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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY DeLUCA, DAVIS, D. COSTA, PASHINSKI, CLYMER, COHEN, DEASY, FABRIZIO, GIBBONS, GOODMAN, HARHAI, HARKINS, HORNAMAN, JOSEPHS, KAVULICH, KIRKLAND, KORTZ, KOTIK, LONGIETTI, MANN, MOUL, SWANGER AND THOMAS, FEBRUARY 4, 2011 |
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| REFERRED TO COMMITTEE ON JUDICIARY, FEBRUARY 4, 2011 |
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| AN ACT |
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1 | Amending Title 18 (Crimes and Offenses) of the Pennsylvania |
2 | Consolidated Statutes, providing for the Anti-Fraud Health |
3 | Care Act, for presentment of false claims, for powers of the |
4 | executive agencies and the Attorney General, for qui tam |
5 | actions, for distribution of awards, for exemptions to civil |
6 | actions, for protection for participating employees and for |
7 | limitation of actions; and imposing penalties. |
8 | The General Assembly of the Commonwealth of Pennsylvania |
9 | hereby enacts as follows: |
10 | Section 1. Article G of Title 18 of the Pennsylvania |
11 | Consolidated Statutes is amended by adding a chapter to read: |
12 | CHAPTER 77 |
13 | ANTI-FRAUD HEALTH CARE ACT |
14 | Sec. |
15 | 7701. Short title. |
16 | 7702. Definitions. |
17 | 7703. Presentment of false claims. |
18 | 7704. Civil actions for false claims. |
19 | 7705. Rights of the parties in civil actions. |
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1 | 7706. Awards to plaintiffs bringing action. |
2 | 7707. Expenses, attorney fees and costs. |
3 | 7708. Exemptions to civil actions. |
4 | 7709. Protection for participating employees. |
5 | 7710. Limitation of actions. |
6 | 7711. Burden of proof. |
7 | § 7701. Short title. |
8 | This chapter shall be known as and may be cited as the Anti- |
9 | Fraud Health Care Act. |
10 | § 7702. Definitions. |
11 | The following words and phrases when used in this chapter |
12 | shall have the meanings given to them in this section unless the |
13 | context clearly indicates otherwise: |
14 | "Agency." An executive agency of the Commonwealth that |
15 | administers, manages or finances a health care services program |
16 | on behalf of the residents of this Commonwealth. |
17 | "AdultBasic program." The program established under Chapter |
18 | 13 of the act of June 26, 2001 (P.L.755, No.77), known as the |
19 | Tobacco Settlement Act. |
20 | "Children's Health Insurance Program." The Children's Health |
21 | Care Program established under Article XXIII of the act of May |
22 | 17, 1921 (P.L.682, No.284), known as The Insurance Company Law |
23 | of 1921. |
24 | "Health care program." A health care program administered, |
25 | managed or financed through an executive agency of the |
26 | Commonwealth, including the Medicaid program, the Children's |
27 | Health Insurance Program and the AdultBasic program. |
28 | "Health care program claim." Includes a written or |
29 | electronically submitted request or demand, under a contract or |
30 | otherwise, for money, property or services, that is made to a |
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1 | health care program or an employee, officer or agent of an |
2 | agency, or to a contractor, grantee or other recipient if the |
3 | agency provides a portion of the money or property requested or |
4 | demanded, or if the agency will reimburse the contractor, |
5 | grantee or other recipient for a portion of the money or |
6 | property requested or demanded. |
7 | "Knowing" or "knowingly." With respect to information, that |
8 | a person: |
9 | (1) has knowledge of the information; |
10 | (2) acts in deliberate ignorance of the truth or falsity |
11 | of the information; or |
12 | (3) acts in reckless disregard of the truth or falsity |
13 | of the information. |
14 | "Medical assistance" or "Medicaid." The program of medical |
15 | assistance established under the act of June 13, 1967 (P.L.31, |
16 | No.21), known as the Public Welfare Code. |
17 | § 7703. Presentment of false claims. |
18 | (a) Violations.--A person who: |
19 | (1) knowingly presents or causes to be presented to an |
20 | officer or employee of an agency a false or fraudulent claim |
21 | for payment or approval; |
22 | (2) knowingly makes, uses or causes to be made or used a |
23 | false record or statement to get a false or fraudulent claim |
24 | paid or approved by an agency; |
25 | (3) conspires to submit a false or fraudulent claim to |
26 | an agency or to deceive an agency for the purpose of getting |
27 | a false or fraudulent claim allowed or paid; |
28 | (4) has possession, custody or control of property or |
29 | money used or to be used by an agency and, intending to |
30 | deceive the agency or knowingly conceal the property, |
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1 | delivers or causes to be delivered less property than the |
2 | amount for which the person receives a receipt; |
3 | (5) is authorized to make or deliver a document |
4 | certifying receipt of property used or to be used by an |
5 | agency and, intending to deceive the agency, makes or |
6 | delivers the receipt without knowing that the information on |
7 | the receipt is true; |
