Whistleblower Litigation

Iowa False Claims Act

IOWA FALSE CLAIMS ACT
(§§ 685.1—685.7)

          § 685.1        Definitions.

                              1.    “Claim” means any request or demand, whether pursuant to a contract or otherwise, for money or property and whether the state has title to the money or property, which is presented to an officer, employee, agent, or other representative of the state or to a contractor, grantee, or other person if the money or property is to be spent or used on the state’s behalf or to advance a state program or interest, and if the state provides any portion of the money or property which is requested or demanded, or if the state will reimburse directly or indirectly such contractor, grantee, or other person for any portion of the money or property which is requested or demanded. “Claim” does not include any requests or demands for money or property that the state has paid to an individual as compensation for state employment or as an income subsidy with no restrictions on that individual’s use of the money or property.

                              2.    “Custodian” means the custodian, or any deputy custodian, designated by the attorney general under section 685.6.

                              3.    “Documentary material” includes the original or any copy of any book, record, report, memorandum, paper, communication, tabulation, chart, or other document, or data compilations stored in or accessible through computer or other information retrieval systems, together with instructions and all other materials necessary to use or interpret such data compilations, and any product of discovery.

                              4.   “False claims law” means this chapter.

                              5.   “False claims law investigation” means any inquiry conducted by a false claims law investigator for the purpose of ascertaining whether any person is or has been engaged in any violation of a false claims law.

                              6.    “False claims law investigator” means any attorney or investigator employed by the department of justice who is charged with the duty of enforcing or carrying into effect any false claims law, or any officer or employee of the state acting under the direction and supervision of such attorney or investigator in connection with a false claims law investigation.

                              7.      a.   “Knowing” or “knowingly” means that a person with respect to information, does any of the following:

                                                  (1)    Has actual knowledge of the information.

                                                  (2)    Acts in deliberate ignorance of the truth or falsity of the information.

                                                  (3)    Acts in reckless disregard of the truth or falsity of the information.

                                        b.   “Knowing” or “knowingly” does not require proof of specific intent to defraud.

                              8.   “Material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.

                              9.    “Obligation” means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.

                              10.   “Official use” means any use that is consistent with the law, and the regulations and policies of the department of justice, including use, in connection with internal department of justice memoranda and reports; communications between the department of justice and a federal, state, or local government agency or a contractor of a federal, state, or local government agency, undertaken in furtherance of a department of justice investigation or prosecution of a case; interviews of any qui tam plaintiff or other witness; oral examinations; depositions; preparation for and response to civil discovery requests; introduction into the record of a case or proceeding; applications, motions, memoranda and briefs submitted to a court or other tribunal; and communications with government investigators, auditors, consultants and experts, the counsel of other parties, and arbitrators and mediators, concerning an investigation, case, or proceeding.

                              11.    “Original source” means an individual who prior to a public disclosure under section 685.3, subsection 5, paragraph “c,” has voluntarily disclosed to the state the information on which the allegations or transactions in a claim are based; or who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and has voluntarily provided the information to the state before filing an action under this chapter.

                              12.    “Person” means any natural person, partnership, corporation, association, or other legal entity, including any state or political subdivision of the state.

                              13.    “Product of discovery” includes all of the following:

                                        a.   The original or duplicate of any deposition, interrogatory, document, thing, result of the inspection of land or other property, examination, or admission, which is obtained by any method of discovery in any judicial or administrative proceeding of an adversarial nature.

                                        b.   Any digest, analysis, selection, compilation, or derivation of any item listed in paragraph “a.”

                                        c.    Any index or other manner of access to any item listed in paragraph “a.”
   
                              14.    “Qui tam plaintiff” means a private plaintiff who brings an action under this chapter on behalf of the state.

                              15.    “State” means the state of Iowa.

          § 685.2        Acts subjecting person to treble damages, costs, and civil penalties—exceptions.

                              1.    A person who commits any of the following acts is liable to the state for a civil penalty of not less than and not more than the civil penalty allowed under the federal False Claims Act, as codified in 31 U.S.C. § 3729, et seq., as may be adjusted in accordance with the inflation adjustment procedures prescribed in the federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, for each false or fraudulent claim, plus three times the amount of damages which the state sustains:

                                        a.    Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.

                                        b.    Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.

                                        c.    Conspires to commit a violation of paragraph “a,” “b,” “c,” “d,” “e,” “f,” or “g.”

