97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB6202

 

Introduced , by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
740 ILCS 175/4  from Ch. 127, par. 4104
740 ILCS 175/4.5 new

    Amends the Illinois False Claims Act. Provides that no court has jurisdiction over a civil action relating to or involving a false claim regarding a tax Act administered by the Department unless the action is brought by the Attorney General at the request of the Department. Provides that: the Department has the sole authority to initiate an administrative or judicial action resulting from information provided by a person alleging a false claim, statement, or record pertaining to a tax Act administered by the Department; the Department shall establish a procedure for the reporting of those allegations; the Department shall diligently investigate allegations of a false claim, statement, or record and may bring an action for all applicable taxes, penalties, and interest due under the tax Act; if the Department proceeds with an administrative or judicial action based on information brought to its attention by a private person, that person shall receive an award, subject to specified limits, from the action or from a settlement in response to that action, taking into account the significance of the person's information and the role of the person and a legal representative of the person in contributing to the action; an award may not be issued if the information resulting in the initiation of the action was originally provided by the person alleging the false claim; if the Department determines that the claim for award is brought by a person who planned and initiated the actions that led to the false claim and a resulting underpayment of tax for the purpose of bringing an action, the Department may appropriately reduce the award; and a determination of the Department regarding an award may be appealed to the Court of Claims within 30 days of the determination.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB6202LRB097 22059 KTG 70785 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois False Claims Act is amended by
5changing Section 4 and by adding Section 4.5 as follows:
 
6    (740 ILCS 175/4)  (from Ch. 127, par. 4104)
7    Sec. 4. Civil actions for false claims.
8    (a) Responsibilities of the Attorney General and the
9Department of State Police. The Attorney General or the
10Department of State Police shall diligently investigate a civil
11violation under Section 3. If the Attorney General finds that a
12person violated or is violating Section 3, the Attorney General
13may bring a civil action under this Section against the person.
14    The State shall receive an amount for reasonable expenses
15that the court finds to have been necessarily incurred by the
16Attorney General, including reasonable attorneys' fees and
17costs. All such expenses, fees, and costs shall be awarded
18against the defendant. The court may award amounts from the
19proceeds of an action or settlement that it considers
20appropriate to any governmental entity or program that has been
21adversely affected by a defendant. The Attorney General, if
22necessary, shall direct the State Treasurer to make a
23disbursement of funds as provided in court orders or settlement

 

 

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1agreements.
2    (b) Actions by private persons.
3        (1) A person may bring a civil action for a violation
4    of Section 3 for the person and for the State. The action
5    shall be brought in the name of the State. The action may
6    be dismissed only if the court and the Attorney General
7    give written consent to the dismissal and their reasons for
8    consenting.
9        (2) A copy of the complaint and written disclosure of
10    substantially all material evidence and information the
11    person possesses shall be served on the State. The
12    complaint shall be filed in camera, shall remain under seal
13    for at least 60 days, and shall not be served on the
14    defendant until the court so orders. The State may elect to
15    intervene and proceed with the action within 60 days after
16    it receives both the complaint and the material evidence
17    and information.
18        (3) The State may, for good cause shown, move the court
19    for extensions of the time during which the complaint
20    remains under seal under paragraph (2). Any such motions
21    may be supported by affidavits or other submissions in
22    camera. The defendant shall not be required to respond to
23    any complaint filed under this Section until 20 days after
24    the complaint is unsealed and served upon the defendant.
25        (4) Before the expiration of the 60-day period or any
26    extensions obtained under paragraph (3), the State shall:

 

 

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1            (A) proceed with the action, in which case the
2        action shall be conducted by the State; or
3            (B) notify the court that it declines to take over
4        the action, in which case the person bringing the
5        action shall have the right to conduct the action.
6        (5) When a person brings an action under this
7    subsection (b), no person other than the State may
8    intervene or bring a related action based on the facts
9    underlying the pending action.
10    (c) Rights of the parties to Qui Tam actions.
11        (1) If the State proceeds with the action, it shall
12    have the primary responsibility for prosecuting the
13    action, and shall not be bound by an act of the person
14    bringing the action. Such person shall have the right to
15    continue as a party to the action, subject to the
16    limitations set forth in paragraph (2).
17        (2)(A) The State may dismiss the action
18    notwithstanding the objections of the person initiating
19    the action if the person has been notified by the State of
20    the filing of the motion and the court has provided the
21    person with an opportunity for a hearing on the motion.
22        (B) The State may settle the action with the defendant
23    notwithstanding the objections of the person initiating
24    the action if the court determines, after a hearing, that
25    the proposed settlement is fair, adequate, and reasonable
26    under all the circumstances. Upon a showing of good cause,

