or employee of the federal 14 government, the state, or a municipality acting in the person's official capacity. 15 (g) When a person brings a valid action under this section, no person other 16 than the state or municipality may intervene or bring a related action based on the facts 17 underlying the pending action. 18 (h) The defendant may not be required to respond to a complaint filed under 19 this section until after the complaint is unsealed and served on the defendant under the 20 applicable Rules of Civil Procedure. 21 Sec. 37.10.130. Rights of the parties to qui tam actions. (a) If the state or a 22 municipality proceeds with a false claims action, the attorney general or municipality 23 shall have the primary responsibility for prosecuting the action and may not be bound 24 by an act of the person bringing the action. The person bringing the action may 25 continue as a party to the action, subject to the limitations under (b) - (d) of this 26 section. 27 (b) The state or municipality may seek to dismiss the action for good cause, 28 notwithstanding the objections of the qui tam plaintiff, if the qui tam plaintiff has been 29 notified by the state or municipality of the filing of the motion and the court has 30 provided the qui tam plaintiff with an opportunity to oppose the motion and present 31 evidence at a hearing.
01 (c) The state or municipality may settle the action with the defendant, 02 notwithstanding the objections of the qui tam plaintiff, if the court determines, after a 03 hearing providing the qui tam plaintiff an opportunity to present evidence, that the 04 proposed settlement is fair, adequate, and reasonable under all of the circumstances. 05 (d) On a showing by the state or municipality that unrestricted participation 06 during the course of the litigation by the qui tam plaintiff would interfere with or 07 unduly delay the state or municipality's prosecution of the case or would be 08 repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, 09 impose limitations on the qui tam plaintiff's participation, including 10 (1) limiting the number of witnesses the qui tam plaintiff may call; 11 (2) limiting the length of the testimony of the witnesses the qui tam 12 plaintiff calls; 13 (3) limiting the qui tam plaintiff's cross-examination of witnesses; and 14 (4) otherwise limiting the participation by the qui tam plaintiff in the 15 litigation. 16 (e) If the state or municipality elects not to proceed with the action, the qui 17 tam plaintiff may conduct the action. The qui tam plaintiff shall serve copies of all 18 pleadings filed in the action and shall be supplied with copies of all deposition 19 transcripts at the request and expense of the state. When a qui tam plaintiff proceeds 20 with the action, the court, without limiting the status and rights of the qui tam plaintiff, 21 may nevertheless permit the state or municipality to intervene at a later date on a 22 showing of good cause. 23 (f) Whether or not the state or municipality proceeds with the action, on a 24 showing by the state or municipality that certain actions of discovery by the qui tam 25 plaintiff would interfere with the state or municipality's investigation or prosecution of 26 a criminal or civil matter arising out of the same facts, the court may stay discovery 27 for not more than 60 days. That showing shall be conducted in camera. The court may 28 extend the 60-day period on a further showing in camera that the state or municipality 29 has pursued the criminal or civil investigation or proceedings with reasonable 30 diligence and proposed discovery in the civil action will interfere with the ongoing 31 criminal or civil investigation or proceedings.
01 (g) Notwithstanding the requirements of this section, the state or municipality 02 may elect to pursue its claim through an alternate remedy available to the state or 03 municipality, including a criminal or administrative proceeding to determine a penalty. 04 If an alternate remedy is pursued in another proceeding, the qui tam plaintiff shall 05 have the same rights in the proceeding as the qui tam plaintiff would have had if the 06 action had continued under this section. A finding of fact or conclusion of law that has 07 become final shall be conclusive on all parties to an action under this section. For 08 purposes of this subsection, a finding or conclusion is final if it has been finally 09 determined on appeal by the appropriate court, if all time for filing an appeal with 10 respect to the finding or conclusion has expired, or if the finding or conclusion is not 11 subject to judicial review. 12 Sec. 37.10.135. Award to qui tam plaintiff. (a) If the state or municipality 13 proceeds with or intervenes in an action brought by a qui tam plaintiff under 14 AS 37.10.110 - 37.10.195, the qui tam plaintiff shall, except as otherwise provided in 15 this section, be awarded at least 15 percent but not more than 25 percent of the 16 proceeds of the action or settlement of the claim, including damages, civil penalties, 17 payments for costs of compliance, and any other economic benefit realized by the 18 state, municipality, or federal government as a result of the action, depending on the 19 extent that the qui tam plaintiff substantially contributed to the prosecution of the 20 action. 