False claims against the state provisions modifications

A bill for an act

relating to civil law; modifying provisions governing false claims against the state;

providing additional grounds for liability; amending Minnesota Statutes 2024,

sections 15C.01, subdivisions 7, 8, by adding a subdivision; 15C.02; 15C.03;

15C.05; 15C.06; 15C.11; 15C.145; 15C.15, subdivisions 1, 2; 15C.16; proposing

coding for new law in Minnesota Statutes, chapter 15C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 15C.01, is amended by adding a subdivision

to read:

new text begin

Subd. 4a.

new text end

new text begin

Ownership or investment interest.

new text end

new text begin

"Ownership or investment interest" means:

new text end

new text begin

(1) a direct or indirect possession of equity in the capital, stock, or profits totaling more

than ten percent of an entity;

new text end

new text begin

(2) an interest held by an investor or group of investors who engage in the raising or

returning of capital and who invest, develop, or dispose of specified assets; or

new text end

new text begin

(3) an interest held by a pool of funds by investors, including a pool of funds managed

or controlled by private limited partnerships, if those investors or the management of that

pool or private limited partnership employ investment strategies to earn a return on that

pool of funds.

new text end

Sec. 2.

Minnesota Statutes 2024, section 15C.01, subdivision 7, is amended to read:

Subd. 7.

Prosecuting attorney.

"Prosecuting attorney" means:

(1) the attorney general, if the false or fraudulent claim involves money, property, or

services provided by the state; or

(2)
deleted text begin
the county attorney, city attorney, or other attorney representing a political subdivision,
deleted text end

if the false or fraudulent claim involves money, property, or services provided by the political

subdivision
new text begin
:
new text end

new text begin

(i) the county attorney, city attorney, or other attorney representing a political subdivision;

or

new text end

new text begin

(ii) the attorney general upon the request of the county attorney, city attorney, or other

attorney representing the political subdivision as the attorney general deems proper
new text end
.

Sec. 3.

Minnesota Statutes 2024, section 15C.01, subdivision 8, is amended to read:

Subd. 8.

State.

"State" means the state of Minnesota and includes a department
deleted text begin
or
deleted text end
new text begin
,
new text end

agency
deleted text begin
of the state
deleted text end
new text begin
, board, bureau, division, commission, council, office, or other government

entity performing a governmental or proprietary function for the state
new text end
.

Sec. 4.

new text begin

[15C.015] EFFECT OF DECISION TO FOREGO REFUND OR PAY CLAIM.

new text end

new text begin

In determining materiality under this chapter, the decision of the state or a political

subdivision to forego a refund or to pay a claim despite actual knowledge of fraud or falsity

shall not be considered dispositive.

new text end

Sec. 5.

Minnesota Statutes 2024, section 15C.02, is amended to read:

15C.02 LIABILITY FOR CERTAIN ACTS.

(a) A person who commits any act described in clauses (1) to
deleted text begin
(7)
deleted text end
new text begin
(8)
new text end
is liable to the state

or the political subdivision for a civil penalty in the amounts set forth in the federal False

Claims Act, United States Code, title 31, section 3729, and as modified by the federal Civil

Penalties Inflation Adjustment Act Improvements Act of 2015, plus three times the amount

of damages
new text begin
, including consequential damages, and interest on the amount of damages

calculated as the prejudgment interest rate in effect on the day the payment or benefit was

received or paid, for the period from the date that the benefit was received or paid to the

date that the state recovers the amount of the payment or value of the benefit,
new text end
that the state

or the political subdivision sustains because of the act of that person, except as otherwise

provided in paragraph (b):

(1) knowingly presents, or causes to be presented, a false or fraudulent claim for payment

or approval;

(2) knowingly makes or uses, or causes to be made or used, a false record or statement

material to a false or fraudulent claim;

(3) knowingly conspires to commit a violation of clause (1), (2), (4), (5), (6),
deleted text begin
or
deleted text end
(7)
new text begin
, or

(8)
new text end
;

(4) has possession, custody, or control of property or money used, or to be used, by the

state or a political subdivision and knowingly delivers or causes to be delivered less than

all of that money or property;