                                        d.    Has possession, custody, or control of property or money used, or to be used, by the state and knowingly delivers, or causes to be delivered, less than all of that money or property.

                                        e.    Is authorized to make or deliver a document certifying receipt of property used, or to be used, by the state and, intending to defraud the state, makes or delivers the receipt without completely knowing that the information on the receipt is true.

                                        f.    Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the state, or a member of the Iowa national guard, who lawfully may not sell or pledge property.

                                        g.    Knowingly makes, 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 knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state.

                              2.    Notwithstanding subsection 1, the court may assess not less than two times the amount of damages which the state sustains because of the act of the person described in subsection 1, if the court finds all of the following:

                                        a.   The person committing the violation furnished officials of the state responsible for investigating false claims violations with all information known to such person about the violation within thirty days after the date on which the person first obtained the information.

                                        b.    The person fully cooperated with the state investigation of such violation.

                                        c.    At the time the person furnished the state with the information about the violation, a criminal prosecution, civil action, or administrative action had not commenced under this chapter with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation.

                              3.    A person violating this section shall also be liable to the state for the costs of a civil action brought to recover any such penalty or damages.

                              4.    Any information furnished pursuant to subsection 2 is deemed confidential information exempt from disclosure pursuant to chapter 22.

                              5.    This section shall not apply to claims, records, or statements made under Title X relating to state revenue and taxation.

          § 685.3        Investigations and prosecutions—powers of prosecuting authority—civil actions by individuals as qui tam plaintiffs and as private citizens—jurisdiction of courts.

                              1.    The attorney general shall diligently investigate a violation under section 685.2. If the attorney general finds that a person has violated or is violating section 685.2, the attorney general may bring a civil action under this section against that person.

                              2.       a.    A person may bring a civil action for a violation of this chapter for the person and for the state, in the name of the state. The person bringing the action shall be referred to as the qui tam plaintiff. Once filed, the action may be dismissed only if the court and the attorney general provide written consent to the dismissal and the reasons for such consent.

                                        b.    A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the attorney general pursuant to the Iowa rules of civil procedure. The complaint shall also be filed in camera, shall remain under seal for at least sixty days, and shall not be served on the defendant until the court so orders. The state may elect to intervene and proceed with the action within sixty days after the state receives both the complaint and the material evidence and the information.

                                        c.    The state may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal under paragraph "b". Any such motions may be supported by affidavits or other submissions in camera. The defendant shall not be required to respond to any complaint filed under this section until twenty days after the complaint is unsealed and served upon the defendant pursuant to rule 1.302 of the Iowa rules of civil procedure.

                                        d.    Before the expiration of the sixty-day period or any extensions obtained under paragraph “c,” the state shall do one of the following:

                                                  (1)    Proceed with the action, in which case the action shall be conducted by the state.

                                                  (2)    Notify the court that the state declines to take over the action, in which case the qui tam plaintiff shall have the right to conduct the action.

                                        e.    When a person brings an action under this section, no person other than the state may intervene or bring a related action based on the facts underlying the pending action.

                              3.       a.   If the state proceeds with the action, the state shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the qui tam plaintiff. Such qui tam plaintiff shall have the right to continue as a party to the action, subject to the limitations specified in paragraph "b".

                                        b.       (1)    The state may move to dismiss the action, notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff has been notified by the state of the filing of the motion and the court has provided the qui tam plaintiff with an opportunity for a hearing on the motion.

                                                  (2)    The state may settle the action with the defendant notwithstanding the objections of the qui tam plaintiff if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all of the circumstances. Upon a showing of good cause, such hearing may be held in camera.

                                                  (3)    Upon a showing by the state that unrestricted participation during the course of the litigation by the qui tam plaintiff would interfere with or unduly delay the state’s prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations on the qui tam plaintiff’s participation, including but not limited to any of the following:

                                                  (a)    Limiting the number of witnesses the qui tam plaintiff may call.

                                                  (b)    Limiting the length of the testimony of such witnesses.

                                                  (c)    Limiting the qui tam plaintiff’s cross-examination of witnesses.

                                                  (d)   Otherwise limiting the participation by the qui tam plaintiff in the litigation.

                                                  (4)   Upon a showing by the defendant that unrestricted participation during the course of the litigation by the qui tam plaintiff would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the qui tam plaintiff in the litigation.

