A BILL TO BE ENTITLED
AN ACT TO AUTHORIZE CIVIL ACTIONS BY PRIVATE PERSONS FOR VIOLATIONS OF THE PROVIDER FALSE CLAIMS ACT; AND TO APPROPRIATE FUNDS TO THE DEPARTMENT OF JUSTICE TO IMPLEMENT THIS ACT.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 2 of Chapter 108A of the General Statutes is amended by adding the following new Part to read:
"Part 7A. Civil Action by Private Persons for Provider False Claims.
"§ 108A‑70.17.  Civil action filed by private persons.
(a)	A person may bring a civil action for a violation of G.S. 108A‑70.12 on behalf of the person and the State. The action shall be brought in the name of the State. The action may be dismissed only if the court and the Attorney General have given written consent to the dismissal and their reasons for consenting.
(b)	A copy of the motion for judgment and written disclosure of substantially all material evidence and information the person possesses shall be served on the State. The motion for judgment shall be filed in camera, shall remain under seal for at least 120 days, and shall not be served on the defendant until the court so orders. The State may elect to intervene and proceed with the action within 120 days after it receives both the motion for judgment and the material evidence and information.
(c)	The State may, for good cause shown, move the court for extensions of the time during which the motion for judgment remains under seal. Any of these motions may be supported by affidavits or other submission in camera. The defendant shall not be required to respond to any motion for judgment filed under this section until 21 days after the motion for judgment is unsealed and served upon the defendant.
(d)	Before the expiration of the 120‑day period or any extensions obtained under subsection (c) of this section, the State shall proceed with the action, in which case the action shall be conducted by the State, or notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to prosecute the action.
(e)	When a person brings an action under this section, no person other than the State may intervene or bring a related action based on the facts underlying the pending action.
"§ 108A‑70.17A.  Rights of private plaintiff and State.
(a)	If the State proceeds with the action, it shall have the primary responsibility for prosecuting the action and shall not be bound by an act of the person bringing the action. The person bringing the action shall have the right to continue as a party to the action, subject to the limitations of this section.
(b)	The State may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the State of the filing of the motion, and the court has provided the person with an opportunity for a hearing on the motion.
(c)	The State may settle the action with the defendant notwithstanding the objections of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon a showing of good cause, such hearing may be held in camera. The State may, for good cause shown, move the court for a partial lifting of the seal to facilitate the investigative process or settlement.
(d)	Upon a showing by the State that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the State's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations on the person's participation, such as (i) limiting the number of witnesses the person may call; (ii) limiting the length of the testimony of such witnesses; (iii) limiting the person's cross‑examination of witnesses; and (iv) otherwise limiting the participation by the person in the litigation.
(e)	Upon a showing by the defendant that unrestricted participation during the course of the litigation by the person initiating the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.
(f)	If the State elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the State so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts at the State's expense. When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the State to intervene at a later date upon a showing of good cause.
(g)	Whether or not the State proceeds with the action, upon a showing by the State that certain actions of discovery by the person initiating the action would interfere with the State's investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay the discovery for a period of not more than 60 days. The showing by the State shall be conducted in camera. The court may extend the 60‑day period upon a further showing in camera that the State 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.
(h)	Notwithstanding G.S. 108A‑70.17(b), the State may elect to pursue its claim through any alternate remedy available to the State, including any administrative proceeding to determine a civil money penalty. If an alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in the alternate proceeding as the person would have had if the action had continued under this section. Any finding of fact or conclusion of law made in the alternate proceeding that has become final shall be conclusive on all parties to an action under this Part. For purposes of this subsection, a finding or conclusion is final if it has been finally determined on appeal to a court of competent jurisdiction of the State, if the time for filing an appeal with respect to the finding or conclusion has expired, or if the finding or conclusions are not subject to judicial review.
"§ 108A‑70.17B.  Award to private plaintiff.
