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					                                  South Carolina General Assembly
                                      117th Session, 2007-2008

S. 82

STATUS INFORMATION

General Bill
Sponsors: Senators Malloy, Sheheen and Knotts
Document Path: l:\s-jud\bills\malloy\jud0004.gm.doc

Introduced in the Senate on January 9, 2007
Currently residing in the Senate Committee on Judiciary

Summary: False Claims Act


HISTORY OF LEGISLATIVE ACTIONS

    Date     Body     Action Description with journal page number
11/29/2006   Senate   Prefiled
11/29/2006   Senate   Referred to Committee on Judiciary
  1/9/2007   Senate   Introduced and read first time SJ-62
  1/9/2007   Senate   Referred to Committee on Judiciary SJ-62
 1/17/2007   Senate   Referred to Subcommittee: Moore (ch), Ford, Mescher, Rankin, Scott
 4/18/2007   Senate   Committee report: Favorable with amendment Judiciary SJ-5
 5/15/2008   Senate   Recommitted to Committee on Judiciary SJ-104


VERSIONS OF THIS BILL

11/29/2006
4/18/2007
 1 COMMITTEE REPORT
 2 April 18, 2007
 3
 4                                                              S. 82
 5
 6            Introduced by Senators Malloy, Sheheen and Knotts
 7
 8   S. Printed 4/18/07--S.
 9   Read the first time January 9, 2007.
10
11
12                 THE COMMITTEE ON JUDICIARY
13     To whom was referred a Bill (S. 82) to amend the Code of Laws
14   of South Carolina, 1976, by adding Chapter 85 to Title 15 so as to
15   enact the “South Carolina False Claims Act” providing for
16   definitions, etc., respectfully
17                                  REPORT:
18     That they have duly and carefully considered the same and
19   recommend that the same do pass with amendment:
20
21      Amend the bill, as and if amended, page 3, by striking line 7 and
22   inserting:
23      /    (1) knowingly presents, or knowingly causes to be
24   presented, to an /
25      Amend the bill further, as and if amended, page 18, by striking
26   line 10 and inserting:
27      / State Treasury, to be administered by the Attorney General.
28   All proceeds of an action or settlement of /
29      Amend the bill further, as and if amended, page 18, by striking
30   line 14 and inserting:
31      /    (1) twenty-five percent of the monies must be retained by
32   the /
33      Amend the bill further, as and if amended, page 18, by striking
34   lines 20-26 and inserting:
35      / (C) The Attorney General shall make disbursements of funds
36   as provided in court orders setting awards, fees, and expenses. The
37   Attorney General shall transfer fund balances in excess of those
38   required to the General Fund; however, fund balances related to
39   the South Carolina Medicaid Program shall be transferred to the
40   Department of Health and Human Services. /



     [82-1]
 1     Renumber sections to conform.
 2     Amend title to conform.
 3
 4   GERALD MALLOY for Committee.
 5
 6
 7         STATEMENT OF ESTIMATED FISCAL IMPACT
 8        ESTIMATED FISCAL IMPACT ON GENERAL FUND
 9                            EXPENDITURES:
10                A Cost to the General Fund (See Below)
11      ESTIMATED FISCAL IMPACT ON FEDERAL & OTHER
12                       FUND EXPENDITURES:
13            A Cost to Federal and/or Other Funds (See Below)
14   EXPLANATION OF IMPACT:
15   Judicial Department
16     The department indicates this bill will have a minimal impact on
17   the General Fund of the State, which can be absorbed by the
18   agency at the current level of funding.
19   Adjutant General's Office
20     The office reports that this bill would require 3 Attorneys, 2
21   Auditors and 2 Paralegals at an annual cost to the general fund of
22   $124,550 and an annual cost to federal funds and other funds of
23   $292,253 for salaries, fringe and other operating expenses. The
24   federal and other funds would consist of Federal Medicaid Grant
25   Funds and court-awarded Medicaid Settlement Funds.




     [82-2]
 1   Department of Health and Human Services (DHHS)
 2      The department anticipates enactment will have no impact on
 3   the general fund and a net minimal impact on federal and/or other
 4   funds. Currently, all recoveries associated with false claims in the
 5   Medicaid program are returned to the DHHS (other funds) to be
 6   used to draw down additional federal matching funds. Recoveries
 7   associated with false claims in the Medicaid program currently
 8   average $2.3 million each five-year period ($460,000 annually).
 9   Section 15-85-130 states all proceeds of an action pursuant to this
10   Act must be deposited in the State False Claims Act Investigation
11   and Prosecution Fund. The funds are to be distributed to the
12   Attorney General and plaintiffs. However, any fund balances
13   related to the Medicaid program after those disbursements are to
14   be transferred to DHHS. As a result DHHS anticipates a net
15   minimal impact on the agency depending on the level of awards to
16   plaintiffs and the overall volume of lawsuits pursuant to
17   enactment.
18
19                                     Approved By:
20                                     Don Addy
21                                     Office of State Budget
22




