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--- version:Edition 1+++ version:Filed@@ -1,15 +1,15 @@GENERAL ASSEMBLY OF NORTH CAROLINASESSION 2025-S 1-SENATE BILL 469+S D+SENATE BILL DRS35188-MC-16Short Title: Improper Action Claims Act. (Public)Sponsors: Senators Moffitt and Hanig (Primary Sponsors).-Referred to: Rules and Operations of the Senate-March 25, 2025-*S469-v-1*+Referred to:++*DRS35188-MC-16*A BILL TO BE ENTITLED 1-AN ACT TO CREATE AN ACTION FOR IMPROPER ACTIONS FOR PUBLIC E NTITIES 2+AN ACT TO CREATE AN ACTION FOR IMPROPER ACTIONS FOR PUBLIC ENTITIES 2ACT. 3The General Assembly of North Carolina enacts: 4SECTION 1. Chapter 1 of the General Statutes is amended by adding a new Article 5@@ -26,7 +26,7 @@(1) Attorney General. – The Attorney General of North Carolina, or any deputy, 16assistant, or associate attorney general. 17(2) Judiciary. – A justice or judge of the General Court of Justice or clerk of court. 18-(3) Knowing or knowingly. – Whenever a person, with r espect to information, 19+(3) Knowing or knowingly. – Whenever a person, with respect to information, 19does any of the following: 20a. Has actual knowledge of the information. 21b. Acts in deliberate ignorance of the truth or falsity of the information. 22@@ -38,18 +38,22 @@regulation, statute, or other legally enacted or adopted directive. 28(6) Public entity. – Any board, commission, department, executive department, 29officer, institution, and any political subdivision of the State. 30-(7) Senior executive branch official. – The Governor, Lieutenant Governor, 31+(7) Senior executive branch official. – The Governor, Lieutenant Governor, 31member of the Council of State, or head of department as defined in 32G.S. 143B-3. 33(c) Claim of Inaction on an Obligation. – A public entity that knowingly fails to comply 34-with an obligation shall be lia ble for a civil penalty of not less than five thousand five hundred 35+with an obligation shall be liable for a civil penalty of not less than five thousand five hundred 35dollars ($5,500) and not more than eleven thousand dollars ($11,000) and for the costs of a civil 36-General Assembly Of North Carolina Session 2025-Page 2 Senate Bill 469-First Edition+FILED SENATE+Mar 24, 2025+S.B. 469+PRINCIPAL CLERK+General Assembly Of North Carolina Session 2025+Page 2 DRS35188-MC-16action to recover any of those penalties or damages. For purposes of this Article, a public entity 1may be sued notwithstanding any statutory or governmental immunity that the public entity could 2otherwise invoke in any civil action not arising under this Article. 3-(d) Responsibilities of the Attorney General. – The Attorney General diligently sh all 4+(d) Responsibilities of the Attorney General. – The Attorney General diligently shall 4investigate a violation under this section. If the Attorney General finds that a public entity has 5violated or is violating this section, the Attorney General may bring a civil action under this 6section against that public entity. 7@@ -63,11 +67,11 @@evidence and information the person possesses shall be served on the Attorney 15General pursuant to applicable rules of the North Carolina Rules of Civil 16Procedure. The complaint shall be filed in camera, shall remain under seal for 17-at least 120 days, and shall not be se rved on the defendant public entity until 18+at least 120 days, and shall not be served on the defendant public entity until 18the court so orders. The State may elect to intervene and proceed with the 19action within 120 days after it receives both the complaint and the material 20evidence and information. 21-(3) The State may, for good cause sh own, move the court for extensions of the 22+(3) The State may, for good cause shown, move the court for extensions of the 22time during which the complaint remains under seal under subdivision (2) of 23this subsection. Any such motions may be supported by affidavits or other 24submissions in camera. The defendant public entity shall not be required to 25@@ -85,7 +89,7 @@intervene or bring a related action based on the facts underlying the pending action. 37(f) Proceeds Retention. – The Attorney General may retain a portion of the damages 38recovered out of the proceeds of the action or settlement under this section as reimbursement for 39-costs incurred by the Attorney General in investigating and bringing a civil action u nder this 40+costs incurred by the Attorney General in investigating and bringing a civil action under this 40section, including reasonable attorneys' fees and investigative costs. Retained funds shall be used 41by the Attorney General to carry out the provisions of this Article. 42(g) Rights of the Parties to Qui Tam Actions. – 43@@ -95,13 +99,13 @@a party to the action, subject to the limitations set forth in this subsection. 47(2) The State may dismiss the action for good cause notwithstanding the 48objections of the qui tam plaintiff if the qui tam plaintiff has been notified by 49-the State of the filing of the motion and the court has provi ded the qui tam 50+the State of the filing of the motion and the court has provided the qui tam 50plaintiff with an opportunity for a hearing on the motion. 