8 | (6) knowingly buys or receives, as a pledge of an |
9 | obligation or a debt, public property from an officer or |
10 | employee of an agency who may not sell or pledge the property |
11 | lawfully; or |
12 | (7) knowingly makes, uses or causes to be made or used a |
13 | false record or statement to conceal, avoid or decrease an |
14 | obligation to pay or transmit money or property to an agency, |
15 | is liable to the Commonwealth for a civil penalty of: |
16 | (i) not less than $5,500 nor more than $11,000; or |
17 | (ii) for treble the amount of damages the agency |
18 | sustains because of the act or omission of the person. |
19 | (b) Defense.--Proof of a violation of this section does not |
20 | require specific intent to defraud a health care program. An |
21 | innocent mistake shall be a defense to an action under this |
22 | chapter. |
23 | (c) Judicial relief.--A court may reduce the treble damages |
24 | authorized under this section if it finds one or more of the |
25 | following specific extenuating circumstances: |
26 | (1) The person committing the violation furnished |
27 | officials of the agency responsible for investigating false |
28 | claims violations with the information known to the person |
29 | about the violation within 30 days after the date the person |
30 | first obtained the information. |
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1 | (2) The person fully cooperated with an official |
2 | investigation of the violation. |
3 | (3) At the time the person furnished the agency with the |
4 | information about the violation, no criminal prosecution, |
5 | civil action or administrative action had commenced under |
6 | this section regarding the violation and the person did not |
7 | have knowledge of the existence of an investigation into the |
8 | violation. In this case, the court shall award no less than |
9 | two times the amount of damages sustained by the agency |
10 | because of the act of the person. The court shall set forth |
11 | in a written order its findings and basis for reducing the |
12 | treble damages award. |
13 | § 7704. Civil actions for false claims. |
14 | (a) Attorney General and affected agency.--The Attorney |
15 | General may diligently investigate a violation under section |
16 | 7703 (relating to presentment of false claims). If the Attorney |
17 | General finds a person has violated or is violating section |
18 | 7703, the agency may bring a civil action under this chapter |
19 | against the person. The affected agency may bring a civil action |
20 | under this section if the action arises from an investigation by |
21 | that agency and the Attorney General has not filed an action |
22 | under this chapter. |
23 | (b) Person and affected agency.--A person may bring a civil |
24 | action for a violation of section 7703 for the person and for |
25 | the affected agency. Civil actions instituted under this chapter |
26 | shall be governed by the Pennsylvania Rules of Civil Procedure |
27 | and shall be brought in the name of the Commonwealth. Prior to |
28 | the court unsealing the complaint under subsection (c), the |
29 | action may be voluntarily dismissed by the person bringing the |
30 | action only if the agency gives written consent to the dismissal |
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1 | and its reasons for the consent. |
2 | (c) Procedure.--The complaint filed under subsection (b) |
3 | shall be identified on its face as a qui tam action and shall be |
4 | filed in the Commonwealth Court. Immediately upon filing the |
5 | complaint, a copy of the complaint and written disclosure of |
6 | substantially all material evidence and information the person |
7 | possesses shall be served on the head of the affected agency and |
8 | the Attorney General by registered mail, return receipt |
9 | requested. The affected agency and the Attorney General under |
10 | the circumstances specified in subsection (d) may elect to |
11 | intervene and proceed with the action, on behalf of the |
12 | Commonwealth, within 60 days after it receives both the |
13 | complaint and the material evidence and information. |
14 | (d) Rights and duties.--If a person brings an action under |
15 | subsection (b) and the action is based upon the facts underlying |
16 | a pending investigation by the affected agency, the affected |
17 | agency may take over the action on behalf of the Commonwealth. |
18 | In order to take over the action, the affected agency shall give |
19 | the Attorney General written notification within 20 days after |
20 | the action is filed that the affected agency is conducting an |
21 | investigation of the facts of the action and that the affected |
22 | agency will take over the action filed under subsection (b). If |
23 | the Attorney General takes over the action under this |
24 | subsection, the Attorney General, for purposes of that action, |
25 | shall have all rights and standing granted the agency under this |
26 | chapter. |
27 | (e) Time extension.--For good cause shown, the affected |
28 | agency may request the court to extend the time during which the |
29 | complaint remains under seal under subsection (b). The motion |
30 | may be supported by affidavits or other submissions in camera. |