 

 

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1    such hearing may be held in camera.
2        (C) Upon a showing by the State that unrestricted
3    participation during the course of the litigation by the
4    person initiating the action would interfere with or unduly
5    delay the State's prosecution of the case, or would be
6    repetitious, irrelevant, or for purposes of harassment,
7    the court may, in its discretion, impose limitations on the
8    person's participation, such as:
9            (i) limiting the number of witnesses the person may
10        call:
11            (ii) limiting the length of the testimony of such
12        witnesses;
13            (iii) limiting the person's cross-examination of
14        witnesses; or
15            (iv) otherwise limiting the participation by the
16        person in the litigation.
17        (D) Upon a showing by the defendant that unrestricted
18    participation during the course of the litigation by the
19    person initiating the action would be for purposes of
20    harassment or would cause the defendant undue burden or
21    unnecessary expense, the court may limit the participation
22    by the person in the litigation.
23        (3) If the State elects not to proceed with the action,
24    the person who initiated the action shall have the right to
25    conduct the action. If the State so requests, it shall be
26    served with copies of all pleadings filed in the action and

 

 

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1    shall be supplied with copies of all deposition transcripts
2    (at the State's expense). When a person proceeds with the
3    action, the court, without limiting the status and rights
4    of the person initiating the action, may nevertheless
5    permit the State to intervene at a later date upon a
6    showing of good cause.
7        (4) Whether or not the State proceeds with the action,
8    upon a showing by the State that certain actions of
9    discovery by the person initiating the action would
10    interfere with the State's investigation or prosecution of
11    a criminal or civil matter arising out of the same facts,
12    the court may stay such discovery for a period of not more
13    than 60 days. Such a showing shall be conducted in camera.
14    The court may extend the 60-day period upon a further
15    showing in camera that the State has pursued the criminal
16    or civil investigation or proceedings with reasonable
17    diligence and any proposed discovery in the civil action
18    will interfere with the ongoing criminal or civil
19    investigation or proceedings.
20        (5) Notwithstanding subsection (b), the State may
21    elect to pursue its claim through any alternate remedy
22    available to the State, including any administrative
23    proceeding to determine a civil money penalty. If any such
24    alternate remedy is pursued in another proceeding, the
25    person initiating the action shall have the same rights in
26    such proceeding as such person would have had if the action

 

 

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1    had continued under this Section. Any finding of fact or
2    conclusion of law made in such other proceeding that has
3    become final shall be conclusive on all parties to an
4    action under this Section. For purposes of the preceding
5    sentence, a finding or conclusion is final if it has been
6    finally determined on appeal to the appropriate court, if
7    all time for filing such an appeal with respect to the
8    finding or conclusion has expired, or if the finding or
9    conclusion is not subject to judicial review.
10    (d) Award to Qui Tam plaintiff.
11        (1) If the State proceeds with an action brought by a
12    person under subsection (b), such person shall, subject to
13    the second sentence of this paragraph, receive at least 15%
14    but not more than 25% of the proceeds of the action or
15    settlement of the claim, depending upon the extent to which
16    the person substantially contributed to the prosecution of
17    the action. Where the action is one which the court finds
18    to be based primarily on disclosures of specific
19    information (other than information provided by the person
20    bringing the action) relating to allegations or
21    transactions in a criminal, civil, or administrative
22    hearing, in a legislative, administrative, or Auditor
23    General's report, hearing, audit, or investigation, or
24    from the news media, the court may award such sums as it
25    considers appropriate, but in no case more than 10% of the
26    proceeds, taking into account the significance of the

 

 