51General Assembly Of North Carolina Session 2025-Senate Bill 469-First Edition Page 3+DRS35188-MC-16 Page 3(3) The State may settle the action with the defendant public entity, 1notwithstanding the objections of the qui tam plaintiff, if the court determines, 2-after a hearing, that the pro posed settlement is fair, adequate, and reasonable 3+after a hearing, that the proposed settlement is fair, adequate, and reasonable 3under all of the circumstances. Upon a showing of good cause, the hearing 4may be heard in camera. 5(4) Upon a showing by the State that the qui tam plaintiff 's unrestricted 6@@ -116,18 +120,18 @@litigation. 15(5) Upon a showing by the defendant public entity that the qui tam plaintiff 's 16unrestricted participation during the course of the litigation would be for 17-purposes of harassment or would cause the defendant undue bu rden or 18+purposes of harassment or would cause the defendant undue burden or 18unnecessary expense, the court may limit the participation by the qui tam 19plaintiff in the litigation. 20(6) If the State elects not to proceed with the action, the qui tam plaintiff shall 21have the right to conduct the action. If the State so requests, it shall be served 22with copies of all pleadings filed in the action and shall be supplied with copies 23of all deposition transcripts at the State 's expense. When a qui tam plaintiff 24-proceeds with the action, the court, without limiting the status and rig hts of 25+proceeds with the action, the court, without limiting the status and rights of 25the qui tam plaintiff, may permit the State to intervene at a later date upon a 26showing of good cause. 27(7) Whether or not the State proceeds with the action, upon a showing by the State 28-that certain actions of discovery by the qui tam plaintiff woul d interfere with 29+that certain actions of discovery by the qui tam plaintiff would interfere with 29the State's investigation or prosecution of a criminal or civil matter arising out 30of the same facts, the court may stay such discovery for a period of not more 31than 120 days. Such a showing shall be conducted in camera. The court may 32@@ -151,13 +155,13 @@action brought by a qui tam plaintiff under this section, the qui tam plaintiff 50shall receive at least fifteen percent (15%) but not more than twenty -five 51General Assembly Of North Carolina Session 2025-Page 4 Senate Bill 469-First Edition+Page 4 DRS35188-MC-16percent (25%) of the proceeds of the action or settlement of the claim, 1depending upon the extent to which the qui tam plaintiff substantially 2contributed to the prosecution of the action. Any payment to a qui tam plaintiff 3under this section shall be made from the proceeds. 4(2) The qui tam plaintiff also shall receive an amount for reasonable expenses that 5-the court finds to have been necessarily incurred, plus reasonable attorneys ' 6+the court finds to have been necessarily incurred, plus reasonable attorneys ' 6fees and costs. All such expenses, fees, and costs shall be awarded against the 7defendant public entity. 8(3) If the State does not proceed with an action under this section, the qui tam 9@@ -167,11 +171,11 @@proceeds of the action or settlement and shall be paid out of the proceeds. The 13qui tam plaintiff also shall receive an amount for reasonable expenses that the 14court finds to have been necessarily incurred, plus reasonable attorneys ' fees 15-and costs. All such expenses, fees, and costs shall be a warded against the 16+and costs. All such expenses, fees, and costs shall be awarded against the 16defendant public entity. 17(4) If the State does not proceed with the action and the qui tam plaintiff conducts 18the action, the court may award to the defendant public entity its reasonable 19-attorneys' fees and expenses if the defendant pub lic entity prevails in the 20+attorneys' fees and expenses if the defendant public entity prevails in the 20action and the court finds that the claim of the qui tam plaintiff was clearly 21frivolous, clearly vexatious, or brought primarily for purposes of harassment. 22"§ 1-621. General provisions. 23@@ -179,7 +183,7 @@(1) No court shall have jurisdiction over an action brought under this Article 25against a member of the General Assembly, a member of the judiciary, or a 26senior executive branch official acting in their official capacity if the action is 27-based on evidence or infor mation known to the State when the action was 28+based on evidence or information known to the State when the action was 28brought. 29(2) In no event may a person bring an action under G.S. 1-620 that is based upon 30allegations or transactions that are the subject of a civil suit or an 31@@ -203,7 +207,7 @@b. The individual (i) has knowledge that is independent of, and materially 49adds to, the publicly disclosed allegations or transactions and (ii) has 50General Assembly Of North Carolina Session 2025-Senate Bill 469-First Edition Page 5+DRS35188-MC-16 Page 5voluntarily provided the information to the State before filing an action 1under G.S. 1-620. 