Delaware False Claims Act
DELAWARE FALSE CLAIMS AND REPORTING ACT
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Subtitle II, Title 6 of the Delaware Code, by adding
the following new chapter:
"Chapter 12. Delaware False Claims and Reporting Act.
Section 1201 Liability for certain acts.
(a) Any person who:
(1) knowingly presents, or causes to be presented, directly or indirectly, to
an officer or employee of the Government a false or fraudulent claim for payment
or approval;
(2) knowingly makes, uses, or causes to be made or used, directly or
indirectly, a false record or statement to get a false or fraudulent claim paid
or approved;
(3) conspires to defraud the Government by getting a false or fraudulent
claim allowed or paid;
(4) has possession, custody, or control of property or money used, or to be
used, by the Government and, intending to defraud the Government or willfully to
conceal the property, delivers, or causes to be delivered, less property than
the amount for which the person receives a certificate or receipt;
(5) is authorized to make or deliver a document certifying receipt of
property used, or to be used, by the Government and, intending to defraud the
Government, makes or delivers the receipt without completely knowing that the
information on the receipt is true;
(6) knowingly buys, or receives as a pledge of an obligation or debt, public
property from an officer or employee of the Government who the person knows may not lawfully sell or pledge the property; or
(7) knowingly makes, uses, or causes to be made or used, a false record or
statement to conceal, avoid, increase or decrease an obligation to pay or
transmit money or property to or from the Government, shall be liable to the
Government for a civil penalty of not less than $ 5,500 and not more than $
11,000 for each act constituting a violation of this section, plus three times
the amount of actual damages which the Government sustains because of the act of
that person.
(b) Notwithstanding the foregoing, the court may assess not less than two
times the amount of damages which the Government sustains because of the act of
the person, if:
(i) the person committing the violation of this subsection furnished
officials of the Government responsible for investigating false claims
violations with all information known to such person about the violation within
30 days after the date on which the defendant first obtained the information;
(ii) such person fully cooperated with any Government investigation of such
violations; and
(iii) at the time such person furnished the Government with the information
about the violation, no criminal prosecution, civil action, investigation or
administrative action had commenced under this title with respect to such
violation, and the person did not have actual knowledge of the existence of an
investigation into such violations.
A person violating this subsection shall also be liable for the costs of a
civil action brought to recover any such penalty or damages, including payment
of reasonable attorneys fees and costs.
(c) The Superior Court shall have jurisdiction of all offenses under this
chapter.
Section 1202 Definitions.
As used in this chapter:
(1) 'Knowing' and 'knowingly' mean that a person, with respect to information
a. has actual knowledge of the information;
b. acts in deliberate ignorance of the truth or falsity of the information; or
c. acts in reckless disregard of the truth or falsity of the information, and
no proof of specific intent to defraud is required.
(2) 'Claim' includes any request or demand, whether under a contract or
otherwise, for money or property which is made to a contractor, grantee, or
other recipient where the Government provides, directly or indirectly, any
portion of the money or property which is requested or demanded, or where the
Government will, directly or indirectly, reimburse such contractor, grantee, or
other recipient for any portion of the money or property which is requested or
demanded.
(3) 'Government' includes all departments, boards or commissions of the
executive branch of the State of Delaware, all political subdivisions of the
State, the Delaware Department of Transportation and all State and municipal
authorities, all organizations created by or pursuant to a statute which
declares in substance that such organization performs or has for its purpose the
performance of an essential governmental function, and all organizations,
entities or persons receiving funds of the State where the act complained of
pursuant to this act relates to the use of such funds of the State.
"(4) 'Affected person, entity or organization' includes an employee or former
employee of a person who is liable under Section 1201 of this chapter, or a
'labor organization' as defined by Section 1107A(d), Title 19 of this Code."
Section 1203. Civil Actions for False Claims.
(a) Responsibilities of the Attorney General. - The Attorney General shall
diligently investigate suspected violations under this chapter. If the
Attorney.General finds that a person has violated or is violating the provisions
of this chapter, the Attorney General may bring a civil action under this
section against the person.
(b) Private Actions. - (1) A private civil action may be brought by any
affected person, entity or organization (hereinafter 'private party' or 'party')
for a violation of this chapter on behalf of the party bringing suit and for the
Government. The action shall be brought in the name of the Government. Unless
dismissed pursuant to paragraph (2), the action may be dismissed only if the
court and the Attorney General give written consent to the dismissal and their
reasons for consenting.
