N.Y. State Finance Law § 190: Civil actions for false claims

§ 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, or on behalf of any

subdivision of such local government, 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

article on behalf of the person and the people of the state of New York

or a 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.

For purposes of subparagraphs (i) and (iv) of paragraph (a) of

subdivision eight of section seventy-three of the public officers law,

any activity by a former government employee in connection with the

securing of rights, protections or benefits related to preparing or

filing an action under this article shall not be deemed to be an

appearance or practice before any agency.

(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. 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

plaintiff 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 agencies 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 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 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.

(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

enforcement 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

plaintiff in the action, or to permit a local government to do so, such

complaint, whether filed separately or as an amendment to the qui tam

plaintiff's 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, transactions, or occurrences set forth, or attempted to be

set forth, in the complaint of the qui tam plaintiff.

(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

to intervene, whether filed separately or as an amendment to the qui tam

plaintiff's complaint, shall be filed within thirty days after the

notification to the court. For statute of limitations purposes, any

complaint filed by the state or a local government, whether filed

separately or as an amendment to the qui tam plaintiff's complaint,

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, transactions, or occurrences set

forth, or attempted to be set forth, in the complaint of the qui tam

plaintiff.

(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.

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

date it is issued. A qui tam plaintiff shall notify the state or any

applicable local government within five business days of any decision,

order or verdict resulting in judgment in favor of the state or local

government.

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

subdivision 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

government 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; provided, however, that nothing in this subdivision shall be

deemed to deny persons the right, upon leave of court, to file briefs

amicus curiae.

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

responsibility 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

bringing 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

prosecution of the case, or would be repetitious or irrelevant, or upon

a showing by the defendant that the original qui tam plaintiff's

unrestricted 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

litigation.

(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

government may elect to pursue any remedy available with respect to the

criminal 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

investigation or proceedings with reasonable diligence and any proposed

discovery in the civil action will interfere with the ongoing criminal

or civil investigation or proceedings.

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

administrative 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. Where the court finds that the action

was based on disclosure of specific information related to the use of

government funds during a declaration of a state of emergency, the court

shall increase the percentage of the proceeds to which the person

commencing such qui tam civil action is entitled by up to five percent

more than the maximum percentage allowed pursuant to this paragraph. Any

such person shall also receive an amount for reasonable expenses that

the court finds to have been necessarily incurred, reasonable attorneys'

fees, and costs pursuant to article eighty-one of the civil practice law

and rules. All such expenses, fees, and costs shall be awarded against

the defendant.

(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

considering the extent to which the plaintiff substantially contributed

to the prosecution of the action. Where the court finds that the action

was based on disclosure of specific information related to the use of

government funds during a declaration of a state of emergency, the court

shall increase the percentage of the proceeds to which the person

commencing such qui tam civil action is entitled by up to ten percent

more than the maximum percentage allowed pursuant to this paragraph.

Such person shall also receive an amount for reasonable expenses that

the court finds to have been necessarily incurred, reasonable attorneys'

fees, and costs pursuant to article eighty-one of the civil practice law

and rules. All such expenses, fees, and costs shall be awarded against

the defendant.

(c) With the exception of a court award of costs, expenses or

attorneys' fees, any payment to a person pursuant to this paragraph

shall be made from the proceeds.

(d) If the attorney general or a local government does not proceed

with the action and the person bringing the action conducts the action,

the court may award to the defendant its reasonable attorneys' fees and

expenses if the defendant prevails in the action and the court finds

that the claim of the person bringing the action was clearly frivolous,

clearly vexatious, or brought primarily for purposes of harassment.

7. Costs, expenses, disbursements and attorneys' fees. In any action

brought pursuant to this article, the court may award any local

government that participates as a party in the action an amount for

reasonable expenses which the court finds to have been necessarily

incurred, plus reasonable attorneys' fees, plus costs pursuant to

article eighty-one of the civil practice 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

a local government 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. (a) The court shall dismiss a qui tam

action under this article if:

(i) it is 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;

(ii) the state or local government has reached a binding settlement or

other agreement with the person who 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 applicable

local government attorney; or

(iii) 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.

(b) The court shall dismiss a qui tam action under this article,

unless opposed by the state or an applicable local government, or unless

the qui tam plaintiff is an original source of the information, if

substantially the same allegations or transactions as alleged in the

action were publicly disclosed:

(i) in a state or local government criminal, civil, or administrative

hearing in which the state or a local government or its agent is a

party;

(ii) in a federal, New York state or New York local government report,

hearing, audit, or investigation that is made on the public record or

disseminated broadly to the general public; provided that such

information shall not be deemed "publicly disclosed" in a report or

investigation because it was disclosed or provided pursuant to article

six of the public officers 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;

(iii) in the news media, provided that such allegations or

transactions are not "publicly disclosed" in the "news media" merely

because information of allegations or transactions have been posted on

the internet or on a computer network.

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.