(a)	Except as otherwise provided in this section, if the State proceeds with an action brought by a person under G.S. 108A‑70.17, the person shall receive at least fifteen percent (15%) but not more than twenty-five percent (25%) of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action. The plaintiff's share in the proceeds of the action or settlement is administrative costs of the action. Where the action is one that the court finds to be based primarily on disclosures of specific information, other than information proved by the person bringing the action, relating to allegations or transaction in a criminal, civil, or administrative hearing, in a legislative, administrative, or State Auditor's 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 (10%) of the proceeds of the award. The person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant. A share of the proceeds of an action or settlement of the claim shall not be awarded to the person bringing the action in State court under this Part if the person has received or may receive a share of the proceeds or settlement of an action or claim on the same facts brought in federal court. 
(b)	If the State does not proceed with an action, the person bringing the action or settling the claim shall receive an amount that the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than twenty-five percent (25%) and not more than thirty percent (30%) of the proceeds of the award or settlement and shall be paid out of the proceeds. The person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.
(c)	Whether or not the State proceeds with the action, if the court finds that the action was brought by a person who planned and initiated the violation of G.S. 108A‑70.12 upon which the action was brought, or if the person bringing the action is convicted of criminal conduct arising from the person's role in the violation of G.S. 108A‑70.12, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. The dismissal shall not prejudice the right of the State to continue the action.
(d)	If the State 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 if the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.
"§ 108A‑70.17C.  Certain actions barred.
(a)	No court shall have jurisdiction over an action brought under this Part based on information discovered by a present or former employee of the State during the course of the present or former employee's employment unless that employee first, in good faith, exhausted existing internal procedures for reporting and seeking recovery of the falsely claimed sums through official channels and unless the State failed to act on the information provided within a reasonable period of time.
(b)	No court shall have jurisdiction over any action brought under this Part by an inmate incarcerated within a State or local correctional facility.
(c)	No court shall have jurisdiction over an action brought under this Part against any department, authority, board, bureau, commission, or agency of the State, any political subdivision of the State, a member of the General Assembly, a member of the judiciary, or an exempt official if the action is based on evidence or information known to the State when the action was brought. For purposes of this section, "exempt official" means the Governor, Lieutenant Governor, Attorney General, and the directors or members of any department, authority, board, bureau, commission, or agency of the State or any political subdivision of the State.
(d)	In no event may a person bring an action under this Part that is based upon allegations or transactions that are the subject of a civil suit or an administrative proceeding in which the State is already a party.
(e)	No court shall have jurisdiction over an action under this Part based upon the public disclosure of allegations or transactions in a criminal,  civil, or administrative hearing, in a legislative, administrative, or State Auditor's report, hearing, audit, or investigation, or from the news media, unless the action is brought by the  Attorney General, or the person bringing the action is an original source of the information. For purposes of this section, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the State before filing an action under this Part that is based on the information.
(f)	The State is not liable for expenses a person incurs in bringing an action under this Part.
(g)	G.S. 108A‑70.14 and G.S. 108A-70.15 apply to this Part.
"§ 108A‑70.17D.  Procedure; statute of limitations.
(a)	A subpoena requiring the attendance of a witness at a trial or hearing conducted under this Part may be served at any place in the State.
(b)	A civil action under this Part may not be brought (i) more than six years after the date on which the violation is committed, or (ii) more than three years after the date when facts material to the right of the action are known or reasonably should have been known by the official of the State charged with responsibility to act in the circumstances, but in that event no more than 10 years after the date on which the violation is committed, whichever occurs last."
SECTION 2.  G.S. 108A‑70.15 reads as rewritten
"§ 108A‑70.15.  Employee remedies.
(a)	In the absence of fraud or malice, no person who furnishes information to officials of the State responsible for investigating false claims violations shall be liable for damages in a civil action for any oral or written statement made or any other action that is necessary to supply information required pursuant to this Part or Part 7A of this Article.
(b)	Any employee of a provider who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by the employee's employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under G.S. 108A‑70.12, or Part 7A of this Article, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under G.S. 108A‑70.12, or Part 7A of this Article, shall be entitled to all relief necessary to make the employee whole. Relief shall include reinstatement with the same seniority status as the employee would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An employee may bring an action in the appropriate court for the relief provided in this section."
SECTION 3.  There is appropriated from the General Fund to the Department of Justice the sum of $ for the 2006‑2007 fiscal year.  These funds shall be used for additional investigative positions needed to carry out the provisions of this act.
SECTION  4.  Sections 1 and 2 of this act become effective December 1, 2006.  The remainder of this act becomes effective July 1, 2006.