2(b) State Liability. – The State is not liable for expenses that a person incurs in bringing 3@@ -217,7 +221,7 @@employee, contractor, or agent would have had but for the discrimination, two times the amount 11of back pay, interest on the back pay, and compensation for any special damages sustained as a 12result of the discrimination, including litigation costs and reasonable attorneys ' fees. An action 13-may be brought in North Carolina superior court for the relief provided in this section. A civ il 14+may be brought in North Carolina superior court for the relief provided in this section. A civil 14action under this section may not be brought more than three years after the date when the 15retaliation occurred. 16"§ 1-622. Civil investigative demand. 17@@ -230,7 +234,7 @@person to produce any documents or objects for their inspection and copying. 24(b) The civil investigative demand shall comply with all of the following: 25(1) Be served upon the person in the manner required for service of process in 26-civil actions and may be served by the Attorney General or investigator 27+civil actions and may be served by the Attorney General or investigator 27assigned to the North Carolina Department of Justice. 28(2) Describe the nature of the conduct constituting the violation under 29investigation. 30@@ -243,26 +247,26 @@time. 37(6) Designate a person to whom any document or object shall be produced. 38(7) Contain a copy of this subsection and subsection (c) of this section. 39-(c) The date within which any document or object must be produced shall be m ore than 40+(c) The date within which any document or object must be produced shall be more than 4030 days after the civil investigative demand has been served upon the person. 41(d) A civil investigative demand may include an express demand for any product of 42-discovery. A product of discovery includes the original or duplicate of any deposition, 43+discovery. A product of discovery includes the original or duplicate of any deposition, 43interrogatory, document, thing, examination, or admission, that is obtained by any method of 44discovery in any judicial or administrative proceeding of an adversarial nature, and any digest, 45compilation, and index of any product of discovery. Whenever a civil investigative demand is an 46express demand for any product of discovery, a copy of the demand shall be served on the person 47from whom the discovery was obtained, and the Attorney General shall notify the person to 48-whom the demand is issued of the date o n which the copy was served. A demand for a product 49+whom the demand is issued of the date on which the copy was served. A demand for a product 49of discovery shall not be returned or returnable until 30 days after a copy of the demand has been 50served on the person from whom the discovery was obtained. Within 30 days after service of the 51General Assembly Of North Carolina Session 2025-Page 6 Senate Bill 469-First Edition+Page 6 DRS35188-MC-16demand, the person from whom the discovery was obtained or the person on whom the demand 1was served will serve on the Attorney General a copy of any protective order that prevents or 2-restrains disclosure of the product of discovery to the Attorney General. The Attor ney General 3+restrains disclosure of the product of discovery to the Attorney General. The Attorney General 3may petition the court that issued the protective order to modify the order to allow compliance 4with the demand. Disclosure of any product of discovery pursuant to any express demand does 5-not constitute a waiver of any right or privilege that t he person making the disclosure may be 6+not constitute a waiver of any right or privilege that the person making the disclosure may be 6entitled to invoke to resist discovery of trial preparation materials. 7(e) The production of documents and objects in response to a civil investigative demand 8served under this section shall be made under a sworn certificate by a person having knowledge 9@@ -274,7 +278,7 @@originals of all or any part of the documents requested. 15(f) If a person objects to or otherwise fails to comply with a civil investigative demand 16served upon the person under subsection (a) of this section, the Attorney General may file an 17-action in superior court for an order to enforce the demand. Venue for the a ction to enforce the 18+action in superior court for an order to enforce the demand. Venue for the action to enforce the 18demand shall be in either Wake County or the county of the public entity. Notice of a hearing on 19the action to enforce the demand and a copy of the action shall be served upon the person in the 20same manner as prescribed in the Rules of Civil Procedure. If the court finds that the demand is 21@@ -290,7 +294,7 @@(3) Grant any other relief as the court may deem proper. 