SB572: Bill Text

LRB-4058/1

CMH&ARG:med:rs

2011 - 2012 LEGISLATURE

2011 Senate BILL 572

March 15, 2012 - Introduced by Senators Lassa and Vinehout, cosponsored by Representatives Jorgensen, Roys, Turner and Ringhand. Referred to Committee on Senate Organization.

SB572,1,6 An Act to amend 25.18 (1) (a), 25.18 (1) (f), 25.18 (1) (m), 84.01 (13), 84.01 (31), 84.06 (2) (a), 84.06 (3), 84.06 (4), 85.015, 102.81 (2), 165.08, 165.25 (11), 221.0903 (4) (b), 801.02 (1), 803.09 (1) and (2), 804.01 (2) (intro.), 805.04 (2m) and 893.981; and to create 16.771, 16.871, 20.932 and 66.0902 of the statutes; relating to: false claims against the state or a local government and providing a penalty.

Analysis by the Legislative Reference Bureau

Under current law, if a contractor or vendor does business with this state or a local government, the terms of the contract or order govern the performance of, and the price to be paid to, the contractor or vendor. If the contractor or vendor claims payment for materials, supplies, equipment, or services that are not provided in accordance with the contract or order, or at a price that is different from the price specified in the contract or order, the state or a local government has a remedy against the contractor or vendor for breach of contract. If the contractor or vendor is asked to swear to the truth of a claim for payment and the claim is false, the contractor or vendor may be prosecuted for false swearing. Currently, except with regard to medical assistance, a private person has no means to recover, on behalf of the state, damages sustained by the state as a result of a fraud committed against the state.

This bill provides that whoever knowingly presents a false claim under any contract or order for materials, supplies, equipment, or services to be provided to a state agency is subject to a forfeiture (civil penalty) of not less than $5,000 nor more than $10,000, plus three times the amount of the damages that were sustained by the state or would have been sustained by the state, whichever is greater, as a result of the false claim. The bill permits the attorney general to bring an action to recover any forfeiture for which a contractor or vendor is liable as a result of a false claim submitted to a state agency. The bill contains similar provisions that apply to local governmental units. The bill creates separate prohibitions against state contractors, grantees, vendors, and other recipients of state resources who knowingly commit certain fraudulent acts against the state. The bill makes these persons liable for three times the amount of damages sustained by the state resulting from such acts and imposes additional forfeitures of not less than $5,000 nor more than $10,000 for each violation. The bill permits the attorney general to pursue an alternate remedy, such as an administrative remedy, against an alleged offender in lieu of an action in court. With certain exceptions, the bill provides that a person who brings an action on behalf of the state is entitled to receive his or her reasonable expenses of bringing the action, including his or her costs and reasonable, actual attorney fees, which are assessed against the defendant. The bill entitles an employee to all relief to make the employee whole if the employee is discriminated against by an employer as a result of lawful actions the employee took to further the investigation of any act of fraud, as defined in the bill, the employer committed against the state. Under the bill, the relief may include reinstatement and double back pay with interest from the time of any discharge to the time of reinstatement. The bill also permits the employee to recover any costs, including reasonable, actual attorney fees, from his or her employer.

The provisions of the bill do not apply to certain contracts of the Department of Transportation, including engineering and highway construction contracts, or to certain contracts of the Investment Board, including investment-related contracts.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB572, s. 1 Section 1. 16.771 of the statutes is created to read:

SB572,2,3 16.771 False claims. (1) In this section, "contract" means any of the following:

SB572,2,4 (a) Contracts or orders that are subject to s. 16.705.

SB572,3,3 (b) Contracts or orders entered into for projects that are subject to s. 103.49 or 103.50 if the party presenting the false claim is alleged to have failed to comply with s. 103.49 or 103.50.

SB572,3,10 (2) Whoever knowingly presents or causes to be presented a false claim for payment under a contract for materials, supplies, equipment, or services to be provided to an agency shall forfeit not less than $5,000 nor more than $10,000, plus 3 times the amount of the damages that were sustained by the state or would have been sustained by the state, whichever is greater, as a result of the false claim. The attorney general may bring an action on behalf of the state to recover any forfeiture incurred under this section.