     [82-3]
 1
 2
 3
 4
 5
 6
 7
 8
 9                               A BILL
10
11   TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
12   1976, BY ADDING CHAPTER 85 TO TITLE 15 SO AS TO
13   ENACT THE “SOUTH CAROLINA FALSE CLAIMS ACT”
14   PROVIDING FOR DEFINITIONS OF CERTAIN TERMS,
15   LIABILITY FOR FALSE OR FRAUDULENT CLAIMS UNDER
16   CERTAIN CIRCUMSTANCES, PROCEDURES FOR CIVIL
17   ACTIONS FOR FALSE CLAIMS, THE PROCEDURE AND
18   CONTENTS OF CIVIL INVESTIGATIVE DEMANDS, AND
19   CREATING    THE    STATE   FALSE  CLAIMS    ACT
20   INVESTIGATION AND PROSECUTION FUND.
21
22   Be it enacted by the General Assembly of the State of South
23   Carolina:
24
25   SECTION 1. Title 15 of the 1976 Code is amended by adding:
26
27                              “Chapter 85
28
29                    South Carolina False Claims Act
30
31     Section 15-85-10. This chapter may be cited as the ‘South
32   Carolina False Claims Act’.
33
34      Section 15-85-20. As used in this chapter, the term:
35      (1) ‘Attorney General’ means the South Carolina Attorney
36   General, any of his Assistant Attorneys General, or any employee,
37   investigator, or auditor employed by the Attorney General.
38      (2) ‘Documentary material’ includes the original or a copy of a
39   book, record, report, memorandum, paper, communication,
40   tabulation, chart, or other document, or data compilations stored in
41   or accessible through computer or other information retrieval
42   systems, together with instructions and all other materials

     [82]                             1
 1   necessary to use or interpret data compilations, and other products
 2   of discovery.
 3      (3) ‘Guard’ means the South Carolina National Guard.
 4      (4) ‘Investigation’ means an inquiry conducted by an
 5   investigator for the purpose of ascertaining whether a person is or
 6   has been engaged in a violation of this act.
 7      (5) ‘Investigator’ means a person who is charged by the
 8   Attorney General with the duty of conducting an investigation
 9   pursuant to this act, or an officer or employee of the State acting
10   pursuant to the direction and supervision of the Attorney General
11   with an investigation.
12      (6) ‘Medicaid Fraud Control Unit’ means the South Carolina
13   Medicaid Fraud Control Unit certified pursuant to federal law.
14      (7) ‘Proceeds’ of the action or settlement means the damages
15   derived from the action or settlement and shall not include fines,
16   penalties, costs, expenses, attorney’s fees, or other recoveries.
17      (8) ‘Person’ means any natural person, corporation, joint
18   venture, partnership, unincorporated association, or any other legal
19   entity.
20      (9) ‘Product of discovery’ includes:
21         (a) the original or duplicate of a deposition, interrogatory,
22   document, thing, result of the inspection of land or other property,
23   examination, or admission, which is obtained by a method of
24   discovery in a judicial or administrative proceeding of an
25   adversarial nature;
26         (b) a digest, analysis, selection, compilation, or derivation of
27   an item listed in item (a); and
28         (c) an index or other manner of access to an item listed in
29   item (a).
30      (10) ‘Relator’ means a person who brings a civil action pursuant
31   to this chapter.
32      (11) ‘State’ means the State of South Carolina.
33
34      Section 15-85-30. (A) As used in this section, the terms:
35        (1) ‘knowing’ and ‘knowingly’ mean, with respect to
36   information, that a person:
37           (a) has actual knowledge of the information;
38           (b) acts in deliberate ignorance of the truth or falsity of the
39   information; or
40           (c) acts in reckless disregard of the truth or falsity of the
41   information, and no proof of specific intent to defraud is required;
42        (2) ‘claim’ includes a request or demand, whether pursuant
43   to a contract or otherwise, for money or property which is made to

     [82]                               2
 1   a contractor, grantee, or other recipient if the State provides a
 2   portion of the money or property which is requested or demanded,
 3   or if the State will reimburse a contractor, grantee, or other
 4   recipient for a portion of the money or property which is requested
 5   or demanded.
 6      (B) Notwithstanding another provision of law, a person who:
 7        (1) knowingly presents, or causes to be presented, to an
 8   officer or employee of the State or a member of the guard a false
 9   or fraudulent claim for payment or approval;
10        (2) knowingly makes, uses, or causes to be made or used, a
11   false record or statement to get a false or fraudulent claim paid or
12   approved by the State;
13        (3) conspires to defraud the State by getting a false or
14   fraudulent claim allowed or paid;
15        (4) has possession, custody, or control of property or money
16   used, or to be used, by the State and, intending to defraud the State
17   or wilfully to conceal the property, delivers, or causes to be
18   delivered, less property than the amount for which the person
19   receives a certificate or receipt;
20        (5) is authorized to make or deliver a document certifying
21   receipt of property used, or to be used, by the State and, intending
22   to defraud the State, makes or delivers the receipt without
23   completely knowing that the information on the receipt is true;
24        (6) knowingly buys, or receives as a pledge of an obligation
25   or debt, public property from an officer or employee of the State,
26   or a member of the guard, who lawfully may not sell or pledge the
27   property; or
28        (7) knowingly makes, uses, or causes to be made or used, a
29   false record or statement to conceal, avoid, or decrease an
30   obligation to pay or transmit money or property to the State, is
31   liable to the State for a civil penalty of not less than five thousand
32   five hundred dollars and not more than eleven thousand dollars,
33   plus three times the amount of damages which the State sustains
34   because of the act of that person. A person who violates the
35   provisions of this subsection is also liable to the State for the costs
36   of a civil action brought to recover a penalty or damages.
37      (C) The provisions of this section do not apply to claims,
38   records, or statements made pursuant to the South Carolina Income
39   Tax Act.
40
41     Section 15-85-40. (A) The Attorney General shall diligently
42   investigate a civil violation pursuant to Section 15-85-30. If the
43   Attorney General finds that a person has violated or is violating the

