BILL ANALYSIS
AB 2512
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Date of Hearing: April 23, 1996
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Brooks Firestone, Chair
AB 2512 (Speier) - As Amended: April 8, 1996
SUBJECT: False Claims Actions: University of California
SUMMARY: Authorizes the University of California to prosecute fraud under the
provisions of the California False Claims Act. Specifically, this bill:
1) Defines the University of California (UC) as a political subdivision under
the California False Claims Act (CFCA).
2) Authorizes the General Counsel of UC to intervene in an action brought by
the Attorney General or investigate and bring action, as a prosecuting
authority under the provisions of the CFCA Act, if the claims involve UC
funds.
FISCAL EFFECT: Unknown
EXISTING LAW:
1) Authorizes the Attorney General to investigate, and bring a civil action
for, false claims made against the state or a political subdivision
(defined as the county counsel, city attorney or other authorities charged
with conducting civil actions for the political subdivision) if any
portion of the money, property, or services issued from or was provided by
the state, and authorizes a prosecuting authority of a political
subdivision to intervene in the action, or investigate and bring an
action, if the claim involves funds of the political subdivision.
2) Provides that the Attorney General is not authorized to represent the
Regents of the University of California.
3) Authorizes UC to employ legal counsel to represent them in legal matters.
4) Provides that under the California Constitution, UC is a public trust
administered by the Regents of the University of California.
BACKGROUND:
1) The CFCA imposed liability, treble damages, and statutory penalties on any
person who knowingly presents to the state or specified political
subdivisions a false claim for payment, or engages in other fraudulent
activity. In addition, the CFCA created an incentive for reporting fraud
by establishing a provision (called qui tam) that permits any person with
information about a violation to bring a suit on behalf of the state or
political subdivision, and receive a percentage of any recovery.
2) According to UC, the CFCA does not explicitly include claims involving
fraud against the University. Because UC is afforded constitutional autonomy
AB 2512
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by Article IX, Section 9 of the California Constitution, it is not included in
the definition of political subdivisions for the purposes of the CFCA, and all
University funds do not originate from the state, it is unclear whether the
CFCA applies to UC. In addition, UC points out that no court has decided
whether UC claims are included as fraud against the state for the purposes of
the CFCA. Furthermore, Section 12511 of the Government Code explicitly states
that the Attorney General is not authorized to represent the Regents, and the
Attorney General is given sole responsibility for investigating and
prosecuting all CFCA claims involving state funds.
ARGUMENTS IN SUPPORT: The University would have a powerful tool to remedy
fraud, and consequently protect UC funds form misappropriation, without any
increase in personnel or administrative costs.
ARGUMENTS IN OPPOSITION: Prosecuting false claims involving the University
has never been tested. No court has decided whether the University claims are
included as fraud against the state for the purposes of the CFCA. False
claims against University may be covered under the CFCA. Once a decision has
been made, in which a claim has been prosecuted and thrown-out, then UC should
pursue this legislative proposal.
REGISTERED SUPPORT / OPPOSITION:
Support
University of California (Sponsor)
Opposition
None
Analysis prepared by: K. Wess Larson / ahed / 324-4655