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1    information and the role of the person bringing the action
2    in advancing the case to litigation. Any payment to a
3    person under the first or second sentence of this paragraph
4    (1) shall be made from the proceeds. Any such person shall
5    also receive an amount for reasonable expenses which the
6    court finds to have been necessarily incurred, plus
7    reasonable attorneys' fees and costs. The State shall also
8    receive an amount for reasonable expenses which the court
9    finds to have been necessarily incurred by the Attorney
10    General, including reasonable attorneys' fees and costs.
11    All such expenses, fees, and costs shall be awarded against
12    the defendant. The court may award amounts from the
13    proceeds of an action or settlement that it considers
14    appropriate to any governmental entity or program that has
15    been adversely affected by a defendant. The Attorney
16    General, if necessary, shall direct the State Treasurer to
17    make a disbursement of funds as provided in court orders or
18    settlement agreements.
19        (2) If the State does not proceed with an action under
20    this Section, the person bringing the action or settling
21    the claim shall receive an amount which the court decides
22    is reasonable for collecting the civil penalty and damages.
23    The amount shall be not less than 25% and not more than 30%
24    of the proceeds of the action or settlement and shall be
25    paid out of such proceeds. Such person shall also receive
26    an amount for reasonable expenses which the court finds to

 

 

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1    have been necessarily incurred, plus reasonable attorneys'
2    fees and costs. All such expenses, fees, and costs shall be
3    awarded against the defendant. The court may award amounts
4    from the proceeds of an action or settlement that it
5    considers appropriate to any governmental entity or
6    program that has been adversely affected by a defendant.
7    The Attorney General, if necessary, shall direct the State
8    Treasurer to make a disbursement of funds as provided in
9    court orders or settlement agreements.
10        (3) Whether or not the State proceeds with the action,
11    if the court finds that the action was brought by a person
12    who planned and initiated the violation of Section 3 upon
13    which the action was brought, then the court may, to the
14    extent the court considers appropriate, reduce the share of
15    the proceeds of the action which the person would otherwise
16    receive under paragraph (1) or (2) of this subsection (d),
17    taking into account the role of that person in advancing
18    the case to litigation and any relevant circumstances
19    pertaining to the violation. If the person bringing the
20    action is convicted of criminal conduct arising from his or
21    her role in the violation of Section 3, that person shall
22    be dismissed from the civil action and shall not receive
23    any share of the proceeds of the action. Such dismissal
24    shall not prejudice the right of the State to continue the
25    action, represented by the Attorney General.
26        (4) If the State does not proceed with the action and

 

 

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1    the person bringing the action conducts the action, the
2    court may award to the defendant its reasonable attorneys'
3    fees and expenses if the defendant prevails in the action
4    and the court finds that the claim of the person bringing
5    the action was clearly frivolous, clearly vexatious, or
6    brought primarily for purposes of harassment.
7    (e) Certain actions barred.
8        (1) No court shall have jurisdiction over an action
9    brought by a former or present member of the Guard under
10    subsection (b) of this Section against a member of the
11    Guard arising out of such person's service in the Guard.
12        (2)(A) No court shall have jurisdiction over an action
13    brought under subsection (b) against a member of the
14    General Assembly, a member of the judiciary, or an exempt
15    official if the action is based on evidence or information
16    known to the State when the action was brought.
17        (B) For purposes of this paragraph (2), "exempt
18    official" means any of the following officials in State
19    service: directors of departments established under the
20    Civil Administrative Code of Illinois, the Adjutant
21    General, the Assistant Adjutant General, the Director of
22    the State Emergency Services and Disaster Agency, members
23    of the boards and commissions, and all other positions
24    appointed by the Governor by and with the consent of the
25    Senate.
26        (3) In no event may a person bring an action under

 

 

