NY State Senate Bill 2009-S7169B

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jul 09, 2010	print number 7169b
Jul 09, 2010	amend and recommit to finance
Mar 22, 2010	print number 7169a
Mar 22, 2010	amend and recommit to finance
Mar 18, 2010	referred to finance

Bill Amendments

Original

B (Active)

2009-S7169 - Details

Current Committee:: Senate Finance
Law Section:: State Finance Law
Laws Affected:: Amd §§188 - 192, St Fin L

2009-S7169 - Summary

Establishes the NY fraud, enforcement and recovery act.

2009-S7169 - Sponsor Memo

                                 BILL NUMBER:  S7169              REVISED 03/22/10

 TITLE OF BILL :

An act to amend the state finance law, in relation to establishing the
New York fraud, enforcement and recovery act


 PURPOSE :

The purpose of this bill is to clarify and strengthen provisions of
the False Claims Act to improve the prevention and deterrence of
frauds against the state and local governments, and to increase the
recovery of funds and property that have been fraudulently obtained
from the state and local governments.

 SUMMARY OF PROVISIONS :

Section 1: Entitles the bill the "Fraud Enforcement and Recovery Act"

Section 2: Amends section 188(1) of the New York False Claims Act to,
among other things, clarify and establish definitions of terms used in
that act in the same way that the just-passed amendments to the United
States False Claims Act changed such definitions in that act.

Section 3: Amends section 189(1) of the New York False Claims Act to,

among other things, change certain provisions relating to conduct
prohibited by the act in the same way that the just passed amendments
to the United States False Claims Act changes those provisions in that
act.  The act also clarifies that local governments can obtain civil
penalties against fraudsters in certain circumstances.

Section 4: Amends section 190(1) of the New York False Claims Act to
clarify that a local government can being an action on behalf of a
subdivision of such local government.

Section 5: Amends section 190(2)(b) of the New York False Claims Act
to, among other things, change the scope of the seal in qui tam cases
brought under the act in the same way that the just-passed amendments
to the United States False Claims Act amended the scope of the seal in
that act.

Section 6: Amends section 190(2)(a) and (b) of the New York False
Claims Act to add a new paragraph (b-1) to the act that clarifies the
application of the attorney-client privilege to qui tam actions.

Section 7: Amends section 190(2)(d) of the New York False Claims Act
to adopt the provision included in the recently-passed amendments to
the United States False Claims Act that clarifies the application of
the relation-back doctrine in a qui tam action.

Section 8: Adds a new subparagraph (i) and (ii) to section 190(2)(f)
of the New York False Claims Act that requires a qui tam plaintiff to
give the state or a local government copies of motions and other
information when litigating a case in which the state and local
governments have declined to intervene. Clarifies that the state or a
local government must consent to any settlement of a qui tam case.

Section 9: Amends paragraphs (a) and (b) of section 190(6) of the New
York False Claims Act to adopt the ranges of relator awards in the
California False Claims Act.

Section 10: Adds a new paragraph (d) to section 190(6) of the New York
False Claims Act to require counsel to a deceased qui tam plaintiff to
notify the government within five days of learning of such death, and

ensures that the estate of the deceased inherent the rights of the qui
tam plaintiff.

Section 11: Amends section 190(9) of the New York False Claims Act to
clarify the undefined terms of the public disclosure bar and give the
government and not private parties the right to control motions to
dismiss cases based on the public disclosure bar.

Section 12: Amends section 191 of the False Claims Act to clarify the
anti-retaliation provisions in the New York False Claims Act in the
same way that recently-passed amendments to the United States False
Claims Act clarify those provisions in that act. Also addresses
blacklisting and transmitting documents to law enforcement.

Section 13: Amends section 192(1) of the New York False Claims Act to
clarify the statute of limitations.

Section 14: Provides rules regarding pleadings for qui tam actions.

Section 15: Sets an immediate effective date of the act and states
that the amendments apply to any claims, records or statements filed
or made prior to, on or after April I, 2007; provided, however, that
changes to the qui tam awards do not apply to any case filed prior to
the passage of the act.

 JUSTIFICATION :

The New York False Claims Act (NYFCA), signed into law by Governor
Spitzer in 2007, is the state's most important civil tool to fight
fraud against the state or local governments.  Most of the critical
language in the NYFCA was "cut and pasted" from the hugely successful
United States False Claims Act (USFCA), which was signed into law by
President Abraham Lincoln in 1863 to address civil war-era contracting
fraud, and later amended in 1943 by President Roosevelt and 1986 by
President Reagan. Thus, the NYFCA mirrors the 1986 version of the
USFCA.  In May of 2009, however, President Barack Obama signed a
series of critical amendments to the USFCA to, among other things,
reverse court decisions (including recent decisions by the U.S.
Supreme Court) that weakened the USFCA in direct contradiction to the
text of the law and the intent of the 1863 act and the 1986
amendments.

Additionally, there are other pending amendments in Congress to fix
other generally acknowledged problems with the USFCA. Even after the
2009 amendments, the USFCA continues to be riddled with undefined
terms that federal courts have struggled to define and interpret
consistently. Many courts have issued rulings making it unduly hard
for the government to fight fraud and abuse.

Since the NYFCA continues to be a replicated version of the now
outdated 1986 version USFCA, there is little doubt that all of the
federal court decisions misinterpreting the USFCA would be applied to
the NYFCA - even those court decisions that Congress has explicitly
overruled. Accordingly, this bill amends the NYFCA to:

(1) incorporate into the NYFCA the recently-passed amendments to the

USFCA signed by President Obama;

(2) clarify major terms in the NYFCA that, in federal cases
interpreting the USFCA, have been inconsistency defined or applied;

(3) further strengthen the NYFCA to enhance the ability of the
government to recover stolen government funds on behalf of taxpayers;
and

(4) fix technical aspects of the NYFCA that hinder the ability of the
department of law, other state agencies, and local governments to
administer the NYFCA and recover stolen government funds and property.

 LEGISLATIVE HISTORY :

This is new legislation.

 FISCAL IMPLICATIONS :

This bill will increase the amount of funds recovered by the state and
local governments in civil actions to recover stolen funds. It will
also decrease the amount of state and local government funds lost to
fraud by deterring would-be fraudsters from using a false claim
records or statements to obtain government funds.

 EFFECTIVE DATE :
This bill would be effective immediately and would apply to all false
claims, records and statements filed or made prior to, on or after
April 1, 2007; provided, however, that the increased incentives for
qui tam suits unrelated to the Medicaid program would only apply to
those suits filed after the passage of this bill.

2009-S7169 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7169

                            I N  S E N A T E

                             March 18, 2010
                               ___________

Introduced  by  Sen. SCHNEIDERMAN -- read twice and ordered printed, and
  when printed to be committed to the Committee on Finance

AN ACT to amend the state finance law, in relation to  establishing  the
  New York fraud, enforcement and recovery act

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act shall be known as the New York Fraud,  Enforcement
and Recovery Act ("FERA").
  S  2.  Section 188 of the state finance law, as added by section 39 of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 188. Definitions. As used in this article, the following terms shall
mean:
  1. "Claim" (A) means any request or demand, whether under  a  contract
or  otherwise,  for  money  or  property [which is made to any employee,
officer, or agent of the state or a local government, or to any contrac-
tor, grantee or other recipient, if the  state  or  a  local  government
provides  any  portion  of  the  money or property which is requested or
demanded or will reimburse such contractor, grantee, or other  recipient
for any portion of the money or property which is requested or demanded]
THAT:
  (I)  IS  PRESENTED  TO AN OFFICER, EMPLOYEE OR AGENT OF THE STATE OR A
LOCAL GOVERNMENT; OR
  (II) IS MADE TO A CONTRACTOR, GRANTEE,  OR  OTHER  RECIPIENT,  IF  THE
MONEY OR PROPERTY IS TO BE SPENT OR USED ON THE STATE OR A LOCAL GOVERN-
MENT'S  BEHALF  OR  TO  ADVANCE  A  STATE OR LOCAL GOVERNMENT PROGRAM OR
INTEREST, AND IF THE STATE OR  LOCAL  GOVERNMENT  (A)  PROVIDES  OR  HAS
PROVIDED  ANY PORTION OF THE MONEY OR PROPERTY REQUESTED OR DEMANDED; OR
(B) WILL REIMBURSE SUCH CONTRACTOR, GRANTEE, OR OTHER RECIPIENT FOR  ANY
PORTION OF THE MONEY OR PROPERTY WHICH IS REQUESTED OR DEMANDED;
  (B)  DOES  NOT  INCLUDE REQUESTS OR DEMANDS FOR MONEY OR PROPERTY THAT
THE STATE OR A LOCAL GOVERNMENT HAS ALREADY PAID  TO  AN  INDIVIDUAL  AS
COMPENSATION  FOR  GOVERNMENT EMPLOYMENT OR AS AN INCOME SUBSIDY WITH NO
RESTRICTIONS ON THAT INDIVIDUAL'S USE OF THE MONEY OR PROPERTY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16488-01-0

S. 7169                             2

  2. "False claim" means any claim which is, either in  whole  or  part,
false or fraudulent.
  3. "Knowing and knowingly" (A) means that [with respect to a claim, or
information relating to a claim,] a person, WITH RESPECT TO INFORMATION:
  [(a)] (I) has actual knowledge of [such claim or] THE information;
  [(b)]  (II)  acts  in  deliberate ignorance of the truth or falsity of
[such claim or] THE information; or
  [(c)] (III) acts in reckless disregard of  the  truth  or  falsity  of
[such claim or] THE information[.]; AND
  [Proof]  (B)  REQUIRE  NO  PROOF of specific intent to defraud [is not
required, provided, however that acts  occurring  by  mistake  or  as  a
result of mere negligence are not covered by this article].
  4. "OBLIGATION" MEANS AN ESTABLISHED DUTY, WHETHER OR NOT FIXED, ARIS-
ING  FROM  AN EXPRESS OR IMPLIED CONTRACTUAL, GRANTOR-GRANTEE, OR LICEN-
SOR-LICENSEE RELATIONSHIP, FROM A  FEE-BASED  OR  SIMILAR  RELATIONSHIP,
FROM STATUTE OR REGULATION, OR FROM THE RETENTION OF ANY OVERPAYMENT.
  5.  "MATERIAL"  MEANS  HAVING  A  NATURAL TENDENCY TO INFLUENCE, OR BE
CAPABLE OF INFLUENCING THE PAYMENT OR RECEIPT OF MONEY OR PROPERTY.
  [4.] 6. "Local government" means  any  county,  city,  town,  village,
school district, board of cooperative educational services, local public
benefit corporation or other municipal corporation or political subdivi-
sion OF SUCH LOCAL GOVERNMENT, OR of the state.
  [5.]  7. "Original source" means a person who has direct and independ-
ent knowledge of the information on which allegations are based, and has
voluntarily provided the information to the state or a local  government
before OR SIMULTANEOUS WITH filing an action under this article which is
based on the information.
  [6.]  8.  "Person" means any natural person, partnership, corporation,
association or any other legal entity  or  individual,  other  than  the
state or a local government.
  [7.]  9. "State" means the state of New York and any state department,
board, bureau, division, commission, committee,  public  benefit  corpo-
ration,  public  authority, council, office or other governmental entity
performing a governmental or proprietary function for the state.
  S 3. Subdivision 1 of section 189 of the state finance law,  as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  Subject  to the provisions of subdivision two of this section, any
person who:
  (a) knowingly presents, or causes to be presented[, to  any  employee,
officer or agent of the state or a local government,] a false or fraudu-
lent claim for payment or approval;
  (b)  knowingly  makes,  uses,  or  causes  to be made or used, a false
record or statement MATERIAL to [get] a false or fraudulent claim  [paid
or approved by the state or a local government];
  (c) conspires to [defraud the state or a local government by getting a
false  or  fraudulent claim allowed or paid] COMMIT A VIOLATION OF PARA-
GRAPH (A), (B), (D), (E), (F) OR (G) OF THIS SUBDIVISION;
  (d) has possession, custody, or control of property or money used,  or
to  be  used,  by  the  state  or  a local government and[, intending to
defraud the state or a local government  or  willfully  to  conceal  the
property  or money,] KNOWINGLY delivers, or causes to be delivered, less
[property or money] than [the amount for which  the  person  receives  a
certificate or receipt] ALL OF THAT MONEY OR PROPERTY;
  (e)  is authorized to make or deliver a document certifying receipt of
property used, or to be used, by the state or a  local  government  and,

