New York False Claims Act

Section 39. The state finance law is amended by adding a new article 13 to read as follows:

ARTICLE XIII
NEW YORK FALSE CLAIMS ACT

Section 187. Short title.
188. Definitions.
189. Liability for certain acts.
190. Civil actions for false claims.
191. Remedies of employees.
192. Limitation of actions, burden of proof.
193. Other law enforcement authority and duties.
194. Regulations.

Section 187. Short title. This article shall be known and may be cited as the "New York false claims act".

Section 188. Definitions. As used in this article, the following terms shall
mean:
1. "Claim" 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 contractor, gran-
tee 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.
2. "False claim" means any claim which is, either in whole or part,
false or fraudulent.
3. "Knowing and knowingly" means that with respect to a claim, or
information relating to a claim, a person:
(a) has actual knowledge of such claim or information;
(b) acts in deliberate ignorance of the truth or falsity of such claim
or information; or
(c) acts in reckless disregard of the truth or falsity of such claim
or information.
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. "Local government" means any county, city, town, village, school
district, board of cooperative educational services, local public bene-
fit corporation or other municipal corporation or political subdivision
of the state.
5. "Original source" means a person who has direct and independent
knowledge of the information on which allegations are based, and has
voluntarily provided the information to the state or a local government
before filing an action under this article which is based on the infor-
mation.
6. "Person" means any natural person, partnership, corporation, asso-
ciation or any other legal entity or individual, other than the state or
a local government.
7. "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.

Section 189. Liability for certain acts. 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 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;
(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, delivers, or causes to be delivered, less property or money than
the amount for which the person receives a certificate or receipt;
(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; or
(g) knowingly makes, uses, or causes to be made or used, a false
record or statement to conceal, avoid, or decrease an obligation to pay
or transmit money or property to the state or a local government;
shall be liable: (i) to the state 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 which the state 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.
2. The court may assess not more than two times the amount of damages
sustained because of the act of the person described in subdivision one
of this section, if the court finds that:
(a) the person committing the violation of this section had furnished
all information known to such person about the violation, to those offi-
cials responsible for investigating false claims violations on behalf of
the state and any local government that sustained damages, within thirty
days after the date on which such person first obtained the information;
(b) such person fully cooperated with any government investigation of
such violation; and
(c) at the time such person furnished information about the violation,
no criminal prosecution, civil action, or administrative action had
commenced with respect to such violation, and the person did not have
actual knowledge of the existence of an investigation into such
violation.
3. A person who violates this section shall also be liable for the
costs, including attorneys' fees, of a civil action brought to recover
any such penalty or damages.
4. This section shall not apply to claims, records, or statements made
under the tax law.

