District of Columbia Procurement Reform Amendment Act

By: Joel M. Androphy1 and Sarah M. Frazier 

The District of Columbia passed the Procurement Reform Amendment Act (“PRAA”) in 1996.2 In 1997, it passed the Emergency Amendment Act, which increased the penalties of the PRAA’s civil false claims and added qui tam provisions.3 The PRAA models the FCA, but also contains some provisions that are unique.

[1]—Liability and Damages Provisions

The liability and damages provisions under the PRAA are similar to those under the FCA. Therefore, an individual will be liable under the PRAA for the same violations as the FCA. For example, an individual will be liable for knowingly presenting or causing the presentation of a false claim, knowingly making, using, or causing to be made or used a false record or statement, or conspiring to defraud the District.4 The PRAA also imposes liability on a “beneficiary of an inadvertent submission of a false claim to the District, [who] subsequently discovers the falsity of the claim, and fails to disclose the false claim to the District.”5The PRAA also provides liability for a “beneficiary of an inadvertent payment or overpayment by the District of monies not due . . . [who] knowingly fails to repay the inadvertent payment or overpayment to the District.”6 In other words, if a person receives money from the District that he should not have received, he will be liable for a violation of the PRAA if he does not return the money to the District.

Similar to the FCA, the PRAA explicitly excludes false tax claims.7 The PRAA also exempts worker’s compensation claims and unemployment claims.8 The damages provision in the PRAA is identical to the statutory language of the FCA and allows for treble damages and civil penalties ranging from $5,000 to $10,000 per claim.9 In addition, the PRAA follows the federal act and provides for the reduction of liability to double damages if the defendant voluntarily discloses the violations.10

[2]—Procedural Issues

[a]—General Procedural Provisions 

The qui tam provisions in the PRAA are similar to those in the FCA, but the PRAA also appears to derive some provisions from other state statutes. Several provisions are the same as the federal statute, including the sealing provisions;11 the required disclosure of material to the Corporation Counsel;12 the Corporation Counsel’s primary responsibility for litigating the action if it chooses to intervene and the right to limit the relator’s participation;13 and the relator’s right to proceed with the litigation if the Corporation Counsel does not intervene.14 However, several differences between the FCA and the PRAA exist. The PRAA allows the Government 180 days to determine if it wants to intervene whereas the federal statute gives the Department of Justice sixty days. Furthermore, the PRAA allows the Government to dismiss the action over relator’s objections without a hearing.15

The PRAA provides similar provisions for the burden of proof, estoppel based on criminal plea, and civil investigative demands.16 Unlike the FCA, pursuant to the PRAA, the state may explicitly request a stay of proceedings if discovery would interfere with the investigation of a criminal matter arising from the facts regardless of whether the state has pursued the matter with reasonable diligence.17

[b]— Statute of Limitations

Although the PRAA provides two statutes of limitations like its federal counterpart, the time periods vary slightly. Like the FCA, an action may not be brought more than six years after a violation of the PRAA occurred.18 The PRAA also provides that an action may not be brought more than three years from the date when the state knew or should have known of material facts of the violation.19 Pursuant to the PRAA, the action may not be brought later than nine years after the violation was committed in contrast to its federal counterpart that prohibits an action from being brought ten years after the violation.20

[3]—Jurisdictional Bars to Actions

[a]—First to File Bar and Bar Against Members of Legislative, Executive or Judicial Branches
                        
Like its federal counterpart, the PRAA provides jurisdictional bars to certain qui tam actions.  The PRAA contains a first to file bar and a bar prohibiting actions against members of the judicial, executive and legislative branches.21

[b]—Public Disclosure Bar

The PRAA also contains a public disclosure bar that is similar to the FCA. The PRAA prohibits a relator from bringing an action based upon “allegations or transactions in a criminal, civil, or administrative proceeding, investigation, or report, or audit conducted by or at the request of the Council, the Auditor, the Inspector General, or other District or federal agency; or upon allegations or transactions disclosed by the news media, unless the person bringing the action is an original source of the information.”22

Like CFCA, in order to be an “original source,” the PRAA requires the relator to provide the basis or the catalyst for the disclosure in addition to having direct and independent knowledge and voluntarily providing this information to the Government.23 Also like the California statute, the PRAA prohibits a former or present employee of the District of Columbia from bring an action based upon information discovered during employment unless the relator has, in good faith, exhausted all internal procedures and the District of Columbia did not act on the information within a reasonable time period.24

[c]—Additional Jurisdictional Bars

In addition to these bars, the PRAA also bars an: 1) action based upon information “learned by the person in the course of an internal investigation in preparation for, or in conjunction with, a voluntary disclosure to the District or federal government;” 2) action by a “member or employee of the Council of the District of Columbia, the Corporation Counsel’s Office, the Office of the Inspector General, the Office of the Auditor, the Office of the Chief Financial Officer, or the Metropolitan Police Department” based upon information learned during employment; and 3) action by individuals who have been convicted of criminal offenses in connection with any false claim.25

