S.B. 213

1

STATE CONTRACT - FALSE CLAIMS ACT
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Allen M. Christensen
5 House Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill enacts the "Utah State Contract False Claims Act" and renames the "Utah
10 False Claims Act" to the "Utah Medical Benefits False Claims Act".
11 Highlighted Provisions:
12 This bill:
13 . provides and modifies definitions;
14 . renames the "Utah False Claims Act" to the "Utah Medical Benefits False Claims
15 Act";
16 . enacts the "Utah State Contract False Claims Act";
17 . amends the duties of the attorney general to provide that the attorney general shall
18 be responsible for investigating and prosecuting violations of the chapter;
19 . provides that violations of the chapter are included as a basis for prosecution of a
20 person for having a pattern of unlawful activity;
21 . prohibits a person from making a false statement or false representation of a
22 material fact, or to cause the statement or representation to be made, in relation to
23 requests for payments under a state contract;
24 . prohibits a person from receiving a kickback or bribe in return for, or to induce, the
25 receipt of goods or services under a state contract;
26 . prohibits entering into a conspiracy to defraud the state in relation to obtaining
27 payment under a state contract;

28 . provides criminal and civil penalties for violations of the chapter;
29 . provides procedures and standards for prosecution of violations and enforcement of
30 the chapter;
31 . requires state agencies to report and cooperate in the investigation and enforcement
32 of the requirements of the chapter;
33 . provides procedures and standards for investigations conducted under the chapter;
34 . provides limitations on the time for bringing claims under the chapter;
35 . requires that liability for violations committed by multiple persons shall be joint and
36 several;
37 . provides a severability clause; and
38 . makes technical changes.
39 Monies Appropriated in this Bill:
40 None
41 Other Special Clauses:
42 This bill coordinates with H.B. 63, Recodification of Title 63 State Affairs in General,
43 by technically renumbering.
44 Utah Code Sections Affected:
45 AMENDS:
46 26-20-1, as last amended by Laws of Utah 2007, Chapter 48
47 35A-3-603, as renumbered and amended by Laws of Utah 2003, Chapter 90
48 67-5-1, as last amended by Laws of Utah 2007, Chapter 48
49 76-8-1202, as last amended by Laws of Utah 1997, Chapter 174
50 76-10-1602, as last amended by Laws of Utah 2007, Chapter 129
51 ENACTS:
52 63-56b-101, Utah Code Annotated 1953
53 63-56b-102, Utah Code Annotated 1953
54 63-56b-103, Utah Code Annotated 1953
55 63-56b-104, Utah Code Annotated 1953
56 63-56b-105, Utah Code Annotated 1953
57 63-56b-106, Utah Code Annotated 1953
58 63-56b-107, Utah Code Annotated 1953

59 63-56b-108, Utah Code Annotated 1953
60 63-56b-109, Utah Code Annotated 1953
61 63-56b-110, Utah Code Annotated 1953
62 63-56b-111, Utah Code Annotated 1953
63 63-56b-112, Utah Code Annotated 1953
64 63-56b-113, Utah Code Annotated 1953
65 63-56b-114, Utah Code Annotated 1953
66 63-56b-115, Utah Code Annotated 1953
67 63-56b-116, Utah Code Annotated 1953
68
69 Be it enacted by the Legislature of the state of Utah:
70 Section 1. Section 26-20-1 is amended to read:
71 CHAPTER 20. UTAH MEDICAL BENEFITS FALSE CLAIMS ACT
72 26-20-1. Title.
73 This chapter is known as the "Utah Medical Benefits False Claims Act."
74 Section 2. Section 35A-3-603 is amended to read:
75 35A-3-603. Civil liability for overpayment.
76 (1) As used in this section, "intentionally, knowingly, and recklessly" mean the same as
77 those terms are defined in Section 76-2-103 .
78 (2) Each provider, client, or other person who receives an overpayment shall,
79 regardless of fault, return the overpayment or repay its value to the department immediately:
80 (a) upon receiving written notice of the overpayment from the department; or
81 (b) upon discovering the overpayment, if that occurs prior to receiving notice.
82 (3) (a) Except as provided under Subsection (3)(b), interest on the unreturned balance
83 of the overpayment shall accrue at the rate of 1% a month.
84 (b) If the overpayment was not the fault of the person receiving it, that person is not
85 liable for interest on the unreturned balance.
86 (c) In accordance with federal law and rules made by the department, an overpayment
87 may be recovered through deductions from cash assistance, general assistance, food stamps,
88 other cash-related assistance provided to a client under this chapter, or any other means
89 provided by federal law.

