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Connecticut False Claims Act

AN ACT IMPLEMENTING THE PROVISIONS OF THE BUDGET CONCERNING HUMAN SERVICES AND MAKING CHANGES TO VARIOUS SOCIAL SERVICES STATUTES.

SUMMARY:

This bill implements provisions of the budget pertaining to human services.

EFFECTIVE DATE: Upon passage

§§ 1-17 — FALSE CLAIMS ACT FOR DSS PROGRAMS

The bill creates a Connecticut False Claims Act (FCA) applicable to the medical assistance programs that the Department of Social Services (DSS) administers, including Medicaid, State-Administered General Assistance (SAGA), HUSKY B, and Charter Oak. The 2005 federal Deficit Reduction Act permits states that adopt their own act to keep a greater share of any Medicaid funds that they recover under it.

§ 2 — Violations

With respect to goods and services rendered through all DSS medical assistance programs, including Medicaid, the bill prohibits anyone from:

1. knowingly presenting, or causing to be presented to a state employee or officer, a false or fraudulent claim for payment or approval;
2. knowingly making, using, or causing to be made or used, a false record or statement to secure payment or approval of a false or fraudulent claim under these programs;
3. conspiring to defraud the state by securing the allowance or payment of a false or fraudulent claim;
4. having possession, custody, or control of property or money used, or to be used, by the state relative to these programs, and, with intent to defraud the state or willfully conceal the property, deliver or cause to be delivered less property than the amount for which the person receives a receipt or certificate;
5. being authorized to make or deliver a document certifying receipt of property used, or to be used, by the state relative to these programs. and, with intent to defraud the state, make or deliver the document without completely knowing that the information on it is true;
6. knowingly buying, or receiving as a pledge of an obligation or debt, public property from a state employee or officer who may not legally sell or pledge the property; and
7. knowingly making, 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 the state.

Penalties

Anyone who violates any of the above provisions is liable for:

1. a civil penalty between $ 5,000 and $ 10,000;
2. three times the amount of damages to the state due to the violation; and
3. the costs of investigating and prosecuting the violation.

The liability is joint and several for any violation committed by two or more people.

An individual faces a smaller penalty for damages (#2, above) if a court finds that (1) the person committing the violation provided state investigators with all information he or she knew about it within 30 days after first obtaining that information; (2) the person fully cooperated with state investigators; and (3) when he or she provides the state the information, (a) no criminal, civil, or administrative actions have begun (see below) and (b) the person had no knowledge of an investigation. The court in these instances can assess a penalty of not less than twice the amount of damages. The bill exempts any information a person provider under these circumstances from disclosure under the Freedom of Information Act (FOIA).

§ 3 — Attorney General- Initiated Civil Actions

The bill authorizes the attorney general to investigate any alleged violations. Information obtained during the investigations is exempt from disclosure under the state Freedom of Information Act. If the attorney general finds that a violation has occurred or is occurring, he can bring a civil action in Hartford Superior Court.

§ 4 — Other Civil Actions

The bill also authorizes any other person to bring a civil action against a violator in the person's and the state's behalf. These actions subsequently can be withdrawn only if the court and the attorney general give written consent and their reasons for doing so. In these actions or actions under the federal False Claims Act, only the state can intervene or bring a related action based on the facts underlying the pending action.

The person bringing the action must provide a copy of the complaint and written disclosure of substantially all material evidence and information he or she possesses by serving the attorney general in the same way civil actions are brought against the state. Among other things, this includes leaving a true and attested copy of the process, including the declaration or complaint, at the Attorney General's Office in Hartford.

The complaint must be filed in camera (in private), remain sealed for at least 60 days, and cannot be served on the defendant until a court orders it. The motion can be supported by in camera affidavits or other submissions. The court, upon the attorney general's motion, can, for good cause, extend the time during which the complaint is sealed. Before the sealed period ends, the attorney general must (1) proceed with the action, which he must conduct or (2) notify the court that he has declined to take over the action, in which case the person can proceed to bring the action.

If the court orders that the complaint be unsealed and served, the Superior Court must issue an appropriate order requiring the same notice that is ordinarily required to bring a civil action. The defendant cannot be required to respond to any complaint until 30 days after he or she is served.

§ 5 — Attorney General Proceeds With or Withdraws From Action

If the attorney general decides to proceed with the action, he has the primary responsibility for prosecuting it and is not bound by any act of the person bringing it. But the person bringing the action has the right to continue as a party to it, subject to limits described below.

