May 16, 2007, Introduced by Reps. Polidori, Spade, Robert Jones, Brown, Valentine, Gonzales, LeBlanc, Vagnozzi, Clack, Hammel, Constan, Simpson, Griffin, Condino, Hood, Byrnes, Wojno, Bennett, Espinoza, Leland, Miller, Hopgood, Melton, Young and Dean and referred to the Committee on Government Operations.
A bill to provide for remedies and prescribe civil sanctions
against a person who presents a false or fraudulent claim to obtain
money, property, or services from this state; to prescribe the
powers and duties of certain state officers and agencies; and to
prohibit retaliation against a person who pursues a remedy under
this act.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "false
claims act".
Sec. 2. As used in this act:
(a) "Claim" means a request or demand for money, property, or
services made to an employee, officer, or agent of this state or a
political subdivision in this state, or to a contractor, grantee,
or other recipient, whether under contract or not, if any portion
of the money, property, or services requested or demanded issued
from or was provided by this state or a political subdivision in
this state.
(b) "Knowingly" means any of the following:
(i) With actual knowledge of the relevant information.
(ii) In deliberate ignorance of the truth or falsity of the
relevant information.
(iii) In reckless disregard of the truth or falsity of the
relevant information.
(c) "Person" means an individual, partnership, corporation,
association, governmental entity, limited liability company, trust,
or other legal entity.
(d) "Political subdivision" means a county, township, city,
village, district, metropolitan government or authority, political
body with the legal power or authority to levy taxes, or other
legally authorized local governmental body, or a legally authorized
combination of political subdivisions.
Sec. 3. A person who commits any of the following acts,
regardless of whether the person acts with the specific intent to
defraud, is liable to this state or a political subdivision of this
state for 3 times the amount of damages the state or political
subdivision sustains because of the act and the costs of an action
brought to recover damages or a penalty, and may be liable to the
state or political subdivision for a civil penalty of up to
$10,000.00 for each act:
(a) Knowingly presents or causes to be presented to an officer
or employee of the state or political subdivision a false claim for
payment or approval.
(b) Knowingly makes, uses, or causes to be made or used a
false record or statement to get a false claim paid or approved by
the state or political subdivision.
(c) Conspires to defraud the state or political subdivision by
getting a false claim allowed or paid by the state or political
subdivision.
(d) Has possession, custody, or control of public property or
money used or to be used by the state or political subdivision and
knowingly delivers or causes to be delivered less property than the
amount for which the person receives a certificate or receipt.
(e) Is authorized to make or deliver a document certifying
receipt of property used or to be used by the state or political
subdivision and knowingly makes or delivers a receipt that falsely
represents the property used or to be used.
(f) Knowingly buys, or receives as a pledge of an obligation
or debt, public property from any person who lawfully may not sell
or pledge the property.
(g) Knowingly makes, uses, or causes to be made or used a
false record or statement to conceal, avoid, or decrease an
obligation to pay or transmit money or property to the state or
political subdivision.
Sec. 4. (1) Any person may bring an action in the name of this
state under this section to recover losses that this state sustains
from an act described in section 3. A court shall not dismiss an
action filed under this section unless the attorney general has
been notified and had an opportunity to appear and oppose the
dismissal. The attorney general waives the opportunity to oppose
the dismissal if it is not exercised within 28 days of receiving
the complaint and disclosure under subsection (2).
(2) If a person other than the attorney general initiates an
action under this section, the complaint shall be sealed and the
clerk shall not issue a summons for service on the defendant until
after the time for the attorney general's election under subsection
(3) expires. At the time the complaint is filed, the person
initiating the action shall serve a copy of the complaint on the
attorney general and shall disclose, in writing, substantially all
material evidence and information in the person's possession
supporting the complaint to the attorney general.
(3) The attorney general may elect to intervene in an action
under this section. Within 90 days after the complaint and
disclosure are served on the attorney general under subsection (2)
or any extension of the 90 days granted by the court, the attorney
general shall notify the court and the person initiating the action
of 1 of the following:
(a) That the attorney general will take over the action for
this state and have primary responsibility for proceeding with the
action.
(b) That the attorney general declines to take over the action
and the person initiating the action has the right to proceed with
the action.
(4) If an action is filed under this section, a person other
than the attorney general shall not intervene in the action or
bring another action on behalf of this state based on the facts
underlying the action.
(5) If the attorney general elects to proceed with the action
under subsection (3) or (6), the attorney general has primary
responsibility for prosecuting the action and may do all of the
following:
(a) Agree to dismiss the action, notwithstanding the objection
of the person initiating the action, but only if that person has
been notified of and offered the opportunity to participate in a
hearing on a motion to dismiss.
(b) Settle the action, notwithstanding the objection of the
person initiating the action, but only if that person has been
notified of and offered the opportunity to participate in a hearing
on the settlement and if the court determines that the settlement
is fair, adequate, and reasonable under the circumstances. On a
showing of good cause, the settlement hearing may be held in
camera.
(c) Request the court to limit the participation of the person
initiating the action. If the attorney general demonstrates that
unrestricted participation by the person initiating the action
during the litigation would interfere with or unduly delay the
attorney general's prosecution of the case or would be repetitious,
irrelevant, or unduly harassing, the court may do any of the
following:
(i) Limit the number of the person's witnesses.
(ii) Limit the length of the testimony of the person's
witnesses.
(iii) Limit the person's cross-examination of witnesses.
(iv) Otherwise limit the person's participation in the
litigation.