                                        c.    If the state elects not to proceed with the action, the qui tam plaintiff shall have the right to conduct the action. If the state so requests, the state shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts at the state’s expense. When a qui tam plaintiff proceeds with the action, the court, without limiting the status and rights of the qui tam plaintiff, may permit the state to intervene at a later date upon a showing of good cause.

                                        d.    Whether or not the state proceeds with the action, upon a showing by the state that certain actions of discovery by the qui tam plaintiff would interfere with the state’s investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery for a period of not more than sixty days. Such a showing shall be conducted in camera. The court may extend the sixty-day period upon a further showing in camera that the state has pursued the criminal or civil investigation or proceedings with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.

                                        e.    Notwithstanding subsection 2, the state may elect to pursue the state’s claim through any alternate remedy available to the state, including any administrative proceeding to determine a civil penalty. If any such alternate remedy is pursued in another proceeding, the qui tam plaintiff shall have the same rights in such proceeding as such qui tam plaintiff would have had if the action had continued under this section. Any finding of fact or conclusion of law made in such other proceeding that has become final, shall be conclusive as to all such parties to an action under this section. For purposes of this paragraph, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of the state, if all time for filing such an appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.

                              4.       a.    (1)   If the state proceeds with an action brought by a qui tam plaintiff under subsection 2, the qui tam plaintiff shall, subject to subparagraph (2), receive at least fifteen percent but not more than twenty-five percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the qui tam plaintiff substantially contributed to the prosecution of the action.

                                                  (2)   If the action is one which the court finds to be based primarily on disclosures of specific information, other than information provided by the qui tam plaintiff, relating to allegations or transactions in a criminal, civil, or administrative hearing, or in a legislative, administrative or state auditor report, hearing, audit, or investigation, or from the news media, the court may award an amount the court considers appropriate, but in no case more than ten percent of the proceeds, taking into account the significance of the information and the role of the qui tam plaintiff in advancing the case to litigation.

                                                  (3)   Any payment to a qui tam plaintiff under subparagraph (1) or (2) shall be made from the proceeds. Any such qui tam plaintiff shall also receive an amount for reasonable expenses which the appropriate court finds to have been necessarily incurred, plus reasonable attorney fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

                                        b.    If the state does not proceed with an action under this section, the qui tam plaintiff or person settling the claim shall receive an amount which the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than twenty-five percent and not more than thirty percent of the proceeds of the action or settlement and shall be paid out of such proceeds. Such qui tam plaintiff or person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorney fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

                                        c.    Whether or not the state proceeds with the action, if the court finds that the action was brought by a qui tam plaintiff who planned and initiated the violation of section 685.2 upon which the action was brought, the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action which the qui tam plaintiff would otherwise receive under paragraph "a" or "b", taking into account the role of that qui tam plaintiff in advancing the case to litigation and any relevant circumstances pertaining to the violation. If the qui tam plaintiff is convicted of criminal conduct arising from the qui tam plaintiff’s role in the violation of section 685.2, the qui tam plaintiff shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the state to continue the action represented by the attorney general.

                                        d.   If the state does not proceed with the action and the qui tam plaintiff conducts the action, the court may award to the defendant reasonable attorney fees and expenses if the defendant prevails in the action and the court finds that the claim of the qui tam plaintiff was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

                              5.       a.    A court shall not have jurisdiction over an action brought by a former or present member of the Iowa national guard under this chapter against a member of the Iowa national guard arising out of such person’s services in the Iowa national guard.

                                        b.   A qui tam plaintiff shall not bring an action under subsection 2 which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil penalty proceeding in which the state is already a party.

                                        c.    A court shall dismiss an action or claim under this section, unless opposed by the state, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed in a state criminal, civil, or administrative hearing in which the state or an agent of the state is a party; in a state legislative, state auditor, or other state report, hearing, audit, or investigation; or by the news media, unless the action is brought by the attorney general or the qui tam plaintiff is an original source of the information.

                                        d.    The state is not liable for expenses which a person incurs in bringing an action under this section.

                              6.    Any employee, contractor, or agent who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts performed by the employee, contractor, or agent on behalf of the employee, contractor, or agent or associated others in furtherance of other efforts to stop a violation of this chapter, shall be entitled to all relief necessary to make the employee, contractor, or agent whole. Such relief shall include reinstatement with the same seniority status such employee, contractor, or agent would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney fees. An employee, contractor, or agent may bring an action in the appropriate district court of the state for the relief provided in this subsection.