S. 7169                             3

intending  to defraud the state or a local government, makes or delivers
the receipt without completely  knowing  that  the  information  on  the
receipt is true;
  (f)  knowingly buys, or receives as a pledge of an obligation or debt,
public property from an officer or employee of  the  state  or  a  local
government  [knowing  that the officer or employee lawfully may not sell
or pledge the property] WHO VIOLATES A PROVISION OF LAW WHEN SELLING  OR
PLEDGING SUCH PROPERTY; or
  (g)  knowingly  makes,  uses,  or  causes  to be made or used, a false
record or statement MATERIAL to [conceal, avoid, or decrease]  an  obli-
gation  to  pay  or  transmit  money or property to the state or a local
government[;] shall be liable[: (i)] to the state OR A LOCAL  GOVERNMENT
for  a  civil penalty of not less than six thousand dollars and not more
than twelve thousand dollars, plus three times the  amount  of  damages,
INCLUDING  CONSEQUENTIAL  DAMAGES,  which  the state OR LOCAL GOVERNMENT
sustains because of the act of that  person[;  and  (ii)  to  any  local
government for three times the amount of damages sustained by such local
government because of the act of that person]. THE CIVIL PENALTIES SHALL
BE  PAID TO THE STATE IN ANY ACTION INVOLVING DAMAGES TO THE STATE OR IN
ANY QUI TAM CIVIL ACTION.  THE CIVIL PENALTIES SHALL BE PAID TO A  LOCAL
GOVERNMENT  ONLY  IF BOTH (I) THE ACTION INVOLVES DAMAGES SUSTAINED BY A
LOCAL GOVERNMENT BUT NOT THE STATE; AND (II) THE STATE PLAYED NO ROLE IN
THE INVESTIGATION OR PROSECUTION OF THE ACTION.
  S 4. Subdivision 1 of section 190 of the state finance law,  as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  Civil  enforcement  actions.  The  attorney general shall have the
authority to investigate violations under section  one  hundred  eighty-
nine of this article. If the attorney general believes that a person has
violated  or  is  violating  such section, then the attorney general may
bring a civil action on behalf of the people of the state of New York or
on behalf of a local government against such person. A local  government
also  shall  have  the authority to investigate violations that may have
resulted in damages to such local government under section  one  hundred
eighty-nine  of  this  article,  and may bring a civil action on its own
behalf [to recover damages sustained  by  such  local  government  as  a
result  of  such violations] OR ON THE BEHALF OF ANY SUBDIVISION OF SUCH
LOCAL GOVERNMENT. No action may be filed pursuant  to  this  subdivision
against  the federal government, the state or a local government, or any
officer or employee thereof acting in his or her official capacity.  The
attorney  general  shall  consult  with the office of medicaid inspector
general prior to filing any action related to the medicaid program.
  S 5. Paragraphs (a) and (b) of subdivision 2 of  section  190  of  the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a)  Any  person  may  bring a qui tam civil action for a violation of
section one hundred eighty-nine of this article on behalf of the PERSON,
THE people of the state of New York, or a local  government.  No  action
may  be  filed  pursuant to this subdivision against the federal govern-
ment, the state or a local government, or any officer or employee there-
of acting in his or her official capacity.
  (b) A copy of the complaint and written  disclosure  of  substantially
all  material  evidence  and  information  the person possesses shall be
served on the state pursuant to subdivision one of section three hundred
seven of the civil practice law and rules. [The] ANY complaint FILED  IN
A  COURT  OF  THE  STATE  OF NEW YORK shall be filed in supreme court in

S. 7169                             4

camera, shall remain under seal for at least sixty days, and  shall  not
be served on the defendant until the court so orders. THE SEAL SHALL NOT
PRECLUDE THE ATTORNEY GENERAL, A LOCAL GOVERNMENT, OR THE QUI TAM PLAIN-
TIFF  FROM  SERVING  THE  COMPLAINT, ANY OTHER PLEADINGS, OR THE WRITTEN
DISCLOSURE  OF  SUBSTANTIALLY  ALL  MATERIAL  EVIDENCE  AND  INFORMATION
POSSESSED  BY THE PERSON BRINGING THE ACTION, ON RELEVANT STATE OR LOCAL
GOVERNMENT AGENCIES, OR ON LAW ENFORCEMENT AUTHORITIES OF THE  STATE,  A
LOCAL  GOVERNMENT,  OR  OTHER  JURISDICTIONS, SO THAT THE ACTIONS MAY BE
INVESTIGATED OR PROSECUTED, EXCEPT THAT SUCH SEAL APPLIES TO  THE  AGEN-
CIES  OR AUTHORITIES SO SERVED TO THE SAME EXTENT AS THE SEAL APPLIES TO
OTHER PARTIES IN THE ACTION. If the allegations in the complaint  allege
a violation of section one hundred eighty-nine of this article involving
damages to a local government, then the attorney general may at any time
provide  a copy of such complaint and written disclosure to the attorney
for such local government; provided, however, that if the allegations in
the complaint involve damages only to a city with a  population  of  one
million or more, or only to the state and such a city, then the attorney
general  shall  provide  such  complaint  and  written disclosure to the
corporation counsel of such city within thirty days. The state may elect
to supersede or intervene and proceed with the action, or to authorize a
local government that may have sustained damages to supersede or  inter-
vene,  within  sixty  days  after it receives both the complaint and the
material evidence and information; provided, however, that if the  alle-
gations  in  the  complaint  involve damages only to a city with a popu-
lation of one million or more, then the attorney general may not  super-
sede  or intervene in such action without the consent of the corporation
counsel of such city. The attorney general shall consult with the office
of the medicaid inspector general prior to superseding or intervening in
any action related to the medicaid program. The  attorney  general  may,
for  good  cause shown, move the court for extensions of the time during
which the complaint remains under seal under this subdivision. Any  such
motions may be supported by affidavits or other submissions in camera.
  S  6. Subdivision 2 of section 190 of the state finance law is amended
by adding a new paragraph (b-1) to read as follows:
  (B-1) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, RULE OR  REGULATION,
THE  WRITTEN  DISCLOSURE  OF  MATERIAL  EVIDENCE  PREPARED  BY A QUI TAM
PLAINTIFF'S COUNSEL AND SERVED ON THE STATE PURSUANT TO PARAGRAPH (B) OF
THIS SUBDIVISION SHALL NOT BE DISCOVERABLE ABSENT A SHOWING OF  EXTRAOR-
DINARY NEED.  NEITHER THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAINTIFF
NOR  THE  QUI TAM PLAINTIFF'S COUNSEL SHALL BE DEEMED TO HAVE WAIVED ANY
OTHERWISE APPLICABLE PRIVILEGE  BECAUSE  OF  COMMUNICATIONS  BETWEEN  OR
AMONG  THE FEDERAL GOVERNMENT, THE STATE, ANY LOCAL GOVERNMENTS ON WHOSE
BEHALF THE ACTION IS BROUGHT, RELEVANT GOVERNMENT  AGENCIES  RELATED  TO
THE  ALLEGATIONS, OTHER LAW ENFORCEMENT AGENCIES, THE QUI TAM PLAINTIFF,
AND THE QUI TAM PLAINTIFF'S COUNSEL.
  S 7. Paragraph (d) of subdivision  2  of  section  190  of  the  state
finance  law, as added by section 39 of part C of chapter 58 of the laws
of 2007, is amended to read as follows:
  (d) If the state  notifies  the  court  that  it  intends  to  file  a
complaint against the defendant and thereby be substituted as the plain-
tiff  in  the  action,  or  to  permit a local government to do so, such
complaint must be filed within thirty days after the notification to the
court.  FOR STATUTE OF LIMITATIONS PURPOSES, ANY SUCH COMPLAINT FILED BY
THE STATE OR A LOCAL GOVERNMENT SHALL RELATE BACK TO THE FILING DATE  OF
THE  COMPLAINT OF THE QUI TAM PLAINTIFF, TO THE EXTENT THAT THE CAUSE OF
ACTION OF THE STATE OR LOCAL GOVERNMENT ARISES OUT OF THE CONDUCT, TRAN-

S. 7169                             5

SACTIONS, OR OCCURRENCES SET FORTH, OR ATTEMPTED TO BE SET FORTH, IN THE
PRIOR COMPLAINT OF THE QUI TAM PLAINTIFF.
  S  8.  Paragraph  (f)  of  subdivision  2  of section 190 of the state
finance law is amended by adding two new subparagraphs (i) and  (ii)  to
read as follows:
  (I)  THE  QUI  TAM PLAINTIFF SHALL PROVIDE THE STATE OR ANY APPLICABLE
LOCAL GOVERNMENT WITH A COPY OF ANY DOCUMENT FILED WITH THE COURT ON  OR
ABOUT THE DATE IT IS FILED, OR ANY ORDER ISSUED BY THE COURT ON OR ABOUT
THE  DAY  IT IS ISSUED. THE QUI TAM PLAINTIFF SHALL PROVIDE THE STATE OR
ANY APPLICABLE LOCAL GOVERNMENT WITH ANY OTHER INFORMATION  RELATING  TO
THE  ACTION  UPON REQUEST. A QUI TAM PLAINTIFF SHALL NOTIFY THE STATE OR
ANY APPLICABLE LOCAL GOVERNMENT WITHIN FIVE DAYS OF ANY DECISION,  ORDER
OR  VERDICT RESULTING IN JUDGMENT IN FAVOR OF THE STATE OR LOCAL GOVERN-
MENT.
  (II) THE QUI TAM PLAINTIFF MAY NOT SETTLE OR DISMISS  THE  ACTION,  IN
WHOLE  OR  IN  PART, WITHOUT THE CONSENT OF EITHER THE STATE, OR A LOCAL
GOVERNMENT ON WHOSE BEHALF THE ACTION WAS BROUGHT.
  S 9. Paragraphs (a) and (b) of subdivision 6 of  section  190  of  the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a) If the attorney general elects to convert the qui tam civil action
into  an  attorney  general  enforcement  action,  or  to permit a local
government to convert the action into a civil enforcement action by such
local government, or if the  attorney  general  or  a  local  government
elects  to  intervene  in  the  qui tam civil action, then the person or
persons who initiated the qui tam civil  action  collectively  shall  be
entitled  IN  ANY  ACTION  RELATED  TO  THE  MEDICAID PROGRAM to receive
between fifteen and twenty-five percent of the proceeds recovered in the
action or in settlement of the action, AND SHALL BE ENTITLED TO  RECEIVE
BETWEEN  FIFTEEN  AND THIRTY-THREE PERCENT OF SUCH PROCEEDS IN ANY OTHER
ACTION.  The court shall determine the percentage  of  the  proceeds  to
which a person commencing a qui tam civil action is entitled, by consid-
ering the extent to which the plaintiff substantially contributed to the
prosecution  of  the  action.  Where the court finds that the action was
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 hear-
ing, in a legislative or administrative report, hearing, audit or inves-
tigation, or from the news media, the court may award such  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 or persons bringing the action in advancing the
case to litigation.
  (b) If the attorney general or a local government does  not  elect  to
intervene  or convert the action, and the action is successful, then the
person or persons  who  initiated  the  qui  tam  action  which  obtains
proceeds shall be entitled IN ANY ACTION RELATED TO THE MEDICAID PROGRAM
to receive between twenty-five and thirty percent of the proceeds recov-
ered in the action or settlement of the action, AND SHALL BE ENTITLED TO
RECEIVE  BETWEEN  TWENTY-FIVE  AND FIFTY PERCENT OF SUCH PROCEEDS IN ANY
OTHER ACTION.  The court shall determine the percentage of the  proceeds
to  which  a  person  commencing  a qui tam civil action is entitled, by
considering the extent to which the plaintiff substantially  contributed
to the prosecution of the action.
  S 10. Subdivision 6 of section 190 of the state finance law is amended
by adding a new paragraph (d) to read as follows:

S. 7169                             6

  (D) FOR PURPOSES OF SECTION ONE HUNDRED FIVE OF THE CIVIL PRACTICE LAW
AND  RULES,  THE PROPER PARTY UPON THE DEATH OF THE QUI TAM PLAINTIFF IS
THE QUI TAM PLAINTIFF'S ESTATE, WHO SHALL HAVE ALL THE RIGHTS AND INTER-
ESTS OF THE DECEASED QUI TAM  PLAINTIFF.  IN  ONGOING  CASES  WHERE  THE
GOVERNMENT  HAS  DECLINED  TO INTERVENE, THE QUI TAM PLAINTIFF'S COUNSEL
SHALL WITHIN FIVE DAYS OF LEARNING OF THE DEATH OF THE QUI TAM PLAINTIFF
NOTIFY THE COURT AND THE STATE OR LOCAL GOVERNMENTS OF ON  WHOSE  BEHALF
THE ACTION WAS BROUGHT.
  S  11. Subdivision 9 of section 190 of the state finance law, as added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  9. Certain actions barred. [No court shall have  jurisdiction  over  a
qui  tam  civil  action  brought  pursuant  to  subdivision  two of this
section:] THE COURT SHALL CAUSE A QUI TAM CIVIL ACTION TO BE DISMISSED:
  (A) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (II)  OF  PARAGRAPH
(B)  OF THIS SUBDIVISION UPON MOTION MADE BY THE ATTORNEY GENERAL, OR BY
ANY PARTY TO THE ACTION WHO FIRST  HAS  OBTAINED  THE  APPROVAL  OF  THE
ATTORNEY GENERAL TO MAKE SUCH MOTION AND OF THE CONTENTS OF SUCH MOTION;
PROVIDED  THAT  SUCH  APPROVAL  SHALL NOT BE DEEMED TO BE A STATEMENT IN
SUPPORT OF THE MERITS OF SUCH MOTION  UNLESS  OTHERWISE  STATED  BY  THE
ATTORNEY GENERAL; OR
  (B) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (I), (III), OR (IV)
OF  THIS  PARAGRAPH  UPON MOTION MADE BY ANY PARTY TO THE ACTION, IF THE
QUI TAM CIVIL ACTION IS:
  [(a)] (I) based on allegations or transactions which are  the  subject
of a pending civil action or an administrative action in which the state
or a local government is already a party;
  [(b)]  (II)  derived  from  public disclosure of allegations or trans-
actions in a criminal, civil, or administrative hearing, in  a  legisla-
tive  or administrative report, hearing, audit or investigation, or from
the news media, unless  the  person  who  initiated  the  action  is  an
original  source  of the information; PROVIDED THAT FOR PURPOSES OF THIS
SUBPARAGRAPH:
  (A) A PERSON DOES NOT CREATE A "PUBLIC DISCLOSURE" BY OBTAINING INFOR-
MATION PURSUANT TO A REQUEST MADE UNDER ARTICLE SIX OF THE PUBLIC  OFFI-
CERS  LAW,  OR  UNDER  ANY  OTHER  FEDERAL,  STATE OR LOCAL LAW, RULE OR
PROGRAM ENABLING THE PUBLIC TO REQUEST, RECEIVE  OR  VIEW  DOCUMENTS  OR
INFORMATION IN THE POSSESSION OF PUBLIC OFFICIALS OR PUBLIC AGENCIES;
  (B)  A  "PUBLIC  DISCLOSURE"  IN  A CRIMINAL, CIVIL, OR ADMINISTRATIVE
HEARING, OR IN A LEGISLATIVE OR ADMINISTRATIVE REPORT, HEARING, AUDIT OR
INVESTIGATION, INCLUDES ONLY THOSE DISCLOSURES  THAT  ARE  MADE  ON  THE
PUBLIC  RECORD,  OR THAT HAVE OTHERWISE BEEN DISSEMINATED BROADLY TO THE
GENERAL PUBLIC;
  (C) A "PUBLIC DISCLOSURE" SHALL NOT BE DEEMED TO HAVE BEEN MADE IN THE
"NEWS MEDIA" MERELY BECAUSE INFORMATION OF ALLEGATIONS  OR  TRANSACTIONS
HAS BEEN POSTED ON THE INTERNET OR ON A COMPUTER NETWORK; AND
  (D)  AN  ACTION IS "DERIVED FROM" THE PUBLIC DISCLOSURE OF ALLEGATIONS
OR TRANSACTIONS ONLY IF THE QUI TAM PLAINTIFF DERIVED KNOWLEDGE  OF  ALL
OF THE ESSENTIAL ELEMENTS OF LIABILITY FROM THE PUBLIC DISCLOSURE;
  [(c)]  (III)  if  the agency has reached a binding settlement or other
agreement with the person who [submitted  such  false  claims]  VIOLATED
SECTION ONE HUNDRED EIGHTY-NINE OF THIS ARTICLE resolving the matter and
such  agreement has been approved in writing by the attorney general, or
by the local government attorney if the matter involves  allegations  of
false claims submitted to a local government; or

S. 7169                             7

  [(d)]  (IV) against a member of the legislature, a member of the judi-
ciary, or a senior executive branch official if the action is  based  on
evidence or information known to the state when the action was brought.
  S  12. Section 191 of the state finance law, as added by section 39 of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 191. [Remedies of employees] ANTI-RETALIATION AND  ANTI-BLACKLISTING
PROTECTIONS.  1. Any CURRENT OR FORMER employee, CONTRACTOR, OR AGENT of
any  private  or  public employer who is discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against in the
terms and conditions of employment [by his or her employer] OR OTHERWISE
HARMED OR PENALIZED BY AN EMPLOYER, OR A PROSPECTIVE  EMPLOYER,  because
of  lawful  acts  done  by  the  employee  [on  behalf of the employer],
CONTRACTOR, AGENT, or ASSOCIATED others  in  furtherance  of  an  action
brought under this article[, including the investigation for, initiation
of, testimony for, or assistance in an action filed or to be filed under
this  section]  OR  OTHER EFFORTS TO STOP ONE OR MORE VIOLATIONS OF THIS
ARTICLE, shall be entitled to all relief necessary to make the employee,
CONTRACTOR OR AGENT whole. Such relief shall include but not be  limited
to:
  (a) an injunction to restrain continued discrimination;
  (b)  INSTALLMENT  OR reinstatement to the position such employee would
have had but for the discrimination or to an equivalent position;
  (c) reinstatement of full fringe benefits and seniority rights;
  (d) payment of two times back pay, plus interest; and
  (e) compensation for any special damages sustained as a result of  the
discrimination,  including  litigation  costs  and reasonable attorneys'
fees.
  2. FOR PURPOSES OF THIS SECTION, A "LAWFUL ACT" SHALL INCLUDE  OBTAIN-
ING  OR  TRANSMITTING TO THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAIN-
TIFF, OR PRIVATE COUNSEL SOLELY  EMPLOYED  TO  INVESTIGATE,  POTENTIALLY
FILE,  OR  FILE  A  CAUSE OF ACTION UNDER THIS ARTICLE, DOCUMENTS, DATA,
CORRESPONDENCE, ELECTRONIC MAIL, OR ANY OTHER INFORMATION,  EVEN  THOUGH
SUCH  ACT  MAY  VIOLATE A CONTRACT, EMPLOYMENT TERM, OR DUTY OWED TO THE
EMPLOYER OR CONTRACTOR, SO LONG AS THE POSSESSION  AND  TRANSMISSION  OF
SUCH  DOCUMENTS  ARE FOR THE SOLE PURPOSE TO FURTHER EFFORTS TO STOP ONE
OR MORE VIOLATIONS OF THIS ARTICLE.  NOTHING IN THIS  SUBDIVISION  SHALL
BE  INTERPRETED TO PREVENT ANY LAW ENFORCEMENT AUTHORITY FROM BRINGING A
CIVIL OR CRIMINAL ACTION AGAINST ANY PERSON FOR VIOLATING ANY  PROVISION
OF LAW.
  [2.]  3. An employee, CONTRACTOR OR AGENT described in subdivision one
of this section may bring an action in the appropriate supreme court for
the relief provided in this section.
  S 13. Subdivision 1 of section 192 of the state finance law, as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  A  civil  action  under  this  article shall be commenced no later
than[:
  (a) six years after the date on which the  violation  of  section  one
hundred eighty-nine of this article is committed; or
  (b)  three  years  after  the date when facts material to the right of
action are known or reasonably should have been known by the official of
the state or local government charged with responsibility to act in  the
circumstances,  but  in  no event more than] ten years after the date on
which the violation is committed[, whichever  occurs  last].    Notwith-
standing  any  other provision of law, for the purposes of this article,

S. 7169                             8

an action under this article is commenced by the filing of the complaint
[in the supreme court].
  S  14. Section 192 of the state finance law is amended by adding a new
subdivision 1-a to read as follows:
  1-A. FOR PURPOSES OF APPLYING RULE THREE THOUSAND SIXTEEN OF THE CIVIL
PRACTICE LAW AND RULES, IN PLEADING AN ACTION BROUGHT UNDER THIS  SUBDI-
VISION  THE QUI TAM PLAINTIFF SHALL NOT BE REQUIRED TO IDENTIFY SPECIFIC
CLAIMS THAT RESULT FROM AN ALLEGED COURSE OF MISCONDUCT, OR ANY SPECIFIC
RECORDS OR STATEMENTS USED, IF THE FACTS ALLEGED IN  THE  COMPLAINT,  IF
ULTIMATELY  PROVEN  TRUE, WOULD PROVIDE A REASONABLE INDICATION THAT ONE
OR MORE VIOLATIONS OF SECTION ONE HUNDRED EIGHTY-NINE  OF  THIS  ARTICLE
ARE  LIKELY  TO  HAVE  OCCURRED,  AND IF THE ALLEGATIONS IN THE PLEADING
PROVIDE ADEQUATE NOTICE OF THE SPECIFIC NATURE OF THE ALLEGED MISCONDUCT
TO PERMIT THE STATE OR A LOCAL GOVERNMENT EFFECTIVELY TO INVESTIGATE AND
DEFENDANTS FAIRLY TO DEFEND THE ALLEGATIONS MADE.
  S 15. This act shall  take  effect  immediately  and  shall  apply  to
claims,  records or statements filed or made prior to, on or after April
1, 2007.

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2009-S7169A - Details

Current Committee:: Senate Finance
Law Section:: State Finance Law
Laws Affected:: Amd §§188 - 192, St Fin L

2009-S7169A - Summary

Establishes the NY fraud, enforcement and recovery act.

2009-S7169A - Sponsor Memo

                                 BILL NUMBER:  S7169A

 TITLE OF BILL :

An act to amend the state finance law, in relation to establishing the
New York fraud, enforcement and recovery act


 PURPOSE :

The purpose of this bill is to clarify and strengthen provisions of
the False Claims Act to improve the prevention and deterrence of
frauds against the state and local governments, and to increase the
recovery of funds and property that have been fraudulently obtained
from the state and local governments.

 SUMMARY OF PROVISIONS :

Section 1: Entitles the bill the "Fraud Enforcement and Recovery Act"

Section 2: Amends section 188(1) of the New York False Claims Act to,
among other things, clarify and establish definitions of terms used in
that act in the same way that the just-passed amendments to the United
States False Claims Act changed such definitions in that act.

Section 3: Amends section 189(1) of the New York False Claims Act to,

among other things, change certain provisions relating to conduct
prohibited by the act in the same way that the just-passed amendments
to the United States False Claims Act changes those provisions in that
act.  The act also clarifies that local governments can obtain civil
penalties against fraudsters in certain circumstances.

Section 4: Amends section 190(1) of the New York False Claims Act to
clarify that a local government can being an action on behalf of a
subdivision of such local government.

Section 5: Amends section 190(2)(b) of the New York False Claims Act
to, among other things, change the scope of the seal in qui tam cases
brought under the act in the same way that the just-passed amendments
to the United States False Claims Act amended the scope of the seal in
that act.

Section 6: Amends section 190(2)(a) and (b) of the New York False
Claims Act to add a new paragraph (b-1) to the act that clarifies the
application of the attorney-client privilege to qui tam actions.

Section 7: Amends section 190(2)(d) of the New York False Claims Act
to adopt the provision included in the recently-passed amendments to
the United States False Claims Act that clarifies the application of
the relation-back doctrine in a qui tam action.

Section 8: Adds a new subparagraph (i) and (ii) to section 190(2)(f)
of the New York False Claims Act that requires a qui tam plaintiff to
give the state or a local government copies of motions and other
information when litigating a case in which the state and local
governments have declined to intervene. Clarifies that the state or a
local government must consent to any settlement of a qui tam case.

Section 9: Amends paragraphs (a) and (b) of section 190(6) of the New
York False Claims Act to adopt the ranges of relator awards in the
California False Claims Act.

Section 10: Adds a new paragraph (d) to section 190(6) of the New York
False Claims Act to require counsel to a deceased qui tam plaintiff to
notify the government within five days of learning of such death, and

ensures that the estate of the deceased inherent the rights of the qui
tam plaintiff.

Section 11: Amends section 190(9) of the New York False Claims Act to
clarify the undefined terms of the public disclosure bar and give the
government and not private parties the right to control motions to
dismiss cases based on the public disclosure bar.

Section 12: Amends section 191 of the False Claims Act to clarify the
anti-retaliation provisions in the New York False Claims Act in the
same way that recently-passed amendments to the United States False
Claims Act clarify those provisions in that act. Also addresses
blacklisting and transmitting documents to law enforcement.

Section 13: Amends section 192(1) of the New York False Claims Act to
clarify the statute of limitations.

Section 14: Provides rules regarding pleadings for qui tam actions.

Section 15: Sets an immediate effective date of the act and states
that the amendments apply to any claims, records or statements filed
or made prior to, on or after April 1, 2007; provided, however, that
changes to the qui tam awards do not apply to any case filed prior to
the passage of the act.

 JUSTIFICATION :

The New York False Claims Act (NYFCA), signed into law by Governor
Spitzer in 2007, is the state's most important civil tool to fight
fraud against the state or local governments.  Most of the critical
language in the NYFCA was "cut and pasted" from the hugely successful
United States False Claims Act (USFCA), which was signed into law by
President Abraham Lincoln in 1863 to address civil war-era contracting
fraud, and later amended in 1943 by President Roosevelt and 1986 by
President Reagan. Thus, the NYFCA mirrors the 1986 version of the
USFCA.  In May of 2009, however, President Barack Obama signed a
series of critical amendments to the USFCA to, among other things,
reverse court decisions (including recent decisions by the U.S.
Supreme Court) that weakened the USFCA in direct contradiction to the
text of the law and the intent of the 1863 act and the 1986
amendments.