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1    subsection (b) which is based upon allegations or
2    transactions which are the subject of a civil suit or an
3    administrative civil money penalty proceeding in which the
4    State is already a party.
5        (4)(A) No court shall have jurisdiction over an action
6    under this Section based upon the public disclosure of
7    allegations or transactions in a criminal, civil, or
8    administrative hearing, in a legislative, administrative,
9    or Auditor General's report, hearing, audit, or
10    investigation, or from the news media, unless the action is
11    brought by the Attorney General or the person bringing the
12    action is an original source of the information.
13        (B) For purposes of this paragraph (4), "original
14    source" means an individual who has direct and independent
15    knowledge of the information on which the allegations are
16    based and has voluntarily provided the information to the
17    State before filing an action under this Section which is
18    based on the information.
19        (5) No court shall have jurisdiction over a civil
20    action brought under subsection (b) that relates to or
21    involves a false claim regarding a tax Act administered by
22    the Department of Revenue unless the action is brought by
23    the Attorney General at the request of the Department of
24    Revenue pursuant to Section 4.5 of this Act.
25    (f) State not liable for certain expenses. The State is not
26liable for expenses which a person incurs in bringing an action

 

 

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1under this Section.
2    (g) Relief from retaliatory actions.
3        (1) In general, any employee, contractor, or agent is
4    entitled to all relief necessary to make that employee,
5    contractor, or agent whole, if that employee, contractor,
6    or agent is discharged, demoted, suspended, threatened,
7    harassed, or in any other manner discriminated against in
8    the terms and conditions of employment because of lawful
9    acts done by the employee, contractor, or agent on behalf
10    of the employee, contractor, or agent or associated others
11    in furtherance of other efforts to stop one or more
12    violations of this Act.
13        (2) Relief under paragraph (1) shall include
14    reinstatement with the seniority status that the employee,
15    contractor, or agent would have had but for the
16    discrimination, 2 times the amount of back pay, interest on
17    the back pay, and compensation for any special damages
18    sustained as a result of the discrimination, including
19    litigation costs and reasonable attorneys' fees. An action
20    under this subsection (g) may be brought in the appropriate
21    circuit court for the relief provided in this subsection
22    (g).
23(Source: P.A. 96-1304, eff. 7-27-10.)
 
24    (740 ILCS 175/4.5 new)
25    Sec. 4.5. Actions for false claims relating to tax Acts

 

 

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1administered by the Department of Revenue.
2    (a) The Department of Revenue shall have the sole authority
3to initiate an administrative or judicial action resulting from
4information provided by any person alleging a false claim,
5statement, or record, as set forth in Section 3 of this Act,
6pertaining to any tax Act administered by the Department of
7Revenue.
8    (b) The Department of Revenue shall establish, by rule, a
9procedure for the reporting of any allegation of a false claim,
10statement, or record to the Department.
11    (c) The Department of Revenue shall diligently investigate
12all allegations of a false claim, statement, or record and may
13bring an action under this Act for all applicable taxes,
14penalties, and interest it determines is due under the
15appropriate tax Act.
16    (d) If the Department of Revenue proceeds with an
17administrative or judicial action based on information brought
18to its attention by a private person, that person shall,
19subject to subsection (e), receive as an award an amount equal
20to at least 15% but not more than 30% of the collected proceeds
21(including any additional penalties and interest that may be
22assessed on the underlying liability) from the action or from
23any settlement in response to that action, taking into account
24the significance of the person's information and the role of
25the person and any legal representative of the person in
26contributing to the action.

 

 

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1    (e) In the event the action is one which the Department of
2Revenue determines to be based principally on disclosures of
3specific allegations resulting from a judicial or
4administrative hearing, from a governmental report, hearing,
5audit, or investigation, or from the news media, the Department
6may award such sums as it considers appropriate, but in no case
7may it award more than 10% of the collected proceeds (including
8all penalties and interest) resulting from the action or from
9any settlement in response to the action, taking into account
10the significance of the person's information and the role of
11the person and any legal representative of the person in
12contributing to the action.
13    (f) No award shall be issued if the information resulting
14in the initiation of the action was originally provided by the
15person alleging the false claim.
16    (g) If the Department of Revenue determines that the claim
17for award is brought by a person who planned and initiated the
18actions that led to the false claim and any resulting
19underpayment of tax for the purpose of bringing an action under
20this Act, the Department may appropriately reduce the award.
21    (h) Any determination of the Department of Revenue
22regarding an award under this Section may be appealed to the
23Court of Claims within 30 days of the determination.