BILL ANALYSIS
AB 1196
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1196 (Blumenfield) - As Amended: April 15, 2009
Policy Committee: JudiciaryVote:8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill amends the California False Claim Act (CFCA) to
redefine key definitions, increase civil liability for making
false claims, strengthen government control over a qui tam
plaintiff's lawsuit, and clarify application of the statute of
limitations. Specifically, this bill:
1.Expands the definitions of "state funds" and "political
subdivision funds" to include any money, property, or services
that were appropriated, administered, expended, or that will
be reimbursed directly or indirectly by the state or political
subdivision, respectively.
2.Removes the instruction that a person's liability to the state
or political subdivision for specified false claim violations
is calculated from the amount of damages sustained by the
state or political subdivision, and instead provides that the
person is liable for "three times the amount of damages
because of the act of that person."
3.Makes the current penalty provision mandatory rather than
discretionary, and imposes the penalty for each specified
violation of the CFCA on a "per violation" basis rather than a
"per claim" basis.
4.Requires written consent from the Attorney General (AG) or
prosecuting authority of a political subdivision for the court
to grant dismissal of a false claim civil action brought by an
individual, the qui tam plaintiff.
5.Permits the state or political subdivision, upon
court-approved intervention in a qui tam plaintiff's action,
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to file its own complaint in intervention or amend the
complaint of the qui tam plaintiff to clarify or add detail to
the claim in which the state or political subdivision is
intervening, and to add any additional claim with respect to
which the state or political subdivision contends it is
entitled to relief.
6.Provides that for statute of limitation purposes, any state or
political subdivision pleading shall relate back to the filing
date of the complaint of the qui tam plaintiff who originally
brought the action, to the extent that the claim of the state
or political subdivision arises out of the conduct,
transaction, or occurrence set forth in the complaint of that
person.
FISCAL EFFECT
1)Any additional costs to the AG would be minor and absorbable.
2)Unknown additional revenues from the enhanced penalties.
COMMENTS
1.Background . The California False Claim Act (CFCA), like its
federal counterpart the False Claims Act (FCA), was created to
address the problem of companies or contractors who defraud
state and local governments of public funds by making false
claims for payment or reimbursement for their services. The
CFCA imposes strict civil penalties and liability for damages
on persons who commit any one of certain enumerated acts
relating to the submission to the government of a false claim
for money, property, or services in violation of the act. The
CFCA also allows an individual called the qui tam plaintiff to
bring a civil action for himself and for the government. The
qui tam plaintiff is generally a whistleblower who exposes the
fraud upon the government. The CFCA encourages whistleblowers
to come forward by allowing a qui tam plaintiff who prevails
to keep a certain portion of any damages collected from the
defendant, with most of the remaining money restored to the
public treasury.
2.Purpose . Recent opinions by federal and state courts have
resulted in outcomes that the author believes do not or will
not give full effect to the Legislature's intent to protect
state treasury funds from false claims when it enacted the
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CFCA. As a result, this bill represents an effort to
legislatively address certain concerns about the CFCA in a
manner that reflects recent jurisprudence and promotes
consistency between the CFCA and the federal FCA wherever
possible. (See the Assembly Judiciary Committee's analysis of
this bill for a thorough discussion of the relevant court
cases.)
The bill seeks to amend the California False Claim Act to
redefine key definitions, increase civil liability, strengthen
government control over a qui tam plaintiff's lawsuit, and
clarify application of the statute of limitations, all in an
effort to improve the ability of state and local authorities
to recover government funds that are the subject of a false
claim. AB 1175 is supported by the Attorney General and
Taxpayers Against Fraud-a public interest organization
affiliated with whistleblowers and qu i tam plaintiffs.
3.Opposition . The bill is opposed by the Civil Justice
Association of California and by associations of businesses,
hospitals, and contractors, who contend that liability for
false claims under the CFCA is sufficiently broad and should
not be further expanded to favor qui tam plaintiffs and the
government in these kinds of actions.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081