          § 685.4        Procedure — statute of limitations.

                              1.    A subpoena requiring the attendance of a witness at a trial or hearing conducted under this chapter may be served at any place in the state, or through any means authorized in the Iowa rules of civil procedure.

                              2.    A civil action under this chapter may not be brought more than six years after the date on which the violation of section 685.2 is committed, or more than three years after the date when facts material to the right of action are known or reasonably should have been known by the official of state charged with responsibility to act in the circumstances, but in no event more than ten years after the date on which the violation is committed, whichever occurs last.

                              3.    If the state elects to intervene and proceed with an action brought under this chapter, the state may file its own complaint or amend the complaint of a qui tam plaintiff to clarify or add detail to the claims in which the state is intervening and to add any additional claims with respect to which the state contends it is entitled to relief. For statute of limitations purposes, any such state pleading shall relate back to the filing date of the complaint of the qui tam plaintiff who originally brought the action, to the extent that the claim of the state arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of that person.

                              4.    In any action brought under section 685.3, the state shall prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.

                              5.    Notwithstanding any other provision of law, the Iowa rules of criminal procedure, or the Iowa rules of evidence, a final judgment rendered in favor of the state in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under section 685.3.

          § 685.5        Jurisdiction.

                              1.    Any action under section 685.3 may be brought in any county in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by section 685.2 occurred. An original notice as required by the Iowa rules of civil procedure shall be issued by the appropriate district court and served in accordance with the Iowa rules of civil procedure.

                              2.    A seal on the action ordered by the court under section 685.3 shall not preclude the state, local government, or the qui tam plaintiff from serving the complaint, any other pleadings, or the written disclosure of substantially all material evidence and information possessed by the qui tam plaintiff on the law enforcement authorities that are authorized under the law of the state or local government to investigate and prosecute such actions on behalf of such governments, except that such seal applies to the law enforcement authorities so served to the same extent as the seal applies to other parties in the action.

          § 685.6        Civil investigative demands.

                              1.   Issuance and service.

a.    If the attorney general, or a designee, for the purposes of this section, has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation, the attorney general, or a designee, may, before commencing a civil proceeding under section 685.3, subsection 1, or other false claims law, or making an election under section 685.3, subsection 2, issue in writing and cause to be served upon such person, a civil investigative demand requiring any of the following of such person:

                                                  (1)    To produce such documentary material for inspection and copying.

                                                  (2)    To answer in writing, written interrogatories with respect to such documentary material or information.

                                                  (3)    To give oral testimony concerning such documentary material or information.

                                                  (4)   To furnish any combination of such material, answers, or testimony.

b.    The attorney general may delegate the authority to issue civil investigative demands under this subsection. If a civil investigative demand is an express demand for any product of discovery, the attorney general, a deputy attorney general, or an assistant attorney general shall cause to be served, in any manner authorized by this section, a copy of such demand upon the person from whom the discovery was obtained and shall notify the person to whom such demand is issued of the date on which such copy was served. Any information obtained by the attorney general or a designee of the attorney general under this section may be shared with any qui tam plaintiff if the attorney general or designee determines it is necessary as part of any false claims law investigation.

                              2.    Contents and deadlines.

                                        a.    Each civil investigative demand issued under subsection 1 shall state the nature of the conduct constituting the alleged violation of a false claims law which is under investigation, and the applicable provision of law alleged to be violated.

                                        b.   If such demand is for the production of documentary material, the demand shall provide all of the following:

                                                  (1)   Describe each class of documentary material to be produced with such definiteness and certainty as to permit such material to be fairly identified.

                                                  (2)    Prescribe a return date for each such class which will provide a reasonable period of time within which the material so demanded may be assembled and made available for inspection and copying.

                                                  (3)   Identify the false claims law investigator to whom such material shall be made available.

                                        c.   If such demand is for answers to written interrogatories, the demand shall provide for all of the following:

                                                  (1)    Set forth with specificity the written interrogatories to be answered.

                                                  (2)    Prescribe dates at which time answers to written interrogatories shall be submitted.

                                                  (3)    Identify the false claims law investigator to whom such answers shall be submitted.