21 (b) If a court finds a false claims action to be based primarily on disclosures of 22 specific information, other than information provided by the qui tam plaintiff, relating 23 to allegations or transactions specifically in a criminal, civil, or administrative hearing, 24 or in a legislative or administrative report, hearing, audit, or investigation, or from the 25 news media, the court may make an award it considers appropriate, not to exceed 10 26 percent of the proceeds, taking into account the significance of the information and the 27 role of the qui tam plaintiff in acquiring the proceeds. The court may also award the 28 qui tam plaintiff an amount to cover reasonable and necessary expenses, including 29 reasonable attorney fees and costs allowable under the court rules. All expenses, fees, 30 and costs awarded under this subsection must be awarded against the defendant. 31 (c) If the state or municipality does not proceed with an action under
01 AS 37.10.110 - 37.10.195, the qui tam plaintiff shall receive an amount that the court 02 decides is reasonable for collecting the civil penalty and damages. The amount may 03 not be less than 25 percent nor more than 30 percent of the proceeds of the action or 04 settlement and shall be paid out of the proceeds, including damages, civil penalties, 05 payments for costs of compliance, and any other economic benefit realized by the 06 state, municipality, or federal government as a result of the action. The award to the 07 qui tam plaintiff must also include an amount for reasonable expenses that the court 08 finds to have been necessarily incurred, including reasonable attorney fees and costs 09 allowable under the court rules. All expenses, fees, and costs awarded under this 10 subsection shall be awarded against the defendant. 11 (d) Whether or not the state or municipality proceeds with a false claims 12 action planned and initiated by a qui tam plaintiff, the court may, to the extent the 13 court considers appropriate, reduce the share of the proceeds of the action that the qui 14 tam plaintiff would otherwise receive under (a) - (c) of this section, taking into 15 account the role of that qui tam plaintiff in advancing the case to litigation and all 16 relevant circumstances pertaining to the violation. If the qui tam plaintiff is convicted 17 of criminal conduct arising from the plaintiff's role in the violation of 18 AS 37.10.110(a), the qui tam plaintiff shall be dismissed from the civil action and may 19 not receive a share of the proceeds of the action. The dismissal may not prejudice the 20 right of the state or municipality to continue the action. 21 (e) If the state or municipality does not proceed with the action and the qui 22 tam plaintiff conducts the action, the court may award to the defendant the defendant's 23 reasonable attorney fees and expenses allowable under the court rules if the defendant 24 prevails in the action and the court finds that the claim of the qui tam plaintiff was 25 frivolous, vexatious, or brought primarily for purposes of harassment. 26 (f) In this section, "proceeds" excludes attorney fees and costs awarded to the 27 state or municipality. 28 Sec. 37.10.140. Certain actions barred. (a) An action brought under 29 AS 37.10.110 - 37.10.195 shall be dismissed if the action is based on allegations or 30 transactions that are the subject of a pending civil action or administrative action in 31 which the state or municipality is already a party.
01 (b) An action brought under AS 37.10.110 - 37.10.195 may not be brought 02 against a member of the legislature, a member of the judiciary, the governor, the 03 lieutenant governor, or the head of an executive department if the action is based on 04 evidence or information known to the attorney general when the action was brought. 05 (c) Upon motion of the state or municipality, the court may, in consideration 06 of all the equities, dismiss a qui tam plaintiff if the elements of the actionable false 07 claims alleged in the qui tam complaint have been publicly disclosed specifically in 08 the news media or in a publicly disseminated governmental report or pleading at the 09 time the complaint is filed. 10 Sec. 37.10.145. State or municipality not liable for certain expenses. The 11 state or a municipality is not liable for expenses a qui tam plaintiff incurs in bringing 12 an action under AS 37.10.110 - 37.10.195. 13 Sec. 37.10.150. Private action for retaliation. (a) An employee who is 14 discharged, demoted, suspended, threatened, harassed, or in any other manner 15 discriminated against in the terms and conditions of employment by the person's 16 employer because of lawful acts done by the employee on behalf of the employee or 17 others in furtherance of an action under AS 37.10.110 - 37.10.195, including 18 investigation for, initiation of, testimony for, or assistance in an action filed or to be 19 filed, is entitled to all relief necessary to make the employee whole. Relief includes 20 reinstatement with the same seniority status the employee would have had but for the 21 discrimination, two times the amount of back pay, interest on the back pay, and 22 compensation for special damages sustained as a result of the discrimination, 23 including litigation costs and reasonable attorney fees. An employee may bring an 24 action in the appropriate court of the state for the relief provided in this section. 25 (b) In this section, "employer" means a natural person, corporation, firm, 26 association, organization, partnership, business, trust, or publicly funded entity. 27 Sec. 37.10.190. Definitions. In AS 37.10.110 - 37.10.190, 28 (1) "claim" means a request or demand for money, property, or 29 services made to an employee, officer, or agent of the state or a municipality, or to any 30 contractor, grantee, or other recipient, whether under contract or not, of any portion of 31 money, property, or service requested or demanded from state or municipal funds as