     [82]                               3
 1   provisions of Section 15-85-30, the Attorney General may bring a
 2   civil action pursuant to this section against the person. An action
 3   brought under this section shall be filed in Richland County.
 4      (B) For an action by a private person:
 5         (1) A person may bring a civil action for a violation of
 6   Section 15-85-30 for the person and for the State. The action must
 7   be brought in the name of the State. The action may be dismissed
 8   only if the court and the Attorney General give written consent to
 9   the dismissal and their reasons for consenting. An action brought
10   under this section shall be filed in Richland County.
11         (2) A copy of the complaint and written disclosure of
12   substantially all material evidence and information the person
13   possesses must be served on the State. The complaint and all
14   attachments must be filed in camera, must remain under seal for at
15   least sixty days, and may not be served on the defendant until the
16   court orders it served. The State may elect to intervene and
17   proceed with the action within sixty days after it receives both the
18   complaint and the material evidence and information.
19         (3) The State may, for good cause shown, move the court for
20   extensions of the time during which the complaint remains under
21   seal pursuant to item (2). The motions may be supported by
22   affidavits or other submissions in camera. The defendant may not
23   be required to respond to a complaint filed pursuant to this section
24   until thirty days after the complaint is unsealed and served on the
25   defendant.
26         (4) Before the expiration of the sixty-day period or an
27   extension obtained pursuant to item (3), the State shall:
28           (a) proceed with the action, in which case the action must
29   be conducted by the State, or
30           (b) notify the court that it declines to take over the action,
31   and the person bringing the action has the right to conduct the
32   action.
33         (5) When a person brings an action pursuant to this
34   subsection, no person other than the State may intervene or bring a
35   separate, related action based on the facts underlying the pending
36   action.
37      (C) In Qui Tam actions:
38         (1) If the State proceeds with the action, it has the primary
39   responsibility for prosecuting the action, and is not bound by an act
40   of the person bringing the action. The person has the right to
41   continue as a party to the action, subject to the limitations provided
42   in item (2).


     [82]                              4
 1         (2)(a) The State may dismiss the action notwithstanding the
 2   objections of the person initiating the action if the person has been
 3   notified by the State of the filing of the motion and the court has
 4   provided the person with an opportunity for a hearing on the
 5   motion.
 6            (b) The State may settle the action with the defendant
 7   notwithstanding the objections of the person initiating the action if
 8   the court determines, after a hearing, that the proposed settlement
 9   is fair, adequate, and reasonable under all the circumstances. Upon
10   a showing of good cause, a hearing may be held in camera.
11            (c) Upon a showing by the State that unrestricted
12   participation during the course of the litigation by the person
13   initiating the action would interfere with or unduly delay the
14   state’s prosecution of the case, or would be repetitious, irrelevant,
15   or for purposes of harassment, the court may, in its discretion,
16   impose limitations on the person’s participation including, but not
17   limited to:
18               (i) limiting the number of witnesses the person may
19   call;
20               (ii) limiting the length of the testimony of the witnesses;
21               (iii) limiting the person’s cross-examination of
22   witnesses; or
23               (iv) otherwise limiting the participation by the person in
24   the litigation.
25            (d) Upon an adequate showing by the defendant that
26   unrestricted participation during the course of the litigation by the
27   person initiating the action would be for purposes of harassment or
28   would cause the defendant undue burden or unnecessary expense,
29   the court may limit the participation by the person in the litigation.
30         (3) If the State elects not to proceed with the action, the
31   person who initiated the action has the right to conduct the action.
32   If the State requests, it must be served with copies of all pleadings
33   filed in the action and must be supplied with copies of all
34   deposition transcripts at the state’s expense. When a person
35   proceeds with the action, the court, without limiting the status and
36   rights of the person initiating the action, may permit the State to
37   intervene at a later date upon a showing of good cause.
38         (4) Whether or not the State proceeds with the action, upon a
39   showing by the State that certain actions of discovery by the
40   person initiating the action would interfere with the state’s
41   investigation or prosecution of a criminal or civil matter arising out
42   of the same facts, the court may stay such discovery for a period of
43   not more than sixty days. This showing must be conducted in

     [82]                               5
 1   camera. The court may extend the sixty-day period upon a further
 2   showing in camera that the State pursued the criminal or civil
 3   investigation or proceedings with reasonable diligence and
 4   proposed discovery in the civil action will interfere with the
 5   ongoing criminal or civil investigation or proceedings.
 6         (5) Notwithstanding the provisions of subsection (B), the
 7   State may elect to pursue its claim through an alternate remedy
 8   available to the State, including an administrative proceeding to
 9   determine a civil money penalty. If an alternate remedy is pursued
10   in another proceeding, the person initiating the action has the same
11   rights in the proceeding as the person would have had if the action
12   had continued pursuant to the provisions of this section. A finding
13   of fact or conclusion of law made in another proceeding that has
14   become final is conclusive on all parties to an action pursuant to
15   the provisions of this section. A finding or conclusion is final
16   pursuant to the provisions of this section if it has been finally
17   determined on appeal to the appropriate court, if all time for filing
18   an appeal with respect to the finding or conclusion has expired, or
19   if the finding or conclusion is not subject to judicial review.
20      (D) In an award to a Qui Tam plaintiff:
21         (1) If the State proceeds with an action brought by a person
22   pursuant to subsection (B), the person shall receive at least fifteen
23   percent but not more than twenty-five percent of the proceeds of
24   the action or settlement of the claim, depending upon the extent to
25   which the person substantially contributed to the prosecution of the
26   action and subject to the limitations of this item. When the action
27   is one the court finds to be based primarily on disclosures of
28   specific information, other than information provided by the
29   person bringing the action, relating to allegations or transactions in
30   a criminal, civil, or administrative hearing, in a legislative,
31   administrative, or Legislative Audit Council’s report, hearing,
32   audit, or investigation, or from the news media the court may
33   award such sums as it considers appropriate, but in no case more
34   than fifteen percent of the proceeds, taking into account the
35   significance of the information and the role of the person bringing
36   the action in advancing the case to litigation. Payment to a person
37   pursuant to the provisions of this item must be made from the
38   proceeds. This person also shall receive an amount for reasonable
39   expenses which the court finds to have been necessarily incurred,
40   plus reasonable attorney’s fees and costs. The State also shall
41   receive an amount for reasonable expenses which the court finds to
42   have been necessarily incurred by the Attorney General, including
43   reasonable attorney’s fees and costs, which shall be paid directly to

