§ 39. The state finance law is amended by adding a new article 13 to
6 read as follows:
7 ARTICLE XIII
8 NEW YORK FALSE CLAIMS ACT
9 Section 187. Short title.
10 188. Definitions.
11 189. Liability for certain acts.
12 190. Civil actions for false claims.
13 191. Remedies of employees.
14 192. Limitation of actions, burden of proof.
15 193. Other law enforcement authority and duties.
16 194. Regulations.
17 § 187. Short title. This article shall be known and may be cited as
18 the "New York false claims act".
19 § 188. Definitions. As used in this article, the following terms shall
20 mean:
21 1. "Claim" means any request or demand, whether under a contract or
22 otherwise, for money or property which is made to any employee, officer,
23 or agent of the state or a local government, or to any contractor, gran-
24 tee or other recipient, if the state or a local government provides any
25 portion of the money or property which is requested or demanded or will
26 reimburse such contractor, grantee, or other recipient for any portion
27 of the money or property which is requested or demanded.
28 2. "False claim" means any claim which is, either in whole or part,
29 false or fraudulent.
30 3. "Knowing and knowingly" means that with respect to a claim, or
31 information relating to a claim, a person:
32 (a) has actual knowledge of such claim or information;
33 (b) acts in deliberate ignorance of the truth or falsity of such claim
34 or information; or
35 (c) acts in reckless disregard of the truth or falsity of such claim
36 or information.
37 Proof of specific intent to defraud is not required, provided, however
38 that acts occurring by mistake or as a result of mere negligence are not
39 covered by this article.
40 4. "Local government" means any county, city, town, village, school
41 district, board of cooperative educational services, local public bene-
42 fit corporation or other municipal corporation or political subdivision
43 of the state.
44 5. "Original source" means a person who has direct and independent
45 knowledge of the information on which allegations are based, and has
46 voluntarily provided the information to the state or a local government
47 before filing an action under this article which is based on the infor-
48 mation.
49 6. "Person" means any natural person, partnership, corporation, asso-
50 ciation or any other legal entity or individual, other than the state or
51 a local government.
52 7. "State" means the state of New York and any state department,
53 board, bureau, division, commission, committee, public benefit corpo-
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1 ration, public authority, council, office or other governmental entity
2 performing a governmental or proprietary function for the state.
3 § 189. Liability for certain acts. 1. Subject to the provisions of
4 subdivision two of this section, any person who:
5 (a) knowingly presents, or causes to be presented, to any employee,
6 officer or agent of the state or a local government, a false or fraudu-
7 lent claim for payment or approval;
8 (b) knowingly makes, uses, or causes to be made or used, a false
9 record or statement to get a false or fraudulent claim paid or approved
10 by the state or a local government;
11 (c) conspires to defraud the state or a local government by getting a
12 false or fraudulent claim allowed or paid;
13 (d) has possession, custody, or control of property or money used, or
14 to be used, by the state or a local government and, intending to defraud
15 the state or a local government or willfully to conceal the property or
16 money, delivers, or causes to be delivered, less property or money than
17 the amount for which the person receives a certificate or receipt;
18 (e) is authorized to make or deliver a document certifying receipt of
19 property used, or to be used, by the state or a local government and,
20 intending to defraud the state or a local government, makes or delivers
21 the receipt without completely knowing that the information on the
22 receipt is true;
23 (f) knowingly buys, or receives as a pledge of an obligation or debt,
24 public property from an officer or employee of the state or a local
25 government knowing that the officer or employee lawfully may not sell or
26 pledge the property; or
27 (g) knowingly makes, uses, or causes to be made or used, a false
28 record or statement to conceal, avoid, or decrease an obligation to pay
29 or transmit money or property to the state or a local government;
30 shall be liable: (i) to the state for a civil penalty of not less than
31 six thousand dollars and not more than twelve thousand dollars, plus
32 three times the amount of damages which the state sustains because of
33 the act of that person; and (ii) to any local government for three times
34 the amount of damages sustained by such local government because of the
35 act of that person.
36 2. The court may assess not more than two times the amount of damages
37 sustained because of the act of the person described in subdivision one
38 of this section, if the court finds that:
39 (a) the person committing the violation of this section had furnished
40 all information known to such person about the violation, to those offi-
41 cials responsible for investigating false claims violations on behalf of
42 the state and any local government that sustained damages, within thirty
43 days after the date on which such person first obtained the information;
44 (b) such person fully cooperated with any government investigation of
45 such violation; and
46 (c) at the time such person furnished information about the violation,
47 no criminal prosecution, civil action, or administrative action had
48 commenced with respect to such violation, and the person did not have
49 actual knowledge of the existence of an investigation into such
50 violation.