                                        d.   If such demand is for the giving of oral testimony, the demand shall provide for all of the following:

                                                  (1)    Prescribe a date, time, and place at which oral testimony shall be commenced.

                                                  (2)   Identify a false claims law investigator who shall conduct the examination and the custodian to whom the transcript of such examination shall be submitted.

                                                  (3)    Specify that such attendance and testimony are necessary to the conduct of the investigation.

                                                  (4)    Notify the person receiving the demand of the right to be accompanied by an attorney and any other representative.

                                                  (5)    Describe the general purpose for which the demand is being issued and the general nature of the testimony, including the primary areas of inquiry, which will be taken pursuant to the demand.

                                        e.    Any civil investigative demand issued under this section which is an express demand for any product of discovery shall not be returned or returnable until twenty days after a copy of such demand has been served upon the person from whom the discovery was obtained.

                                        f.    The date prescribed for the commencement of oral testimony pursuant to a civil investigative demand issued under this section shall be a date which is not less than seven days after the date on which demand is received, unless the attorney general or an assistant attorney general designated by the attorney general determines that exceptional circumstances are present which warrant the commencement of such testimony within a lesser period of time.

                                        g.    The attorney general shall not authorize the issuance under this section of more than one civil investigative demand for oral testimony by the same person, unless the person requests otherwise or unless the attorney general, after investigation, notifies that person in writing that an additional demand for oral testimony is necessary.

                              3. Protected material or information.

                                        a.    A civil investigative demand issued under subsection 1 shall not require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony if such material, answers, or testimony would be protected from disclosure under any of the following:

                                                  (1)   The standards applicable to subpoenas or subpoenas duces tecum issued by a court of the state to aid in a grand jury investigation.

                                                  (2)    The standards applicable to discovery requests under the Iowa rules of civil procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this section.

                                        b.    Any such demand which is an express demand for any product of discovery supersedes any inconsistent order, rule, or provision of law, other than this section, preventing or restraining disclosure of such product of discovery to any person. Disclosure of any product of discovery pursuant to any such express demand does not constitute a waiver of any right or privilege which the person making such disclosure may be entitled to invoke to resist discovery of trial preparation materials.

                              4.    Service.

                                        a.   Any civil investigative demand issued under subsection 1 may be served by a false claims law investigator, or by any official authorized to issue civil investigative demands.

                                        b.    Service of any civil investigative demand issued under subsection 1 or of any petition filed under subsection 9 may be made upon a partnership, corporation, association, or other legal entity by any of the following methods:

                                                  (1)    Delivering an executed copy of such demand or petition to any partner, executive officer, managing agent, or general agent of the partnership, corporation, association, or entity, or to any agent authorized by appointment or by law to receive service of process on behalf of such partnership, corporation, association, or entity.

                                                  (2)    Delivering an executed copy of such demand or petition to the principal office or place of business of the partnership, corporation, association, or entity.

                                                  (3)    Depositing an executed copy of such demand or petition in the United States mails by registered or certified mail, with a return receipt requested, addressed to such partnership, corporation, association, or entity at its principal office or place of business.

                                        c.    Service of any such demand or petition may be made upon any natural person by any of the following methods:

                                                  (1)    Delivering an executed copy of such demand or petition to the person.

                                                  (2)    Depositing an executed copy of such demand or petition in the United States mails by registered or certified mail, with a return receipt requested, addressed to the person at the person’s residence or principal office or place of business.

                                        d.    A verified return by the individual serving any civil investigative demand issued under subsection 1 or any petition filed under subsection 9 setting forth the manner of such service shall be proof of such service. In the case of service by registered or certified mail, such return shall be accompanied by the return post office receipt of delivery of such demand.

                              5.    Documentary material.

                                        a.    The production of documentary material in response to a civil investigative demand served under this section shall be made under a sworn certificate, in such form as the demand designates, by the following persons, as applicable:

                                                  (1)    In the case of a natural person, the person to whom the demand is directed.

                                                  (2)   In the case of a person other than a natural person, a person having knowledge of the facts and circumstances relating to such production and authorized to act on behalf of such person.

                                        b.   The certificate shall state that all of the documentary material required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been produced and made available to the false claims law investigator identified in the demand.

                                        c.    Any person upon whom any civil investigative demand for the production of documentary material has been served under this section shall make such material available for inspection and copying to the false claims law investigator identified in such demand<