     [82]                              6
 1   the Attorney General. All expenses, fees, and costs must be
 2   awarded against the defendant.
 3         (2) If the State does not proceed with an action pursuant to
 4   this section, the person bringing the action or settling the claim
 5   shall receive an amount which the court decides is reasonable for
 6   collecting the civil penalty and damages. The amount may not be
 7   less than twenty-five percent and not more than forty percent of the
 8   proceeds of the action or settlement and must be paid out of the
 9   proceeds. The person also shall receive an amount for reasonable
10   expenses which the court finds to have been necessarily incurred,
11   plus reasonable attorney’s fees and costs. All expenses, fees, and
12   costs must be awarded against the defendant.
13         (3) Whether or not the State proceeds with the action, if the
14   court finds that the action was brought by a person who planned
15   and initiated the violation of Section 15-85-30 upon which the
16   action was brought, then the court may, to the extent the court
17   considers appropriate, reduce the share of the proceeds of the
18   action which the person would otherwise receive pursuant to
19   subsection (D)(1) or (2), taking into account the role of that person
20   in advancing the case to litigation and relevant circumstances
21   pertaining to the violation. If the person bringing the action is
22   convicted of criminal conduct arising from his role in the violation
23   of Section 15-85-30, that person must be dismissed from the civil
24   action and shall not receive a share of the proceeds of the action.
25   A dismissal does not prejudice the right of the State or other
26   relators to continue the action.
27         (4) If the State does not proceed with the action and the
28   person bringing the action conducts the action, the court may
29   award to the defendant its reasonable attorney’s fees and expenses
30   if the defendant prevails in the action and the court finds by clear
31   and convincing evidence that the claim of the person bringing the
32   action was clearly frivolous, clearly vexatious, or brought
33   primarily for purposes of harassment.
34      (E)(1) A court does not have jurisdiction over an action brought
35   by a former or present member of the guard pursuant to subsection
36   (B) against a member of the guard arising out of the person’s
37   service in the guard.
38         (2) A court does not have jurisdiction over an action brought
39   pursuant to subsection (B) against a member of the General
40   Assembly, a member of the judiciary, or an exempt official if the
41   action is based on evidence or information known to the State
42   when the action was brought. ‘Exempt official’ means the
43   following officials in state service: directors of state agencies, the

     [82]                              7
 1   Adjutant General, the Assistant Adjutant General, members of
 2   state boards and commissions, and all other positions appointed by
 3   the Governor by and with the consent of the Senate.
 4        (3) A person may not bring an action pursuant to subsection
 5   (B) which is based upon allegations or transactions which are the
 6   subject of a civil suit or an administrative civil money penalty
 7   proceeding in which the State is already a party.
 8        (4) A court does not have jurisdiction over an action
 9   pursuant to this section based upon the public disclosure of
10   allegations or transactions in a criminal, civil, or administrative
11   hearing, in a legislative, administrative, or Legislative Audit
12   Council’s report, hearing, audit, or investigation, or from the news
13   media, unless the action is brought by the Attorney General or the
14   person bringing the action is an original source of the information.
15   ‘Original source’ means an individual who has direct and
16   independent knowledge of the information on which the
17   allegations are based and has voluntarily provided the information
18   to the State before filing an action pursuant to this section which is
19   based on the information.
20      (F) The State is not liable for expenses which a person incurs
21   in bringing an action pursuant to this section.
22      (G) An employee who is discharged, demoted, suspended,
23   threatened, harassed, or in another manner discriminated against in
24   the terms and conditions of employment by his employer because
25   of lawful acts done by the employee on behalf of the employee or
26   others in furtherance of an action pursuant to this section,
27   including investigation for, initiation of, testimony for, or
28   assistance in an action filed or to be filed pursuant to this section,
29   is entitled to all relief necessary to make the employee whole.
30   Relief includes reinstatement with the seniority status the
31   employee would have had but for the discrimination; double the
32   amounts of back pay, interest on the back pay, and compensation
33   for special damages sustained as a result of the discrimination
34   including litigation costs; and reasonable attorney’s fees. An
35   employee may bring an action in the appropriate circuit court for
36   the relief provided in this subsection.
37
38     Section 15-85-50. (A) A subpoena requiring the attendance of
39   a witness at a trial or hearing conducted pursuant to Section
40   15-85-40 may be served at any place in the State.
41     (B) A civil action pursuant to Section 15-85-40 may not be
42   brought the latter of:


     [82]                              8
 1         (1) more than ten years after the date on which the violation
 2   of Section 15-85-30 is committed; or
 3         (2) more than six years after the date when facts material to
 4   the right of action are known or reasonably should have been
 5   known by the official of the State charged with responsibility to
 6   act in the circumstances, but in no event more than fifteen years
 7   after the date on which the violation is committed.
 8      (C) In an action brought pursuant to Section 15-85-40, the State
 9   is required to prove all essential elements of the cause of action,
10   including damages, by a preponderance of the evidence.
11      (D) Notwithstanding another provision of law, a final judgment
12   rendered in favor of the State in a criminal proceeding charging
13   fraud or false statements, whether upon a verdict after trial or upon
14   a plea of guilty, estops the defendant from denying the essential
15   elements of the offense in an action which involves the same
16   transaction as in the criminal proceeding and which is brought
17   pursuant to Section 15-85-40(A) or (B).
18
19      Section 15-85-60. (A) Whenever the Attorney General has
20   reason to believe that a person may be in possession, custody, or
21   control of documentary material or information relevant to an
22   investigation, the Attorney General, before commencing a civil
23   proceeding pursuant to this chapter, may issue in writing and cause
24   to be served upon a person, a civil investigative demand requiring
25   the person to:
26        (1) produce documentary material for inspection and
27   copying;
28        (2) answer, in writing, written interrogatories with respect to
29   documentary material or information;
30        (3) give oral testimony concerning documentary material or
31   information; or
32        (4) furnish a combination of material, answers, or testimony.
33      (B) When a civil investigative demand is an express demand
34   for a product of discovery, the Attorney General shall cause to be
35   served, in a manner authorized by this section, a copy of the
36   demand upon the person from whom the discovery was obtained
37   and shall notify the person to whom the demand is issued of the
38   date on which the copy was served.
39      (C) Each civil investigative demand issued pursuant to
40   subsection (A) must state the nature of the conduct constituting an
41   alleged violation, which is under investigation, and the applicable
42   provision of law alleged to be violated.


     [82]                              9
 1      (D) If the demand is for the production of documentary
 2   material, the demand must:
 3         (1) describe each class of documentary material to be
 4   produced with such definiteness and certainty as to permit the
 5   material to be fairly identified;
 6         (2) prescribe a return date for each class which will provide
 7   a reasonable period of time within which the material demanded
 8   may be assembled and made available for inspection and copying;
 9   and
10         (3) identify the investigator to whom the material must be
11   made available.
12      (E) If the demand is for answers to written interrogatories, the
13   demand must:
14         (1) list with specificity the written interrogatories to be
15   answered;
16         (2) prescribe dates at which time answers to written
17   interrogatories must be submitted; and
18         (3) identify the investigator to whom the answers must be
19   submitted.
20      (F) If the demand is for the giving of oral testimony, the
21   demand must:
22         (1) prescribe a date, time, and place at which oral testimony
23   must be commenced;
24         (2) identify an investigator who shall conduct the
25   examination and identify the custodian to whom the transcript of
26   the examination must be submitted;
27         (3) specify that the attendance and testimony are necessary
28   to the conduct of the investigation;
29         (4) notify the person receiving the demand of the right to be
30   accompanied by an attorney and another representative; and
31         (5) describe the general purpose for which the demand is
32   being issued and the general nature of the testimony, including the
33   primary areas of inquiry, which will be taken pursuant to the
34   demand.
35      (G) A civil investigative demand issued pursuant to this section
36   which is an express demand for a product of discovery may not be
37   returned or returnable until twenty days after a copy of the demand
38   is served upon the person from whom the discovery was obtained.
39      (H) The date prescribed for the commencement of oral
40   testimony pursuant to a civil investigative demand issued pursuant
41   to this section must be a date which is not less than seven days
42   after the date on which the demand is received, unless the Attorney
43   General determines that exceptional circumstances are present

     [82]                            10
 1   which warrant the commencement of the testimony within a lesser
 2   period of time.
 3      (I) The Attorney General shall not authorize the issuance
 4   pursuant to this section of more than one civil investigative
 5   demand for oral testimony by the same person unless the person
 6   requests otherwise or unless the Attorney General, after
 7   investigation, notifies that person in writing that an additional
 8   demand for oral testimony is necessary.
 9      (J) A civil investigative demand issued under subsection (A)
10   may not require the production of documentary material, the
11   submission of answers to written interrogatories, or the giving of
12   oral testimony if the material, answers, or testimony would be
13   protected from disclosure pursuant to the standards applicable to:
14         (1) subpoenas or subpoenas duces tecum issued by a court of
15   this State to aid in grand jury investigations; or
16         (2) discovery requests pursuant to the Rules of Civil
17   Procedure, to the extent that the application of these standards to a
18   demand is appropriate and consistent with the provisions and
19   purposes of this section.
20      (K) Except as provided in this section, a demand which is an
21   express demand for a product of discovery supersedes an
22   inconsistent order, rule, or provision of law preventing or
23   restraining disclosure of a product of discovery to another person.
24   Disclosure of a product of discovery pursuant to an express
25   demand does not constitute a waiver of any right or privilege
26   which the person making the disclosure may be entitled to invoke
27   to resist discovery of trial preparation materials.
28
29      Section 15-85-70. (A)(1) A civil investigative demand issued
30   pursuant to Section 15-85-60(A) may be served by an investigator,
31   or by another person authorized to serve process on individuals
32   within South Carolina.
33        (2) A demand or petition filed pursuant to Section 15-85-120
34   may be served upon a person who is not found within South
35   Carolina in a manner as the Rules of Civil Procedure and
36   applicable statutory law prescribe for service of process outside
37   South Carolina. To the extent that the courts of this State can
38   assert jurisdiction over a person consistent with due process, the
39   courts of this State have the same jurisdiction to take an action
40   respecting compliance with this section by a person that the court
41   would have if the person were personally within the jurisdiction of
42   the court.