51 3. A person who violates this section shall also be liable for the
52 costs, including attorneys' fees, of a civil action brought to recover
53 any such penalty or damages.
54 4. This section shall not apply to claims, records, or statements made
55 under the tax law.
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1 § 190. Civil actions for false claims. 1. Civil enforcement actions.
2 The attorney general shall have the authority to investigate violations
3 under section one hundred eighty-nine of this article. If the attorney
4 general believes that a person has violated or is violating such
5 section, then the attorney general may bring a civil action on behalf of
6 the people of the state of New York or on behalf of a local government
7 against such person. A local government also shall have the authority
8 to investigate violations that may have resulted in damages to such
9 local government under section one hundred eighty-nine of this article,
10 and may bring a civil action on its own behalf to recover damages
11 sustained by such local government as a result of such violations. No
12 action may be filed pursuant to this subdivision against the federal
13 government, the state or a local government, or any officer or employee
14 thereof acting in his or her official capacity. The attorney general
15 shall consult with the office of medicaid inspector general prior to
16 filing any action related to the medicaid program.
17 2. Qui tam civil actions. (a) Any person may bring a qui tam civil
18 action for a violation of section one hundred eighty-nine of this arti-
19 cle on behalf of the people of the state of New York or a local govern-
20 ment. No action may be filed pursuant to this subdivision against the
21 federal government, the state or a local government, or any officer or
22 employee thereof acting in his or her official capacity.
23 (b) A copy of the complaint and written disclosure of substantially
24 all material evidence and information the person possesses shall be
25 served on the state pursuant to subdivision one of section three hundred
26 seven of the civil practice law and rules. The complaint shall be filed
27 in supreme court in camera, shall remain under seal for at least sixty
28 days, and shall not be served on the defendant until the court so
29 orders. If the allegations in the complaint allege a violation of
30 section one hundred eighty-nine of this article involving damages to a
31 local government, then the attorney general may at any time provide a
32 copy of such complaint and written disclosure to the attorney for such
33 local government; provided, however, that if the allegations in the
34 complaint involve damages only to a city with a population of one
35 million or more, or only to the state and such a city, then the attorney
36 general shall provide such complaint and written disclosure to the
37 corporation counsel of such city within thirty days. The state may
38 elect to supersede or intervene and proceed with the action, or to
39 authorize a local government that may have sustained damages to super-
40 sede or intervene, within sixty days after it receives both the
41 complaint and the material evidence and information; provided, however,
42 that if the allegations in the complaint involve damages only to a city
43 with a population of one million or more, then the attorney general may
44 not supersede or intervene in such action without the consent of the
45 corporation counsel of such city. The attorney general shall consult
46 with the office of the medicaid inspector general prior to superseding
47 or intervening in any action related to the medicaid program. The
48 attorney general may, for good cause shown, move the court for exten-
49 sions of the time during which the complaint remains under seal under
50 this subdivision. Any such motions may be supported by affidavits or
51 other submissions in camera.
52 (c) Prior to the expiration of the sixty day period or any extensions
53 obtained under paragraph (b) of this subdivision, the attorney general
54 shall notify the court that he or she:
55 (i) intends to file a complaint against the defendant on behalf of the
56 people of the state of New York or a local government, and thereby be
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1 substituted as the plaintiff in the action and convert the action in all
2 respects from a qui tam civil action brought by a private person into a
3 civil enforcement action by the attorney general under subdivision one
4 of this section;
5 (ii) intends to intervene in such action, as of right, so as to aid
6 and assist the plaintiff in the action; or
7 (iii) if the action involves damages sustained by a local government,
8 intends to grant the local government permission to: (A) file and serve
9 a complaint against the defendant, and thereby be substituted as the
10 plaintiff in the action and convert the action in all respects from a
11 qui tam civil action brought by a private person into a civil enforce-
12 ment action by the local government under subdivision one of this
13 section; or (B) intervene in such action, as of right, so as to aid and
14 assist the plaintiff in the action.
15 The attorney general shall provide the local government with a copy of
16 any such notification at the same time the court is notified.
17 (d) If the state notifies the court that it intends to file a
18 complaint against the defendant and thereby be substituted as the plain-
19 tiff in the action, or to permit a local government to do so, such
20 complaint must be filed within thirty days after the notification to the
21 court.