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1 | The defendant is not required to respond to a complaint filed |
2 | under this section until 20 days after the complaint is unsealed |
3 | and served upon the defendant in accordance with law. |
4 | (f) Expiration of extension.--Before the expiration of the |
5 | 60-day period or an extension obtained under subsection (e), the |
6 | affected agency shall: |
7 | (1) proceed with the action, in which case the action is |
8 | conducted by the agency on behalf of the Commonwealth; or |
9 | (2) notify the court that it declines to take over the |
10 | action, in which case the person bringing the action has the |
11 | right to conduct the action. |
12 | (g) Intervention.--When a person files an action under this |
13 | section, no person, other than the affected agency or the |
14 | Attorney General on behalf of the Commonwealth, may intervene or |
15 | bring an action under this chapter based on the facts underlying |
16 | the pending action. |
17 | § 7705. Rights of the parties in civil actions. |
18 | (a) Parties.--If the Attorney General or the affected agency |
19 | on behalf of the Commonwealth proceeds with the action, it has |
20 | the primary responsibility for prosecuting the action and is not |
21 | bound by an act of the person bringing the action. The person |
22 | bringing the action has the right to continue as a party to the |
23 | action, subject to the limitations specified in subsection (c). |
24 | (b) Dismissal.--The affected agency may voluntarily dismiss |
25 | the action notwithstanding the objections of the person |
26 | initiating the action. |
27 | (c) Limitations.-- |
28 | (1) Nothing in this chapter shall be construed to limit |
29 | the authority of the affected agency or the qui tam plaintiff |
30 | to settle a claim brought in a complaint filed under this |
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1 | chapter if the court determines, after a hearing, that the |
2 | proposed settlement is fair, adequate and reasonable under |
3 | the circumstances. |
4 | (2) Upon a showing by the affected agency that |
5 | unrestricted participation during the course of the |
6 | litigation by the person initiating the action would |
7 | interfere with or unduly delay the agency's prosecution of |
8 | the case, or would be repetitious, irrelevant or for purposes |
9 | of harassment, the court may, in its discretion, impose |
10 | limitations on the person's participation, including, but not |
11 | limited to: |
12 | (i) limiting the number of witnesses the person may |
13 | call; |
14 | (ii) limiting the length of the testimony of the |
15 | person's witnesses; |
16 | (iii) limiting the person's cross-examination of |
17 | witnesses; or |
18 | (iv) otherwise limiting the participation by the |
19 | person in the litigation. |
20 | (3) Upon a showing by the defendant that unrestricted |
21 | participation during the course of the litigation by the |
22 | person initiating the action would be for purposes of |
23 | harassment or would cause the defendant undue burden or |
24 | unnecessary expense, the court may limit the participation by |
25 | the person in the litigation. |
26 | (d) Election not to proceed.--If the Attorney General and |
27 | the affected agency elect not to proceed with the action, the |
28 | person who initiated the action has the right to conduct the |
29 | action. If the Attorney General requests, the Attorney General |
30 | shall be served, at the Attorney General's expense, with copies |
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1 | of the pleadings and motions filed in the action and copies of |
2 | the deposition transcripts. When a person proceeds with the |
3 | action, the court, without limiting the rights of the person |
4 | initiating the action, may permit the Attorney General or |
5 | affected agency to intervene and take over the action on behalf |
6 | of the Commonwealth at a later date upon showing of good cause. |
7 | (e) Stay of discovery.--Whether or not the Attorney General |
8 | or the affected agency proceeds with the action, upon a showing |
9 | by the agency that certain actions of discovery by the person |
10 | initiating the action would interfere with an investigation by |
11 | another agency of State government or the prosecution of a |
12 | criminal or civil matter arising out of the same facts, the |
13 | court may stay the discovery for a period not to exceed 60 days. |
14 | Such a showing shall be conducted in camera. The court may |
15 | extend the 60-day period upon a further showing in camera by the |
16 | agency that the criminal or civil investigation or proceeding |
17 | has been pursued with reasonable diligence and the proposed |
18 | discovery in the civil action will interfere with an ongoing |
19 | criminal or civil investigation or proceeding. |
20 | (f) Remedies.--The application of a civil remedy under this |
21 | chapter does not preclude the application of another remedy, |
22 | civil or criminal, under this chapter or another provision of |
23 | law. Civil remedies under this chapter are supplemental, not |
24 | mutually exclusive. A finding of fact or conclusion of law made |
25 | in the other proceeding that has become final shall be |