90 (4) Each person who knowingly assists a client, provider, or other person in obtaining
91 an overpayment is jointly and severally liable for the overpayment.
92 (5) (a) In proving civil liability for overpayment under this section or Section
93 35A-3-605 when fault is alleged, the department shall prove by clear and convincing evidence
94 that the overpayment was obtained intentionally, knowingly, recklessly, by false statement,
95 misrepresentation, impersonation, or other fraudulent means, such as by committing any of the
96 acts or omissions described in Sections 76-8-1203 through 76-8-1205 .
97 (b) If fault is established under Subsection (5)(a), Section 35A-3-605 , or Title 76,
98 Chapter 8, Part 12, Public Assistance Fraud, any person who obtained or helped another obtain
99 an overpayment shall be subject to:
100 (i) a civil penalty of 10% of the amount of the overpayment; and
101 (ii) disqualification from receiving cash assistance from the Family Employment
102 Program and the general assistance program, if the overpayment was obtained from either of
103 those programs, for 12 months for the first offense, 24 months for the second offense, and
104 permanently for the third offense, or as otherwise provided by federal law; or
105 (iii) disqualification from the food stamp program, if that is the program from which
106 the overpayment was received, for 12 months for the first offense, 24 months for the second
107 offense, and permanently for the third offense, or as otherwise provided by federal law.
108 (6) If an action is filed, the department may recover, in addition to the principal sum
109 plus interest, reasonable [attorneys'] attorney fees and costs unless the repayment obligation
110 arose from an administrative error by the department.
111 (7) If a court finds that funds or benefits were secured, in whole or part, by fraud by the
112 person from whom repayment is sought, the court shall assess an additional sum as considered
113 appropriate as punitive damages up to the amount of repayment being sought.
114 (8) Criminal actions for public assistance fraud are governed by Title 76, Chapter 8,
115 Part 12, Public Assistance Fraud.
116 (9) Jurisdiction over benefits is continuous.
117 (10) This chapter does not preclude the Department of Health from carrying out its
118 responsibilities under Title 26, Chapter 19, Medical Benefits Recovery Act, and Chapter 20,
119 Utah Medical Benefits False Claims Act.
120 Section 3. Section 63-56b-101 is enacted to read:

121 CHAPTER 56b. UTAH STATE CONTRACT FALSE CLAIMS ACT
122 63-56b-101. Title.
123 This chapter is known as the "Utah State Contract False Claims Act."
124 Section 4. Section 63-56b-102 is enacted to read:
125 63-56b-102. Definitions.
126 As used in this chapter:
127 (1) "Benefit" means the receipt of money, goods, or any other thing of pecuniary value.
128 (2) "Claim" means any request or demand for money or property:
129 (a) made to any:
130 (i) employee, officer, or agent of the state; or
131 (ii) contractor with the state; and
132 (b) if:
133 (i) any portion of the money or property requested or demanded was issued from or
134 provided by the state; or
135 (ii) the state will reimburse the contractor, grantee, or other recipient for any portion of
136 the money or property.
137 (3) "False statement" or "false representation" means a wholly or partially untrue
138 statement or representation which is:
139 (a) knowingly made; and
140 (b) a material fact with respect to the claim.
141 (4) "Kickback or bribe" includes a rebate, compensation, or any other form of
142 remuneration which is:
143 (a) direct or indirect;
144 (b) overt or covert; or
145 (c) in cash or in kind.
146 (5) "Knowing" and "knowingly":
147 (a) for purposes of criminal prosecutions for violations of this chapter, is one of the
148 culpable mental states described in Subsection 26-20-9 (1); and
149 (b) for purposes of civil prosecutions for violations of this chapter, is the required
150 culpable mental state as defined in Subsection 26-20-9.5 (1).
151 (6) "Person" has the same meaning as defined in Section 68-3-12 .

