Legislature(1999 - 2000)
03/07/2000 08:08 AM House CRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
March 7, 2000
8:08 a.m.
MEMBERS PRESENT
Representative John Harris, Co-Chairman
Representative Carl Morgan, Co-Chairman
Representative Andrew Halcro
Representative Fred Dyson
Representative Reggie Joule
Representative Albert Kookesh
MEMBERS ABSENT
Representative Lisa Murkowski
COMMITTEE CALENDAR
HOUSE BILL NO. 425
"An Act relating to misrepresentation and false claims made against
the state or a municipality; and providing for an effective date."
- MOVED CSHB 425(CRA) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 425
SHORT TITLE: FALSE CLAIMS AGAINST STATE OR MUNI.
Jrn-Date Jrn-Page Action
2/28/00 2334 (H) READ THE FIRST TIME - REFERRALS
2/28/00 2335 (H) CRA, JUD, FIN
2/28/00 2335 (H) INDETERMINATE FISCAL NOTE (LAW)
2/28/00 2335 (H) ZERO FISCAL NOTE (ADM/ALL DEPTS)
2/28/00 2335 (H) GOVERNOR'S TRANSMITTAL LETTER
3/07/00 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
JIM BALDWIN, Assistant Attorney General
Governmental Affairs Section
Civil Division
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Reviewed HB 425.
ACTION NARRATIVE
TAPE 00-16, SIDE A
Number 0001
CO-CHAIRMAN called the House Community and Regional Affairs
Standing Committee meeting to order at 8:08 a.m. Members present
at the call to order were Representatives Harris, Morgan, Halcro,
Dyson, Joule and Kookesh. Representative Murkowski was not in
attendance.
HB 425-FALSE CLAIMS AGAINST STATE OR MUNI.
CO-CHAIRMAN MORGAN announced that the first order of business would
be HOUSE BILL NO. 425, "An Act relating to misrepresentation and
false claims made against the state or a municipality; and
providing for an effective date."
Number 0082
JIM BALDWIN, Assistant Attorney General, Governmental Affairs
Section, Civil Division, Department of Law, informed the committee
that "our office" [the Department of Law] requested introduction of
this legislation. This legislation would place in the state's law
a false claims statute, which is intended to provide remedies to
state and municipal governments against persons who would file
false claims for property or money from the state treasury or the
treasury of local municipalities. This statute is modeled after
California's false claim statute, which is modeled after the
federal false claim statute. He noted that nearly all
jurisdictions have similar types of legislation as does Alaska.
Alaska has something similar to it in existing law, which has been
in effect since 1949. What Alaska has is basically skeletal in
nature and does not carry the penalties that make this type of
statute useful in collecting amounts that may have been falsely
claimed against the state or municipal governments.
MR. BALDWIN pointed out that the most effective element of the bill
is that it would impose treble damages on a person who submits a
false claim against the state or municipal government. The method
of how to establish the claims against a person is clear.
Furthermore, the bill provides incentives for a person who may
inadvertently make a false claim and discover the mistake after the
fact. If the person acts within a certain amount of time, the
amount of recovery against them could be greatly reduced if the
person cooperates with the proceedings against the person(s) who
is really at fault.
MR. BALDWIN informed the committee of how [the department]
determined the need for this legislation and he noted that the bill
packet should include a letter outlining this. The department was
contacted by the City of San Francisco, which was engaged in major
litigation with a major bank that had acted as a trustee for bond
debt service payments that were made by the City of San Francisco
and hundreds of other municipalities in California. It was alleged
in this case that over the years when bond holders had failed to
collect their bond payments, the bank had held on to those monies
which were unclaimed funds. The bank had never filed a report with
the state and thus had basically filed false reports as to the fact
that the bank was not holding unclaimed funds due to the state.
Therefore, the bank was sued by the State of California and various
of its municipalities. That case resulted in an approximately $200
million settlement that the bank paid to the state and the
municipalities. He said that in working with the attorneys that
represented the city [San Francisco] and the state [California], it
was determined that the threat of the treble damages under the
false claim statute brought the bank to the table for a settlement.