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 1      (B) Service of a civil investigative demand issued pursuant to
 2   Section 15-85-60 or of a petition filed pursuant to Section
 3   15-85-120 may be made upon a partnership, corporation,
 4   association, or other legal entity by:
 5         (1) delivering an executed copy of the demand or petition to
 6   a partner, executive officer, managing agent, general agent, or
 7   registered agent of the partnership, corporation, association, or
 8   entity;
 9         (2) delivering an executed copy of the demand or petition to
10   the principal office or place of business of the partnership,
11   corporation, association, or entity; or
12         (3) depositing an executed copy of the demand or petition in
13   the United States mail by registered or certified mail, with a return
14   receipt requested, addressed to the partnership, corporation,
15   association, or entity at its principal office or place of business.
16      (C) Service of a demand or petition pursuant to Section
17   15-85-60, or filed pursuant to Section 15-85-120, may be made on
18   a natural person by:
19         (1) delivering an executed copy of the demand or petition to
20   the person; or
21         (2) depositing an executed copy of the demand or petition in
22   the United States mail by registered or certified mail, with a return
23   receipt requested, addressed to the person at the person’s residence
24   or principal office or place of business.
25      (D) A verified return by the individual serving a civil
26   investigative demand issued pursuant to Section 15-85-60 or a
27   petition filed pursuant to Section 15-85-120 providing the manner
28   of service is proof of service. In the case of service by registered
29   or certified mail, the return is accompanied by the return post
30   office receipt of delivery of the demand.
31
32      Section 15-85-80. (A) The production of documentary
33   material in response to a civil investigative demand served
34   pursuant to Section 15-85-60 must be made under a sworn
35   certificate, in a form as the demand designates, by:
36         (1) the person to whom the demand is directed in the case of
37   a natural person; or
38         (2) a person having knowledge of the facts and
39   circumstances relating to the production and authorized to act on
40   behalf of the person, in the case of a person other than a natural
41   person.
42      (B) The certificate must state that all of the documentary
43   material required by the demand and in the possession, custody, or

     [82]                             12
 1   control of the person to whom the demand is directed has been
 2   produced and made available to the investigator identified in the
 3   demand.
 4      (C) A person upon whom a civil investigative demand for the
 5   production of documentary material has been served pursuant to
 6   Section 15-85-60 shall make the material available for inspection
 7   and copying to the investigator identified in the demand at the
 8   principal place of business of the person, or at another place as the
 9   investigator and the person may agree and prescribe in writing, or
10   as the court may direct pursuant to Section 15-85-120(A). The
11   material must be made available on the return date specified in the
12   demand, or on a later date as the investigator may prescribe in
13   writing. The person, upon written agreement between the person
14   and the investigator, may substitute copies for originals of all or
15   any part of the material.
16
17      Section 15-85-90. (A) Each interrogatory in a civil
18   investigative demand served pursuant to Section 15-85-60 must be
19   answered separately and fully in writing under oath and must be
20   submitted under a sworn certificate, in a form as the demand
21   designates by:
22        (1) the person to whom the demand is directed in the case of
23   a natural person; or
24        (2) the person or persons responsible for answering each
25   interrogatory, in the case of a person other than a natural person.
26      (B) If an interrogatory is objected to, the reasons for the
27   objection must be stated in the certificate instead of an answer.
28   The certificate must state that all information required by the
29   demand and in the possession, custody, control, or knowledge of
30   the person to whom the demand is directed has been submitted.
31   To the extent that information is not furnished, the information
32   must be identified and reasons provided with particularity
33   regarding the reasons why the information was not furnished.
34
35      Section 15-85-100. (A) The examination of a person pursuant to
36   a civil investigative demand for oral testimony served pursuant to
37   Section 15-85-60 must be taken before an officer authorized to
38   administer oaths and affirmations by the laws of the State or of the
39   place where the examination is held. The officer before whom the
40   testimony is to be taken shall put the witness under oath or
41   affirmation and, personally or by someone acting under the
42   direction of the officer and in the officer’s presence, shall record
43   the testimony of the witness. The testimony must be taken