31(h) A petition for an order of the court to modify or set aside a civil investigative demand 32issued under this section may be filed by any person who has received a civil investigative 33-demand or in the case of an express demand for any product of discovery, the person on whom 34+demand or in the case of an express demand for any product of discovery, the person on whom 34the discovery was obtained. The petition may be filed in superior court in either Wake County or 35the county of the public entity, or, in the case of a petition to modify an express demand for any 36product of discovery, the petition shall be filed in the court in which the proceeding was pending 37@@ -298,18 +302,18 @@within 30 days after the date of service of the civil investigative demand or before the return date 39specified in the demand, whichever date is earlier, or within a longer period as may be prescribed 40in writing by the investigator identified in the demand. The petition shall specify each ground 41-upon which the petitioner relies in seeking relief and may be based upon any f ailure to comply 42+upon which the petitioner relies in seeking relief and may be based upon any failure to comply 42with the provisions of this section or upon any constitutional or other legal right or privilege of 43the person. During the pendency of the petition in the court, the court may stay, as it deems 44-proper, the running of the time allowed for c ompliance with the demand, in whole or in part, 45+proper, the running of the time allowed for compliance with the demand, in whole or in part, 45except that the person filing the petition shall comply with any portions of the demand not sought 46to be modified or set aside. 47(i) Any documents and objects produced pursuant to this section may be used in 48connection with any civil action brought under G.S. 1-620 and for any use that is consistent with 49the law, and the regulations and policies of the Attorney General, including use in connection 50-with internal Attorney General memoranda and reports; communicat ions between the Attorney 51-General Assembly Of North Carolina Session 2025-Senate Bill 469-First Edition Page 7+with internal Attorney General memoranda and reports; communications between the Attorney 51+General Assembly Of North Carolina Session 2025+DRS35188-MC-16 Page 7General and a federal, State, or local governmental agency, or a contractor of a federal, State, or 1local governmental agency, undertaken in furtherance of an Attorney General investigation or 2prosecution of a case; interviews of any qui tam relator or other witness; oral examinations; 3@@ -317,7 +321,7 @@of a case or proceeding applications, motions, memoranda, and briefs submitted to a court or 5other tribunal; and communications with government investigators, auditors, consultants and 6experts, the counsel of other parties, arbitrators, and mediators, concerning an investigation, case, 7-or proceeding. Any documents and objects obtained by the Attorney Ge neral under this section 8+or proceeding. Any documents and objects obtained by the Attorney General under this section 8may be shared with any qui tam relator if the Attorney General determines it is necessary as part 9of any improper actions act investigation. Before using or sharing documents and objects 10obtained by the Attorney General under this section with any person, the Attorney General may 11@@ -334,21 +338,21 @@thereof, while in the possession of the North Carolina Department of Justice, shall be available 22for examination by any person other than an employee of the North Carolina Department of 23Justice. The prohibition in the preceding sentence on the availability of documents or objects 24-shall not apply if consent is given by the person who produ ced the documents or objects, or, in 25+shall not apply if consent is given by the person who produced the documents or objects, or, in 25the case of any product of discovery produced pursuant to an express demand, consent is given 26by the person from whom the discovery was obtained, or prevent disclosure to any other federal 27-or State agency for use by tha t agency in furtherance of its statutory responsibilities upon 28+or State agency for use by that agency in furtherance of its statutory responsibilities upon 28application made by the Attorney General to the superior court showing substantial need for the 29use of the documents or objects by any agency in furtherance of its statutory responsibilities. 30(l) While in the possession of the custodian and under reasonable terms and conditions 31as the Attorney General shall prescribe, documents or objects shall be available for examination 32-by the person who produced the documents or objects, or by a representati ve of that person 33+by the person who produced the documents or objects, or by a representative of that person 33authorized by that person to examine the documents or objects. 