(5) is authorized to make or deliver a document certifying receipt for money or property

used, or to be used, by the state or a political subdivision and, intending to defraud the state

or a political subdivision, 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 state or a political subdivision who lawfully may not

sell or pledge the property;
deleted text begin
or
deleted text end

(7) knowingly makes or uses, or causes to be made or used, a false record or statement

material to an obligation to pay or transmit money or property to the state or a political

subdivision, or knowingly conceals or knowingly and improperly avoids or decreases an

obligation to pay or transmit money or property to the state or a political subdivision
deleted text begin
.
deleted text end
new text begin
; or
new text end

new text begin

(8) knowingly makes or uses, or causes to be made or used, a false record or statement

resulting in the underpayment of taxes due to the unemployment insurance program

established under chapter 268 or in the payment of unemployment benefits of more than

$15,000 in a calendar year, notwithstanding the exclusion set forth in section 15C.03.

new text end

(b) Notwithstanding paragraph (a), the court may assess not less than two times the

amount of damages that the state or the political subdivision sustains because of the act of

the person if:

(1) the person committing a violation under paragraph (a) furnished an officer or

employee of the state or the political subdivision responsible for investigating the false or

fraudulent claim violation with all information known to the person about the violation

within 30 days after the date on which the person first obtained the information;

(2) the person fully cooperated with any investigation by the state or the political

subdivision of the violation; and

(3) at the time the person furnished the state or the political subdivision with information

about the violation, no criminal prosecution, civil action, or administrative action had been

commenced under this chapter with respect to the violation and the person did not have

actual knowledge of the existence of an investigation into the violation.

(c) A person violating this section is also liable to the state or the political subdivision

for the costs of a civil action brought to recover any penalty or damages.

new text begin

(d) A person who has an ownership or investment interest in a person who violates

paragraph (a), clauses (1) to (8), knows about the violation, and fails to disclose the violation

to the state or a political subdivision within 60 days of identifying the violation is liable to

the state or political subdivision under paragraph (a).

new text end

new text begin

(e) The damage multiplier as set forth in this section must be trebled or doubled, as

applicable, before subtractions are made for compensatory payments received by the state

from any source, including but not limited to the defendant, or before subtractions are

otherwise made because of an offset or credit received by the state from any source, including

but not limited to the defendant.

new text end

deleted text begin

(d)
deleted text end
new text begin
(f)
new text end
A person is not liable under this section for mere negligence, inadvertence, or

mistake with respect to activities involving a false or fraudulent claim.

new text begin

(g) No person may take an action to impede another person from commencing an action

under this chapter or communicating directly with the state or prosecuting attorney or their

agent about possible conduct giving rise to a violation of this chapter, including enforcing

or threatening to enforce a confidentiality agreement or requiring a waiver of a distribution

to a person or requiring waiver of attorney fees, costs, or expenses. A person who violates

this paragraph is liable for each violation:

new text end

new text begin

(1) an amount not to exceed the greater of $50,000 for a natural person or $250,000 for

any other person; or

new text end

new text begin

(2) the gross amount of pecuniary gain to the person as a result of the violation if the

violation involved fraud, deceit, manipulation, or knowing disregard of a regulatory

requirement.

new text end

new text begin

The person bringing the action, or who is the original source of the information leading to

an action by the prosecuting attorney, is entitled to 25 percent of the amount ordered against

a person found liable under this paragraph. The remainder of the net proceeds must be

credited to the false claims account pursuant to section 15C.15.

new text end

new text begin

(h) This section applies to violations of tax law only if:

new text end

new text begin

(1) the net income or sales of the person against whom the action is brought equals or

exceeds $1,000,000 for any taxable year subject to an action brought pursuant to this chapter,

or the value of an estate sued through its personal representative exceeds $3,000,000; and

new text end

new text begin

(2) the damages pleaded in the action exceed $350,000.

new text end

new text begin

(i) The attorney general must consult with the commissioner of revenue prior to filing

or intervening in an action under this chapter that is based on the filing of false claims,

records, or statements made under a tax law. If the state declines to participate or to authorize

participation by a political subdivision in the action, the qui tam plaintiff must obtain approval

from the attorney general before making a motion to compel the commissioner of revenue

to disclose tax records.

new text end

Sec. 6.

Minnesota Statutes 2024, section 15C.03, is amended to read:

15C.03 EXCLUSION.

new text begin

Except as provided under section 15C.02, paragraphs (a), clause (8), (h), and (i),
new text end
this

chapter does not apply to claims, records, or statements made under portions of Minnesota

Statutes relating to taxation.

Sec. 7.

Minnesota Statutes 2024, section 15C.05, is amended to read:

15C.05 PRIVATE REMEDIES; COMPLAINT UNDER SEAL; COPY OF

COMPLAINT AND WRITTEN DISCLOSURE OF EVIDENCE TO BE SENT TO

PROSECUTING ATTORNEY.