22 (e) If the state notifies the court that it intends to intervene in
23 the action, or to permit a local government to do so, then such motion
24 for intervention shall be filed within thirty days after the notifica-
25 tion to the court.
26 (f) If the state declines to participate in the action or to authorize
27 participation by a local government, the qui tam action may proceed
28 subject to judicial review under this section, the civil practice law
29 and rules, and other applicable law.
30 3. Time to answer. If the state decides to participate in a qui tam
31 action or to authorize the participation of a local government, the
32 court shall order that the qui tam complaint be unsealed and served at
33 the time of the filing of the complaint or intervention motion by the
34 state or local government. After the complaint is unsealed, or if a
35 complaint is filed by the state or a local government pursuant to subdi-
36 vision one of this section, the defendant shall be served with the
37 complaint and summons pursuant to article three of the civil practice
38 law and rules. A copy of any complaint which alleges that damages were
39 sustained by a local government shall also be served on such local
40 government. The defendant shall be required to respond to the summons
41 and complaint within the time allotted under rule three hundred twenty
42 of the civil practice law and rules.
43 4. Related actions. When a person brings a qui tam action under this
44 section, no person other than the attorney general, or a local govern-
45 ment attorney acting pursuant to subdivision one of this section or
46 paragraph (b) of subdivision two of this section, may intervene or bring
47 a related civil action based upon the facts underlying the pending
48 action, unless such other person has first obtained the permission of
49 the attorney general to intervene or to bring such related action;
50 provided, however, that nothing in this subdivision shall be deemed to
51 deny persons the right, upon leave of court, to file briefs amicus curi-
52 ae.
53 5. Rights of the parties of qui tam actions. (a) If the attorney
54 general elects to convert the qui tam civil action into an attorney
55 general enforcement action, then the state shall have the primary
56 responsibility for prosecuting the action. If the attorney general
S. 2108--C 137 A. 4308--C
1 elects to intervene in the qui tam civil action then the state and the
2 person who commenced the action, and any local government which
3 sustained damages and intervenes in the action, shall share primary
4 responsibility for prosecuting the action. If the attorney general
5 elects to permit a local government to convert the action into a civil
6 enforcement action, then the local government shall have primary respon-
7 sibility for investigating and prosecuting the action. If the action
8 involves damages to a local government but not the state, and the local
9 government intervenes in the qui tam civil action, then the local
10 government and the person who commenced the action shall share primary
11 responsibility for prosecuting the action. Under no circumstances shall
12 the state or a local government be bound by an act of the person bring-
13 ing the original action. Such person shall have the right to continue as
14 a party to the action, subject to the limitations set forth in paragraph
15 (b) of this subdivision. Under no circumstances shall the state be
16 bound by the act of a local government that intervenes in an action
17 involving damages to the state. If neither the attorney general nor a
18 local government intervenes in the qui tam action then the qui tam
19 plaintiff shall have the responsibility for prosecuting the action,
20 subject to the attorney general's right to intervene at a later date
21 upon a showing of good cause.
22 (b)(i) The state may move to dismiss the action notwithstanding the
23 objections of the person initiating the action if the person has been
24 served with the motion to dismiss and the court has provided the person
25 with an opportunity to be heard on the motion. If the action involves
26 damages to both the state and a local government, then the state shall
27 consult with such local government before moving to dismiss the action.
28 If the action involves damages sustained by a local government but not
29 the state, then the local government may move to dismiss the action
30 notwithstanding the objections of the person initiating the action if
31 the person has been served with the motion to dismiss and the court has
32 provided the person with an opportunity to be heard on the motion.
33 (ii) The state or a local government may settle the action with the
34 defendant notwithstanding the objections of the person initiating the
35 action if the court determines, after an opportunity to be heard, that
36 the proposed settlement is fair, adequate, and reasonable with respect
37 to all parties under all the circumstances. Upon a showing of good
38 cause, such opportunity to be heard may be held in camera.
39 (iii) Upon a showing by the attorney general or a local government
40 that the original plaintiff's unrestricted participation during the
41 course of the litigation would interfere with or unduly delay the prose-
42 cution of the case, or would be repetitious or irrelevant, or upon a
43 showing by the defendant that the original qui tam plaintiff's unre-
44 stricted participation during the course of the litigation would be for
45 purposes of harassment or would cause the defendant undue burden, the
46 court may, in its discretion, impose limitations on the original
47 plaintiff's participation in the case, such as:
48 (A) limiting the number of witnesses the person may call;
49 (B) limiting the length of the testimony of such witnesses;
50 (C) limiting the person's cross-examination of witnesses; or
51 (D) otherwise limiting the participation by the person in the liti-
52 gation.