Additionally, there are other pending amendments in Congress to fix
other generally acknowledged problems with the USFCA. Even after the
2009 amendments, the USFCA continues to be riddled with undefined
terms that federal courts have struggled to define and interpret
consistently. Many courts have issued rulings making it unduly hard
for the government to fight fraud and abuse.

Since the NYFCA continues to be a replicated version of the now
outdated 1986 version USFCA, there is little doubt that all of the
federal court decisions misinterpreting the USFCA would be applied to
the NYFCA - even those court decisions that Congress has explicitly
overruled. Accordingly, this bill amends the NYFCA to:

(1) incorporate into the NYFCA the recently-passed amendments to the
USFCA signed by President Obama;

(2) clarify major terms in the NYFCA that, in federal cases
interpreting the USFCA, have been inconsistency defined or applied;

(3) further strengthen the NYFCA to enhance the ability of the
government to recover stolen government funds on behalf of taxpayers;
and


(4) fix technical aspects of the NYFCA that hinder the ability of the
department of law, other state agencies, and local governments to
administer the NYFCA and recover stolen government funds and property.

 LEGISLATIVE HISTORY :

This is new legislation.

 FISCAL IMPLICATIONS :

This bill will increase the amount of funds recovered by the state and
local governments in civil actions to recover stolen funds. It will
also decrease the amount of state and local government funds lost to
fraud by deterring would-be fraudsters from using a false claim
records or statements to obtain government funds.

 EFFECTIVE DATE :
This bill would be effective immediately and would apply to all false
claims, records and statements filed or made prior to, on or after
April 1, 2007; provided, however, that the increased incentives for
qui tam suits unrelated to the Medicaid program would only apply to
those suits filed after the passage of this bill.

2009-S7169A - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7169--A

                            I N  S E N A T E

                             March 18, 2010
                               ___________

Introduced  by  Sens.  SCHNEIDERMAN,  ONORATO  -- read twice and ordered
  printed, and when printed to be committed to the Committee on  Finance
  --  committee  discharged,  bill amended, ordered reprinted as amended
  and recommitted to said committee

AN ACT to amend the state finance law, in relation to  establishing  the
  New York fraud, enforcement and recovery act

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act shall be known as the New York Fraud,  Enforcement
and Recovery Act ("FERA").
  S  2.  Section 188 of the state finance law, as added by section 39 of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 188. Definitions. As used in this article, the following terms shall
mean:
  1. "Claim" (A) means any request or demand, whether under  a  contract
or  otherwise,  for  money  or  property [which is made to any employee,
officer, or agent of the state or a local government, or to any contrac-
tor, grantee or other recipient, if the  state  or  a  local  government
provides  any  portion  of  the  money or property which is requested or
demanded or will reimburse such contractor, grantee, or other  recipient
for any portion of the money or property which is requested or demanded]
THAT:
  (I)  IS  PRESENTED  TO AN OFFICER, EMPLOYEE OR AGENT OF THE STATE OR A
LOCAL GOVERNMENT; OR
  (II) IS MADE TO A CONTRACTOR, GRANTEE,  OR  OTHER  RECIPIENT,  IF  THE
MONEY OR PROPERTY IS TO BE SPENT OR USED ON THE STATE OR A LOCAL GOVERN-
MENT'S  BEHALF  OR  TO  ADVANCE  A  STATE OR LOCAL GOVERNMENT PROGRAM OR
INTEREST, AND IF THE STATE OR  LOCAL  GOVERNMENT  (A)  PROVIDES  OR  HAS
PROVIDED  ANY PORTION OF THE MONEY OR PROPERTY REQUESTED OR DEMANDED; OR
(B) WILL REIMBURSE SUCH CONTRACTOR, GRANTEE, OR OTHER RECIPIENT FOR  ANY
PORTION OF THE MONEY OR PROPERTY WHICH IS REQUESTED OR DEMANDED;
  (B)  DOES  NOT  INCLUDE REQUESTS OR DEMANDS FOR MONEY OR PROPERTY THAT
THE STATE OR A LOCAL GOVERNMENT HAS ALREADY PAID  TO  AN  INDIVIDUAL  AS

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16488-02-0

S. 7169--A                          2

COMPENSATION  FOR  GOVERNMENT EMPLOYMENT OR AS AN INCOME SUBSIDY WITH NO
RESTRICTIONS ON THAT INDIVIDUAL'S USE OF THE MONEY OR PROPERTY.
  2.  "False  claim"  means any claim which is, either in whole or part,
false or fraudulent.
  3. "Knowing and knowingly" (A) means that [with respect to a claim, or
information relating to a claim,] a person, WITH RESPECT TO INFORMATION:
  [(a)] (I) has actual knowledge of [such claim or] THE information;
  [(b)] (II) acts in deliberate ignorance of the  truth  or  falsity  of
[such claim or] THE information; or
  [(c)]  (III)  acts  in  reckless  disregard of the truth or falsity of
[such claim or] THE information[.]; AND
  [Proof] (B) REQUIRE NO PROOF of specific intent  to  defraud  [is  not
required,  provided,  however  that  acts  occurring  by mistake or as a
result of mere negligence are not covered by this article].
  4. "OBLIGATION" MEANS AN ESTABLISHED DUTY, WHETHER OR NOT FIXED, ARIS-
ING FROM AN EXPRESS OR IMPLIED CONTRACTUAL, GRANTOR-GRANTEE,  OR  LICEN-
SOR-LICENSEE  RELATIONSHIP,  FROM  A  FEE-BASED OR SIMILAR RELATIONSHIP,
FROM STATUTE OR REGULATION, OR FROM THE RETENTION OF ANY OVERPAYMENT.
  5. "MATERIAL" MEANS HAVING A NATURAL  TENDENCY  TO  INFLUENCE,  OR  BE
CAPABLE OF INFLUENCING THE PAYMENT OR RECEIPT OF MONEY OR PROPERTY.
  [4.]  6.  "Local  government"  means  any county, city, town, village,
school district, board of cooperative educational services, local public
benefit corporation or other municipal corporation or political subdivi-
sion OF SUCH LOCAL GOVERNMENT, OR of the state.
  [5.] 7. "Original source" means a person who has direct and  independ-
ent knowledge of the information on which allegations are based, and has
voluntarily  provided the information to the state or a local government
before OR SIMULTANEOUS WITH filing an action under this article which is
based on the information.
  [6.] 8. "Person" means any natural person,  partnership,  corporation,
association  or  any  other  legal  entity or individual, other than the
state or a local government.
  [7.] 9. "State" means the state of New York and any state  department,
board,  bureau,  division,  commission, committee, public benefit corpo-
ration, public authority, council, office or other  governmental  entity
performing a governmental or proprietary function for the state.
  S  3.  Subdivision 1 of section 189 of the state finance law, as added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1. Subject to the provisions of subdivision two of this  section,  any
person who:
  (a)  knowingly  presents, or causes to be presented[, to any employee,
officer or agent of the state or a local government,] a false or fraudu-
lent claim for payment or approval;
  (b) knowingly makes, uses, or causes to  be  made  or  used,  a  false
record  or statement MATERIAL to [get] a false or fraudulent claim [paid
or approved by the state or a local government];
  (c) conspires to [defraud the state or a local government by getting a
false or fraudulent claim allowed or paid] COMMIT A VIOLATION  OF  PARA-
GRAPH (A), (B), (D), (E), (F) OR (G) OF THIS SUBDIVISION;
  (d)  has possession, custody, or control of property or money used, or
to be used, by the state  or  a  local  government  and[,  intending  to
defraud  the  state  or  a  local government or willfully to conceal the
property or money,] KNOWINGLY delivers, or causes to be delivered,  less
[property  or  money]  than  [the amount for which the person receives a
certificate or receipt] ALL OF THAT MONEY OR PROPERTY;

S. 7169--A                          3

  (e) is authorized to make or deliver a document certifying receipt  of
property  used,  or  to be used, by the state or a local government and,
intending to defraud the state or a local government, makes or  delivers
the  receipt  without  completely  knowing  that  the information on the
receipt is true;
  (f)  knowingly buys, or receives as a pledge of an obligation or debt,
public property from an officer or employee of  the  state  or  a  local
government  [knowing  that the officer or employee lawfully may not sell
or pledge the property] WHO VIOLATES A PROVISION OF LAW WHEN SELLING  OR
PLEDGING SUCH PROPERTY; or
  (g)  knowingly  makes,  uses,  or  causes  to be made or used, a false
record or statement MATERIAL to [conceal, avoid, or decrease]  an  obli-
gation  to  pay  or  transmit  money or property to the state or a local
government[;] shall be liable[: (i)] to the state OR A LOCAL  GOVERNMENT
for  a  civil penalty of not less than six thousand dollars and not more
than twelve thousand dollars, plus three times the  amount  of  damages,
INCLUDING  CONSEQUENTIAL  DAMAGES,  which  the state OR LOCAL GOVERNMENT
sustains because of the act of that  person[;  and  (ii)  to  any  local
government for three times the amount of damages sustained by such local
government because of the act of that person]. THE CIVIL PENALTIES SHALL
BE  PAID TO THE STATE IN ANY ACTION INVOLVING DAMAGES TO THE STATE OR IN
ANY QUI TAM CIVIL ACTION.  THE CIVIL PENALTIES SHALL BE PAID TO A  LOCAL
GOVERNMENT  ONLY  IF BOTH (I) THE ACTION INVOLVES DAMAGES SUSTAINED BY A
LOCAL GOVERNMENT BUT NOT THE STATE; AND (II) THE STATE PLAYED NO ROLE IN
THE INVESTIGATION OR PROSECUTION OF THE ACTION.
  S 4. Subdivision 1 of section 190 of the state finance law,  as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  Civil  enforcement  actions.  The  attorney general shall have the
authority to investigate violations under section  one  hundred  eighty-
nine of this article. If the attorney general believes that a person has
violated  or  is  violating  such section, then the attorney general may
bring a civil action on behalf of the people of the state of New York or
on behalf of a local government against such person. A local  government
also  shall  have  the authority to investigate violations that may have
resulted in damages to such local government under section  one  hundred
eighty-nine  of  this  article,  and may bring a civil action on its own
behalf [to recover damages sustained  by  such  local  government  as  a
result  of  such violations] OR ON THE BEHALF OF ANY SUBDIVISION OF SUCH
LOCAL GOVERNMENT. No action may be filed pursuant  to  this  subdivision
against  the federal government, the state or a local government, or any
officer or employee thereof acting in his or her official capacity.  The
attorney  general  shall  consult  with the office of medicaid inspector
general prior to filing any action related to the medicaid program.
  S 5. Paragraphs (a) and (b) of subdivision 2 of  section  190  of  the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a)  Any  person  may  bring a qui tam civil action for a violation of
section one hundred eighty-nine of this article on behalf of the PERSON,
THE people of the state of New York, or a local  government.  No  action
may  be  filed  pursuant to this subdivision against the federal govern-
ment, the state or a local government, or any officer or employee there-
of acting in his or her official capacity.
  (b) A copy of the complaint and written  disclosure  of  substantially
all  material  evidence  and  information  the person possesses shall be
served on the state pursuant to subdivision one of section three hundred