01 reimbursement or direct payment; 02 (2) "knowing" and "knowingly" mean that a person, with or without 03 specific intent to defraud another person, 04 (A) has actual knowledge of information relating to a false 05 claim; 06 (B) acts in deliberate disregard for the truth or falsity of 07 information relating to a false claim; or 08 (C) acts in reckless disregard for the truth or falsity of 09 information relating to a false claim; 10 (3) "qui tam plaintiff" means a person who initiates an action under 11 AS 37.10.125. 12 Sec. 37.10.195. Short title. AS 37.10.110 - 37.10.195 may be cited as the 13 Alaska False Claims Act. 14 * Sec. 3. AS 47.05 is amended by adding a new section to article 1 to read: 15 Sec. 47.05.110. False claims. The department shall cooperate with the attorney 16 general and, subject to a subpoena issued by a court of competent jurisdiction, a 17 person who brings a civil action for a violation of AS 37.10.110 - 37.10.195 (Alaska 18 False Claims Act). 19 * Sec. 4. AS 47.25.260 is amended to read: 20 Sec. 47.25.260. Recovery and disposition of allowances improperly 21 granted. If the department finds that a general relief allowance has been improperly 22 granted, it shall investigate, and if it appears from the investigation that the assistance 23 was improperly granted, the department may cancel the allowance and notify the 24 recipient of the cancellation. The state then has a claim against the person who 25 received the improper allowance. Except for a false claim that may be enforced 26 under AS 37.10.110 - 37.10.195 (Alaska False Claims Act), the [THE] claim may 27 be enforced by civil action in the name of the state by the attorney general to recover 28 the amount paid to the person, with interest, together with the necessary costs of the 29 action. 30 * Sec. 5. AS 47.25.500(a) is amended to read: 31 (a) If the department has reasonable grounds for believing that assistance was
01 improperly granted, it shall investigate and document the grounds in the case file, and, 02 if it appears as a result of the investigation that assistance was improperly granted, it 03 may, after providing an opportunity for a hearing, terminate or reduce assistance and 04 notify the recipient to that effect. The department shall continue the payment of 05 benefits pending the hearing. The state has a claim against a person who received an 06 improper amount of assistance. Except for a false claim that may be enforced 07 under AS 37.10.110 - 37.10.195 (Alaska False Claims Act), the [THE] claim may 08 be enforced by an action instituted in the name of the state by the attorney general to 09 recover the amount paid to the person, with interest, together with the necessary costs 10 of the action. 11 * Sec. 6. AS 47.27.085 is amended by adding a new subsection to read: 12 (f) A false claim submitted under the Alaska temporary assistance program is 13 subject to investigation and prosecution under AS 37.10.110 - 37.10.195. 14 * Sec. 7. AS 36.30.687(a)(2) and 36.30.687(c) are repealed. 15 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 INDIRECT COURT RULE AMENDMENT. AS 37.10.125, added by sec. 2 of this 18 Act, has the effect of amending Rule 4, Alaska Rules of Civil Procedure, by changing the 19 procedure for initiating an action and for the timing of service. 20 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 INDIRECT COURT RULE AMENDMENT. AS 37.10.130(d), added by sec. 2 of this 23 Act, has the effect of amending Rule 46, Alaska Rules of Civil Procedure, by limiting the 24 participation of a private party in a false claims action in certain circumstances. 25 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 INDIRECT COURT RULE AMENDMENT. AS 37.10.125(e) and 37.10.130, added 28 by sec. 2 of this Act, have the effect of amending Rule 24, Alaska Rules of Civil Procedure, 29 by limiting intervention and by changing the procedure for intervention by allowing the state 30 or a municipality to intervene at various times and for various reasons in a false claims action 31 brought by a private party.
01 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 APPLICABILITY. AS 37.10.110 - 37.10.195, added by sec. 2 of this Act, apply to 04 violations or acts or omissions that occur on or after the effective date of this Act. 05 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 CONDITIONAL EFFECT. AS 37.10.110 - 37.10.195, added by sec. 2 of this Act, 08 take effect only if secs. 8 - 10 of this Act receive the two-thirds majority vote of each house 09 required by art. IV, sec. 15, Constitution of the State of Alaska.