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