S. 7169--A                          4

seven of the civil practice law and rules. [The] ANY complaint FILED  IN
A  COURT  OF  THE  STATE  OF NEW YORK shall be filed in supreme court in
camera, shall remain under seal for at least sixty days, and  shall  not
be served on the defendant until the court so orders. THE SEAL SHALL NOT
PRECLUDE THE ATTORNEY GENERAL, A LOCAL GOVERNMENT, OR THE QUI TAM PLAIN-
TIFF  FROM  SERVING  THE  COMPLAINT, ANY OTHER PLEADINGS, OR THE WRITTEN
DISCLOSURE  OF  SUBSTANTIALLY  ALL  MATERIAL  EVIDENCE  AND  INFORMATION
POSSESSED  BY THE PERSON BRINGING THE ACTION, ON RELEVANT STATE OR LOCAL
GOVERNMENT AGENCIES, OR ON LAW ENFORCEMENT AUTHORITIES OF THE  STATE,  A
LOCAL  GOVERNMENT,  OR  OTHER  JURISDICTIONS, SO THAT THE ACTIONS MAY BE
INVESTIGATED OR PROSECUTED, EXCEPT THAT SUCH SEAL APPLIES TO  THE  AGEN-
CIES  OR AUTHORITIES SO SERVED TO THE SAME EXTENT AS THE SEAL APPLIES TO
OTHER PARTIES IN THE ACTION. If the allegations in the complaint  allege
a violation of section one hundred eighty-nine of this article involving
damages to a local government, then the attorney general may at any time
provide  a copy of such complaint and written disclosure to the attorney
for such local government; provided, however, that if the allegations in
the complaint involve damages only to a city with a  population  of  one
million or more, or only to the state and such a city, then the attorney
general  shall  provide  such  complaint  and  written disclosure to the
corporation counsel of such city within thirty days. The state may elect
to supersede or intervene and proceed with the action, or to authorize a
local government that may have sustained damages to supersede or  inter-
vene,  within  sixty  days  after it receives both the complaint and the
material evidence and information; provided, however, that if the  alle-
gations  in  the  complaint  involve damages only to a city with a popu-
lation of one million or more, then the attorney general may not  super-
sede  or intervene in such action without the consent of the corporation
counsel of such city. The attorney general shall consult with the office
of the medicaid inspector general prior to superseding or intervening in
any action related to the medicaid program. The  attorney  general  may,
for  good  cause shown, move the court for extensions of the time during
which the complaint remains under seal under this subdivision. Any  such
motions may be supported by affidavits or other submissions in camera.
  S  6. Subdivision 2 of section 190 of the state finance law is amended
by adding a new paragraph (b-1) to read as follows:
  (B-1) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, RULE OR  REGULATION,
THE  WRITTEN  DISCLOSURE  OF  MATERIAL  EVIDENCE  PREPARED  BY A QUI TAM
PLAINTIFF'S COUNSEL AND SERVED ON THE STATE PURSUANT TO PARAGRAPH (B) OF
THIS SUBDIVISION SHALL NOT BE DISCOVERABLE ABSENT A SHOWING OF  EXTRAOR-
DINARY NEED.  NEITHER THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAINTIFF
NOR  THE  QUI TAM PLAINTIFF'S COUNSEL SHALL BE DEEMED TO HAVE WAIVED ANY
OTHERWISE APPLICABLE PRIVILEGE  BECAUSE  OF  COMMUNICATIONS  BETWEEN  OR
AMONG  THE FEDERAL GOVERNMENT, THE STATE, ANY LOCAL GOVERNMENTS ON WHOSE
BEHALF THE ACTION IS BROUGHT, RELEVANT GOVERNMENT  AGENCIES  RELATED  TO
THE  ALLEGATIONS, OTHER LAW ENFORCEMENT AGENCIES, THE QUI TAM PLAINTIFF,
AND THE QUI TAM PLAINTIFF'S COUNSEL.
  S 7. Paragraph (d) of subdivision  2  of  section  190  of  the  state
finance  law, as added by section 39 of part C of chapter 58 of the laws
of 2007, is amended to read as follows:
  (d) If the state  notifies  the  court  that  it  intends  to  file  a
complaint against the defendant and thereby be substituted as the plain-
tiff  in  the  action,  or  to  permit a local government to do so, such
complaint must be filed within thirty days after the notification to the
court.  FOR STATUTE OF LIMITATIONS PURPOSES, ANY SUCH COMPLAINT FILED BY
THE STATE OR A LOCAL GOVERNMENT SHALL RELATE BACK TO THE FILING DATE  OF

S. 7169--A                          5

THE  COMPLAINT OF THE QUI TAM PLAINTIFF, TO THE EXTENT THAT THE CAUSE OF
ACTION OF THE STATE OR LOCAL GOVERNMENT ARISES OUT OF THE CONDUCT, TRAN-
SACTIONS, OR OCCURRENCES SET FORTH, OR ATTEMPTED TO BE SET FORTH, IN THE
PRIOR COMPLAINT OF THE QUI TAM PLAINTIFF.
  S  8.  Paragraph  (f)  of  subdivision  2  of section 190 of the state
finance law is amended by adding two new subparagraphs (i) and  (ii)  to
read as follows:
  (I)  THE  QUI  TAM PLAINTIFF SHALL PROVIDE THE STATE OR ANY APPLICABLE
LOCAL GOVERNMENT WITH A COPY OF ANY DOCUMENT FILED WITH THE COURT ON  OR
ABOUT THE DATE IT IS FILED, OR ANY ORDER ISSUED BY THE COURT ON OR ABOUT
THE  DAY  IT IS ISSUED. THE QUI TAM PLAINTIFF SHALL PROVIDE THE STATE OR
ANY APPLICABLE LOCAL GOVERNMENT WITH ANY OTHER INFORMATION  RELATING  TO
THE  ACTION  UPON REQUEST. A QUI TAM PLAINTIFF SHALL NOTIFY THE STATE OR
ANY APPLICABLE LOCAL GOVERNMENT WITHIN FIVE DAYS OF ANY DECISION,  ORDER
OR  VERDICT RESULTING IN JUDGMENT IN FAVOR OF THE STATE OR LOCAL GOVERN-
MENT.
  (II) THE QUI TAM PLAINTIFF MAY NOT SETTLE OR DISMISS  THE  ACTION,  IN
WHOLE  OR  IN  PART, WITHOUT THE CONSENT OF EITHER THE STATE, OR A LOCAL
GOVERNMENT ON WHOSE BEHALF THE ACTION WAS BROUGHT.
  S 9. Paragraphs (a) and (b) of subdivision 6 of  section  190  of  the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a) If the attorney general elects to convert the qui tam civil action
into  an  attorney  general  enforcement  action,  or  to permit a local
government to convert the action into a civil enforcement action by such
local government, or if the  attorney  general  or  a  local  government
elects  to  intervene  in  the  qui tam civil action, then the person or
persons who initiated the qui tam civil  action  collectively  shall  be
entitled  IN  ANY  ACTION  RELATED  TO  THE  MEDICAID PROGRAM to receive
between fifteen and twenty-five percent of the proceeds recovered in the
action or in settlement of the action, AND SHALL BE ENTITLED TO  RECEIVE
BETWEEN  FIFTEEN  AND THIRTY-THREE PERCENT OF SUCH PROCEEDS IN ANY OTHER
ACTION.  The court shall determine the percentage  of  the  proceeds  to
which a person commencing a qui tam civil action is entitled, by consid-
ering the extent to which the plaintiff substantially contributed to the
prosecution  of  the  action.  Where the court finds that the action was
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 hear-
ing, in a legislative or administrative report, hearing, audit or inves-
tigation, or from the news media, the court may award such  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 or persons bringing the action in advancing the
case to litigation.
  (b) If the attorney general or a local government does  not  elect  to
intervene  or convert the action, and the action is successful, then the
person or persons  who  initiated  the  qui  tam  action  which  obtains
proceeds shall be entitled IN ANY ACTION RELATED TO THE MEDICAID PROGRAM
to receive between twenty-five and thirty percent of the proceeds recov-
ered in the action or settlement of the action, AND SHALL BE ENTITLED TO
RECEIVE  BETWEEN  TWENTY-FIVE  AND FIFTY PERCENT OF SUCH PROCEEDS IN ANY
OTHER ACTION.  The court shall determine the percentage of the  proceeds
to  which  a  person  commencing  a qui tam civil action is entitled, by
considering the extent to which the plaintiff substantially  contributed
to the prosecution of the action.

S. 7169--A                          6

  S 10. Subdivision 6 of section 190 of the state finance law is amended
by adding a new paragraph (d) to read as follows:
  (D) FOR PURPOSES OF SECTION ONE HUNDRED FIVE OF THE CIVIL PRACTICE LAW
AND  RULES,  THE PROPER PARTY UPON THE DEATH OF THE QUI TAM PLAINTIFF IS
THE QUI TAM PLAINTIFF'S ESTATE, WHO SHALL HAVE ALL THE RIGHTS AND INTER-
ESTS OF THE DECEASED QUI TAM  PLAINTIFF.  IN  ONGOING  CASES  WHERE  THE
GOVERNMENT  HAS  DECLINED  TO INTERVENE, THE QUI TAM PLAINTIFF'S COUNSEL
SHALL WITHIN FIVE DAYS OF LEARNING OF THE DEATH OF THE QUI TAM PLAINTIFF
NOTIFY THE COURT AND THE STATE OR LOCAL GOVERNMENTS OF ON  WHOSE  BEHALF
THE ACTION WAS BROUGHT.
  S  11. Subdivision 9 of section 190 of the state finance law, as added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  9. Certain actions barred. [No court shall have  jurisdiction  over  a
qui  tam  civil  action  brought  pursuant  to  subdivision  two of this
section:] THE COURT SHALL CAUSE A QUI TAM CIVIL ACTION TO BE DISMISSED:
  (A) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (II)  OF  PARAGRAPH
(B)  OF THIS SUBDIVISION UPON MOTION MADE BY THE ATTORNEY GENERAL, OR BY
ANY PARTY TO THE ACTION WHO FIRST  HAS  OBTAINED  THE  APPROVAL  OF  THE
ATTORNEY GENERAL TO MAKE SUCH MOTION AND OF THE CONTENTS OF SUCH MOTION;
PROVIDED  THAT  SUCH  APPROVAL  SHALL NOT BE DEEMED TO BE A STATEMENT IN
SUPPORT OF THE MERITS OF SUCH MOTION  UNLESS  OTHERWISE  STATED  BY  THE
ATTORNEY GENERAL; OR
  (B) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (I), (III), OR (IV)
OF  THIS  PARAGRAPH  UPON MOTION MADE BY ANY PARTY TO THE ACTION, IF THE
QUI TAM CIVIL ACTION IS:
  [(a)] (I) based on allegations or transactions which are  the  subject
of a pending civil action or an administrative action in which the state
or a local government is already a party;
  [(b)]  (II)  derived  from  public disclosure of allegations or trans-
actions in a criminal, civil, or administrative hearing, in  a  legisla-
tive  or administrative report, hearing, audit or investigation, or from
the news media, unless  the  person  who  initiated  the  action  is  an
original  source  of the information; PROVIDED THAT FOR PURPOSES OF THIS
SUBPARAGRAPH:
  (A) A PERSON DOES NOT CREATE A "PUBLIC DISCLOSURE" BY OBTAINING INFOR-
MATION PURSUANT TO A REQUEST MADE UNDER ARTICLE SIX OF THE PUBLIC  OFFI-
CERS  LAW,  OR  UNDER  ANY  OTHER  FEDERAL,  STATE OR LOCAL LAW, RULE OR
PROGRAM ENABLING THE PUBLIC TO REQUEST, RECEIVE  OR  VIEW  DOCUMENTS  OR
INFORMATION IN THE POSSESSION OF PUBLIC OFFICIALS OR PUBLIC AGENCIES;
  (B)  A  "PUBLIC  DISCLOSURE"  IN  A CRIMINAL, CIVIL, OR ADMINISTRATIVE
HEARING, OR IN A LEGISLATIVE OR ADMINISTRATIVE REPORT, HEARING, AUDIT OR
INVESTIGATION, INCLUDES ONLY THOSE DISCLOSURES  THAT  ARE  MADE  ON  THE
PUBLIC  RECORD,  OR THAT HAVE OTHERWISE BEEN DISSEMINATED BROADLY TO THE
GENERAL PUBLIC;
  (C) A "PUBLIC DISCLOSURE" SHALL NOT BE DEEMED TO HAVE BEEN MADE IN THE
"NEWS MEDIA" MERELY BECAUSE INFORMATION OF ALLEGATIONS  OR  TRANSACTIONS
HAS BEEN POSTED ON THE INTERNET OR ON A COMPUTER NETWORK; AND
  (D)  AN  ACTION IS "DERIVED FROM" THE PUBLIC DISCLOSURE OF ALLEGATIONS
OR TRANSACTIONS ONLY IF THE QUI TAM PLAINTIFF DERIVED KNOWLEDGE  OF  ALL
OF THE ESSENTIAL ELEMENTS OF LIABILITY FROM THE PUBLIC DISCLOSURE;
  [(c)]  (III)  if  the agency has reached a binding settlement or other
agreement with the person who [submitted  such  false  claims]  VIOLATED
SECTION ONE HUNDRED EIGHTY-NINE OF THIS ARTICLE resolving the matter and
such  agreement has been approved in writing by the attorney general, or