(6) If the attorney general notifies the court that he or she
declines to take over the action under subsection (3), the person
who initiated the action may proceed with the action. At the
attorney general's request and expense, the attorney general shall
be provided with copies of all pleadings filed in the action and
copies of all deposition transcripts. Notwithstanding the attorney
general's election not to take over the action, the court may
permit the attorney general to intervene in the action at any time
on a showing of good cause and, subject to subsection (7), without
affecting the rights or status of the person initiating the action.
(7) If the court determines, after a hearing conducted in
camera, that actions of the person initiating the action during
discovery would interfere with the attorney general's investigation
or prosecution of a criminal or civil matter, the court may stay
the discovery for not more than 90 days. The court may extend the
stay on a further showing that the attorney general is pursuing the
investigation or proceeding with reasonable diligence and the
discovery would interfere with the ongoing investigation or
proceeding.
(8) As an alternative to an action permitted under this
section, the attorney general may pursue damages or a penalty for
an act described in section 3 through any proceeding available to
this state, including an administrative proceeding. If the attorney
general pursues an alternative proceeding, a person who initiates
an action under this section has rights in that proceeding
equivalent to the rights that the person would have had if the
action had continued under this section to the extent that those
rights are consistent with the law governing the proceeding.
Findings of fact and conclusions of law that become final in an
alternative proceeding are conclusive on the parties to an action
under this section. For purposes of this subsection, a finding or
conclusion is final if it has been finally determined on appeal to
the appropriate court, if the time for filing an appeal of the
finding or conclusion has expired, or if the finding or conclusion
is not subject to judicial review.
(9) Subject to subsections (10) and (11), if a person other
than the attorney general prevails in an action that the person
initiates under this section, the court shall award the person
necessary expenses, costs, reasonable attorney fees, and, based on
the amount of effort involved, the following percentage of the
monetary proceeds resulting from the action or any settlement of
the claim:
(a) If the attorney general intervenes, 15% to 25%.
(b) If the attorney general does not intervene, 25% to 30%.
(10) If the court finds an action under this section to be
based primarily on disclosure of specific information that was not
provided by the person bringing the action, such as information
from a criminal, civil, or administrative hearing in a state or
federal department or agency, a legislative report, hearing, audit,
or investigation, or the news media, and the attorney general
proceeds with the action, the court shall award the person bringing
the action no more than 10% of the monetary recovery in addition to
reasonable attorney fees, necessary expenses, and costs.
(11) If the court finds that the person bringing an action
under this section planned, initiated, or participated in the
conduct on which the action is brought, then the court may reduce
or eliminate, as it considers appropriate, the share of the
proceeds of the action that the person would otherwise be entitled
to receive. A person who is convicted of criminal conduct arising
from a violation of this act shall not initiate or remain a party
to an action under this section and is not entitled to share in the
monetary proceeds resulting from the action or any settlement of
the claim.
(12) A person other than the attorney general shall not bring
an action under this section that is based on allegations or
transactions that are already the subject of a civil action, a
criminal investigation or prosecution, or an administrative
investigation or proceeding to which this state or the federal
government is already a party. The court shall dismiss an action
brought in violation of this section.
(13) Unless the person is the original source of the
information, a person, other than the attorney general, shall not
initiate an action under this section based on the public
disclosure of allegations or transactions in a criminal, civil, or
administrative hearing, in a state or federal legislative,
investigative, or administrative report, hearing, audit, or
investigation, or from the news media. The person is the original
source if he or she had direct and independent knowledge of the
information on which the allegations are based and voluntarily
provided the information to the attorney general before filing an
action based on that information under this section.
(14) This state and the attorney general are not liable for
any expenses, costs, or attorney fees that a person incurs in
bringing an action under this section. Any amount awarded to a
person initiating an action to enforce this act is payable solely
from the proceeds of the action or settlement.
(15) If a person proceeds with an action under this section
after being notified that the attorney general has declined to
intervene and the court finds that the claim was frivolous, as
defined in section 2591 of the revised judicature act of 1961, 1961
PA 236, MCL 600.2591, the court shall award the prevailing
defendant actual and reasonable attorney fees and expenses and, in
addition, shall impose a civil fine of not more than $10,000.00 on
the person who initiated the action. The civil fine shall be
deposited into the general fund of this state.
(16) The attorney general may recover all costs this state
incurs in the litigation and recovery of restitution under this
act, including the cost of investigation and attorney fees. The
attorney general shall retain the amount received for activities
under this act, excluding amounts for restitution, court costs, and
fines.
(17) The attorney general shall not retain amounts under this
section until all the restitution awarded in the proceeding has
been paid.
Sec. 5. (1) An employer shall not discharge, demote, suspend,
threaten, harass, or otherwise discriminate against an employee in
the terms and conditions of employment because the employee
initiates, assists in, or participates in a proceeding or court
action under this act or because the employee cooperates with or
assists in an investigation under this act. This prohibition does
not apply to an employment action against an employee if the court
finds that 1 or more of the following apply:
(a) The employee brought a frivolous claim under this act, as
defined in section 2591 of the revised judicature act of 1961, 1961
PA 236, MCL 600.2591.
(b) The employee planned, initiated, or participated in the
conduct on which the action is brought.
(c) The employee is convicted of criminal conduct arising from
an act described in section 3.
(2) An employer who violates this section is liable to the
employee for all of the following:
(a) Reinstatement to the employee's previous position without
loss of seniority.
(b) Two times the amount of lost back pay.
(c) Interest on the back pay.
(d) Compensation for any special damages.
(e) Any other relief necessary to make the employee whole.
Sec. 6. A civil action under section 4 may not be filed more
than 3 years after the official of the state or political
subdivision charged with responsibility to act in the circumstances
discovers the act on which the action is based or more than 10
years after the act was committed, whichever is later.