The bill authorizes the attorney general to withdraw the action regardless of any objections the person bringing it has if the attorney general notifies the person of his motion (presumably to withdraw) and the court provides the person the opportunity for a hearing on it. Likewise, the attorney general can settle with the defendant even if the person bringing the action objects if the court, after a hearing, determines that the proposed settlement is fair, adequate, and reasonable under all the circumstances. These hearings can be held in camera for good cause.

§ 13, 14 — Proving Essential Elements Through Preponderance of Evidence

Under the bill, whoever brings the FCA action must prove all its essential elements, including damages, by a preponderance of the evidence.

The bill also specifies that regardless of any other contrary state law, a final judgment for the state's favor against a defendant in any criminal proceeding charging fraud or false statements, whether after a trial or plea of guilty or no contest, prevents the defendant from denying the essential elements of the offense in a civil action that involves the same transaction as the criminal proceeding.

§ 5(d) — Court Limits on Person's Participation in Action

The bill gives the court discretion to limit participation by the person bringing the action when either the attorney general or defendant can show cause. Specifically, the attorney general must show that unrestricted participation would (1) interfere with or unduly delay his prosecution of the case or (2) be repetitious, irrelevant, or for harassment. The defendant must show that unrestricted participation would be for harassment or would cause him or her undue burden or unnecessary expense. The court can limit (1) the number of witnesses the person can call, (2) the length of their testimony, (3) cross-examination, and (4) their participation in other ways it chooses.

§ 5(e)(f) — Rewards for Person Bringing Actions

The bill provides that if (1) the court awards civil penalties or damages to the state or (2) the attorney general settles and receives civil penalties or damages, the person bringing the action must receive between 15% and 25 % of the proceeds, based on the extent to which he or she substantially contributed to the prosecution.

The court can award the person less than 15% in certain cases. When it finds that the action is based primarily on disclosures or specific information relating to allegations or transactions (1) in a criminal, civil, or administrative hearing; (2) in a report, hearing, audit, or investigation conducted by the General Assembly or one of its committees, the state auditors, or a state agency or quasi-public agency; or (3) from the news media, the court may award the person an amount it deems appropriate, but no more than 10% of the proceeds, taking into account the significance of the information and the person's role in advancing the case to litigation.

In either instance, the person must also receive an amount for the reasonable expenses that the court finds he or she incurred necessarily, plus reasonable attorney fees and costs. The defendant must pay all of these expenses, fees, and costs.

§ 6 — When Attorney General Declines to Proceed

The bill empowers the person bringing the action to conduct it when the attorney general declines to proceed. If the attorney general makes this decision and asks, the court must order that copies of all pleadings filed in the action and of any deposition transcripts be provided to the state. When the person proceeds with the action, the court, without limiting the person's status or rights, can permit the attorney general to intervene at a later date if he can show good cause.

When Individual Prevails. The bill provides rewards for people bringing or settling these actions that the court decides are reasonable. The award is between 25% and 30% of the proceeds. As with the actions the attorney general brings, the person must also be reimbursed for expenses and legal fees and costs.

When Defendant Prevails. Under the bill, if the defendant prevails in these actions and the court finds that the claim was clearly frivolous or vexatious or brought primarily to harass, the court can require the person bringing the action to pay the defendant's attorney fees and expenses.

Stays of Discovery. The bill provides that whether or not the attorney general proceeds with an action, if he requests and can show that certain motions or requests for discovery by the person bringing the action would interfere with the state's investigation or prosecution of a criminal or civil matter arising from the same facts, the court can stay the discovery for up to 60 days. This showing must be done in camera. The court can extend the stay for an additional 60 days upon further in camera showing that the state has pursued its investigation or proceedings with reasonable diligence and any proposed discovery in the individual's civil action will interfere with the state's case. The bill allows the chief state's attorney or state's attorney for the appropriate judicial district to explain to the court the potential impact of the discovery on a pending criminal investigation or prosecution.

§ 7 — Alternate Means to Pursue State's Claim

The bill authorizes the attorney general to pursue the state's claim through any alternate remedy available to the state, including an administrative proceeding to determine a civil penalty. If he pursues an alternate remedy, the person bringing the action has the same rights as he or she would have had if the action had continued in court. Any fact finding or conclusion of law made in an alternate proceeding that has become final is conclusive on all parties to court actions. A finding or conclusion is final if it has been finally determined on appeal to the appropriate state court, if the time for filing an appeal has expired, or if it is not subject to judicial review.