53 (c) Notwithstanding any other provision of law, whether or not the
54 attorney general or a local government elects to supersede or intervene
55 in a qui tam civil action, the attorney general and such local govern-
56 ment may elect to pursue any remedy available with respect to the crimi-
S. 2108--C 138 A. 4308--C
1 nal or civil prosecution of the presentation of false claims, including
2 any administrative proceeding to determine a civil money penalty or to
3 refer the matter to the office of the medicaid inspector general for
4 medicaid related matters. If any such alternate civil remedy is pursued
5 in another proceeding, the person initiating the action shall have the
6 same rights in such proceeding as such person would have had if the
7 action had continued under this section.
8 (d) Notwithstanding any other provision of law, whether or not the
9 attorney general elects to supersede or intervene in a qui tam civil
10 action, or to permit a local government to supersede or intervene in the
11 qui tam civil action, upon a showing by the state or local government
12 that certain actions of discovery by the person initiating the action
13 would interfere with the state's or a local government's investigation
14 or prosecution of a criminal or civil matter arising out of the same
15 facts, the court may stay such discovery for a period of not more than
16 sixty days. Such a showing shall be conducted in camera. The court may
17 extend the period of such stay upon a further showing in camera that the
18 state or a local government has pursued the criminal or civil investi-
19 gation or proceedings with reasonable diligence and any proposed discov-
20 ery in the civil action will interfere with the ongoing criminal or
21 civil investigation or proceedings.
22 6. Awards to qui tam plaintiff. (a) If the attorney general elects to
23 convert the qui tam civil action into an attorney general enforcement
24 action, or to permit a local government to convert the action into a
25 civil enforcement action by such local government, or if the attorney
26 general or a local government elects to intervene in the qui tam civil
27 action, then the person or persons who initiated the qui tam civil
28 action collectively shall be entitled to receive between fifteen and
29 twenty-five percent of the proceeds recovered in the action or in
30 settlement of the action. The court shall determine the percentage of
31 the proceeds to which a person commencing a qui tam civil action is
32 entitled, by considering the extent to which the plaintiff substantially
33 contributed to the prosecution of the action. Where the court finds that
34 the action was based primarily on disclosures of specific information
35 (other than information provided by the person bringing the action)
36 relating to allegations or transactions in a criminal, civil or adminis-
37 trative hearing, in a legislative or administrative report, hearing,
38 audit or investigation, or from the news media, the court may award such
39 sums as it considers appropriate, but in no case more than ten percent
40 of the proceeds, taking into account the significance of the information
41 and the role of the person or persons bringing the action in advancing
42 the case to litigation.
43 (b) If the attorney general or a local government does not elect to
44 intervene or convert the action, and the action is successful, then the
45 person or persons who initiated the qui tam action which obtains
46 proceeds shall be entitled to receive between twenty-five and thirty
47 percent of the proceeds recovered in the action or settlement of the
48 action. The court shall determine the percentage of the proceeds to
49 which a person commencing a qui tam civil action is entitled, by consid-
50 ering the extent to which the plaintiff substantially contributed to the
51 prosecution of the action.
52 (c) With the exception of a court award of costs, expenses or attor-
53 neys' fees, any payment to a person pursuant to this paragraph shall be
54 made from the proceeds.
55 7. Costs, expenses, disbursements and attorneys' fees. In any action
56 brought pursuant to this article, the court may award the attorney
S. 2108--C 139 A. 4308--C
1 general, on behalf of the people of the state of New York, and any local
2 government that participates as a party in the action, and any person
3 who is a qui tam plaintiff, an amount for reasonable expenses which the
4 court finds to have been necessarily incurred, plus reasonable attor-
5 neys' fees, plus costs pursuant to article eighty-one of the civil prac-
6 tice law and rules. All such expenses, fees and costs shall be awarded
7 directly against the defendant and shall not be charged from the
8 proceeds, but shall only be awarded if the state or a local government
9 or the qui tam civil action plaintiff prevails in the action.