SB572, s. 2 Section 2. 16.871 of the statutes is created to read:

SB572,3,12 16.871 False claims. (1) In this section:

SB572,3,13 (a) "Agency" has the meaning given in s. 16.70 (1e).

SB572,3,14 (b) "Construction work" has the meaning given in s. 16.87 (1) (a).

SB572,3,15 (bm) "Contract" has the meaning given in s. 16.771 (1).

SB572,3,16 (c) "Limited trades work" has the meaning given in s. 16.70 (7).

SB572,3,23 (2) Whoever knowingly presents or causes to be presented a false claim under any contract for construction work or limited trades work, or for engineering or architectural services, to be provided to any agency shall forfeit not less than $5,000 nor more than $10,000, plus 3 times the amount of the damages that were sustained by the state or would have been sustained by the state, whichever is greater, as a result of the false claim. The attorney general may bring an action on behalf of the state to recover any forfeiture incurred under this subsection.

SB572, s. 3 Section 3. 20.932 of the statutes is created to read:

SB572,3,25 20.932 False claims; actions by or on behalf of state. (1) In this section:

SB572,4,1 (a) "Authority" has the meaning given in s. 16.70 (2).

SB572,4,9 (b) "Claim" includes any request or demand for money, property, or services made to any officer, employee, or agent of this state, or to any contractor, grantee, or other recipient, whether or not under contract, if any portion of the money, property, or services that are requested or demanded is derived from state resources, or if the state is obligated to reimburse the contractor, grantee, or other recipient for any portion of the money, property, or services that are requested or demanded. "Claim" does not include any request or demand for medical assistance described under s. 20.931 (1) (b).

SB572,4,10 (c) "Employer" includes all agencies and authorities.

SB572,4,11 (d) "Knowingly" has the meaning given in s. 20.931 (1) (d).

SB572,4,12 (e) "Proceeds" has the meaning given in s. 20.931 (1) (e).

SB572,4,13 (f) "State public official" has the meaning given in s. 19.42 (14).

SB572,4,16 (2) Except as provided in subs. (3m) and (4), any person who does any of the following is liable to this state as provided under sub. (3) and shall forfeit not less than $5,000 nor more than $10,000 for each violation:

SB572,4,19 (a) Knowingly presents or causes to be presented to any officer, employee, or agent of this state, or to any contractor, grantee, or other recipient of state resources, a false claim for payment or approval.

SB572,4,21 (b) Knowingly makes, uses, or causes to be made or used a false record or statement to obtain approval or payment of a false claim.

SB572,4,25 (c) Conspires to defraud this state by obtaining allowance or payment of a false claim, or by knowingly making or using, or causing 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 this state.

SB572,5,3 (d) Has possession, custody, or control of property used or to be used by this state and knowingly delivers or causes to be delivered less property than the amount for which the person receives a certificate or receipt.

SB572,5,6 (e) Being authorized to make or deliver a document certifying receipt of property that is used or to be used by this state, knowingly makes or delivers a receipt that falsely represents the property that is used or to be used.

SB572,5,9 (f) Knowingly buys or receives as a pledge for payment of an obligation or debt for this state property from any person who lawfully may not sell or pledge the property.

SB572,5,12 (g) Knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease any obligation to pay or transmit money or property to this state.

SB572,5,16 (h) Is a beneficiary of the submission of a false claim to any officer, employee, or agent of this state, or to any contractor, grantee, or other recipient of state resources, knows that the claim is false, and fails to disclose the false claim to this state within a reasonable time after the person becomes aware that the claim is false.

SB572,5,19 (3) Except as provided in subs. (3m) and (4), the court may assess against a person who violates sub. (2) not less than 2 nor more than 3 times the amount of the damages sustained by the state because of the acts of the person.

SB572,5,21 (3m) The court may not assess any forfeiture under sub. (2) if the court finds all of the following:

SB572,5,24 (a) The person who commits the acts furnished the attorney general with all information known to the person about the acts within 30 days after the date on which the person obtained the information.

SB572,5,25 (b) The person fully cooperated with any investigation of the acts by this state.

SB572,6,4 (c) At the time that the person furnished the attorney general with information concerning the acts, no criminal prosecution or civil or administrative enforcement action had been commenced with respect to the act, and the person did not have actual knowledge of the existence of any investigation into the act.