§ 8 — When the Person Bringing the Action Planned or Initiated the Violation

The bill provides that if the court finds that the action was brought by someone who planned and initiated the violation upon which the action is brought, the court can reduce the share of the proceeds the person would otherwise receive (10-30%), taking into account the person's role in advancing the case to litigation and any relevant circumstances relating to the violation.

If the person bringing the action is convicted of criminal conduct arising from his or her role in the violation, he or she must be dismissed from the civil action and may not receive any share of the proceeds. A dismissal does not prejudice the attorney general's right to continue the action.

§ 9 — Court Jurisdiction Limited

Unless the attorney general brings the action or the person bringing it is an original source of the information, the bill provides that the court does not have jurisdiction over an action:

1. against a member of the General Assembly or the judiciary, an elected state officer or a state department head if the action is based on evidence or information known to the state when the action was brought;
2. that is based on allegations or transactions that are the subject of a civil suit or an administrative civil penalty proceeding in which the state is already a party; or
3. that is based on the public disclosure of allegations or transactions (a) in a criminal, civil, or administrative hearing; (b) in a report, hearing, audit, or investigation conducted by the General Assembly or one of its committees, the state auditors, a state agency, or quasi-public agency; or (c) from the news media An “original source” means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided it to the state before filing the action based on the information.

The court likewise has no jurisdiction over actions brought by a person who knew or had reason to know that the attorney general or another state law enforcement official knew of the allegations or transactions before the person filed the action or disclosed the material evidence to the attorney general.

§ 10 — No State Liability for Expenses Incurred by Individuals Bringing Actions

The bill provides that the state is not liable for expenses that a person bringing an action incurs.

§ 11 — Whistle-Blower Protections

The bill provides that any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against by his or her employer because the employee lawfully acts on his, her, or others' behalf in furthering one of the bill's actions, including investigating, initiating, or testifying or assisting in, an action filed or to be filed under the bill is entitled to all relief necessary to make the employee whole.

This relief, which the employee can request through Superior Court, must include (1) reinstatement with the same seniority status that the employee would have had except for the discrimination and (2) twice the amount of any back pay, plus interest on it, and compensation for any special damages that the discrimination caused, including litigation costs and reasonable attorneys' fees.

§ 12 — Statute of Limitations

The bill specifies that any FCA action it permits cannot be brought (1) more than six years after the date the violation occurs or (2) more than three years after the date when material facts are known or reasonably should have been known by the state official charged with acting on them, whichever occurs later, but in no event can an action be brought more than 10 years after the date the violation is committed.

§ 15 — Non-Exclusivity of Remedies

The bill provides that its FCA provisions and the state Whistleblower law are not exclusive and that the remedies it provides are in addition to any others provided in state, federal, or common law.

§ 17 — Authority for Attorney General to Act; Confidentiality of Records

By law, the attorney general has the power to summon witnesses and take other steps when investigating complaints brought to the state auditors against state or quasi-public agencies or involving large state contracts. The bill extends this authority to enable him to begin investigating suspected FCA violations until he files a civil action under the bill.

The bill also provides that neither the state auditors nor the attorney general may disclose the identity of the person who provided information under these FCA provisions without his or her consent unless the auditors or attorney general determine that disclosure is unavoidable. By law they may withhold records of the investigation while it is occurring.

The bill also exempts from disclosure under the Freedom of Information Act records of an investigation or the name of an employee providing information under the FCA.

§ 18 — False Claims Report

The bill requires the attorney general to submit a report to the General Assembly and the governor beginning on the 30th day after the bill's passage and annually thereafter that provides:

1. the number of civil actions he and private individuals filed under the FCA during the previous calendar year;
2. with respect to civil actions filed by private individuals during that period, the number that remain under seal, the number of action filed by court location, the state agency or program involved in the action, and the number of actions filed by people who previously filed actions under the federal FCA or another state's act;
3. any known amount the state recovered from these actions in settlements, damages, penalties, and litigation costs; and
4. for all recoveries, the case number and parties; a breakdown of damages, penalties, and litigation costs; and the amount and per cent paid by the state to the person who brought the civil action.

The bill requires the attorney general to include in his first report information on false claim actions brought under the FCA that the bill establishes during this past. However, the FCA provisions are effective upon passage and were not in existence during the previous year; thus, it does not appear that the attorney general can provide any information in the first report.

For more information, email quitam@bafirm.com.

Notice

This website is designed to provide general information only. This information is not and should not be construed to be legal advice. The transmission of the information found on this website also does not result in the formation of a lawyer-client relationship.

You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.