34(m) If any documents or objects have been produced by any person in the course of any 35-investigation pursuant to a civil investigative demand under this section, and any case o r 36+investigation pursuant to a civil investigative demand under this section, and any case or 36proceeding before any court arising out of the investigation, or any proceeding before any agency 37involving the documents or objects, has been completed, or no case or proceeding in which the 38-documents or objects may be used has been commenced within a r easonable time after 39+documents or objects may be used has been commenced within a reasonable time after 39completion of the investigation, the custodian shall, upon written request of the person who 40produced the documents or objects, return to the person any documents or objects that have not 41passed into the control of any court or agency. 42@@ -362,10 +366,10 @@to act in the circumstances, but in no event more than 10 years after the date on which the 50violation is committed, whichever occurs last. 51General Assembly Of North Carolina Session 2025-Page 8 Senate Bill 469-First Edition+Page 8 DRS35188-MC-16(b) If the Attorney General elects to intervene and proceed with an action brought 1pursuant to G.S. 1-620, the State may file its own complaint or amend the complaint of a person 2-who has brought the action to clarify or add detail to the claims with respect to which the State 3+who has brought the action to clarify or add detail to the claims with respect to which the State 3is intervening and to add any additional claims with respect to which the State contends it is 4entitled to relief. For statute of limitations purposes, any such State pleading shall relate back to 5the filing date of the complaint of the person who originally brought the action, to the extent that 6@@ -377,7 +381,7 @@or nonfeasance by a public entity in the performance of an obligation is entitled to a presumption 12that the element of actual damages has been met. 13(d) Estoppel. – Notwithstanding any other provision of law, a final judgment rendered in 14-favor of the State in a pro ceeding charging malfeasance or nonfeasance by a public entity, 15+favor of the State in a proceeding charging malfeasance or nonfeasance by a public entity, 15whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the 16defendant public entity from denying the essential elements of the offense in any action that 17involves the same transaction as in the criminal proceeding and which is brought under 18@@ -389,14 +393,14 @@G.S. 1-620, a seal on the action ordered by the court shall not preclude the State or the person 24bringing the action from serving the complaint, any other pleadings, or the written disclosure of 25substantially all material evidence and information possessed by the person bringing the action 26-on the law enforcement authorities that are authorized under the law of the co -plaintiff 27+on the law enforcement authorities that are authorized under the law of the co -plaintiff 27government to investigate and prosecute such actions on behalf of that co -plaintiff government, 28except that the seal applies to the law enforcement authorities so served to the same extent as the 29seal applies to other parties in the action. 30"§ 1-624. Remedies under other laws; severability of provisions; liberality of legislative 31construction; reporting; rules. 32(a) Remedies Under Other Laws. – The provisions of this Article are not exclusive, and 33-the remedies provided for in this A rticle shall be in addition to any other remedies provided for 34+the remedies provided for in this Article shall be in addition to any other remedies provided for 34in any other law or available under common law. No criminal or administrative action need be 35brought against any person as a condition for establishing civil liability under this section. 36(b) If any provision of this Article or the application of this Article to any person or 37@@ -407,15 +411,15 @@shall include the percentage of the proceeds and the amount paid to any qui tam plaintiff under 42G.S. 1-620. 43(d) On or before February 1 of each year, the Attorney General shall submit to the Joint 44-Legislative Commission on Governmental Oper ations and the chairs of the Appropriations 45+Legislative Commission on Governmental Operations and the chairs of the Appropriations 45Subcommittees on Justice and Public Safety of the House of Representatives and the Senate a 46report on the number of qui tam cases under this Article pending in the State, the number of qui 47-tam cases under this Ar ticle that were settled, the number of qui tam cases in which judgment 48+tam cases under this Article that were settled, the number of qui tam cases in which judgment 48was entered, and the amount of proceeds paid to qui tam plaintiffs during the previous calendar 49year. 50General Assembly Of North Carolina Session 2025-Senate Bill 469-First Edition Page 9-(e) The Attorney General may adopt rules necessary to carry out the purposes set fo rth 1+DRS35188-MC-16 Page 9+(e) The Attorney General may adopt rules necessary to carry out the purposes set forth 1in this Article." 2SECTION 2. This act is effective when it becomes law and applies to obligations 3existing on or after that date. 4
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