     [82]                             13
 1   stenographically and must be transcribed. When the testimony is
 2   fully transcribed, the officer before whom the testimony is taken
 3   shall promptly transmit a copy of the transcript of the testimony to
 4   the custodian. This subsection does not preclude the taking of
 5   testimony by another means authorized by, and in a manner
 6   consistent with, the Rules of Civil Procedure or other applicable
 7   statutory law.
 8      (B) The investigator conducting the examination shall exclude
 9   from the place where the examination is held all persons except the
10   person giving the testimony, the attorney for and another
11   representative of the person giving the testimony, the attorney for
12   the State, a person who may be agreed upon by the attorney for the
13   State, and the person giving the testimony, the officer before
14   whom the testimony is to be taken, and a stenographer taking the
15   testimony.
16      (C) The oral testimony of a person taken pursuant to a civil
17   investigative demand served pursuant to Section 15-85-60 must be
18   taken in the county within which the person resides, is found, or
19   transacts business, or in another place as may be agreed upon by
20   the investigator conducting the examination and the person.
21      (D) When the testimony is fully transcribed, the investigator or
22   the officer before whom the testimony is taken shall afford the
23   witness, who may be accompanied by counsel, a reasonable
24   opportunity to examine and read the transcript, unless the
25   examination and reading are waived by the witness. Changes in
26   form or substance which the witness desires to make must be
27   entered and identified upon the transcript by the officer or the
28   investigator, with a statement of the reasons given by the witness
29   for making the changes. The transcript must then be signed by the
30   witness, unless the witness in writing waives the signing, is ill,
31   cannot be found, or refuses to sign. If the transcript is not signed
32   by the witness within thirty days after being afforded a reasonable
33   opportunity to examine it, the officer or investigator shall sign it
34   and state on the record the fact of the waiver, illness, absence of
35   the witness, or the refusal to sign, together with the reasons given.
36      (E) The officer before whom the testimony is taken shall certify
37   on the transcript that the witness was sworn by the officer and that
38   the transcript is a true record of the testimony given by the witness,
39   and the officer or investigator shall promptly deliver the transcript,
40   or send the transcript by registered or certified mail, to the
41   custodian.
42      (F) Upon payment of reasonable charges, the investigator shall
43   furnish a copy of the transcript to the witness only, except that the

     [82]                              14
 1   Attorney General may, for good cause, limit the witness to
 2   inspection of the official transcript of his testimony.
 3      (G) A person compelled to appear for oral testimony pursuant
 4   to a civil investigative demand issued pursuant to Section 15-85-60
 5   may be accompanied, represented, and advised by counsel.
 6   Counsel may advise the person, in confidence, with respect to a
 7   question asked of the person. The person or counsel may object on
 8   the record to a question, in whole or in part, and shall briefly state
 9   for the record the reason for the objection. An objection may be
10   made, received, and entered upon the record when it is claimed
11   that the person is entitled to refuse to answer the question on the
12   grounds of a constitutional or other legal right or privilege,
13   including the privilege against self-incrimination. If the person
14   refuses to answer a question, a petition may be filed in circuit court
15   pursuant to Section 15-85-120(A) for an order compelling the
16   person to answer the question.
17      (H) A person appearing for oral testimony pursuant to a civil
18   investigative demand issued pursuant to Section 15-85-60 is
19   entitled to the same fees and allowances which are paid to
20   witnesses in the circuit court.
21
22      Section 15-85-110. (A) The Attorney General shall serve as
23   custodian of documentary material, answers to interrogatories, and
24   transcripts of oral testimony received pursuant to this chapter.
25      (B) Except as otherwise provided in this section, no
26   documentary material, answers to interrogatories, or transcripts of
27   oral testimony, or copies of these, while in the possession of the
28   custodian, are available for examination. The prohibition on the
29   availability of material, answers, or transcripts does not apply if
30   consent is given by the person who produced the material,
31   answers, or transcripts, or, in the case of a product of discovery
32   produced pursuant to an express demand for the material, consent
33   is given by the person from whom the discovery was obtained.
34   Nothing in this subsection is intended to prevent disclosure to, at
35   the discretion of the Attorney General, the General Assembly,
36   including a committee or subcommittee of the General Assembly,
37   or to another state agency for use by an agency in furtherance of its
38   statutory responsibilities, or to another state Attorney General, or
39   to a federal investigative entity, or to an appropriate investigative
40   entity of another state. Disclosure of information to another entity
41   is allowed only upon application, made by the Attorney General to
42   a circuit court, showing substantial need for the use of the


     [82]                              15
 1   information by the agency in furtherance of its statutory
 2   responsibilities.
 3      (C) While in the possession of the Attorney General and under
 4   reasonable terms and conditions as the Attorney General shall
 5   prescribe:
 6         (1) documentary material and answers to interrogatories
 7   must be available for examination by the person who produced the
 8   material or answers, or by a representative for that person
 9   authorized by that person to examine the material and answers; and
10         (2) transcripts of oral testimony must be available for
11   examination by the person who produced the testimony, or by a
12   representative of that person authorized by that person to examine
13   the transcripts.
14
15      Section 15-85-120. (A) When a person fails to comply with a
16   civil investigative demand issued pursuant to Section 15-85-60, or
17   whenever satisfactory copying or reproduction of material
18   requested in the demand cannot be done and the person refuses to
19   surrender the material, the Attorney General may file, in the circuit
20   court of a county in which the person resides, is found, or transacts
21   business, and serve upon the person a petition for an order of the
22   court for the enforcement of the civil investigative demand.
23      (B) A person who has received a civil investigative demand
24   issued pursuant to Section 15-85-60 may file, in the circuit court of
25   a county within which the person resides, is found, or transacts
26   business, and serve upon the investigator identified in the demand
27   a petition for an order of the court to modify or set aside the
28   demand. In the case of a petition addressed to an express demand
29   for a product of discovery, a petition to modify or set aside the
30   demand may be brought only in the circuit court of the county in
31   which the proceeding in which discovery was obtained or was last
32   pending. A petition pursuant to this subsection must be filed
33   within:
34         (1) twenty days after the date of service of the civil
35   investigative demand, or at a time before the return date specified
36   in the demand, whichever date is earlier; or
37         (2) a longer period as may be prescribed in writing by an
38   investigator identified in the demand.
39      (C) The petition must specify each ground upon which the
40   petitioner relies in seeking relief pursuant to subsection (B) and
41   may be based upon failure of the demand to comply with the
42   provisions of this chapter or upon a constitutional or other legal
43   right or privilege of the person. During the pendency of the

