Under current law, if a contractor or vendor does business with this state or a
local government, the terms of the contract or order govern the performance of, and
the price to be paid to, the contractor or vendor. If the contractor or vendor claims
payment for materials, supplies, equipment, or services that are not provided in
accordance with the contract or order, or at a price that is different from the price
specified in the contract or order, the state or a local government has a remedy
against the contractor or vendor for breach of contract. If the contractor or vendor
is asked to swear to the truth of a claim for payment and the claim is false, the
contractor or vendor may be prosecuted for false swearing. Currently, except with
regard to medical assistance, a private person has no means to recover, on behalf of
the state, damages sustained by the state as a result of a fraud committed against
the state.

This bill provides that whoever knowingly presents a false claim under any
contract or order for materials, supplies, equipment, or services to be provided to a

---

state agency is subject to a forfeiture (civil penalty) of not less than $5,000 nor more
than $10,000, plus three times the amount of the damages that were sustained by
the state or would have been sustained by the state, whichever is greater, as a result
of the false claim. The bill permits the attorney general to bring an action to recover
any forfeiture for which a contractor or vendor is liable as a result of a false claim
submitted to a state agency. The bill contains similar provisions that apply to local
governmental units. The bill creates separate prohibitions against state contractors,
grantees, vendors, and other recipients of state resources who knowingly commit
certain fraudulent acts against the state. The bill makes these persons liable for
three times the amount of damages sustained by the state resulting from such acts
and imposes additional forfeitures of not less than $5,000 nor more than $10,000 for
each violation. The bill permits the attorney general to pursue an alternate remedy,
such as an administrative remedy, against an alleged offender in lieu of an action in
court. With certain exceptions, the bill provides that a person who brings an action
on behalf of the state is entitled to receive his or her reasonable expenses of bringing
the action, including his or her costs and reasonable, actual attorney fees, which are
assessed against the defendant. The bill entitles an employee to all relief to make
the employee whole if the employee is discriminated against by an employer as a
result of lawful actions the employee took to further the investigation of any act of
fraud, as defined in the bill, the employer committed against the state. Under the
bill, the relief may include reinstatement and double back pay with interest from the
time of any discharge to the time of reinstatement. The bill also permits the employee
to recover any costs, including reasonable, actual attorney fees, from his or her
employer.

The provisions of the bill do not apply to certain contracts of the Department
of Transportation, including engineering and highway construction contracts, or to
certain contracts of the Investment Board, including investment-related contracts.