S. 7169--A                          7

by the local government attorney if the matter involves  allegations  of
false claims submitted to a local government; or
  [(d)]  (IV) against a member of the legislature, a member of the judi-
ciary, or a senior executive branch official if the action is  based  on
evidence or information known to the state when the action was brought.
  S  12. Section 191 of the state finance law, as added by section 39 of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 191. [Remedies of employees] ANTI-RETALIATION AND  ANTI-BLACKLISTING
PROTECTIONS.  1. Any CURRENT OR FORMER employee, CONTRACTOR, OR AGENT of
any  private  or  public employer who is discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against in the
terms and conditions of employment [by his or her employer] OR OTHERWISE
HARMED OR PENALIZED BY AN EMPLOYER, OR A PROSPECTIVE  EMPLOYER,  because
of  lawful  acts  done  by  the  employee  [on  behalf of the employer],
CONTRACTOR, AGENT, or ASSOCIATED others  in  furtherance  of  an  action
brought under this article[, including the investigation for, initiation
of, testimony for, or assistance in an action filed or to be filed under
this  section]  OR  OTHER EFFORTS TO STOP ONE OR MORE VIOLATIONS OF THIS
ARTICLE, shall be entitled to all relief necessary to make the employee,
CONTRACTOR OR AGENT whole. Such relief shall include but not be  limited
to:
  (a) an injunction to restrain continued discrimination;
  (b)  INSTALLMENT  OR reinstatement to the position such employee would
have had but for the discrimination or to an equivalent position;
  (c) reinstatement of full fringe benefits and seniority rights;
  (d) payment of two times back pay, plus interest; and
  (e) compensation for any special damages sustained as a result of  the
discrimination,  including  litigation  costs  and reasonable attorneys'
fees.
  2. FOR PURPOSES OF THIS SECTION, A "LAWFUL ACT" SHALL INCLUDE  OBTAIN-
ING  OR  TRANSMITTING TO THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAIN-
TIFF, OR PRIVATE COUNSEL SOLELY  EMPLOYED  TO  INVESTIGATE,  POTENTIALLY
FILE,  OR  FILE  A  CAUSE OF ACTION UNDER THIS ARTICLE, DOCUMENTS, DATA,
CORRESPONDENCE, ELECTRONIC MAIL, OR ANY OTHER INFORMATION,  EVEN  THOUGH
SUCH  ACT  MAY  VIOLATE A CONTRACT, EMPLOYMENT TERM, OR DUTY OWED TO THE
EMPLOYER OR CONTRACTOR, SO LONG AS THE POSSESSION  AND  TRANSMISSION  OF
SUCH  DOCUMENTS  ARE FOR THE SOLE PURPOSE TO FURTHER EFFORTS TO STOP ONE
OR MORE VIOLATIONS OF THIS ARTICLE.  NOTHING IN THIS  SUBDIVISION  SHALL
BE  INTERPRETED TO PREVENT ANY LAW ENFORCEMENT AUTHORITY FROM BRINGING A
CIVIL OR CRIMINAL ACTION AGAINST ANY PERSON FOR VIOLATING ANY  PROVISION
OF LAW.
  [2.]  3. An employee, CONTRACTOR OR AGENT described in subdivision one
of this section may bring an action in the appropriate supreme court for
the relief provided in this section.
  S 13. Subdivision 1 of section 192 of the state finance law, as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  A  civil  action  under  this  article shall be commenced no later
than[:
  (a) six years after the date on which the  violation  of  section  one
hundred eighty-nine of this article is committed; or
  (b)  three  years  after  the date when facts material to the right of
action are known or reasonably should have been known by the official of
the state or local government charged with responsibility to act in  the
circumstances,  but  in  no event more than] ten years after the date on
which the violation is committed[, whichever  occurs  last].    Notwith-

S. 7169--A                          8

standing  any  other provision of law, for the purposes of this article,
an action under this article is commenced by the filing of the complaint
[in the supreme court].
  S  14. Section 192 of the state finance law is amended by adding a new
subdivision 1-a to read as follows:
  1-A. FOR PURPOSES OF APPLYING RULE THREE THOUSAND SIXTEEN OF THE CIVIL
PRACTICE LAW AND RULES, IN PLEADING AN ACTION BROUGHT UNDER THIS  SUBDI-
VISION  THE QUI TAM PLAINTIFF SHALL NOT BE REQUIRED TO IDENTIFY SPECIFIC
CLAIMS THAT RESULT FROM AN ALLEGED COURSE OF MISCONDUCT, OR ANY SPECIFIC
RECORDS OR STATEMENTS USED, IF THE FACTS ALLEGED IN  THE  COMPLAINT,  IF
ULTIMATELY  PROVEN  TRUE, WOULD PROVIDE A REASONABLE INDICATION THAT ONE
OR MORE VIOLATIONS OF SECTION ONE HUNDRED EIGHTY-NINE  OF  THIS  ARTICLE
ARE  LIKELY  TO  HAVE  OCCURRED,  AND IF THE ALLEGATIONS IN THE PLEADING
PROVIDE ADEQUATE NOTICE OF THE SPECIFIC NATURE OF THE ALLEGED MISCONDUCT
TO PERMIT THE STATE OR A LOCAL GOVERNMENT EFFECTIVELY TO INVESTIGATE AND
DEFENDANTS FAIRLY TO DEFEND THE ALLEGATIONS MADE.
  S 15. This act shall  take  effect  immediately  and  shall  apply  to
claims,  records or statements filed or made prior to, on or after April
1, 2007; provided, however, that section nine  of  this  act  shall  not
apply to any cause of action filed under article 13 of the state finance
law prior to the effective date of this act.

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2009-S7169B (ACTIVE) - Details

Current Committee:: Senate Finance
Law Section:: State Finance Law
Laws Affected:: Amd §§188 - 192, St Fin L

2009-S7169B (ACTIVE) - Summary

Establishes the NY fraud, enforcement and recovery act.

2009-S7169B (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S7169B

TITLE OF BILL:

An act to amend the state finance law, in relation to establishing the
New York fraud, enforcement and recovery act

PURPOSE:

The purpose of this bill is to clarify and strengthen provisions of
the False Claims Act to improve the prevention and deterrence of
frauds against the state and local governments, and to increase the
recovery of funds and property that have been fraudulently obtained
from the state and local governments.

SUMMARY OF PROVISIONS:

Section 1: Entitles the bill the "Fraud Enforcement and Recovery Act"

Section 2: Amends section 188(1) of the New York False Claims Act to,
among other things, clarify and establish definitions of terms used in
that act in the same way that the just-passed amendments to the United
States False Claims Act changed such definitions in that act.

Section 3: Amends section 189(1) of the New York False Claims Act to,
among other things, change certain provisions relating to conduct

prohibited by the act in the same way that the just-passed amendments
to the United States False Claims Act changes those provisions in that
act. The act also clarifies that local governments can obtain civil
penalties against fraudsters in certain circumstances.

Section 4: Amends section 190(1) of the New York False Claims Act to
clarify that a local government can being an action on behalf of a
subdivision of such local government.

Section 5: Amends section 190(2) (b) of the New York False Claims Act
to, among other things, change the scope of the seal in qui tam cases
brought under the act in the same way that the just-passed amendments
to the United States False Claims Act amended the scope of the seal in
that act.

Section 6: Amends section 190(2; (a) and (b) of the New York False
Claims Act to add a new paragraph (b-1) to the act that clarifies the
application of the attorney-client privilege to qui tam actions.

Section 7: Amends section 190(2) (d) of the New York False Claims Act
to adopt the provision included in the recently-passed amendments to
the United States False Claims Act that clarifies the application of
the relation-back doctrine in a qui tam action.

Section 8: Adds a new subparagraph (i) and (ii) to section 190(2) (f)
of the New York False Claims Act that requires a qui tam plaintiff to
give the state or a local government copies of motions and other
information when litigating a case in which the state and local
governments have declined to intervene. Clarifies that the state or a
local government must consent to any settlement of a qui tam case.


Section 9: Amends paragraphs (a) and (b) of section 190(6) of the New
York False Claims Act to adopt the ranges of relator awards in the
California False Claims Act.

Section 10: Adds a new paragraph (d) to section 190(6) of the New York
False Claims Act to require counsel to a deceased qui tam plaintiff to
notify the government within five days of learning of such death, and
ensures that the estate of the deceased inherent the rights of the qui
tam plaintiff.

Section 11: Amends section 190(9) of the New York False Claims Act to
clarify the undefined terms of the public disclosure bar and give the
government and not private parties the right to control motions to
dismiss cases based on the public disclosure bar.

Section 12: Amends section 191 of the False Claims Act to clarify the
anti-retaliation provisions in the New York False Claims Act in the
same way that recently-passed amendments to the United States False
Claims Act clarify those provisions in that act. Also addresses
blacklisting and transmitting documents to law enforcement.

Section 13: Amends section 192(1) of the New York False Claims Act to
clarify the statute of limitations.

Section 14: Provides rules regarding pleadings for qui tam actions.

Section 15: Sets an immediate effective date of the act and states
that the amendments apply to any claims, records or statements filed
or made prior to, on or after April 1, 2007; provided, however, that
changes to the qui tam awards do not apply to any case filed prior to
the passage of the act.

JUSTIFICATION:

The New York False Claims Act (NYFCA), signed into law by Governor
Spitzer in 2007, is the state's most important civil tool to fight
fraud against the state or local governments. Most of the critical
language in the NYFCA was "cut and pasted" from the hugely successful
United States False Claims Act (USFCA), which was signed into law by
President Abraham Lincoln in 1863 to address civil war-era contracting
fraud, and later amended in 1943 by President Roosevelt and 1986 by
President Reagan. Thus, the NYFCA mirrors the 1986 version of the
USFCA. In May of 2009, however, President Barack Obama signed a series
of critical amendments to the USFCA to, among other things, reverse
court decisions (including recent decisions by the U.S. Supreme Court)
that weakened the USFCA in direct contradiction to the text of the law
and the intent of the 1863 act and the 1986 amendments.

Additionally, there are other pending amendments in Congress to fix
other generally acknowledged problems with the USFCA. Even after the
2009 amendments, the USFCA continues to be riddled with undefined
terms that federal courts have struggled to define and interpret
consistently. Many courts have issued rulings making it unduly hard
for the government to fight fraud and abuse.

Since the NYFCA continues to be a replicated version of the now
outdated 1986 version USFCA, there is little doubt that all of the


federal court decisions misinterpreting the USFCA would be applied to
the NYFCA - even those court decisions that congress has explicitly
overruled. Accordingly, this bill amends the NYFCA to:

(1) incorporate into the NYFCA the recently-passed amendments to the
USFCA signed by President Obama;

(2) clarify major terms in the NYFCA that, in federal cases
interpreting the USFCA, have been inconsistency defined or applied;

(3) further strengthen the NYFCA to enhance the ability of the
government to recover stolen government funds on behalf of taxpayers;
and

(4) fix technical aspects of the NYFCA that hinder the ability of the
department of law, other state agencies, and local governments to
administer the NYFCA and recover stolen government funds and property.

LEGISLATIVE HISTORY:

This is new legislation.

FISCAL IMPLICATIONS:

This bill will increase the amount of funds recovered by the state and
local governments in civil actions to recover stolen funds. It will
also decrease the amount of state and local government funds lost to
fraud by deterring would-be fraudsters from using a false claim
records or statements to obtain government funds.

EFFECTIVE DATE:
This bill would be effective immediately and would apply to all false
claims, records and statements filed or made prior to, on or after
April 1, 2007; provided, however, that the increased incentives for
qui tam suits unrelated to the Medicaid program would only apply to
those suits filed after the passage of this bill.

2009-S7169B (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7169--B

                            I N  S E N A T E

                             March 18, 2010
                               ___________

Introduced  by Sens. SCHNEIDERMAN, ADAMS, DILAN, ONORATO, PARKER, STAVI-
  SKY -- read twice and ordered printed, and when printed to be  commit-
  ted to the Committee on Finance -- committee discharged, bill amended,
  ordered  reprinted  as  amended  and  recommitted to said committee --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to amend the state finance law, in relation to establishing the
  New York fraud, enforcement and recovery act

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. This act shall be known as the New York Fraud, Enforcement
and Recovery Act ("FERA").
  S 2. Section 188 of the state finance law, as added by section  39  of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 188. Definitions. As used in this article, the following terms shall
mean:
  1.  "Claim"  (A) means any request or demand, whether under a contract
or otherwise, for money or property [which  is  made  to  any  employee,
officer, or agent of the state or a local government, or to any contrac-
tor,  grantee  or  other  recipient,  if the state or a local government
provides any portion of the money or  property  which  is  requested  or
demanded  or will reimburse such contractor, grantee, or other recipient
for any portion of the money or property which is requested or demanded]
THAT:
  (I) IS PRESENTED TO AN OFFICER, EMPLOYEE OR AGENT OF THE  STATE  OR  A
LOCAL GOVERNMENT; OR
  (II)  IS  MADE  TO  A  CONTRACTOR, GRANTEE, OR OTHER RECIPIENT, IF THE
MONEY OR PROPERTY IS TO BE SPENT OR USED ON THE STATE OR A LOCAL GOVERN-
MENT'S BEHALF OR TO ADVANCE A  STATE  OR  LOCAL  GOVERNMENT  PROGRAM  OR
INTEREST,  AND  IF  THE  STATE  OR  LOCAL GOVERNMENT (A) PROVIDES OR HAS
PROVIDED ANY PORTION OF THE MONEY OR PROPERTY REQUESTED OR DEMANDED;  OR
(B)  WILL REIMBURSE SUCH CONTRACTOR, GRANTEE, OR OTHER RECIPIENT FOR ANY
PORTION OF THE MONEY OR PROPERTY WHICH IS REQUESTED OR DEMANDED;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16488-04-0

