H 4074 Session 110 (1993-1994)
H 4074 General Bill, By S.E. Gonzales, R.A. Barber, Harrison, Jennings, Kelley,
Kirsh, Klauber, R. Smith, C.C. Wells, Wilder, D.A. Wright and Young-Brickell
Similar(S 686)
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Sections
15-75-60 and 15-75-65 so as to prohibit false claims to defraud the State, to
provide a civil penalty, and to provide for a civil action.
04/14/93 House Introduced and read first time HJ-54
04/14/93 House Referred to Committee on Judiciary HJ-55
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976,
BY ADDING SECTIONS 15-75-60 AND 15-75-65 SO AS TO
PROHIBIT FALSE CLAIMS TO DEFRAUD THE STATE, TO
PROVIDE A CIVIL PENALTY, AND TO PROVIDE FOR A CIVIL
ACTION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 15-75-60. (A) It is unlawful for a person to:
(1) knowingly present or cause to be presented to an officer or
employee of the State a false or fraudulent claim for payment or
approval;
(2) knowingly make, use, or cause to be made or used a false
record or statement to get a false or fraudulent claim paid or approved
by the State;
(3) conspire to defraud the State by getting a false or fraudulent
claim allowed or paid;
(4) have possession, custody, or control of property or money
used or to be used by the State and intending to defraud the State or
wilfully to conceal the property, deliver, or cause to be delivered less
property than the amount for which the person receives a certificate or
receipt;
(5) make or deliver a document certifying receipt of property used
or to be used by the State and intending to defraud the State, or make or
deliver the receipt without completely knowing that the information on
the receipt is true;
(6) knowingly buy or receive as a pledge of an obligation or debt
public property from an officer or employee of the State who lawfully
may not sell or pledge the property; or
(7) knowingly make, use, or cause 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.
(B) A person who violates the provisions of this section is liable to
the State for a civil penalty of not less than five thousand dollars nor
more than ten thousand dollars, plus three times the amount of damages
which the State sustains because of the act of that person. If the court
finds that: (1) the person committing the violation of this subsection
furnished officials of the State responsible for investigating false claims
violations with all information known to the person about the violation
within thirty days after the date on which the defendant first obtained the
information; (2) the person fully cooperated with any state investigation
of the violation; and (3) at the time the person furnished the State with
the information about the violation, no criminal prosecution, civil action,
or administrative action had commenced under Title 16 with respect to
the violation, and the person did not have actual knowledge of the
existence of an investigation into the violation; then, the court may
assess not less than two times the amount of damages which the State
sustains because of the act of the person. A person who violates this
subsection also is liable to the State for the costs of a civil action brought
to recover any penalty or damages.
(C) For purposes of this section:
(1) `Knowing' and 'knowingly' mean that a person:
(a) has actual knowledge of the information;
(b) acts in deliberate ignorance of the truth or falsity of the
information; or
(c) acts in reckless disregard of the truth or falsity of the
information.
No proof of specific intent to defraud is required.
(2) `Claim' includes a request or demand, whether under a
contract or otherwise, for money or property which is made to a
contractor, grantee, or other recipient if the State provides a portion of
the money or property which is requested or demanded, or if the State
will reimburse the contractor, grantee, or other recipient for a portion of
the money or property which is requested or demanded.
Section 15-75-65. (A) The Attorney General diligently shall
investigate a violation under Section 15-75-60. If the Attorney General
finds that a person has violated or is violating Section 15-75-60, the
Attorney General may bring a civil action under this section against the
person.
(B) (1) A person may bring a civil action for a violation of Section
15-75-60 for the person and for the State. The action must be brought
in the name of the State. The action may be dismissed only if the court
and the Attorney General give written consent to the dismissal and their
reason for consenting.