10 8. Exclusion from recovery. If the court finds that the qui tam civil
11 action was brought by a person who planned or initiated the violation of
12 section one hundred eighty-nine of this article upon which the action
13 was brought, then the court may, to the extent the court considers
14 appropriate, reduce the share of the proceeds of the action which the
15 person would otherwise be entitled to receive under subdivision six of
16 this section, taking into account the role of such person in advancing
17 the case to litigation and any relevant circumstances pertaining to the
18 violation. If the person bringing the qui tam civil action is convicted
19 of criminal conduct arising from his or her role in the violation of
20 section one hundred eighty-nine of this article, that person shall be
21 dismissed from the qui tam civil action and shall not receive any share
22 of the proceeds of the action. Such dismissal shall not prejudice the
23 right of the attorney general to supersede or intervene in such action
24 and to civilly prosecute the same on behalf of the state or a local
25 government.
26 9. Certain actions barred. No court shall have jurisdiction over a qui
27 tam civil action brought pursuant to subdivision two of this section:
28 (a) based on allegations or transactions which are the subject of a
29 pending civil action or an administrative action in which the state or a
30 local government is already a party;
31 (b) derived from public disclosure of allegations or transactions in a
32 criminal, civil, or administrative hearing, in a legislative or adminis-
33 trative report, hearing, audit or investigation, or from the news media,
34 unless the person who initiated the action is an original source of the
35 information;
36 (c) if the agency has reached a binding settlement or other agreement
37 with the person who submitted such false claims resolving the matter and
38 such agreement has been approved in writing by the attorney general, or
39 by the local government attorney if the matter involves allegations of
40 false claims submitted to a local government; or
41 (d) against a member of the legislature, a member of the judiciary, or
42 a senior executive branch official if the action is based on evidence or
43 information known to the state when the action was brought.
44 10. Liability. Neither the state nor any local government shall be
45 liable for any expenses which any person incurs in bringing a qui tam
46 civil action under this article.
47 § 191. Remedies of employees. 1. Any employee of any private or public
48 employer who is discharged, demoted, suspended, threatened, harassed or
49 in any other manner discriminated against in the terms and conditions of
50 employment by his or her employer because of lawful acts done by the
51 employee on behalf of the employer or others in furtherance of an action
52 brought under this article, including the investigation for, initiation
53 of, testimony for, or assistance in an action filed or to be filed under
54 this section, shall be entitled to all relief necessary to make the
55 employee whole. Such relief shall include but not be limited to:
56 (a) an injunction to restrain continued discrimination;
S. 2108--C 140 A. 4308--C
1 (b) reinstatement to the position such employee would have had but for
2 the discrimination or to an equivalent position;
3 (c) reinstatement of full fringe benefits and seniority rights;
4 (d) payment of two times back pay, plus interest; and
5 (e) compensation for any special damages sustained as a result of the
6 discrimination, including litigation costs and reasonable attorneys'
7 fees.
8 2. An employee described in subdivision one of this section may bring
9 an action in the appropriate supreme court for the relief provided in
10 this section.
11 § 192. Limitation of actions, burden of proof. 1. A civil action under
12 this article shall be commenced no later than:
13 (a) six years after the date on which the violation of section one
14 hundred eighty-nine of this article is committed; or
15 (b) three years after the date when facts material to the right of
16 action are known or reasonably should have been known by the official of
17 the state or local government charged with responsibility to act in the
18 circumstances, but in no event more than ten years after the date on
19 which the violation is committed, whichever occurs last. Notwithstand-
20 ing any other provision of law, for the purposes of this article, an
21 action under this article is commenced by the filing of the complaint in
22 the supreme court.
23 2. In any action brought under this article, the state, a local
24 government that participates as a party in the action, or the person
25 bringing the qui tam civil action, shall be required to prove all essen-
26 tial elements of the cause of action, including damages, by a preponder-
27 ance of the evidence.
28 § 193. Other law enforcement authority and duties. This article shall
29 not:
30 1. preempt the authority, or relieve the duty, of other law enforce-
31 ment agencies to investigate and prosecute suspected violations of law;
32 2. prevent or prohibit a person from voluntarily disclosing any infor-
33 mation concerning a violation of this article to any law enforcement
34 agency; or
35 3. limit any of the powers granted elsewhere in this chapter and other
36 laws to the attorney general or state agencies or local governments to
37 investigate possible violations of this article and take appropriate
38 action against wrongdoers.
39 § 194. Regulations. The attorney general is authorized to adopt such
40 rules and regulations as is necessary to effectuate the purposes of this
41 article.
§ 93. This act shall take effect immediately and shall be deemed to
6 have been in full force and effect on and after April 1, 2007; provided,
7 however, that:
22 5. section thirty-nine of this act shall apply to claims filed or
23 presented prior to, on or after April 1, 2007;