Section 190. Civil actions for false claims. 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. 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.
2. Qui tam civil actions. (a) Any person may bring a qui tam civil
action for a violation of section one hundred eighty-nine of this arti-
cle on behalf of the people of the state of New York or a local govern-
ment. 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.
(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 complaint 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. 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 super-
sede or intervene, within sixty days after it receives both the
complaint and the material evidence and information; provided, however,
that if the allegations in the complaint involve damages only to a city
with a population of one million or more, then the attorney general may
not supersede 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 exten-
sions 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.
(c) Prior to the expiration of the sixty day period or any extensions
obtained under paragraph (b) of this subdivision, the attorney general
shall notify the court that he or she:
(i) intends to file a complaint against the defendant on behalf of the
people of the state of New York or a local government, and thereby be
substituted as the plaintiff in the action and convert the action in all
respects from a qui tam civil action brought by a private person into a
civil enforcement action by the attorney general under subdivision one
of this section;
(ii) intends to intervene in such action, as of right, so as to aid
and assist the plaintiff in the action; or
(iii) if the action involves damages sustained by a local government,
intends to grant the local government permission to: (A) file and serve
a complaint against the defendant, and thereby be substituted as the
plaintiff in the action and convert the action in all respects from a
qui tam civil action brought by a private person into a civil enforce-
ment action by the local government under subdivision one of this
section; or (B) intervene in such action, as of right, so as to aid and
assist the plaintiff in the action.
The attorney general shall provide the local government with a copy of
any such notification at the same time the court is notified.
(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.
(e) If the state notifies the court that it intends to intervene in
the action, or to permit a local government to do so, then such motion
for intervention shall be filed within thirty days after the notifica-
tion to the court.
(f) If the state declines to participate in the action or to authorize
participation by a local government, the qui tam action may proceed
subject to judicial review under this section, the civil practice law
and rules, and other applicable law.
3. Time to answer. If the state decides to participate in a qui tam
action or to authorize the participation of a local government, the
court shall order that the qui tam complaint be unsealed and served at
the time of the filing of the complaint or intervention motion by the
state or local government. After the complaint is unsealed, or if a
complaint is filed by the state or a local government pursuant to subdi-
vision one of this section, the defendant shall be served with the
complaint and summons pursuant to article three of the civil practice
law and rules. A copy of any complaint which alleges that damages were
sustained by a local government shall also be served on such local
government. The defendant shall be required to respond to the summons
and complaint within the time allotted under rule three hundred twenty
of the civil practice law and rules.
4. Related actions. When a person brings a qui tam action under this
section, no person other than the attorney general, or a local govern-
ment attorney acting pursuant to subdivision one of this section or
paragraph (b) of subdivision two of this section, may intervene or bring
a related civil action based upon the facts underlying the pending
action, unless such other person has first obtained the permission of
the attorney general to intervene or to bring such related action;
provided, however, that nothing in this subdivision shall be deemed to
deny persons the right, upon leave of court, to file briefs amicus curi-
ae.
5. Rights of the parties of qui tam actions. (a) If the attorney
general elects to convert the qui tam civil action into an attorney
general enforcement action, then the state shall have the primary
responsibility for prosecuting the action. If the attorney general
elects to intervene in the qui tam civil action then the state and the
person who commenced the action, and any local government which
sustained damages and intervenes in the action, shall share primary
responsibility for prosecuting the action. If the attorney general
elects to permit a local government to convert the action into a civil
enforcement action, then the local government shall have primary respon-
sibility for investigating and prosecuting the action. If the action
involves damages to a local government but not the state, and the local
government intervenes in the qui tam civil action, then the local
government and the person who commenced the action shall share primary
responsibility for prosecuting the action. Under no circumstances shall
the state or a local government be bound by an act of the person bring-
ing the original action. Such person shall have the right to continue as
a party to the action, subject to the limitations set forth in paragraph
(b) of this subdivision. Under no circumstances shall the state be
bound by the act of a local government that intervenes in an action
involving damages to the state. If neither the attorney general nor a
local government intervenes in the qui tam action then the qui tam
plaintiff shall have the responsibility for prosecuting the action,
subject to the attorney general's right to intervene at a later date
upon a showing of good cause.
(b)(i) The state may move to dismiss the action notwithstanding the
objections of the person initiating the action if the person has been
served with the motion to dismiss and the court has provided the person
with an opportunity to be heard on the motion. If the action involves
damages to both the state and a local government, then the state shall
consult with such local government before moving to dismiss the action.
If the action involves damages sustained by a local government but not
the state, then the local government may move to dismiss the action
notwithstanding the objections of the person initiating the action if
the person has been served with the motion to dismiss and the court has
provided the person with an opportunity to be heard on the motion.
(ii) The state or a local government may settle the action with the
defendant notwithstanding the objections of the person initiating the
action if the court determines, after an opportunity to be heard, that
the proposed settlement is fair, adequate, and reasonable with respect
to all parties under all the circumstances. Upon a showing of good
cause, such opportunity to be heard may be held in camera.
(iii) Upon a showing by the attorney general or a local government
that the original plaintiff's unrestricted participation during the
course of the litigation would interfere with or unduly delay the prose-
cution of the case, or would be repetitious or irrelevant, or upon a
showing by the defendant that the original qui tam plaintiff's unre-
stricted participation during the course of the litigation would be for
purposes of harassment or would cause the defendant undue burden, the
court may, in its discretion, impose limitations on the original
plaintiff's participation in the case, such as:
(A) limiting the number of witnesses the person may call;
(B) limiting the length of the testimony of such witnesses;
(C) limiting the person's cross-examination of witnesses; or
(D) otherwise limiting the participation by the person in the liti-
gation.
(c) Notwithstanding any other provision of law, whether or not the
attorney general or a local government elects to supersede or intervene
in a qui tam civil action, the attorney general and such local govern-
ment may elect to pursue any remedy available with respect to the crimi-
nal or civil prosecution of the presentation of false claims, including
any administrative proceeding to determine a civil money penalty or to
refer the matter to the office of the medicaid inspector general for
medicaid related matters. If any such alternate civil remedy is pursued
in another proceeding, the person initiating the action shall have the
same rights in such proceeding as such person would have had if the
action had continued under this section.
(d) Notwithstanding any other provision of law, whether or not the
attorney general elects to supersede or intervene in a qui tam civil
action, or to permit a local government to supersede or intervene in the
qui tam civil action, upon a showing by the state or local government
that certain actions of discovery by the person initiating the action
would interfere with the state's or a local government's investigation
or prosecution of a criminal or civil matter arising out of the same
facts, the court may stay such discovery for a period of not more than
sixty days. Such a showing shall be conducted in camera. The court may
extend the period of such stay upon a further showing in camera that the
state or a local government has pursued the criminal or civil investi-
gation or proceedings with reasonable diligence and any proposed discov-
ery in the civil action will interfere with the ongoing criminal or
civil investigation or proceedings.
6. Awards to qui tam plaintiff. (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 to receive between fifteen and
twenty-five percent of the proceeds recovered in the action or in
settlement of the 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. 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 adminis-
trative hearing, in a legislative or administrative report, hearing,
audit or investigation, 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 to receive between twenty-five and thirty
percent of the proceeds recovered in the action or settlement of the
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.
(c) With the exception of a court award of costs, expenses or attor-
neys' fees, any payment to a person pursuant to this paragraph shall be
made from the proceeds.
7. Costs, expenses, disbursements and attorneys' fees. In any action
brought pursuant to this article, the court may award the attorney
general, on behalf of the people of the state of New York, and any local
government that participates as a party in the action, and any person
who is a qui tam plaintiff, an amount for reasonable expenses which the
court finds to have been necessarily incurred, plus reasonable attor-
neys' fees, plus costs pursuant to article eighty-one of the civil prac-
tice law and rules. All such expenses, fees and costs shall be awarded
directly against the defendant and shall not be charged from the
proceeds, but shall only be awarded if the state or a local government
or the qui tam civil action plaintiff prevails in the action.
8. Exclusion from recovery. If the court finds that the qui tam civil
action was brought by a person who planned or initiated the violation of
section one hundred eighty-nine of this article upon which the action
was brought, then the court may, to the extent the court considers
appropriate, reduce the share of the proceeds of the action which the
person would otherwise be entitled to receive under subdivision six of
this section, taking into account the role of such person in advancing
the case to litigation and any relevant circumstances pertaining to the
violation. If the person bringing the qui tam civil action is convicted
of criminal conduct arising from his or her role in the violation of
section one hundred eighty-nine of this article, that person shall be
dismissed from the qui tam civil action and shall not receive any share
of the proceeds of the action. Such dismissal shall not prejudice the
right of the attorney general to supersede or intervene in such action
and to civilly prosecute the same on behalf of the state or a local
government.
9. Certain actions barred. No court shall have jurisdiction over a qui
tam civil action brought pursuant to subdivision two of this section:
(a) 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) derived from public disclosure of allegations or transactions in a
criminal, civil, or administrative hearing, in a legislative or adminis-
trative report, hearing, audit or investigation, or from the news media,
unless the person who initiated the action is an original source of the
information;
(c) if the agency has reached a binding settlement or other agreement
with the person who submitted such false claims 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.
10. Liability. Neither the state nor any local government shall be
liable for any expenses which any person incurs in bringing a qui tam
civil action under this article.