(a) Except as otherwise provided in this section, a person may maintain an action under

this chapter on the person's own account and that of the state; the person's own account and

that of a political subdivision; or on the person's own account and that of both the state and

a political subdivision. After an action is commenced, it may be voluntarily dismissed only

if the court and the prosecuting attorney give written consent to the dismissal and their

reasons for consenting.

(b) If an action is brought under this section, no other person may bring another action

under this section based on the same facts that are the subject of the pending action.

(c) An action may not be maintained under this section:

(1) against the state, the legislature, the judiciary, the executive branch, or a political

subdivision, or respective officers, members, or employees if the action is based on evidence

or information known to the state or political subdivision when the action was brought; or

(2) if the action is based upon allegations or transactions that are the subject of a civil

action or an administrative proceeding for a monetary penalty to which the state or a political

subdivision is already a party.

(d) A complaint in an action under this section must be commenced by filing the

complaint with the court in chambers and the court must place it under seal for at least 60

days. No service may be made upon the defendant until the complaint is unsealed.
new text begin
The seal

must not preclude the prosecuting attorney from providing the complaint, any other pleadings,

or the written disclosure of substantially all material evidence and information possessed

by the person bringing the action to a state agency or political subdivision, a law enforcement

agency in this state or another state, or a federal law enforcement agency so that the actions

may be investigated or prosecuted. The seal applies to the law enforcement agencies served

to the same extent as the seal applies to other parties in the action.
new text end

(e) If a complaint is filed under this section, the plaintiff shall serve a copy of the

complaint on the prosecuting attorney in accordance with the Minnesota Rules of Civil

Procedure and at the same time shall serve a written disclosure of all material evidence and

information the plaintiff possesses.

(f) A court must dismiss an action or claim under this section, unless opposed by the

prosecuting attorney, if substantially the same allegations or transactions as alleged in the

action or claim were publicly disclosed:

(1) in a criminal, civil, or administrative hearing in which the state or a political

subdivision or its agent is a party;

(2) in a report, hearing, audit, or investigation of the legislature, the governing body of

a political subdivision, the legislative auditor, or the state auditor
new text begin
, provided that the

information is not deemed publicly disclosed because it was provided pursuant to chapter

13 or any other federal, state, or local law permitting the public to request, receive, or view

documents or information in the possession of public entities
new text end
; or

(3) by the news media
new text begin
, provided that the allegations or transactions are not deemed

publicly disclosed in the news media merely because information of allegations or

transactions are posted on the Internet or otherwise published digitally
new text end
.

This paragraph does not apply if the action or claim is brought by the prosecuting attorney

or the person bringing the action or claim is an original source of the information.

Sec. 8.

Minnesota Statutes 2024, section 15C.06, is amended to read:

15C.06 PROSECUTING ATTORNEY INTERVENTION; MOTION TO EXTEND

TIME; UNSEALING OF COMPLAINT.

(a) Within 60 days after receiving a complaint and disclosure under section
15C.05
, the

prosecuting attorney shall intervene or decline intervention or, for good cause shown, move

the court to extend the time for doing so. The motion may be supported by affidavits or

other submissions in chambers.

(b) The complaint must be unsealed after the prosecuting attorney decides whether or

not to intervene
new text begin
, but if the prosecuting attorney declines to intervene, the person bringing

the action under section 15C.05 may elect not to proceed with the action by voluntarily

discontinuing the action, without an order and without unsealing the action, by filing with

the court a notice of discontinuance and serving a copy of the notice on the prosecuting

attorney. The complaint in these cases must remain sealed until the prosecuting attorney

makes an in camera motion to unseal the complaint
new text end
.

(c) Notwithstanding the prosecuting attorney's decision regarding intervention in an

action brought by a plaintiff under section
15C.05
, the prosecuting attorney may pursue the

claim through any alternate remedy available to the state, including an administrative

proceeding to determine a civil monetary penalty. If the prosecuting attorney pursues an

alternate remedy in another proceeding, the person initiating the action has the same rights

in that proceeding as if the action had continued under section
15C.05
. A finding of fact or

conclusion of law made in the other proceeding that has become final is conclusive on all

parties to an action under section
15C.05
. For purposes of this paragraph, a finding or

conclusion is final if it has been finally determined on appeal to the appropriate state court,

if the time for filing an appeal has expired, or if the finding or conclusion is not subject to

judicial review.
new text begin
For purposes of this paragraph, a criminal prosecution against a defendant

constitutes an alternate remedy except that this subdivision must not be interpreted to allow

the person initiating an action under this chapter to intervene in a criminal proceeding against

a person for violating a provision of law.
new text end

Sec. 9.