152 (7) "State agency" means each executive, legislative, and judicial branch department,
153 agency, board, commission, or division, and includes a state institution of higher education as
154 defined in Section 53B-3-102 .
155 (8) "State Contract" means any agreement to supply materials, construction, or services
156 to a state agency.
157 Section 5. Section 63-56b-103 is enacted to read:
158 63-56b-103. False statement or representation.
159 (1) A person may not make or cause to be made a false statement or false
160 representation of a material fact in an application for payment under a state contract.
161 (2) A person may not make or cause to be made a false statement or false
162 representation of a material fact for use in seeking payment under a state contact.
163 (3) A person who, having knowledge of the occurrence of an event affecting the
164 person's right to receive payment under a state contract, may not conceal or fail to disclose that
165 event with intent to obtain a payment:
166 (a) to which the person is not entitled; or
167 (b) in an amount greater than that to which the person is entitled.
168 Section 6. Section 63-56b-104 is enacted to read:
169 63-56b-104. Kickbacks or bribes prohibited.
170 (1) A person may not solicit, offer, pay, or receive a kickback or bribe in return for or
171 to induce the purchasing, leasing, or ordering of any goods or services for which payment is or
172 may be made, in whole or in part, pursuant to a state contract.
173 (2) The culpable mental state required for a criminal violation of this chapter for
174 kickbacks or bribes under this section is knowingly and intentionally as defined in Section
175 76-2-103 .
176 Section 7. Section 63-56b-105 is enacted to read:
177 63-56b-105. False statements or false representations relating to state contract
178 prohibited -- Criminal penalties.
179 (1) A person may not knowingly, intentionally, or recklessly make, induce, or seek to
180 induce, the making of a false statement or false representation of a material fact with respect to
181 the performance of or a payment made under a state contract.
182 (2) A person who violates this section is guilty of a second degree felony.

183 Section 8. Section 63-56b-106 is enacted to read:
184 63-56b-106. Conspiracy to defraud prohibited.
185 A person may not enter into an agreement, combination, or conspiracy to defraud the
186 state by obtaining, or aiding another to obtain, the payment or allowance of a false, fictitious, or
187 fraudulent claim for payment under a state contract payment.
188 Section 9. Section 63-56b-107 is enacted to read:
189 63-56b-107. False claims relating to contract prohibited.
190 (1) A person may not make or present, or cause to be made or presented, to an
191 employee or officer of the state, a claim for payment under a state contract:
192 (a) which is wholly or partially false, fictitious, or fraudulent;
193 (b) for services which were not rendered or for items or materials which were not
194 delivered;
195 (c) which misrepresents the type, quality, or quantity of items or services rendered;
196 (d) for items or services which the person knew were not reasonably necessary in
197 accordance with professionally recognized standards; or
198 (e) which has previously been made.
199 (2) In addition to the prohibitions in Subsection (1), a person may not:
200 (a) falsify or alter, with intent to deceive, any report or document required by the state
201 contract, or by state or federal law;
202 (b) retain any unauthorized payment as a result of acts described under this section; or
203 (c) aid or abet the commission of any act prohibited by this section.
204 Section 10. Section 63-56b-108 is enacted to read:
205 63-56b-108. Knowledge of past acts not necessary to establish fact that false
206 statement or representation knowingly made.
207 In prosecution under this chapter, in order to establish the fact that a false statement or
208 representation was knowingly made, it shall not be necessary to show that:
209 (1) the person had knowledge of similar acts having been performed in the past on the
210 part of persons acting on his behalf; or
211 (2) the person had actual notice that the acts by the persons acting on his behalf
212 occurred.
213 Section 11. Section 63-56b-109 is enacted to read:

214 63-56b-109. Criminal penalties.
215 (1) Except as provided in Section 63-56b-104 , the culpable mental state required for a
216 criminal violation of this chapter is knowingly, intentionally, or recklessly as defined in Section
217 76-2-103 .
218 (2) The punishment for a criminal violation of any provision of this chapter, except as
219 provided under Section 63-56b-105 , is determined by the cumulative value of the funds or
220 other benefits received or claimed in the commission of all violations of a similar nature, and
221 not by each separate violation.
222 (3) Except as provided under Section 63-56b-105 , punishment for criminal violation of
223 this chapter shall be based on the dollar amounts as prescribed by Subsection 76-6-412 (1) for
224 theft of property and services.
225 Section 12. Section 63-56b-110 is enacted to read:
226 63-56b-110. Civil penalties.
227 (1) The culpable mental state required for a civil violation of this chapter is "knowing"
228 or "knowingly" which:
229 (a) means that person, with respect to information:
230 (i) has actual knowledge of the information;
231 (ii) acts in deliberate ignorance of the truth or falsity of the information; or
232 (iii) acts in reckless disregard of the truth or falsity of the information; and
233 (b) does not require a specific intent to defraud.
234 (2) Any person who violates this chapter shall, in all cases, in addition to other
235 penalties provided by law, be required to:
236 (a) make full and complete restitution to the state of all damages that the state sustains
237 because of the person's violation of this chapter;
238 (b) pay to the state its costs of enforcement of this chapter in that case, including but
239 not limited to the cost of investigators, attorneys, and other public employees, as determined by
240 the state; and
241 (c) pay to the state a civil penalty equal to:
242 (i) three times the amount of damages that the state sustains because of the person's
243 violation of this chapter; and
244 (ii) not less than $5,000 or more than $10,000 for each claim filed or act done in

245 violation of this chapter.
246 (3) Any civil penalties assessed under Subsection (2) shall be awarded by the court as
247 part of its judgment in both criminal and civil actions.
248 (4) A criminal action need not be brought against a person in order for that person to be
249 civilly liable under this section.
250 Section 13. Section 63-56b-111 is enacted to read:
251 63-56b-111. Presumption based on paid state warrant -- Repayment of benefit
252 received.
253 (1) In any civil or criminal action brought under this chapter, a paid state warrant, made
254 payable to the order of a party, creates a presumption that the party received funds from the
255 state.
256 (2) In any criminal action under this chapter:
257 (a) the value of materials or benefits received shall be the ordinary or usual charge for
258 similar materials or benefits in the private sector; and
259 (b) the repayment of funds or other benefits obtained in violation of the provisions of
260 this chapter does not constitute a defense to, or grounds for, dismissal of that action.
261 Section 14. Section 63-56b-112 is enacted to read:
262 63-56b-112. Violation of other laws.
263 The provisions of this chapter:
264 (1) are not exclusive, and the remedies provided for in this chapter are in addition to
265 any other remedies provided for under:
266 (a) any other applicable law; or
267 (b) common law; and
268 (2) are to be liberally construed and applied to:
269 (a) effectuate the chapter's remedial and deterrent purposes; and
270 (b) serve the public interest.
271 Section 15. Section 63-56b-113 is enacted to read:
272 63-56b-113. State contract fraud enforcement.
273 (1) This chapter shall be enforced in accordance with this section.
274 (2) Each state agency is responsible for:
275 (a) (i) investigating and prosecuting suspected civil violations of this chapter; or

276 (ii) referring suspected civil violations of this chapter to the attorney general for
277 investigation and prosecution; and
278 (b) promptly referring suspected criminal violations of this chapter to the attorney
279 general for criminal investigation and prosecution.
280 (3) The attorney general has:
281 (a) concurrent jurisdiction with the state agency for investigating and prosecuting
282 suspected civil violations of this chapter; and
283 (b) exclusive jurisdiction to investigate and prosecute all suspected criminal violations
284 of this chapter.
285 (4) (a) Any violation of this chapter which comes to the attention of any state
286 government officer or state agency shall be reported to the attorney general or the department.
287 (b) All state government officers and state agencies shall cooperate with and assist in
288 any prosecution for violation of this chapter.
289 Section 16. Section 63-56b-114 is enacted to read:
290 63-56b-114. Investigations -- Civil investigative demands.
291 (1) The attorney general may take investigative action under Subsection (2) if the
292 attorney general has reason to believe that:
293 (a) a person has information or custody or control of documentary material relevant to
294 the subject matter of an investigation of an alleged violation of this chapter;
295 (b) a person is committing, has committed, or is about to commit a violation of this
296 chapter; or
297 (c) it is in the public interest to conduct an investigation to ascertain whether or not a
298 person is committing, has committed, or is about to commit a violation of this chapter.
299 (2) In taking investigative action, the attorney general may:
300 (a) require the person to file on a prescribed form a statement in writing, under oath or
301 affirmation, describing:
302 (i) the facts and circumstances concerning the alleged violation of this chapter; and
303 (ii) other information considered necessary by the attorney general;
304 (b) examine a person under oath in connection with the alleged violation of this
305 chapter; and
306 (c) in accordance with Subsections (7) through (18), execute in writing, and serve on