SB572,6,6 (4) Subsections (2) and (3) do not apply to any claim, record, statement, or return made under chs. 70 to 79.

SB572,6,9 (5) (a) Except as provided in subs. (10) and (12), any person may bring a civil action as a qui tam plaintiff against a person who commits an act in violation of sub. (2) for the person and the state in the name of the state.

SB572,6,17 (b) The plaintiff shall serve upon the attorney general a copy of the complaint and documents disclosing substantially all material evidence and information that the person possesses. The plaintiff shall file a copy of the complaint with the court for inspection in camera. Except as provided in par. (c), the complaint shall remain under seal for a period of 60 days from the date of filing, and shall not be served upon the defendant until the court so orders. Within 60 days from the date of service upon the attorney general of the complaint, evidence, and information under this paragraph, the attorney general may intervene in the action.

SB572,6,20 (c) The attorney general may, for good cause shown, move the court for one or more extensions of the period during which a complaint in an action under this subsection remains under seal.

SB572,6,22 (d) Before the expiration of the period during which the complaint remains under seal, the attorney general shall do one of the following:

SB572,6,24 1. Proceed with the action or an alternate remedy under sub. (10), in which case the state shall prosecute the action or proceeding under sub. (10).

SB572,7,2 2. Notify the court that he or she declines to proceed with the action, in which case the action may not proceed.

SB572,7,5 (e) If a person brings a valid action under this subsection, no person other than the state may intervene or bring a related action while the original action is pending based upon the same facts underlying the pending action.

SB572,7,8 (f) In any action or other proceeding under sub. (10) brought under this subsection, all essential elements of the cause of action or complaint, including damages, must be proven by a preponderance of the evidence.

SB572,7,13 (6) If the state proceeds with an action under sub. (5) or an alternate remedy under sub. (10), the state has primary responsibility for prosecuting the action or proceeding under sub. (10). The state is not bound by any act of the person bringing the action, but that person has the right to continue as a party to the action, subject to the limitations under sub. (7).

SB572,7,19 (7) (a) The state may move to dismiss an action under sub. (5) or an administrative proceeding under sub. (10) to which the state is a party for good cause shown, notwithstanding objection of the person bringing the action, if that person is served with a copy of the state's motion and is provided with an opportunity to oppose the motion before the court or the administrative agency before which the proceeding is conducted.

SB572,8,2 (b) With the approval of the governor, the attorney general may compromise and settle an action under sub. (5) or an administrative proceeding under sub. (10) to which the state is a party, notwithstanding objection of the person bringing the action, if the court determines, after affording to the person bringing the action the right to a hearing at which the person has the opportunity to present evidence in opposition to the proposed settlement, that the proposed settlement is fair, adequate, and reasonable considering the relevant circumstances pertaining to the violation.

SB572,8,9 (c) Upon a showing by the state that unrestricted participation in the prosecution of an action under sub. (5) or an alternate proceeding to which the state is a party by the person bringing the action would interfere with or unduly delay the prosecution of the action or proceeding, or would result in consideration of repetitious or irrelevant evidence or evidence presented for purposes of harassment, the court may limit the person's participation in the prosecution in any of the following ways:

SB572,8,10 1. Limiting the number of witnesses that the person may call.

SB572,8,11 2. Limiting the length of the testimony of the witnesses.

SB572,8,12 3. Limiting the cross-examination of witnesses by the person.

SB572,8,14 4. Otherwise limiting the participation by the person in the prosecution of the action or proceeding.

SB572,8,19 (d) Upon showing by a defendant that unrestricted participation in the prosecution of an action under sub. (5) or alternate proceeding under sub. (10) to which the state is a party by the person bringing the action would result in harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the person's participation in the prosecution.

SB572,9,3 (9) Upon showing in camera by the attorney general that discovery by the person bringing the action would interfere with the state's ongoing investigation or prosecution of a criminal or civil matter arising out of the same facts as the facts upon which the action is based, the court may stay the discovery in whole or in part for not more than 60 days. The court may extend the stay upon further showing in camera by the attorney general that the state has pursued the criminal or civil investigation of the matter with reasonable diligence and the proposed discovery in the action brought under sub. (5) will interfere with the ongoing criminal or civil investigation or prosecution.