S. 7169--B                          2

  (B) DOES NOT INCLUDE REQUESTS OR DEMANDS FOR MONEY  OR  PROPERTY  THAT
THE  STATE  OR  A  LOCAL GOVERNMENT HAS ALREADY PAID TO AN INDIVIDUAL AS
COMPENSATION FOR GOVERNMENT EMPLOYMENT OR AS AN INCOME SUBSIDY  WITH  NO
RESTRICTIONS ON THAT INDIVIDUAL'S USE OF THE MONEY OR PROPERTY.
  2.  "False  claim"  means any claim which is, either in whole or part,
false or fraudulent.
  3. "Knowing and knowingly" (A) means that [with respect to a claim, or
information relating to a claim,] a person, WITH RESPECT TO INFORMATION:
  [(a)] (I) has actual knowledge of [such claim or] THE information;
  [(b)] (II) acts in deliberate ignorance of the  truth  or  falsity  of
[such claim or] THE information; or
  [(c)]  (III)  acts  in  reckless  disregard of the truth or falsity of
[such claim or] THE information[.]; AND
  [Proof] (B) REQUIRE NO PROOF of specific intent  to  defraud  [is  not
required,  provided,  however  that  acts  occurring  by mistake or as a
result of mere negligence are not covered by this article].
  4. "OBLIGATION" MEANS AN ESTABLISHED DUTY, WHETHER OR NOT FIXED, ARIS-
ING FROM AN EXPRESS OR IMPLIED CONTRACTUAL, GRANTOR-GRANTEE,  OR  LICEN-
SOR-LICENSEE  RELATIONSHIP,  FROM  A  FEE-BASED OR SIMILAR RELATIONSHIP,
FROM STATUTE OR REGULATION, OR FROM THE RETENTION OF ANY OVERPAYMENT.
  5. "MATERIAL" MEANS HAVING A NATURAL  TENDENCY  TO  INFLUENCE,  OR  BE
CAPABLE OF INFLUENCING THE PAYMENT OR RECEIPT OF MONEY OR PROPERTY.
  [4.]  6.  "Local  government"  means  any county, city, town, village,
school district, board of cooperative educational services, local public
benefit corporation or other municipal corporation or political subdivi-
sion OF SUCH LOCAL GOVERNMENT, OR of the state.
  [5.] 7. "Original source" means a person who has direct and  independ-
ent knowledge of the information on which allegations are based, and has
voluntarily  provided the information to the state or a local government
before OR SIMULTANEOUS WITH filing an action under this article which is
based on the information.
  [6.] 8. "Person" means any natural person,  partnership,  corporation,
association  or  any  other  legal  entity or individual, other than the
state or a local government.
  [7.] 9. "State" means the state of New York and any state  department,
board,  bureau,  division,  commission, committee, public benefit corpo-
ration, public authority, council, office or other  governmental  entity
performing a governmental or proprietary function for the state.
  S  3.  Subdivision 1 of section 189 of the state finance law, as added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1. Subject to the provisions of subdivision two of this  section,  any
person who:
  (a)  knowingly  presents, or causes to be presented[, to any employee,
officer or agent of the state or a local government,] a false or fraudu-
lent claim for payment or approval;
  (b) knowingly makes, uses, or causes to  be  made  or  used,  a  false
record  or statement MATERIAL to [get] a false or fraudulent claim [paid
or approved by the state or a local government];
  (c) conspires to [defraud the state or a local government by getting a
false or fraudulent claim allowed or paid] COMMIT A VIOLATION  OF  PARA-
GRAPH (A), (B), (D), (E), (F) OR (G) OF THIS SUBDIVISION;
  (d)  has possession, custody, or control of property or money used, or
to be used, by the state  or  a  local  government  and[,  intending  to
defraud  the  state  or  a  local government or willfully to conceal the
property or money,] KNOWINGLY delivers, or causes to be delivered,  less

S. 7169--B                          3

[property  or  money]  than  [the amount for which the person receives a
certificate or receipt] ALL OF THAT MONEY OR PROPERTY;
  (e)  is authorized to make or deliver a document certifying receipt of
property used, or to be used, by the state or a  local  government  and,
intending  to defraud the state or a local government, makes or delivers
the receipt without completely  knowing  that  the  information  on  the
receipt is true;
  (f)  knowingly buys, or receives as a pledge of an obligation or debt,
public property from an officer or employee of  the  state  or  a  local
government  [knowing  that the officer or employee lawfully may not sell
or pledge the property] WHO VIOLATES A PROVISION OF LAW WHEN SELLING  OR
PLEDGING SUCH PROPERTY; or
  (g)  knowingly  makes,  uses,  or  causes  to be made or used, a false
record or statement MATERIAL to [conceal, avoid, or decrease]  an  obli-
gation  to  pay  or  transmit  money or property to the state or a local
government[;] shall be liable[: (i)] to the state OR A LOCAL  GOVERNMENT
for  a  civil penalty of not less than six thousand dollars and not more
than twelve thousand dollars, plus three times the  amount  of  damages,
INCLUDING  CONSEQUENTIAL  DAMAGES,  which  the state OR LOCAL GOVERNMENT
sustains because of the act of that  person[;  and  (ii)  to  any  local
government for three times the amount of damages sustained by such local
government because of the act of that person]. THE CIVIL PENALTIES SHALL
BE  PAID TO THE STATE IN ANY ACTION INVOLVING DAMAGES TO THE STATE OR IN
ANY QUI TAM CIVIL ACTION.  THE CIVIL PENALTIES SHALL BE PAID TO A  LOCAL
GOVERNMENT  ONLY  IF BOTH (I) THE ACTION INVOLVES DAMAGES SUSTAINED BY A
LOCAL GOVERNMENT BUT NOT THE STATE; AND (II) THE STATE PLAYED NO ROLE IN
THE INVESTIGATION OR PROSECUTION OF THE ACTION.
  S 4. Subdivision 1 of section 190 of the state finance law,  as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  Civil  enforcement  actions.  The  attorney general shall have the
authority to investigate violations under section  one  hundred  eighty-
nine of this article. If the attorney general believes that a person has
violated  or  is  violating  such section, then the attorney general may
bring a civil action on behalf of the people of the state of New York or
on behalf of a local government against such person. A local  government
also  shall  have  the authority to investigate violations that may have
resulted in damages to such local government under section  one  hundred
eighty-nine  of  this  article,  and may bring a civil action on its own
behalf [to recover damages sustained  by  such  local  government  as  a
result  of  such violations] OR ON THE BEHALF OF ANY SUBDIVISION OF SUCH
LOCAL GOVERNMENT. No action may be filed pursuant  to  this  subdivision
against  the federal government, the state or a local government, or any
officer or employee thereof acting in his or her official capacity.  The
attorney  general  shall  consult  with the office of medicaid inspector
general prior to filing any action related to the medicaid program.
  S 5. Paragraphs (a) and (b) of subdivision 2 of  section  190  of  the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a)  Any  person  may  bring a qui tam civil action for a violation of
section one hundred eighty-nine of this article on behalf of the PERSON,
THE people of the state of New York, or a local  government.  No  action
may  be  filed  pursuant to this subdivision against the federal govern-
ment, the state or a local government, or any officer or employee there-
of acting in his or her official capacity.

S. 7169--B                          4

  (b) A copy of the complaint and written  disclosure  of  substantially
all  material  evidence  and  information  the person possesses shall be
served on the state pursuant to subdivision one of section three hundred
seven of the civil practice law and rules. [The] ANY complaint FILED  IN
A  COURT  OF  THE  STATE  OF NEW YORK shall be filed in supreme court in
camera, shall remain under seal for at least sixty days, and  shall  not
be served on the defendant until the court so orders. THE SEAL SHALL NOT
PRECLUDE THE ATTORNEY GENERAL, A LOCAL GOVERNMENT, OR THE QUI TAM PLAIN-
TIFF  FROM  SERVING  THE  COMPLAINT, ANY OTHER PLEADINGS, OR THE WRITTEN
DISCLOSURE  OF  SUBSTANTIALLY  ALL  MATERIAL  EVIDENCE  AND  INFORMATION
POSSESSED  BY THE PERSON BRINGING THE ACTION, ON RELEVANT STATE OR LOCAL
GOVERNMENT AGENCIES, OR ON LAW ENFORCEMENT AUTHORITIES OF THE  STATE,  A
LOCAL  GOVERNMENT,  OR  OTHER  JURISDICTIONS, SO THAT THE ACTIONS MAY BE
INVESTIGATED OR PROSECUTED, EXCEPT THAT SUCH SEAL APPLIES TO  THE  AGEN-
CIES  OR AUTHORITIES SO SERVED TO THE SAME EXTENT AS THE SEAL APPLIES TO
OTHER PARTIES IN THE ACTION. If the allegations in the complaint  allege
a violation of section one hundred eighty-nine of this article involving
damages to a local government, then the attorney general may at any time
provide  a copy of such complaint and written disclosure to the attorney
for such local government; provided, however, that if the allegations in
the complaint involve damages only to a city with a  population  of  one
million or more, or only to the state and such a city, then the attorney
general  shall  provide  such  complaint  and  written disclosure to the
corporation counsel of such city within thirty days. The state may elect
to supersede or intervene and proceed with the action, or to authorize a
local government that may have sustained damages to supersede or  inter-
vene,  within  sixty  days  after it receives both the complaint and the
material evidence and information; provided, however, that if the  alle-
gations  in  the  complaint  involve damages only to a city with a popu-
lation of one million or more, then the attorney general may not  super-
sede  or intervene in such action without the consent of the corporation
counsel of such city. The attorney general shall consult with the office
of the medicaid inspector general prior to superseding or intervening in
any action related to the medicaid program. The  attorney  general  may,
for  good  cause shown, move the court for extensions of the time during
which the complaint remains under seal under this subdivision. Any  such
motions may be supported by affidavits or other submissions in camera.
  S  6. Subdivision 2 of section 190 of the state finance law is amended
by adding a new paragraph (b-1) to read as follows:
  (B-1) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, RULE OR  REGULATION,
THE  WRITTEN  DISCLOSURE  OF  MATERIAL  EVIDENCE  PREPARED  BY A QUI TAM
PLAINTIFF'S COUNSEL AND SERVED ON THE STATE PURSUANT TO PARAGRAPH (B) OF
THIS SUBDIVISION SHALL NOT BE DISCOVERABLE ABSENT A SHOWING OF  EXTRAOR-
DINARY NEED.  NEITHER THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAINTIFF
NOR  THE  QUI TAM PLAINTIFF'S COUNSEL SHALL BE DEEMED TO HAVE WAIVED ANY
OTHERWISE APPLICABLE PRIVILEGE  BECAUSE  OF  COMMUNICATIONS  BETWEEN  OR
AMONG  THE FEDERAL GOVERNMENT, THE STATE, ANY LOCAL GOVERNMENTS ON WHOSE
BEHALF THE ACTION IS BROUGHT, RELEVANT GOVERNMENT  AGENCIES  RELATED  TO
THE  ALLEGATIONS, OTHER LAW ENFORCEMENT AGENCIES, THE QUI TAM PLAINTIFF,
AND THE QUI TAM PLAINTIFF'S COUNSEL.
  S 7. Paragraph (d) of subdivision  2  of  section  190  of  the  state
finance  law, as added by section 39 of part C of chapter 58 of the laws
of 2007, is amended to read as follows:
  (d) If the state  notifies  the  court  that  it  intends  to  file  a
complaint against the defendant and thereby be substituted as the plain-
tiff  in  the  action,  or  to  permit a local government to do so, such

S. 7169--B                          5

complaint must be filed within thirty days after the notification to the
court.  FOR STATUTE OF LIMITATIONS PURPOSES, ANY SUCH COMPLAINT FILED BY
THE STATE OR A LOCAL GOVERNMENT SHALL RELATE BACK TO THE FILING DATE  OF
THE  COMPLAINT OF THE QUI TAM PLAINTIFF, TO THE EXTENT THAT THE CAUSE OF
ACTION OF THE STATE OR LOCAL GOVERNMENT ARISES OUT OF THE CONDUCT, TRAN-
SACTIONS, OR OCCURRENCES SET FORTH, OR ATTEMPTED TO BE SET FORTH, IN THE
PRIOR COMPLAINT OF THE QUI TAM PLAINTIFF.
  S 8. Paragraph (f) of subdivision  2  of  section  190  of  the  state
finance  law  is amended by adding two new subparagraphs (i) and (ii) to
read as follows:
  (I) THE QUI TAM PLAINTIFF SHALL PROVIDE THE STATE  OR  ANY  APPLICABLE
LOCAL  GOVERNMENT WITH A COPY OF ANY DOCUMENT FILED WITH THE COURT ON OR
ABOUT THE DATE IT IS FILED, OR ANY ORDER ISSUED BY THE COURT ON OR ABOUT
THE DAY IT IS ISSUED. THE QUI TAM PLAINTIFF SHALL PROVIDE THE  STATE  OR
ANY  APPLICABLE  LOCAL GOVERNMENT WITH ANY OTHER INFORMATION RELATING TO
THE ACTION UPON REQUEST. A QUI TAM PLAINTIFF SHALL NOTIFY THE  STATE  OR
ANY  APPLICABLE LOCAL GOVERNMENT WITHIN FIVE DAYS OF ANY DECISION, ORDER
OR VERDICT RESULTING IN JUDGMENT IN FAVOR OF THE STATE OR LOCAL  GOVERN-
MENT.
  (II)  THE  QUI  TAM PLAINTIFF MAY NOT SETTLE OR DISMISS THE ACTION, IN
WHOLE OR IN PART, WITHOUT THE CONSENT OF EITHER THE STATE,  OR  A  LOCAL
GOVERNMENT ON WHOSE BEHALF THE ACTION WAS BROUGHT.
  S  9.  Paragraphs  (a)  and (b) of subdivision 6 of section 190 of the
state finance law, as added by section 39 of part C of chapter 58 of the
laws of 2007, are amended to read as follows:
  (a) If the attorney general elects to convert the qui tam civil action
into an attorney general  enforcement  action,  or  to  permit  a  local
government to convert the action into a civil enforcement action by such
local  government,  or  if  the  attorney  general or a local government
elects to intervene in the qui tam civil  action,  then  the  person  or
persons  who  initiated  the  qui tam civil action collectively shall be
entitled IN ANY ACTION  RELATED  TO  THE  MEDICAID  PROGRAM  to  receive
between fifteen and twenty-five percent of the proceeds recovered in the
action  or in settlement of the action, AND SHALL BE ENTITLED TO RECEIVE
BETWEEN FIFTEEN AND THIRTY-THREE PERCENT OF SUCH PROCEEDS IN  ANY  OTHER
ACTION.    The  court  shall determine the percentage of the proceeds to
which a person commencing a qui tam civil action is entitled, by consid-
ering the extent to which the plaintiff substantially contributed to the
prosecution of the action. Where the court finds  that  the  action  was
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 hear-
ing, in a legislative or administrative report, hearing, audit or inves-
tigation,  or  from  the news media, the court may award such 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 or persons bringing the action in  advancing  the
case to litigation.
  (b)  If  the  attorney general or a local government does not elect to
intervene or convert the action, and the action is successful, then  the
person  or  persons  who  initiated  the  qui  tam  action which obtains
proceeds shall be entitled IN ANY ACTION RELATED TO THE MEDICAID PROGRAM
to receive between twenty-five and thirty percent of the proceeds recov-
ered in the action or settlement of the action, AND SHALL BE ENTITLED TO
RECEIVE BETWEEN TWENTY-FIVE AND FIFTY PERCENT OF SUCH  PROCEEDS  IN  ANY
OTHER  ACTION.  The court shall determine the percentage of the proceeds