26 | conclusive on the parties to an action under this section. |
27 | (g) Intervention.--The affected agency and the Attorney |
28 | General may intervene on its own behalf as a matter of right. |
29 | (h) Definition.--As used in this section, the term "final" |
30 | means not subject to judicial review. |
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1 | § 7706. Awards to plaintiffs bringing action. |
2 | (a) Distribution.--Except as provided in subsection (b), if |
3 | the Attorney General or the affected agency proceeds with and |
4 | prevails in an action brought by a person under this chapter, |
5 | the court shall order the distribution to the person of at least |
6 | 15% but not more than 25% of the proceeds recovered under a |
7 | judgment obtained by the Attorney General or the affected agency |
8 | in an action under section 7703 (relating to presentment of |
9 | false claims) or of the proceeds of a settlement of the claim, |
10 | depending upon the extent to which the person substantially |
11 | contributed to the prosecution of the action. |
12 | (b) Alternative distribution.--If the Attorney General or |
13 | the affected agency proceeds with an action which the court |
14 | finds to be based primarily on disclosures of specific |
15 | information, other than that provided by the person bringing the |
16 | action, relating to allegations or transactions in a criminal, |
17 | civil or administrative hearing; a legislative, administrative, |
18 | Inspector General or Auditor General report, hearing, audit or |
19 | investigation; or from the news media, the court may award sums |
20 | as it considers appropriate, but in no case more than 10% of the |
21 | proceeds recovered under a judgment or received in settlement of |
22 | a claim under this chapter, taking into account the significance |
23 | of the information and the role of the person bringing the |
24 | action in advancing the case to litigation. |
25 | (c) Attorney General or affected agency not proceeding.--If |
26 | the Attorney General or the affected agency does not proceed |
27 | with an action under this section, the person bringing the |
28 | action or settling the claim shall receive an amount which the |
29 | court decides is reasonable for collecting the civil penalty and |
30 | damages. The amount shall be not less than 25% and not more than |
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1 | 30% of the proceeds recovered under a judgment rendered in an |
2 | action under this chapter or in settlement of a claim under this |
3 | chapter. |
4 | (d) Injured agency.--Following distributions under |
5 | subsection (a), (b) or (c), the agency injured by the submission |
6 | of a false or fraudulent claim shall be awarded an amount not to |
7 | exceed its compensatory damages. Proceeds, including civil |
8 | penalties awarded under this chapter, shall be deposited in the |
9 | appropriate fund and used exclusively for that health care |
10 | program. |
11 | (e) Person bringing action.--Payment under this section to |
12 | the person bringing the action shall be paid only out of the |
13 | proceeds recovered from the defendant. |
14 | (f) Reduction and effect of conviction.--Whether or not the |
15 | affected agency or the Attorney General proceeds with the |
16 | action, if the court finds that the action was brought by a |
17 | person who planned and initiated the violation of section 7703 |
18 | upon which the action was brought, the court may, to the extent |
19 | the court considers appropriate, reduce the share of the |
20 | proceeds of the action which the person would otherwise receive |
21 | under this section, taking into account the role of the person |
22 | in advancing the case to litigation and any relevant |
23 | circumstances pertaining to the violation. If the person |
24 | bringing the action is convicted of criminal conduct arising |
25 | from his role in the violation of section 7703, the person shall |
26 | be dismissed from the civil action and shall not receive any |
27 | share of the proceeds of the action. The dismissal shall not |
28 | prejudice the right of the affected agency or the Attorney |
29 | General to continue the action. |
30 | § 7707. Expenses, attorney fees and costs. |
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1 | (a) Agency.--If the agency initiates an action under this |
2 | chapter or assumes control of an action brought by a person |
3 | under this chapter, the agency shall be awarded its reasonable |
4 | attorney fees, expenses and costs. |
5 | (b) Person.--If the court awards the person bringing the |
6 | action proceeds under this chapter, the person shall also be |
7 | awarded an amount for reasonable attorney fees and costs. |
8 | Payment for reasonable attorney fees and costs shall be made |
9 | from the recovered proceeds before the distribution of an award. |
10 | (c) Agency not proceeding.--If the agency does not proceed |
11 | with an action under this chapter and the person bringing the |
12 | action conducts the action, the court may award to the defendant |
13 | its reasonable attorney fees and costs if the defendant prevails |
14 | in the action and the court finds that the claim of the person |
15 | bringing the action was clearly frivolous, clearly vexatious or |