Mr. Baldwin expressed the need to have similar types of remedies
available in Alaska.
MR. BALDWIN informed the committee that [the department] has an
ongoing case with the same bank. He explained that Alaska and its
municipal governments had over $23 billion in debt service placed
with this bank over the course of 30-40 years. Based on what is
known in regard to how much of that money the bank acceded to the
state government as unclaimed funds, it appears that the bank has
not returned what would be considered a reasonable amount of money
based on the knowledge of bond holder activity/behavior. It
appears as if this bank has paid Alaska much less than what has
been established as the usual and customary rate. Mr. Baldwin
pointed out that when HB 425 was first drafted, [the department]
felt that it would be in litigation with the bank much sooner than
it now appears. Therefore, the effective date in the original bill
was established based on the premise that HB 425 would not have
much effect on this litigation. However, it appears that this
litigation is now being set back as mediation this winter became
protracted. Now it appears that mediation will not occur until
late this summer. Therefore, Mr. Baldwin requested that the
committee consider moving the effective date up to July 1, 2000 and
then HB 425 would become a factor in negotiations with the bank.
He pointed out that the effective date change would require the
specified date in the bill to be changed to July 1, 2001 on page 4,
line 18, and page 5, line 16.
Number 0657
REPRESENTATIVE DYSON moved that the committee adopt the following
amendment:
Page 4, line 18,
Delete "January 1, 2001"
Insert "July 1, 2000"
Page 5, line 16
Delete "January 1, 2001"
Insert "July 1, 2000"
There being no objection, it was so ordered and the amendment was
adopted.
REPRESENTATIVE DYSON commented that HB 425 is barely in the purview
of this committee. Unless there are some cities or communities
that would adversely be affected, HB 425 should be waived from this
committee or forwarded on to the next committee of referral, the
House Judiciary Committee.
REPRESENTATIVE JOULE inquired as to the definition of "person" on
page 1, line 5. He noted agreement with Representative Dyson that
this legislation is probably best dealt with in the House Judiciary
Committee.
MR. BALDWIN informed the committee that Title 1 has a definition of
"person" which includes a corporation or a partnership.
Number 0825
REPRESENTATIVE KOOKESH inquired as to the definition of a
"municipality"; what statute would that be?
MR. BALDWIN specified that a municipality would be a general law or
home rule municipality. That definition can be found in Title 29.
REPRESENTATIVE DYSON asked why [HB 425] would not allow any second
class city or [disorganized area] under Title 29 to do this.
MR. BALDWIN directed the committee to AS 37.10.090(a) which in part
says, "A person is civilly liable to the state or a municipality".
He explained that those specified entities would have the remedy
available in HB 425. Further on in the bill, it provides that if
there is an investigation and there is a determination that
municipal property is involved, the state is required to provide
the city with notice that it has property involved. He specified
that it would [apply to] a general law or home rule municipality.
In the case of a second class city that does not have a regular
city attorney, the state would proceed on their behalf and amounts
recovered attributable to them would be paid to that second class
city. This is the process followed now. For a larger city such as
Anchorage, Fairbanks or Juneau with a city attorney, the
investigation could be tendered over to the city to take over.
REPRESENTATIVE DYSON asked if this false claims [statute] would
apply to other entities organized under state law besides
municipalities. He asked if this would apply to a borough or a
second class city.
MR. BALDWIN stated that the false claims statute would only apply
to municipalities at this point. He specified that this would
apply to a borough or a second class city.
REPRESENTATIVE DYSON surmised then that this false claims statute
would apply to any civil government that is recognized in Title 29.
MR. BALDWIN agreed and specified that it would apply to any
municipal corporation recognized in Title 29, which would include
a city and a borough.
CO-CHAIRMAN MORGAN asked if there is anyone who would like to
testify. There being no one, he closed the public testimony.
Number 1077
REPRESENTATIVE DYSON moved to report HB 425 as amended out of
committee with individual recommendations and the zero fiscal note.
There being no objection, it was so ordered and CSHB 425(CRA) was
reported from committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:24 a.m.
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