S. 7169--B                          6

to which a person commencing a qui tam  civil  action  is  entitled,  by
considering  the extent to which the plaintiff substantially contributed
to the prosecution of the action.
  S 10. Subdivision 6 of section 190 of the state finance law is amended
by adding a new paragraph (d) to read as follows:
  (D) FOR PURPOSES OF SECTION ONE HUNDRED FIVE OF THE CIVIL PRACTICE LAW
AND  RULES,  THE PROPER PARTY UPON THE DEATH OF THE QUI TAM PLAINTIFF IS
THE QUI TAM PLAINTIFF'S ESTATE, WHO SHALL HAVE ALL THE RIGHTS AND INTER-
ESTS OF THE DECEASED QUI TAM  PLAINTIFF.  IN  ONGOING  CASES  WHERE  THE
GOVERNMENT  HAS  DECLINED  TO INTERVENE, THE QUI TAM PLAINTIFF'S COUNSEL
SHALL WITHIN FIVE DAYS OF LEARNING OF THE DEATH OF THE QUI TAM PLAINTIFF
NOTIFY THE COURT AND THE STATE OR LOCAL GOVERNMENTS OF ON  WHOSE  BEHALF
THE ACTION WAS BROUGHT.
  S  11. Subdivision 9 of section 190 of the state finance law, as added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  9. Certain actions barred. [No court shall have  jurisdiction  over  a
qui  tam  civil  action  brought  pursuant  to  subdivision  two of this
section:] THE COURT SHALL CAUSE A QUI TAM CIVIL ACTION TO BE DISMISSED:
  (A) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (II)  OF  PARAGRAPH
(B)  OF THIS SUBDIVISION UPON MOTION MADE BY THE ATTORNEY GENERAL, OR BY
ANY PARTY TO THE ACTION WHO FIRST  HAS  OBTAINED  THE  APPROVAL  OF  THE
ATTORNEY GENERAL TO MAKE SUCH MOTION AND OF THE CONTENTS OF SUCH MOTION;
PROVIDED  THAT  SUCH  APPROVAL  SHALL NOT BE DEEMED TO BE A STATEMENT IN
SUPPORT OF THE MERITS OF SUCH MOTION  UNLESS  OTHERWISE  STATED  BY  THE
ATTORNEY GENERAL; OR
  (B) UNDER THE CONDITIONS SET FORTH IN SUBPARAGRAPH (I), (III), OR (IV)
OF  THIS  PARAGRAPH  UPON MOTION MADE BY ANY PARTY TO THE ACTION, IF THE
QUI TAM CIVIL ACTION IS:
  [(a)] (I) based on allegations or transactions which are  the  subject
of a pending civil action or an administrative action in which the state
or a local government is already a party;
  [(b)]  (II)  derived  from  public disclosure of allegations or trans-
actions in a criminal, civil, or administrative hearing, in  a  legisla-
tive  or administrative report, hearing, audit or investigation, or from
the news media, unless  the  person  who  initiated  the  action  is  an
original  source  of the information; PROVIDED THAT FOR PURPOSES OF THIS
SUBPARAGRAPH:
  (A) A PERSON DOES NOT CREATE A "PUBLIC DISCLOSURE" BY OBTAINING INFOR-
MATION PURSUANT TO A REQUEST MADE UNDER ARTICLE SIX OF THE PUBLIC  OFFI-
CERS  LAW,  OR  UNDER  ANY  OTHER  FEDERAL,  STATE OR LOCAL LAW, RULE OR
PROGRAM ENABLING THE PUBLIC TO REQUEST, RECEIVE  OR  VIEW  DOCUMENTS  OR
INFORMATION IN THE POSSESSION OF PUBLIC OFFICIALS OR PUBLIC AGENCIES;
  (B)  A  "PUBLIC  DISCLOSURE"  IN  A CRIMINAL, CIVIL, OR ADMINISTRATIVE
HEARING, OR IN A LEGISLATIVE OR ADMINISTRATIVE REPORT, HEARING, AUDIT OR
INVESTIGATION, INCLUDES ONLY THOSE DISCLOSURES  THAT  ARE  MADE  ON  THE
PUBLIC  RECORD,  OR THAT HAVE OTHERWISE BEEN DISSEMINATED BROADLY TO THE
GENERAL PUBLIC;
  (C) A "PUBLIC DISCLOSURE" SHALL NOT BE DEEMED TO HAVE BEEN MADE IN THE
"NEWS MEDIA" MERELY BECAUSE INFORMATION OF ALLEGATIONS  OR  TRANSACTIONS
HAS BEEN POSTED ON THE INTERNET OR ON A COMPUTER NETWORK; AND
  (D)  AN  ACTION IS "DERIVED FROM" THE PUBLIC DISCLOSURE OF ALLEGATIONS
OR TRANSACTIONS ONLY IF THE QUI TAM PLAINTIFF DERIVED KNOWLEDGE  OF  ALL
OF THE ESSENTIAL ELEMENTS OF LIABILITY FROM THE PUBLIC DISCLOSURE;
  [(c)]  (III)  if  the agency has reached a binding settlement or other
agreement with the person who [submitted  such  false  claims]  VIOLATED

S. 7169--B                          7

SECTION ONE HUNDRED EIGHTY-NINE OF THIS ARTICLE resolving the matter and
such  agreement has been approved in writing by the attorney general, or
by the local government attorney if the matter involves  allegations  of
false claims submitted to a local government[; or
  (d) against a member of the legislature, a member of the judiciary, or
a senior executive branch official if the action is based on evidence or
information known to the state when the action was brought].
  S  12. Section 191 of the state finance law, as added by section 39 of
part C of chapter 58 of the laws of 2007, is amended to read as follows:
  S 191. [Remedies of employees] ANTI-RETALIATION AND  ANTI-BLACKLISTING
PROTECTIONS.  1. Any CURRENT OR FORMER employee, CONTRACTOR, OR AGENT of
any  private  or  public employer who is discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against in the
terms and conditions of employment [by his or her employer] OR OTHERWISE
HARMED OR PENALIZED BY AN EMPLOYER, OR A PROSPECTIVE  EMPLOYER,  because
of  lawful  acts  done  by  the  employee  [on  behalf of the employer],
CONTRACTOR, AGENT, or ASSOCIATED others  in  furtherance  of  an  action
brought under this article[, including the investigation for, initiation
of, testimony for, or assistance in an action filed or to be filed under
this  section]  OR  OTHER EFFORTS TO STOP ONE OR MORE VIOLATIONS OF THIS
ARTICLE, shall be entitled to all relief necessary to make the employee,
CONTRACTOR OR AGENT whole. Such relief shall include but not be  limited
to:
  (a) an injunction to restrain continued discrimination;
  (b)  INSTALLMENT  OR reinstatement to the position such employee would
have had but for the discrimination or to an equivalent position;
  (c) reinstatement of full fringe benefits and seniority rights;
  (d) payment of two times back pay, plus interest; and
  (e) compensation for any special damages sustained as a result of  the
discrimination,  including  litigation  costs  and reasonable attorneys'
fees.
  2. FOR PURPOSES OF THIS SECTION, A "LAWFUL ACT" SHALL INCLUDE  OBTAIN-
ING  OR  TRANSMITTING TO THE STATE, A LOCAL GOVERNMENT, A QUI TAM PLAIN-
TIFF, OR PRIVATE COUNSEL SOLELY  EMPLOYED  TO  INVESTIGATE,  POTENTIALLY
FILE,  OR  FILE  A  CAUSE OF ACTION UNDER THIS ARTICLE, DOCUMENTS, DATA,
CORRESPONDENCE, ELECTRONIC MAIL, OR ANY OTHER INFORMATION,  EVEN  THOUGH
SUCH  ACT  MAY  VIOLATE A CONTRACT, EMPLOYMENT TERM, OR DUTY OWED TO THE
EMPLOYER OR CONTRACTOR, SO LONG AS THE POSSESSION  AND  TRANSMISSION  OF
SUCH  DOCUMENTS  ARE FOR THE SOLE PURPOSE TO FURTHER EFFORTS TO STOP ONE
OR MORE VIOLATIONS OF THIS ARTICLE.  NOTHING IN THIS  SUBDIVISION  SHALL
BE  INTERPRETED TO PREVENT ANY LAW ENFORCEMENT AUTHORITY FROM BRINGING A
CIVIL OR CRIMINAL ACTION AGAINST ANY PERSON FOR VIOLATING ANY  PROVISION
OF LAW.
  [2.]  3. An employee, CONTRACTOR OR AGENT described in subdivision one
of this section may bring an action in the appropriate supreme court for
the relief provided in this section.
  S 13. Subdivision 1 of section 192 of the state finance law, as  added
by section 39 of part C of chapter 58 of the laws of 2007, is amended to
read as follows:
  1.  A  civil  action  under  this  article shall be commenced no later
than[:
  (a) six years after the date on which the  violation  of  section  one
hundred eighty-nine of this article is committed; or
  (b)  three  years  after  the date when facts material to the right of
action are known or reasonably should have been known by the official of
the state or local government charged with responsibility to act in  the

S. 7169--B                          8

circumstances,  but  in  no event more than] ten years after the date on
which the violation is committed[, whichever  occurs  last].    Notwith-
standing  any  other provision of law, for the purposes of this article,
an action under this article is commenced by the filing of the complaint
[in the supreme court].
  S  14. Section 192 of the state finance law is amended by adding a new
subdivision 1-a to read as follows:
  1-A. FOR PURPOSES OF APPLYING RULE THREE THOUSAND SIXTEEN OF THE CIVIL
PRACTICE LAW AND RULES, IN PLEADING AN ACTION BROUGHT UNDER THIS  SUBDI-
VISION  THE QUI TAM PLAINTIFF SHALL NOT BE REQUIRED TO IDENTIFY SPECIFIC
CLAIMS THAT RESULT FROM AN ALLEGED COURSE OF MISCONDUCT, OR ANY SPECIFIC
RECORDS OR STATEMENTS USED, IF THE FACTS ALLEGED IN  THE  COMPLAINT,  IF
ULTIMATELY  PROVEN  TRUE, WOULD PROVIDE A REASONABLE INDICATION THAT ONE
OR MORE VIOLATIONS OF SECTION ONE HUNDRED EIGHTY-NINE  OF  THIS  ARTICLE
ARE  LIKELY  TO  HAVE  OCCURRED,  AND IF THE ALLEGATIONS IN THE PLEADING
PROVIDE ADEQUATE NOTICE OF THE SPECIFIC NATURE OF THE ALLEGED MISCONDUCT
TO PERMIT THE STATE OR A LOCAL GOVERNMENT EFFECTIVELY TO INVESTIGATE AND
DEFENDANTS FAIRLY TO DEFEND THE ALLEGATIONS MADE.
  S 15. This act shall  take  effect  immediately  and  shall  apply  to
claims,  records or statements filed or made prior to, on or after April
1, 2007; provided, however, that section nine  of  this  act  shall  not
apply to any cause of action filed under article 13 of the state finance
law prior to the effective date of this act.

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