(2) A copy of the complaint and written disclosure of substantially all
material evidence and information the private party possesses shall be served on
the Attorney General pursuant to Rules 4 and 5 of the Superior Court Civil
Rules. The complaint shall be filed in camera, shall remain under seal for at
least 60 days. The complaint shall not be served on the defendant until the
expiration of sixty (60) days or any extension approved under paragraph (3)
hereof. Within 60 days after receiving a copy of the compliant, the Attorney
General shall conduct an investigation of the factual allegations and legal
contentions made in the complaint, shall make a written determination of whether
there is substantial evidence that a violation of this chapter has occurred, and
shall provide the affected person, entity or organization, and the Government,
with a copy of the determination. The Government may elect to intervene and
proceed with the action within 60 days after it receives the complaint, the
material evidence and information, and the written determination of the Attorney
General. If the Attorney General determines that there is not substantial
evidence that a violation of this chapter occurred, then the complaint shall be
dismissed.
(3) The Government or the Attorney General may, for good cause shown, move
the court for extensions of time during which the complaint remains under seal
under paragraph (2). Any such motion may be supported by affidavits or other
submissions in camera. The defendant shall not be required to respond to any
complaint filed under this section until 20 days after the complaint is unsealed
and served upon the defendant pursuant to Rule 4 of the Superior Court Civil
Rules. The complaint shall be deemed unsealed at the expiration of the sixty
(60) day period in the absence of a court approved extension of the time frame.
(4) Before the expiration of the 60-day period or any extensions obtained
under paragraph (3), the Government shall -
(A) proceed with the action, in which case the action shall be conducted by
the Government; or
(B) notify the court that it declines to take over the action, in which case
the private party bringing the action shall have the right to conduct the action
if, pursuant to subparagraph (2) of this subsection, the Attorney General
determined that there is substantial evidence that a violation of this chapter
has occurred.
(5) When a party brings an action under this subsection, no party other than
Government may intervene or bring a related action based on the facts underlying
the pending action.
Section 1204. Rights of the parties to Qui Tam actions.
(a) If the Government proceeds with the action, it shall have the exclusive
responsibility for prosecuting the action, and shall not be bound by an act of
the party bringing the action. Such party shall have the right to continue as a
nominal party to the action, but, except as provided in subsections (b) and (c)
of this section, such party shall not have the right to participate in the
litigation except as a witness.
(b) The Government may dismiss the action notwithstanding the objections of
the party initiating the action if the party has been notified by the Government
of the filing of the motion and the court has provided the party with an
opportunity for a hearing on the motion.
(c) The Government may settle the action with the defendant notwithstanding
the objections of the party 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.
(d) If the Government elects not to proceed with the action, the party who
initiated the action shall have the right to conduct the action. If the
Government so requests, it shall be served with copies of the pleadings filed in
the action and shall be supplied with copies of all deposition transcripts (at
the Government's expense). When a party proceeds with the action, the court,
without limiting the status and rights of the party initiating the action, may
nevertheless permit the Government to intervene at a later date upon a showing
of good cause.
(e) Whether or not the Government proceeds with the action, upon a showing by
the Government that certain actions of discovery by the party initiating the
action would interfere with the Government's investigation or prosection 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 60 days. Such a showing shall be
conducted in camera. The court may extend the 60 day period upon a further
showing in camera that the 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.
Section 1205. Award to Qui Tam plaintiff.
(a) If the Government proceeds with an action brought by a party under
Section 1203(b), such party shall, subject to the second sentence of this
subsection, receive at least 15 percent but not more than 25 percent of the
proceeds of the action or settlement of the claim, depending upon the extent to
which the party substantially contributed to the prosecution of the action.
Where the action is one which the court finds to be based primarily on
disclosures of specific information (other than information provided by the
party bringing the action) relating to allegations or transactions in a
criminal, civil, or administrative hearing, or from the news media, the court
may award such sums as it considers appropriate, but in no case more than 10
percent of the proceeds, taking into account the significance of the information
and the role of the party bringing the action in advancing the case to
litigation. Any payment to a party under the first or second sentence of this
paragraph shall be made from the proceeds. Any such party shall also receive an
amount for reasonable expenses which the court finds to have necessarily
incurred, plus reasonable attorneys' fees and costs. In determining the amount
of reasonable attorneys' fees and costs, the court shall consider, without
limitation, whether such fees and costs were necessary to the prosecution of the
action, were incurred for activities which were duplicative of the activities of
the Government in prosecuting the case, or were repetitious, irrelevant, or for
purposes of harassment, or caused the defendant undue burden or unnecessary
expense. All such expenses, fees and costs shall be awarded against the
defendant.