Minnesota Statutes 2024, section 15C.11, is amended to read:

15C.11 LIMITATION OF ACTIONS; REMEDIES.

(a) An action under this chapter may not be commenced more than three years after the

date of discovery of the fraudulent activity by the prosecuting attorney or more than six

years after the fraudulent activity occurred, whichever occurs later, but in no event more

than ten years after the date on which the violation is committed.

(b) A finding of guilt in a criminal proceeding charging a false statement or fraud,

whether upon a verdict of guilty or a plea of guilty or nolo contendere, stops the person

found guilty from denying an essential element of that offense in an action under this chapter

based upon the same transaction as the criminal proceeding.

(c) In an action under this chapter, the state or the political subdivision and any plaintiff

under section
15C.05
must prove the essential elements of the cause of action, including

damages, by a preponderance of the evidence.

new text begin

(d) In an action brought under section 15C.05, the pleading is not required to identify

specific claims that result from an alleged course of misconduct, or any specific records or

statements used, if the facts alleged in the complaint and ultimately proven true would

provide a reasonable indication that one or more violations of this chapter are likely to have

occurred and if the allegations in the pleading provide adequate notice of the specific nature

of the alleged misconduct to permit the state or a local government to effectively investigate

and defendants to fairly defend against the allegations.

new text end

Sec. 10.

Minnesota Statutes 2024, section 15C.145, is amended to read:

15C.145 RELIEF FROM RETALIATORY ACTIONS.

(a)
deleted text begin
An
deleted text end
new text begin
A current or former
new text end
employee, contractor, or agent is entitled to all relief necessary

to make that employee, contractor, or agent whole if that employee, contractor, or agent is

discharged, demoted,
new text begin
disciplined, penalized,
new text end
suspended,
new text begin
interfered with, sued, intimidated,
new text end

threatened, harassed,
new text begin
restrained, coerced, defamed, blacklisted,
new text end
or
deleted text begin
in any other manner
deleted text end
new text begin

otherwise retaliated against;
new text end
discriminated against in the
new text begin
compensation,
new text end
terms
deleted text begin
and
deleted text end
new text begin
,
new text end
conditions
new text begin
,

location, or privileges
new text end
of employment
new text begin
, contract, business, or profession; or otherwise harmed

or penalized by an employer, former employer, or any other person
new text end
because of lawful acts

done by the
new text begin
current or former
new text end
employee, contractor, agent, or associated others in furtherance

of an action under this chapter or other efforts to stop one or more violations
new text begin
or potential

violations
new text end
of this chapter
new text begin
regardless of whether other factors may have also contributed to

the adverse action
new text end
.

(b) Relief under paragraph (a) shall include reinstatement with the same seniority status

that the
new text begin
current or former
new text end
employee, contractor, or agent would have had but for the

discrimination, two times the amount of back pay, interest on the back pay,
deleted text begin
and compensation

for any special damages sustained as a result of the discrimination, including
deleted text end
new text begin
any other

damages available at law, and
new text end
litigation costs and reasonable attorney fees.

(c) A civil action under this section may not be brought more than three years after the

date when the retaliation occurred.

new text begin

(d) For purposes of this section, a "lawful act" includes but is not limited to the following:

new text end

new text begin

(1) conducting or assisting with an investigation for, initiation of, testimony for, or

assistance in an action filed or to be filed pursuant to this chapter;

new text end

new text begin

(2) conducting or assisting with an investigation in good faith, as that term is defined in

section 181.931, subdivision 4, of a potential violation of this chapter;

new text end

new text begin

(3) meeting with potential or retained counsel or agents or representatives of the state

or prosecuting attorney about the matter that is the subject of an action filed or to be filed

pursuant to this chapter; or

new text end

new text begin

(4) obtaining or transmitting to the state, prosecuting attorney, a local government, a qui

tam plaintiff, or private counsel engaged to investigate or file or potentially file a cause of

action under this chapter documents, data, correspondence, electronic mail, medical records,

financial records, trade-secret information, intellectual property, or any other information

even though the act may violate a contract or agreement, employment term, or duty owed

to the employer or contractor so long as the possession and transmission of the documents

are for the purpose of furthering efforts to stop one or more violations or potential violations

of this chapter.

new text end

new text begin

(e) Nothing in paragraph (d) prevents a law enforcement agency from bringing a civil

or criminal action against a person for violating a provision of law.

new text end

Sec. 11.