(2) A copy of the complaint and written disclosure of
substantially all material evidence and information the person possesses
must be served on the State pursuant to Rule 4(d)(4) of the South
Carolina Rules of Civil Procedure. The complaint must be filed in
camera, shall remain under seal for at least sixty days, and must not be
served on the defendant until the court orders. The State may elect to
intervene and proceed with the action within sixty days after it receives
both the complaint and the material evidence and information.
(3) The State, for good cause shown, may move the court for
extensions of the time during which the complaint remains under seal
under item (2) of this subsection. The motions may be supported by
affidavits or other submissions in camera. The defendant is not required
to respond to any complaint filed under this section until twenty days
after the complaint is unsealed and served upon the defendant pursuant
to Rule 4 of the South Carolina Rules of Civil Procedure.
(4) Before the expiration of the sixty-day period or any extensions
obtained under item (3) of this subsection, the State shall:
(a) proceed with the action, in which case the action must be
contained by the State; or
(b) notify the court that it declines to take over the action, in
which case the person bringing the action has the right to conduct the
action.
(5) When a person brings an action under this subsection, no
person other than the State may intervene or bring a related action based
on the facts underlying the pending action.
(C) (1) If the State proceeds with the action, it has the primary
responsibility for prosecuting the action and is not bound by an act of
the person bringing the action. That person has the right to continue as
a party to the action, subject to the limitations set forth in item (2) of this
subsection.
(2) (a) The State may dismiss the action notwithstanding the
objections of the person initiating the action if the person has been
notified by the State of the filing of the motion and the court has
provided the person with an opportunity for a hearing on the motion.
(b) The State may settle the action with the defendant
notwithstanding the objections of the person initiating the action if the
court determines, after a hearing, that the proposed settlement is fair,
adequate, and reasonable under all the circumstances. Upon a showing
of good cause, the hearing may be held in camera.
(c) Upon a showing by the State that unrestricted participation
during the course of the litigation by the person initiating the action
would interfere with or unduly delay the State prosecution of the case,
or would be repetitious, irrelevant, or for purposes of harassment, the
court, in its discretion, may impose limitations on the person's
participation, such as:
(i) limiting the number of witnesses the person may call;
(ii) limiting the length of the testimony of the witnesses;
(iii) limiting the person's cross-examination of witnesses; or
(iv) otherwise limiting the participation by the person in the
litigation.
(d) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the person initiating
the action would be for purposes of harassment or would cause the
defendant undue burden or unnecessary expense, the court may limit the
participation by the person in the litigation.
(3) If the State elects not to proceed with the action, the person
who initiated the action has the right to conduct the action. If the State
requests, it must be served with copies of all pleadings filed in the action
and must be supplied with copies of all deposition transcripts at the
state's expense. When a person proceeds with the action, the court,
without limiting the status and rights of the person initiating the action,
may permit the State to intervene at a later date upon a showing of good
cause.
(4) Whether or not the State proceeds with the action, upon a
showing by the State that certain actions of discovery by the person
initiating the action would interfere with the state's investigation or
prosecution of a criminal or civil matter arising out of the same facts, the
court may stay discovery for a period of not more than sixty days. This
showing must be conducted in camera. The court may extend the
sixty-day period upon a further showing, in camera, that the State has
pursued the criminal or civil investigation or proceedings with
reasonable diligence and any proposed discovery in the civil action will
interfere with the ongoing criminal or civil investigation or proceedings.
(5) Notwithstanding subsection (B), the State may elect to pursue
its claim through any alternate remedy available to the State, including
any administrative proceeding to determine a civil money penalty. If
any alternate remedy is pursued in another proceeding, the person
initiating the action has the same rights in the proceeding as the person
would have had if the action had continued under this section. A finding
of fact or conclusion of law made in the other proceeding that has
become final is conclusive on all parties to an action under this section.
A finding or conclusion is final if it has been finally determined on
appeal to the appropriate court, if all time for filing an appeal with
respect to the finding or conclusion has expired or if the finding or
conclusion is not subject to judicial review.
(D) (1) If the State proceeds with an action brought by a person
under subsection (B), the person, subject to this item, shall receive at
least fifteen percent but not more than twenty-five percent of the
proceeds of the action or settlement of the claim, depending upon the
extent to which the person substantially contributed to the prosecution
of the action. Where the action is one which the court finds to be based
primarily on disclosures of specific information, other than information
provided by the person bringing the action, relating to allegations or
transactions in a criminal, civil, or administrative hearing, in a
legislative, administrative, or State Auditor or Legislative Audit Council
report, hearing, audit, or investigation, or from the news media, the court
may award the sums as it considers appropriate, but in no case more than
ten percent of the proceeds, taking into account the significance of the
information and the role of the person bringing the action in advancing
the case to litigation. Payment to a person under this item must be made
from the proceeds. The person also shall receive an amount for
reasonable expenses which the court finds to have been necessarily
incurred, plus reasonable attorney's fees and costs. All expenses, fees,
and costs must be awarded against the defendant.
(2) If the State does not proceed with an action under this section,
the person bringing the action or settling the claim shall receive an
amount which the court decides is reasonable for collecting the civil
penalty and damages. The amount must be not less than twenty-five
percent nor more than thirty percent of the proceeds of the action or
settlement and must be paid out of the proceeds. The person also shall
receive an amount for reasonable expenses which the court finds to have
been necessarily incurred, plus reasonable attorney's fees and costs. All
expenses, fees, and costs must be awarded against the defendant.
(3) Whether or not the State proceeds with the action, if the court
finds that the action was brought by a person who planned and initiated
the violation of Section 15-75-60 upon which the action was brought,
then the court, to the extent the court considers appropriate, may reduce
the share of the proceeds of the action which the person would otherwise
receive under item (1) or (2) of this subsection, taking into account the
role of that person in advancing the case to litigation and any relevant
circumstances pertaining to the violation. If the person bringing the
action is convicted of criminal conduct arising from his role in the
violation of Section 15-75-60, that person must be dismissed from the
civil action and shall not receive any share of the proceeds of the action.
Dismissal does not prejudice the right of the State to continue the action
represented by the Attorney General.
(4) If the State does not proceed with the action and the person
bringing the action conducts the action, the court may award to the
defendant its reasonable attorney's fees and expenses if the defendant
prevails in the action and the court finds that the claim of the person
bringing the action was clearly frivolous, clearly vexatious, or brought
primarily for purposes of harassment.
(E) (1) In no event may a person bring an action under subsection
(B) which is based upon allegations or transactions which are the subject
of a civil suit or an administrative civil money penalty proceeding in
which the State is already a party.
(2) No court has jurisdiction over an action under this section
based upon the public disclosure of allegations or transactions in a
criminal, civil, or administrative hearing, in a congressional,
administrative, or State Auditor or Legislative Audit Council report,
hearing, audit, or investigation, or from the news media, unless the
action is brought by the Attorney General or the person bringing the
action is an original source of the information. For purposes of this
item, `original source' means an individual who has direct and
independent knowledge of the information on which the allegations are
based and has voluntarily provided the information to the State before
filing an action under this section which is based on the information.
(F) The State is not liable for expenses which a person incurs in
bringing an action under this section.
(G) An employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated against in the
terms and conditions of employment by his employer because of a
lawful act done by the employee on behalf of the employee or others in
furtherance of an action under this section, including investigation for,
initiation of, testimony for, or assistance in an action filed or to be filed
under this section, is entitled to all relief necessary to make the
employee whole. Relief includes reinstatement with the same seniority
status the employee would have had but for the discrimination, two
times the amount of back pay, interest on the back pay, and
compensation for any special damages sustained as a result of the
discrimination, including litigation costs and reasonable attorney's fees.
An employee may bring an action in the appropriate district court of the
State for the relief provided in this subsection."
SECTION 2. This act takes effect upon approval by the Governor.
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