     [82]                             16
 1   petition in the court, the court may stay, as it deems proper, the
 2   running of the time allowed for compliance with the demand, in
 3   whole or in part, except that the person filing the petition shall
 4   comply with the portion of the demand not sought to be modified
 5   or set aside.
 6      (D) In the case of a civil investigative demand issued pursuant
 7   to Section 15-85-60 which is an express demand for a product of
 8   discovery, the person from whom discovery was obtained may file,
 9   in the circuit court of the county in which the proceeding in which
10   discovery was obtained or was last pending, and serve upon an
11   investigator identified in the demand and upon the recipient of the
12   demand, a petition for an order of the court to modify or set aside
13   those portions of the demand requiring production of a product of
14   discovery. A petition pursuant to this subsection must be filed
15   within:
16         (1) twenty days after the date of service of the civil
17   investigative demand, or at a time before the return date specified
18   in the demand, whichever date is earlier; or
19         (2) a longer period as may be prescribed in writing by an
20   investigator identified in the demand.
21      (E) The petition shall specify each ground upon which the
22   petitioner relies in seeking relief upon subsection (D) and may be
23   based upon failure of the portions of the demand from which relief
24   is sought to comply with the provisions of this section or upon a
25   constitutional or other legal right or privilege of the petitioner.
26   During the pendency of the petition, the court may stay, as it
27   deems proper, compliance with the demand and the running of the
28   time allowed from compliance with the demand.
29      (F) At a time during which a custodian is in custody or control
30   of documentary material or answers to interrogatories produced, or
31   transcripts of oral testimony given, by a person in compliance with
32   a civil investigative demand issued pursuant to Section 15-85-60,
33   the person, and in the case of an express demand for a product of
34   discovery, the person from whom discovery was obtained, may
35   file, in the circuit court of the county within which the office of the
36   custodian is situated, and serve upon such custodian, a petition for
37   an order of the court to require the performance by the custodian of
38   a duty imposed upon the custodian by this chapter.
39      (G) When a petition is filed in a circuit court pursuant to this
40   section, the court has jurisdiction to hear and determine the matter
41   so presented, and to enter orders as may be required to carry out
42   the provisions of this section. A final order entered is subject to
43   appeal in the same manner as appeals of other final orders in civil

     [82]                              17
 1   matters. A disobedience of a final order entered pursuant to this
 2   section by a court is punished as a contempt of the court.
 3      (H) Documentary material, answers to written interrogatories,
 4   or oral testimony provided pursuant to a civil investigative demand
 5   issued pursuant to Section 15-85-60 is exempt from disclosure
 6   under the South Carolina Administrative Procedures Act.
 7
 8      Section 15-85-130. (A) There is created the State False Claims
 9   Act Investigation and Prosecution Fund as a special fund in the
10   State Treasurer’s Office. All proceeds of an action or settlement of
11   a claim brought pursuant to this chapter must be deposited in the
12   fund.
13      (B) Monies in the fund must be allocated as follows:
14        (1) twenty-five percent of the monies must be paid to the
15   Attorney General; and
16        (2) the remaining seventy-five percent of the monies in the
17   fund must be used for payment of awards, calculated on the full
18   amount, to Qui Tam plaintiffs and as otherwise specified in this
19   chapter.
20      (C) The Attorney General shall direct the State Treasurer to
21   make disbursement of funds as provided in court orders setting
22   those awards, fees, and expenses. The State Treasurer shall
23   transfer fund balances in excess of those required for these
24   purposes to the General Revenue Fund; provided, however, fund
25   balances related to the South Carolina Medicaid Program shall be
26   transferred to the Department of Health and Human Services.
27
28     Section 15-85-140. The Rules of Civil Procedure apply to all
29   proceedings pursuant to this chapter, except when inconsistent
30   with the provisions of this chapter.”
31
32   SECTION 2. The repeal or amendment by this act of any law,
33   whether temporary or permanent or civil or criminal, does not
34   affect pending actions, rights, duties, or liabilities founded thereon,
35   or alter, discharge, release or extinguish any penalty, forfeiture, or
36   liability incurred under the repealed or amended law, unless the
37   repealed or amended provision shall so expressly provide. After
38   the effective date of this act, all laws repealed or amended by this
39   act must be taken and treated as remaining in full force and effect
40   for the purpose of sustaining any pending or vested right, civil
41   action, special proceeding, criminal prosecution, or appeal existing
42   as of the effective date of this act, and for the enforcement of


     [82]                              18
 1   rights, duties, penalties, forfeitures, and liabilities as they stood
 2   under the repealed or amended laws.
 3
 4   SECTION 3. If any section, subsection, item, subitem, paragraph,
 5   subparagraph, sentence, clause, phrase, or word of this act is for
 6   any reason held to be unconstitutional or invalid, such holding
 7   shall not affect the constitutionality or validity of the remaining
 8   portions of this act, the General Assembly hereby declaring that it
 9   would have passed this act, and each and every section, subsection,
10   item, subitem, paragraph, subparagraph, sentence, clause, phrase,
11   and word thereof, irrespective of the fact that any one or more
12   other sections, subsections, items, subitems, paragraphs,
13   subparagraphs, sentences, clauses, phrases, or words hereof may
14   be declared to be unconstitutional, invalid, or otherwise
15   ineffective.
16
17   SECTION 4. This act takes effect upon approval by the
18   Governor.
19                         ----XX----
20




     [82]                             19

				
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