[4]—Retaliation

Like the California statute, the PRAA provides broader Protections to whistleblowers than its federal counterpart. The PRAA prohibits an employer from creating, adopting, or enforcing any rule, regulation, or policy that prevents an employee from disclosing information to the state or from acting in furtherance of the prosecution of a false claims action such as investigating or testifying.26 However, the PRAA also safeguards an employer’s legitimate disciplinary actions.27 It prevents an employee who participated in conduct that directly or indirectly leads to a false claim from bringing suit unless the employee voluntarily disclosed the information to the state and was “harassed, threatened with termination or demotion, or otherwise coerced by the employer or its management into engaging in the fraudulent activity in the first place.”28 While the PRAA provides “all relief necessary to make the employee whole” including punitive damages, an employee cannot recover punitive damages from the District of Columbia for violations under Section 2-308.16 of the PRAA.29

[5]—Relator’s Share

The relator’s recovery under the PRAA differs from the FCA. If the District of Columbia proceeds with an action, the relator is entitled to only ten to twenty percent of the recovery in contrast to the federal relator’s recovery of fifteen to twenty-five percent.30  In addition, if the District of Columbia litigates the action, it must give twenty-five percent of its recovery to the Anti-Fraud Fund, which was established to finance enforcement of the PRAA.31 However, if the District of Columbia decides not to intervene and the relator proceeds with an action, the relator is entitled to twenty-five to forty percent of the recovery contrary to the federal relator’s recovery of twenty-five to thirty percent.32  The PRAA provides for the reduction of a relator’s award if the relator was “substantially involved” in the fraudulent activity.33 In contrast, the federal statute allows for reduction of a relator’s award if the relator “planned and initiated” the fraudulent activity.34

  1. Author of treatise, Federal False Claims Act and Qui Tam Litigation, Law Journal Press (2010), research source of the issues discussed in this article.
  2. D.C. Code Ann. § 2-308.13.
  3. 1997 District of Columbia Laws 12-104 (Act 12-280), May 8, 1998.
  4. D.C. Code Ann.  § 2-308.14(a)(1-3).
  5. D.C. Code Ann. § 2-308.14(a)(8). Compare Cal Gov’t Code Ann. § 12651(a)(8).
  6. D.C. Code Ann. § 2-308.14(a)(9).
  7. D.C. Code Ann. § 2-308.14(d)(1). Compare 31 U.S.C. § 3729(e).
  8. D.C. Code Ann. § 2-308.14(d)(2 & 3).
  9. D.C. Code Ann. § 2-308.14(a). Compare 31 U.S.C. § 3729(a). The civil penalties under the FCA have now been raised to $5,500 and $11,000 to account for inflation.  See Chapter 4, supra, for further discussion of this issue.
  10. D.C. Code Ann. § 2-308.14(b).
  11. D.C. Code Ann. § 2-308.15(b)(2 & 3).
  12. D.C. Code Ann. § 2-308.15(b)(2). The District’s “Corporation Counsel’ is the equivalent of a state’s attorney general.
  13. D.C. Code Ann. § 2-308.15(d)(1).
  14. D.C. Code Ann. § 2-308.15(e)(1).
  15. D.C. Code Ann. § 2-308.15(d)(2)(A). Compare 31 U.S.C. § 3730(c)(2)(A).
  16. D.C. Code Ann. §§ 2-308.17 and 2.308.19.
  17. D.C. Code Ann. § 2-308.15(g). Compare 31 U.S.C. § 3730(c)(4).
  18. D.C. Code Ann. § 2-308.17(a).
  19. Id.
  20. Id. See also, 31 U.S.C. § 3731(b).
  21. D.C. Code Ann. § 2-308.15(b)(6) & (c)(1). Compare 31 U.S.C. § 3730(b)(5) and (e)(2).
  22. D.C. Code Ann. § 2-308.15(c)(2)(A).
  23. D.C. Code Ann. § 2-308.15(c)(2)(B). Compare 31 U.S.C. § 3730(e)(4)(B) and Cal. Gov’t Code Ann. §12652(d)(3)(B).
  24. D.C. Code Ann. § 2-308.15(c)(4). Compare Cal. Gov’t Code Ann. §12652(d)(4).
  25. D.C. Code Ann. § 2-308.15(c)(3, 5, & 6).
  26. D.C. Code Ann. § 2-308.16(a).
  27. D.C. Code Ann. § 2-308.16(d).
  28. Id.
  29. D.C. Code Ann. § 2-308.16(c).
  30. D.C. Code Ann. § 2-308.15(f)(1).’
  31. Id.See also, D.C. Code Ann. § 2-308.20.
  32. D.C. Code Ann. § 2-308.15(f)(2).
  33. D.C. Code Ann. § 2-308.15(f)(1).
  34. 31 U.S.C. § 3730(d)(3).

 

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