SB572,9,15 (10) The attorney general may pursue a claim relating to an alleged violation of sub. (2) through an alternate remedy available to the state or any state agency, including an administrative proceeding to assess a civil forfeiture. If the attorney general elects an alternate remedy, the attorney general shall serve timely notice of his or her election upon the person bringing the action under sub. (5), and that person has the same rights in the alternate venue as the person would have had if the action had continued under sub. (5). Any finding of fact or conclusion of law made by a court or by a state agency in the alternate venue that has become final is conclusive upon all parties named in an action under sub. (5). For purposes of this subsection, a finding or conclusion is final if it has been finally determined on appeal, if all time for filing an appeal or petition for review with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.

SB572,9,21 (11) (a) Except as provided in pars. (b) and (d), if the state proceeds with an action brought by a person under sub. (5) or the state pursues an alternate remedy relating to the same acts under sub. (10), the person who brings the action shall receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person contributed to the prosecution of the action or claim.

SB572,9,25 (b) Except as provided in par. (d), if an action or claim is one in which the court or other adjudicator finds to be based primarily upon disclosures of specific information not provided by the person who brings an action under sub. (5) relating to allegations or transactions specifically in a criminal, civil, or administrative hearing; in a legislative or administrative report, hearing, audit, or investigation; or in a report made by the news media, the court or other adjudicator may award an amount that it considers appropriate but that is not more than 10 percent of the proceeds of the action or settlement of the claim, depending upon the significance of the information and the role of the person bringing the action in advancing the prosecution of the action or claim.

SB572,10,11 (c) Except as provided in par. (d), in addition to any amount received under par. (a) or (b), a person bringing an action under sub. (5) shall be awarded his or her reasonable expenses necessarily incurred in bringing the action together with the person's costs and reasonable actual attorney fees. The court or other adjudicator shall assess any award under this paragraph against the defendant.

SB572,10,23 (d) Whether the state proceeds with the action or an alternate proceeding under sub. (10), if the court or other adjudicator finds that the person who brought an action under sub. (5) also planned or initiated the violation upon which the action or proceeding is based, then the court may, to the extent that the court considers appropriate, reduce the share of the proceeds of the action that the person would otherwise receive under par. (a) or (b), taking into account the role of that person in advancing the prosecution of the action or claim and any other relevant circumstance pertaining to the violation, except that if the person bringing the action is convicted of criminal conduct arising from his or her role in a violation of sub. (2), the court or other adjudicator shall dismiss the person as a party and the person shall not receive any share of the proceeds of the action or claim or any expenses, costs, or fees under par. (c).

SB572,10,25 (12) (a) No court has jurisdiction over an action brought by a private person under sub. (5) if any of the following applies:

SB572,11,2 1. The action is against a state public official and is based upon information known to the attorney general at the time that the action is brought.

SB572,11,8 2. The action is based on public disclosure of allegations or transactions in a criminal action; in a legislative, administrative, or other governmental report, hearing, audit, or investigation; or from news media, unless the private person has direct and independent knowledge of the information on which the allegations or transactions are based and has voluntarily provided the knowledge to the attorney general under sub. (5) (b).

SB572,11,12 (b) No person may bring an action under sub. (5) that is based upon allegations or transactions that are the subject of a civil action or an administrative proceeding to assess a civil forfeiture in which the state is a party if that action or proceeding was commenced prior to the date that the action is filed.

SB572,11,14 (13) The state is not liable for any expenses incurred by a private person in bringing an action under sub. (5).

SB572,12,2 (14) Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against by his or her employer because of lawful actions taken by the employee, on behalf of the employee, or by others in furtherance of an action or claim filed under this section, including investigation for, initiation of, testimony for, or assistance in an action or claim filed or to be filed under sub. (5) is entitled to all necessary relief to make the employee whole. The relief shall in each case include reinstatement with the same seniority status that the employee would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay at the legal rate, and compensation for any special damages sustained as a result of the discrimination, including costs and reasonable actual attorney fees. An employee may bring an action to obtain the relief to which the employee is entitled under this subsection.