16 | brought primarily for purposes of harassment. |
17 | (d) Liability.--No liability shall be incurred by the |
18 | Commonwealth, the affected agency or the Attorney General for |
19 | expenses, attorney fees or other costs incurred by a person in |
20 | bringing or defending an action under this chapter. |
21 | § 7708. Exemptions to civil actions. |
22 | (a) Jurisdiction of court.--No court shall have jurisdiction |
23 | over an action brought under this chapter against a member of |
24 | the General Assembly, a member of the judiciary or a senior |
25 | executive branch official if the action is based on evidence or |
26 | information known to the State government when the action was |
27 | brought. |
28 | (b) Bringing an action.--A person may not bring an action |
29 | under section 7704 (relating to civil actions for false claims) |
30 | based upon allegations or transactions that are the subject of a |
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1 | civil action or an administrative proceeding in which the agency |
2 | is already a party. |
3 | (c) Public disclosure.--No court shall have jurisdiction |
4 | over an action brought under this chapter based upon the public |
5 | disclosure of allegations or transactions: |
6 | (1) in a criminal, civil or administrative hearing; |
7 | (2) in a legislative, administrative, Inspector General, |
8 | Auditor General, Attorney General or Treasury Department |
9 | hearing, audit or investigation; or |
10 | (3) from the news media, unless the action is brought by |
11 | the agency or unless the person bringing the action is an |
12 | original source of the information. |
13 | (d) Prohibition.--No court shall have jurisdiction over an |
14 | action where the person bringing the action under is: |
15 | (1) acting as an attorney for the Commonwealth; or |
16 | (2) an employee or former employee of State government |
17 | and the action is based, in whole or in part, upon |
18 | information obtained in the course or scope of government |
19 | employment. |
20 | (e) Acting within the scope of employment.--No court shall |
21 | have jurisdiction over an action where the person bringing the |
22 | action under section 7704 obtained the information from an |
23 | employee or former employee of State government who was not |
24 | acting in the course or scope of government employment. |
25 | (f) Local government.--No court shall have jurisdiction over |
26 | an action brought under this chapter against a local government. |
27 | (g) Definitions.--As used in this section, the following |
28 | words and phrases shall have the meanings given to them in this |
29 | subsection unless the context clearly indicates otherwise: |
30 | "Local government." A school district, county or |
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1 | municipality. |
2 | "Original source." An individual who has direct and |
3 | independent knowledge of the information on which the |
4 | allegations are based and has voluntarily provided the |
5 | information to the agency before filing an action under this |
6 | chapter based on the information. |
7 | "Senior executive branch official." A person employed in the |
8 | executive branch of government holding a position as a senior |
9 | management employee. A senior management employee includes an |
10 | agency head, deputy secretary or its equivalent, chief counsel, |
11 | agency counsel, bureau director or equivalent, board member, |
12 | commission member and other employee not covered as a civil |
13 | service employee. |
14 | § 7709. Protection for participating employees. |
15 | An employee who is discharged, demoted, suspended, |
16 | threatened, harassed or otherwise discriminated against in the |
17 | terms and conditions of employment by his employer because of |
18 | lawful acts done by the employee on behalf of the employer or |
19 | others in furtherance of an action under this chapter, including |
20 | investigation for initiation of, testimony for or assistance in |
21 | an action filed or to be filed under this chapter, shall have a |
22 | cause of action under the act of December 12, 1986 (P.L.1559, |
23 | No.169), known as the Whistleblower Law. |
24 | § 7710. Limitation of actions. |
25 | A civil action under this chapter may not be brought: |
26 | (1) more than six years after the date on which the |
27 | violation of section 7704 (relating to civil actions for |
28 | false claims) is committed; or |
29 | (2) more than three years after the date when facts |
30 | material to the right of action are known or reasonably |
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1 | should have been known by the Commonwealth official charged |
2 | with responsibility to act in the circumstances, but in no |
3 | event more than ten years after the date on which the |
4 | violation is committed, whichever occurs last. |
5 | § 7711. Burden of proof. |
6 | In an action brought under this chapter, the Commonwealth or |
7 | the qui tam plaintiff shall be required to prove the essential |
8 | elements of the cause of action, including damages, by a |
9 | preponderance of the evidence. |
10 | Section 2. This act shall take effect in 60 days. |
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