(b) If the Government does not proceed with an action under this chapter, the
party bringing the action or settling the claim shall receive an amount which
the court decides is reasonable for collecting the civil penalty and damages.
The amount shall be not less than 25 percent and not more than 30 percent of the
proceeds of the action or settlement and shall be paid out of such proceeds.
Such party shall also receive an amount for reasonable expenses which the court
finds to have been necessarily incurred, plus reasonable attorneys' fees and
costs. In determining the amount of reasonable attorneys' fees and costs, the
court shall consider, without limitation, whether such fees and costs were
necessary to the prosecution of the action, were incurred for activities which
were repetitious, irrelevant or for purposes of harassment, or caused the
defendant undue burden or unnecessary expense. All such expenses, fees, and
costs shall be awarded against the defendant.
(c) Whether or not the Government proceeds with the action, if the court
finds that the action was brought by a party who planned and initiated the
violation 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 party would otherwise receive under subsection (a) or (b) hereof,
taking into account the role of that party in advancing the case to litigation
and any relevant circumstances pertaining to the violation. If the party
bringing the action is convicted of criminal conduct arising from his or her or
its role in the violation of this chapter, that party shall be dismissed from
the civil action and shall not receive any share of the proceeds of the action.
Such dismissal shall not prejudice the right of the State of Delaware to
continue the action, represented by the Attorney General's Office.
(d) If the Government does not proceed with the action and the party 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 party bringing the action was (1)
filed for any improper purpose, such as to harass or to vex, (2) not warranted
by existing law or by a nonfrivolous argument for the extension, modification,
or reversal of existing law or the establishment of new law, or (3) was based on
allegations or factual contentions not supported by the evidence of record.
Section 1206. Certain actions barred.
(a) No court shall have jurisdiction of an action brought pursuant to this
chapter against a State Government official if the action is substantially based
on evidence or information known to the Government when the action was brought.
(b) In no event may a party bring an action under this chapter which is
substantially based upon allegations or transactions which are the subject of a
civil suit or an administrative proceeding in which the Government is already a
party.
(c) No court shall have jurisdiction over an action under this chapter
substantially based upon the public disclosure of allegations or actions in a
criminal civil or administrative hearing, or from the news media, unless the
action is brought by the Attorney General or the party bringing the action is an
original source of this information.
For purposes of this subsection, 'original source' means the party bringing
suit who has independent knowledge, including knowledge based on its own
investigation of the defendant's conduct, of the information on which the
allegations are based and has voluntarily provided or verified the information
on which the allegations are based or has voluntarily provided the information
to the Government before filing an action under this section which is based on
the information.
Section 1207. Government not liable for certain expenses.
No Government shall be liable for expenses which a party incurs in bringing
an action under this chapter.
Section 1208. Employee Protection.
Any employee 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 employee or others in furtherance of an action under this chapter,
including investigation for, initiation of, testimony for, or assistance in an
action filed or to be filed under this chapter, shall be entitled to all relief
necessary to make the employee whole. Such relief shall include reinstatement
with the same seniority status such 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 of the State of Delaware
for the relief provided in this subsection.
Section 1209. False Claims and Reporting Procedure.
(a) A civil action under this Act may not be brought -
(1) more than 6 years after the date on which the violation is committed, or
(2) more than 3 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
Government charged with responsibility to act in the circumstances, but in no
event more than 10 years after the date on which the violation is committed,
whichever occurs last.
(b) In any action brought under this chapter, the Government or the private
party shall be required to prove all essential elements of the cause of action,
including damages, by a preponderance of the evidence.
(c) Notwithstanding any other provision of law, the Delaware Rules of
Criminal Procedure, or the Delaware Rules of Civil Procedure, a final judgment
rendered in favor of the Government in any criminal proceeding charging fraud or
false statements, whether upon a verdict after trial or upon a plea of guilty,
shall estop the defendant from denying the essential elements of the offense in
any action which involves the same transaction as in the criminal proceeding and
which is brought under this chapter."
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