Section 191. Remedies of employees. 1. Any employee 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 because of lawful acts done by the
employee on behalf of the employer or 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, shall be entitled to all relief necessary to make the
employee whole. Such relief shall include but not be limited to:
(a) an injunction to restrain continued discrimination;
(b) 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. An employee described in subdivision one of this section may bring
an action in the appropriate supreme court for the relief provided in
this section.

Section 192. Limitation of actions, burden of proof. 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. Notwithstand-
ing 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.
2. In any action brought under this article, the state, a local
government that participates as a party in the action, or the person
bringing the qui tam civil action, shall be required to prove all essen-
tial elements of the cause of action, including damages, by a preponder-
ance of the evidence.

Section 193. Other law enforcement authority and duties. This article shall
not:
1. preempt the authority, or relieve the duty, of other law enforce-
ment agencies to investigate and prosecute suspected violations of law;
2. prevent or prohibit a person from voluntarily disclosing any infor-
mation concerning a violation of this article to any law enforcement
agency; or
3. limit any of the powers granted elsewhere in this chapter and other
laws to the attorney general or state agencies or local governments to
investigate possible violations of this article and take appropriate
action against wrongdoers.

Section 194. Regulations. The attorney general is authorized to adopt such
rules and regulations as is necessary to effectuate the purposes of this
article.

Section 93. This act shall take effect immediately and shall be deemed to
have been in full force and effect on and after April 1, 2007; provided,
however, that:
5. section thirty-nine of this act shall apply to claims filed or
presented prior to, on or after April 1, 2007;