Minnesota Statutes 2024, section 15C.15, subdivision 1, is amended to read:

Subdivision 1.

Deposit of funds.

The net proceeds received by the state in an action

under this chapter, after distributions made to private plaintiffs and as otherwise required

by federal law, must be deposited in the state treasury and credited as follows:

(1) the portion of net proceeds equal to the amount of the actual damages that the state

sustains because of an act specified in section
15C.02
must be credited to the fund that

sustained the damages;

(2) the portion of net proceeds equal to the additional recovery of federal money

authorized by United States Code, title 42, section 1396h, for a recovery under this chapter,

as determined by the commissioner of management and budget, must be credited to the

false claims account under subdivision 2, provided that the amount credited may not exceed

$1,000,000 in a fiscal year;
deleted text begin
and
deleted text end

new text begin

(3) if clause (2) does not apply, 50 percent of the remaining net proceeds must be credited

to the false claims account under subdivision 2, provided that the amount credited must not

exceed $1,000,000 in a fiscal year; and

new text end

deleted text begin

(3)
deleted text end

new text begin
(4)
new text end
the remainder of the net proceeds must be credited to the general fund.

Sec. 12.

Minnesota Statutes 2024, section 15C.15, subdivision 2, is amended to read:

Subd. 2.

False claims account.

A false claims account is established in the special

revenue fund in the state treasury. The commissioner of management and budget may enter

into interagency agreements to deposit up to $2,055,000 for litigation and related expenses

under this chapter. Money in the account deposited through interagency agreement or under

subdivision 1 is annually appropriated to the attorney general for purposes of this chapter.
new text begin

All interest and income derived from investment and deposit of money in the account must

be credited to the false claims account.
new text end

Sec. 13.

Minnesota Statutes 2024, section 15C.16, is amended to read:

15C.16 REPORTING.

The attorney general shall report to the chairs and ranking minority members of the

senate and house of representatives committees with jurisdiction over state government

finance by
deleted text begin
January
deleted text end
new text begin
October
new text end
15 each year, on activities under this chapter during the prior
deleted text begin

calendar
deleted text end
new text begin
fiscal
new text end
year. The report must include:

(1) the number of complaints received by the attorney general under section
15C.05
;

(2) the number of times the attorney general intervened and declined to intervene after

receiving a complaint;

(3) an estimate of the amount of time spent by attorneys in the attorney general's office

and an estimate of the amount of time spent by other staff in the attorney general's office

on activities under this chapter; and

(4) net proceeds received by the state in each action under this chapter.

Sec. 14.

new text begin

[15C.17] REPORTING BY THE OFFICE OF THE STATE AUDITOR.

new text end

new text begin

(a) Notwithstanding chapter 13 or any other law classifying data held by the state auditor

as not public data, as defined in section 13.02, subdivision 8a, if in the course of an audit

the state auditor identifies data related to a potential false claim submitted to the state or a

political subdivision, the state auditor may share the data with the attorney general or the

political subdivision. The state auditor may participate, with the consent of the attorney

general, in a subsequent investigation or prosecution of that false claim.

new text end

new text begin

(b) If the state auditor elects to participate in an investigation and prosecution of a false

claim, the state auditor's interests must be represented by the attorney general.

new text end

Sec. 15.

new text begin

[15C.18] OTHER LAW ENFORCEMENT AUTHORITY AND DUTIES.

new text end

new text begin

This chapter does not:

new text end

new text begin

(1) preempt the authority or relieve the duty of law enforcement agencies to investigate

and prosecute suspected violations of law;

new text end

new text begin

(2) prevent or prohibit a person from voluntarily disclosing information concerning a

violation of this chapter to a law enforcement agency; or

new text end

new text begin

(3) limit the powers granted under other laws to the attorney general, state agencies, or

political subdivisions to investigate possible violations of this chapter and take appropriate

action, including seeking injunctive relief.

new text end

Sec. 16.
new text begin
EFFECTIVE DATE; RETROACTIVE APPLICATION.
new text end

new text begin

This act is effective August 1, 2026, and applies retroactively to false claims, records,

and statements made on or after January 1, 2017.

new text end