307 the person, a civil investigative demand requiring the person to produce the documentary
308 material and permit inspection and copying of the material.
309 (3) The attorney general may not release or disclose information that is obtained under
310 Subsection (2)(a) or (b), or any documentary material or other record derived from the
311 information obtained under Subsection (2)(a) or (b), except:
312 (a) by court order for good cause shown;
313 (b) with the consent of the person who provided the information;
314 (c) to an employee of the attorney general or the state agency;
315 (d) to an agency of this state, the United States, or another state;
316 (e) to a special assistant attorney general representing the state in a civil action;
317 (f) to a political subdivision of this state; or
318 (g) to a person authorized by the attorney general to receive the information.
319 (4) The attorney general may use documentary material derived from information
320 obtained under Subsection (2)(a) or (b), or copies of that material, as the attorney general
321 determines necessary in the enforcement of this chapter, including presentation before a court.
322 (5) (a) If a person fails to file a statement as required by Subsection (2)(a) or fails to
323 submit to an examination as required by Subsection (2)(b), the attorney general may file a
324 complaint in district court for an order to compel the person to, within a period stated by court
325 order:
326 (i) file the statement required by Subsection (2)(a); or
327 (ii) submit to the examination required by Subsection (2)(b).
328 (b) Failure to comply with an order entered under Subsection (5)(a) is punishable as
329 contempt.
330 (6) A civil investigative demand must:
331 (a) state the rule or statute under which the alleged violation of this chapter is being
332 investigated;
333 (b) describe the:
334 (i) general subject matter of the investigation; and
335 (ii) class or classes of documentary material to be produced with reasonable specificity
336 to fairly indicate the documentary material demanded;
337 (c) designate a date within which the documentary material is to be produced; and

338 (d) identify an authorized employee of the attorney general to whom the documentary
339 material is to be made available for inspection and copying.
340 (7) A civil investigative demand may require disclosure of any documentary material
341 that is discoverable under the Utah Rules of Civil Procedure.
342 (8) Service of a civil investigative demand may be made by:
343 (a) delivering an executed copy of the demand to the person to be served, or to a
344 partner, officer, or agent authorized by appointment or by law to receive service of process on
345 behalf of that person;
346 (b) delivering an executed copy of the demand to the principal place of business in this
347 state of the person to be served; or
348 (c) mailing by registered or certified mail an executed copy of the demand addressed to
349 the person to be served:
350 (i) at the person's principal place of business in this state; or
351 (ii) if the person has no place of business in this state, to the person's principal office or
352 place of business.
353 (9) Documentary material demanded in a civil investigative demand shall be produced
354 for inspection and copying during normal business hours at the office of the attorney general or
355 as agreed by the person served and the attorney general.
356 (10) The attorney general may not produce for inspection or copying, or otherwise
357 disclose, the contents of documentary material obtained pursuant to a civil investigative
358 demand except:
359 (a) by court order for good cause shown;
360 (b) with the consent of the person who produced the information;
361 (c) to an employee of the attorney general or the state agency;
362 (d) to an agency of this state, the United States, or another state;
363 (e) to a special assistant attorney general representing the state in a civil action;
364 (f) to a political subdivision of this state; or
365 (g) to a person authorized by the attorney general to receive the information.
366 (11) (a) With respect to documentary material obtained pursuant to a civil investigative
367 demand, the attorney general shall prescribe reasonable terms and conditions allowing the
368 documentary material to be available for inspection and copying by the person who produced

369 the material or by an authorized representative of that person.
370 (b) The attorney general may use the documentary material or copies of it as the
371 attorney general determines necessary in the enforcement of this chapter, including presentation
372 before a court.
373 (12) A person may file a complaint, stating good cause, to extend the return date for the
374 demand or to modify or set aside the demand. A complaint under this Subsection (12) shall be
375 filed in district court and must be filed before the earlier of: