Puerto Rico False Claims Act

This Act shall be known as the “False Claims to Government of Puerto Rico Programs, Contracts, and Services Act.”

(a) Health Insurance Administration or ASES (Spanish acronym)—Public corporation
created by Act No. 72–1993 with autonomy to discharge the duties and responsibilities of
implementing, administering, and negotiating a health insurance system through contracts with
insurers.
(b) Medicaid State Agency—The agency designated to administer the Medicaid Program
in Puerto Rico; in this case, the Department of Health.
(c) Beneficiary—Any person eligible to have benefits paid to him under any Government
Program, including Medicaid.
(d) Benefit—Any aid or benefit authorized by any Government Program, including the
Medicaid Program.
(e) Knowing and Knowingly—means that a person, with respect to information:

(i) Has actual knowledge of the information.
(ii) Acts in deliberate ignorance of the truth or falsity of the information.
(iii) Acts in reckless disregard of the truth or falsity of the information. In this
case, it requires no proof of specific intent to defraud.

(f) Service Contracts—A written obligation executed between an agency, public
corporation, or instrumentality of the Government and a natural or juridical person, whereby such person has the obligation to provide certain services to the Government for which the amount agreed upon shall be paid.
(g) Relator—A person who files a lawsuit and/or furnished the information that serves as
the cause of action, as an informant, or whistleblower. The following persons are hereby
expressly prohibited from being relators or be deemed as such:

(a) Personnel, including contractors, of the Medicaid Fraud Control Unit;
(b) Personnel, including contractors, detailed in the Medicaid Integrity and ASES
Programs;
(c) Personnel, including contractors, of the Government concerned with the operations
of the Medicaid Management Information System, or any similar program that has
the necessary tools to identify fraud or violations of this Act;
(d) Any employee or contractor of the Government, including its personnel, whose
duties are related to fraud detection in the Medicaid Program;
(e) Any employee or contractor of the Government, including its personnel, whose
duties are related to fraud and abuse detection in Government programs and
contracting; and
(f) Any person who files a lawsuit based on information furnished and detected by any of
the persons mentioned in paragraphs (a), (b), (c), (d), and (e) of this definition.

(h) Fraud—Means an intentional deception or misrepresentation made by a person with
the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable Federal or State law.
(i) Material—For purposes of this statute means having a natural tendency to influence or
be capable of influencing the payment or receipt of money or property.
(j) Government—The Government of Puerto Rico comprises its agencies,
instrumentalities, and public corporations, as defined in their respective organic acts. Likewise, this definition includes the Legislative and Judicial Branches. This definition also covers contractors and subcontractors who have been subject to fraud and/or false claims in the contracting process and/or structure.
(k) Managed Care Organization—An entity that has executed a contract with an insurer
or another state agency to provide and/or outsource healthcare services for individuals who are Medicaid beneficiaries, and that holds an insurer license issued by the Commissioner of Insurance of Puerto Rico.
(l) Obligation—Means an established duty, whether or not fixed, arising from an express
or implied contractual fee-based relationship, between the Government and any natural or
juridical person, from statute and/or regulation, or from the retention of any overpayment.
(m) Person—Includes natural and/or juridical persons.
(n) Government Programs—Means any Federal or State program authorized by law
where the Government administers the funds and/or services and makes the appropriate
disbursements to program participants.
(o) Medicaid Program in Puerto Rico—Means the Medical Assistance Program
authorized by the federal law known as the Social Security Act, as amended, and approved in Puerto Rico in accordance with the state plan.
(p) Provider—Any natural and/or juridical person who requested to participate and/or
participates in any Government Program, including the Medicaid Program, as a provider of
products, goods, or services.
(q) Claim—Means any communication, whether written or verbal, electronic or otherwise,
any request or demand, whether under a contract or otherwise, for money or property and
whether or not the United States has title to the money or property, that is presented to an officer, employee, or agent of the Government; or is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government’s behalf or to advance a state program or interest, and if the Government provides or has provided any portion of the money or property requested or demanded; or shall reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded; and does not include requests or demands for money or property that the Government has paid to an individual as compensation for Government employment or as an income subsidy with no restrictions on that individual’s use of the money or property. Likewise, means any communication, whether written or verbal, electronic or otherwise, any request or demand, by virtue of which a certain good and/or service is identified as reimbursable under the Medicaid Program, or whereby income and/or expenditures are reported and that is used or may be used to determine the amount or source of a payment under the Medicaid Program.
(r) Records—Any document or file or medical, professional, or business record relating to
the treatment or care of any beneficiary; or relating to any good or service received by any beneficiary; or relating to the rates paid for any good or service; or any other document or file or
record required by the regulations of any Government Program.
(s) Secretary—Means the Secretary of the Department of Justice of Puerto Rico.
(t) Unit—The Medicaid Fraud Control Unit attached to the Department of Justice, created
in this Act.

It shall be the public policy of the Government to prevent and act on fraud in Government
Programs, Contracts and Services, including the Medicaid Program as well as any conduct that
is detrimental to the sound use and management of funds allocated for such programs,
contracts, and services. The eradication of such conduct is a priority in the agenda of this
Government Administration, since we are aware of the consequences of fraud in the services
provided in Puerto Rico, including health services and, most of all, Medicaid Program services.
We certainly recognize that the availability of such funds is contingent on the Government’s
ability to detect and prevent fraud, and to facilitate the subsequent criminal prosecution and/or
the pertinent collection actions.

In accordance with the foregoing, the Government shall make all the necessary efforts to
strengthen the structures to investigate and/or prosecute fraudulent actions, and the dynamic
and efficient development of such investigations and proceedings. Pursuant to the foregoing,
this legislation shall be construed so as to promote and facilitate the investigation and criminal
prosecution and civil actions that are appropriate in order to minimize the impact of fraudulent
and unlawful conduct on programs, contracts, and services provided in Puerto Rico, including
the Medicaid Program.

The Medicaid Fraud Control Unit is hereby created attached to the Department of Justice for the
purpose of conducting a program for investigating and prosecuting, or referring for prosecution,
violations of all applicable state laws pertaining to fraud in the administration of the Medicaid
Program in Puerto Rico, the provision of medical assistance, or the activities of providers of
medical assistance under the state Medicaid Program.

The unit shall also review complaints alleging abuse and/or neglect of patients in health care
facilities receiving payments under the state Medicaid Program and may review complaints of
the misappropriation of patient’s private funds or property in such facilities.

For such purposes, the Unit shall conduct investigations and bring civil and criminal actions, as
appropriate, for the collection and/or restitution of losses and damages caused to the Medicaid
Program, including, but not limited to actions under the False Claims Act or any similar statute.
The Unit shall have autonomy and independence from other offices of the Department of
Justice, and shall be completely independent from the State Medicaid Agency and the Health
Insurance Administration (ASES). The Unit, however, shall establish a referral system and
ensure compliance with the parameters established in Section 455.21(a)(2) of Title 42 of the Code of Federal Regulations.

The Unit shall operate under the general supervision of the Secretary, and a Director selected by the Secretary shall be charged with the immediate direction of the Unit. The Unit’s staff shall comprise attorneys, investigators, and auditors as well as the administrative staff as deemed necessary by the Secretary. All the staff of the Unit shall be engaged solely to address the matters for which the Unit was created. Attorneys shall be experienced in the investigation or prosecution of fraud, capable of providing effective prosecution and giving informed advice on applicable law and procedures.

Auditors attached to the Unit shall be capable of supervising the review of financial records and
data, and advising or assisting in the investigation of alleged fraud. The Unit shall also have a senior investigator with substantial experience in commercial or financial investigations who shall supervise and direct the investigative activities of the unit.  The rest of the staff shall also be knowledgeable about the legislation that regulates the Medicaid Program and about the operation of health care providers.

The attorneys of the Unit shall be empowered by law to conduct criminal investigations as
Prosecutors and to bring civil and administrative actions as deemed necessary to enforce the
purposes for which this Unit was created. Furthermore, in order to carry out the task entrusted
thereto, the investigators of the Unit shall be empowered to investigate, report, arrest, serve
orders, possess and carry firearms, administer oaths, and issue subpoenas and/or civil
investigative demands.

The Unit shall receive referrals of suspected or potential fraud in the Medicaid Program in
Puerto Rico from the State Medicaid Agency, the Health Insurance Administration, affected
beneficiaries and/or outside sources. Depending on the nature of the allegations, the Unit
Director shall order an investigation, refer the matter to the competent body, or order the
dismissal thereof if he determines that no further action is required. The Unit shall notify in
writing the decision of whether to accept or deny a referral. If the initial review of the referral
does not show sufficient basis for criminal prosecution, the Unit shall transfer the matter to the appropriate agency for analysis and determination. Likewise, the Unit shall have access to the
Medicaid Management Information System (MMIS) of Puerto Rico as part of the investigative
duties thereof. The Units shall also have access to the Prescription Drug Monitoring Program
(PDMP) for the same purposes.

The Unit may also refer to both the State Medicaid Agency and ASES for the potential
suspension of payment to any provider with respect to which an investigation has been initiated
for material and credible allegations of Medicaid fraud. Likewise, if in the discharge of the
delegated duties relating to the initial review, the Unit finds that there was an overpayment in
favor of a healthcare facility or another provider of medical assistance under the Medicaid
Program, the Unit shall initiate the pertinent collections actions or refer the matter to the
appropriate agency.

Whenever the Secretary has reason to believe that any person and/or entity has possession,
custody, or control of any documentary material and/or information relevant to an investigation
about potential Medicaid fraud, the Secretary may require in writing the production of
documentary material and/or information, and/or access for the examination and investigation
thereof through a civil investigative demand. This includes the healthcare service provider or
organization that, in accordance with 42 C.F.R. x431.107, shall furnish information and/or
records related to the services provided to beneficiaries. The Secretary may require information
about the owner or holder of stocks or of any other financial interest to the members of the
Board of Directors, administrators, or any other employee of a company.

The civil investigative demands shall:

(1) Establish the nature of the conduct constituting the alleged fraudulent acts in
connection with the Medicaid Program which is being investigated under this Act or other
applicable provisions of law;
(2) Describe the class or classes of documentary material to be produced with such
definiteness and certainty as to permit such material to be fairly identified;
(3) Prescribe a return date for each such class which shall provide a reasonable period of
time within which the material so demanded may be assembled and made available for
inspection, copying, and/or reproduction; and
(4) Identify the false claims law investigator to whom such material shall be delivered.
No person having custody of documentary material relevant to an investigation about potential Medicaid fraud, including records of services provided to beneficiaries may deny access thereto under the right of privacy of the beneficiary, under any of the privileges of the beneficiary against disclosure or use, nor under any other privilege or right in accordance with the exclusions of the general privacy rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104–191, as amended.

The Unit shall respect the privacy and the right thereto of individuals and shall establish safeguards to prevent the wrongful use of the information under its control.

(a) Service of any civil investigative demand or of any petition filed under this Section
may be made in any of the following manners:

(1) Delivering an executed copy to any partner, officer, agent, or general agent or
to any agent authorized by law to receive service of process on behalf of such
person, and/or directly to the person;
(2) Delivering an executed copy to the principal office or place of business; or
(3) Depositing an executed copy by certified mail with a return receipt requested,
addressed to the person to his principal office or place of business.

(b) A verified return by the individual serving any civil investigative demand setting forth the manner of such service shall be prima facie evidence 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 thereof. 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, copying, and reproduction to the false claims law investigator at the principal place of business of such person, or at such other place as the false claims law investigator and the person thereafter may agree and prescribe in writing, or as the Court may direct. A false claims law investigator who receives any documentary material as prescribed in this Section shall take physical possession thereof and shall be responsible for the use made and for the return thereof
as provided herein. While in the possession of such investigator, such documentary material shall not be available for examination by any individual other than the Secretary, the person to whom he delegates, or the Unit’s staff, unless consent is given by the person who produced such documentary material. Under such terms and conditions as the Secretary shall prescribe, documentary material in the possession of the false claims law investigator shall be available for examination by the person who produced it or by an authorized agent of that person.

Upon petition of the Secretary or the person to whom he delegates in the Unit, the Court may enter a temporary injunction or a preliminary restraining order to freeze bank accounts, require the execution of a performance bond for real property, or take any action to preserve the availability of property described in Section 3.02 available so as to guarantee the subsequent forfeiture thereof if appropriate under this Section, according to any of the following alternatives:

(1) Upon the filing of an indictment or information charging a violation of this Act and
alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section; or
(2) A temporary restraining order may be entered without notice or opportunity for a
hearing when an information or indictment has not yet been filed with respect to the property, if the Prosecutor demonstrates that there is probable cause to believe that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture and that provision of notice shall jeopardize the availability of the property for forfeiture. The temporary order shall expire not more than ninety (90) days after the date on which it is entered, unless extended for good cause shown. A hearing requested concerning an order entered under this subsection shall be held by the Court at the earliest possible time and prior to the expiration of the temporary order.
(3) At any hearing held pursuant to this section the Puerto Rico Rules of Evidence shall
not apply.

Whenever any person fails to comply with any civil investigative demand for the production of documentary material issued under this Act, or whenever satisfactory copying or reproduction of any material requested in such demand cannot be done and such person refuses to surrender such material, the Secretary may file with the Court a petition for the enforcement of the provisions of this Act. Any disobedience of any order entered under this section by any court shall be punished as a contempt of the court and shall be the basis for the suspension of any license, permit, or authorization that has been granted to the person or business under investigation. Within twenty (20) days after the date of service of the civil investigative demand, or at any time before the return date specified in the demand, whichever date is earlier, the person may file a petition for a Court order to modify or render it without effect. During the pendency of the petition in the Court, the Court may stay the running of the time allowed for compliance with the demand. The petition shall specify the grounds therefor, and may be based upon any failure of the demand to comply with the provisions of this Act and/or upon any constitutional or other legal right.

Upon the completion of the investigation or of any case or proceeding arising out of such
investigation, the false claims law investigator shall return the documentary material to the person who produced them, other than the copies made by the Secretary. If no case or
proceeding has been commenced within a reasonable time after completion of the examination
and analysis of all the evidence assembled in the course of such investigation, the person who produced such evidence shall be entitled, upon written request to the Secretary, to have such documentary material returned to him. In the event of the death, disability, or separation from service of the custodian of any documentary material produced pursuant to a civil investigative demand under this Act, or in the event that the false claims law investigator is relieved from responsibility for the custody of such material, the Secretary shall promptly: (1) designate another false claims law investigator from the Unit to serve as custodian of such material, and
(2) notify in writing to the person who produced such material, the name and address of the successor so designated. Any person who is designated to be a successor shall have, with regard to such material, the same function, duties, and responsibilities as were imposed by this Act upon that person’s predecessor in office, except that the successor shall not be held responsible for any negligence which occurred before that designation.

A. Shall incur in Medicaid Program Fraud, any person who willingly and knowingly:

(1) Presents and/or causes to be presented a claim to the Medicaid Program, knowing
that it is partially or completely false.
(2) Makes or causes to be made a false statement or representation for the purpose of
obtaining or attempting to obtain an authorization to offer a good or service
under the Medicaid Program, knowing that the false statement or representation is
partially or completely false.
(3) Makes or causes to be made a false statement or representation to be used by
another person to obtain a good or service under the Medicaid Program, knowing
that the false statement or representation is partially or completely false.
(4) Makes or causes to be made a false statement or representation in order to be
used to qualify as provider of a good or service under the Medicaid Program,
knowing that the false statement or representation is partially or completely
false.
(5) Charges to any beneficiary or person who acts on behalf of a beneficiary, money
or other consideration at a rate in excess of the rates agreed with the Managed
Care Organization, any health service organization and/or insurer, regardless of
the healthcare delivery model.
(6) Except as otherwise authorized under the Medicaid Program, pays, charges,
solicits, accepts, or receives, in addition to any amount otherwise required to
be paid under the Medicaid Program any gift, money, donation, or other
consideration or bribe in connection with the goods or services paid or claimed
by a provider under the Medicaid Program.
(7) Knowingly presents or causes to be presented a claim for payment under the
Medicaid Program for:

(a) A good or service that has not been approved or acquiesced in by a treating
physician or a health care professional;
(b) A good or service that is substantially inadequate or inappropriate when
compared to generally recognized standards within the particular discipline or
within the health care industry; or
(c) A product that has been adulterated, debased, mislabeled, or that is
otherwise inappropriate;
(d) A good or service that has not been provided as claimed; and/or
(e) A good or service that is not medically necessary.

(8) Is a Managed Care Organization, a health service organization and/or insurer
regardless of the regardless of the healthcare delivery model and knowingly:

(a) Fails to provide to an individual a health care benefit or service that the
entity is required to provide under the contract;
(b) Fails to provide to the commission or appropriate state agency information
required to be provided by law, regulation, or contractual provision; or
(c) Engages in a fraudulent activity in connection with the enrollment of an
individual eligible under the Medicaid Program in the organization’s managed care
plan or in connection with marketing the organization’s services to an individual
eligible under the Medicaid Program;
(d) Commits a violation of any of the provisions of this Act to receive or cause
to be received an unauthorized payment or benefit under the Medicaid Program.

B. Penalties for Medicaid Fraud

Any person who violates any of the provisions of this Act to receive or cause to be received an unauthorized payment or benefit under the Medicaid Program shall be guilty of a Medicaid Fraud offense and shall be punished as follows:

(a) Any person who commits Medicaid Fraud shall be guilty of a felony if the total amount
of the payments unlawfully claimed or obtained is less than two thousand five hundred dollars ($2,500), and upon conviction, shall be punished by imprisonment for a fixed term of three (3) years. If there are aggravating circumstances, the punishment shall be increased to up to five (5) years; if there are mitigating circumstances, the punishment shall be reduced to a minimum of one (1) year. Likewise, such person shall pay a fine not to exceed three (3) times the amount of the payments unlawfully claimed or obtained, or a fine of one thousand dollars ($1,000), whichever is higher.
(b) Any person who commits Medicaid Fraud shall be guilty of a felony if the total amount
of the payments unlawfully claimed or obtained is two thousand five hundred dollars ($2,500) or more, and upon conviction, shall be punished by imprisonment for a fixed term of five (5) years. If there are aggravating circumstances, the fixed punishment shall be increased to up to eight (8) years; if there are mitigating circumstances, the punishment shall be reduced to a minimum of three (3) years. Likewise, such person shall pay a fine not to exceed three (3) times the amount of the payments unlawfully claimed or obtained, or a fine of ten thousand dollars ($10,000), whichever is higher.                                                        (c) If the person that committed Medicaid Fraud is an entity or juridical person rather than an individual, such person shall be punished with a fine not to exceed fifty thousand dollars ($50,000) for each offense under subsection (a), and not to exceed two hundred fifty thousand dollars ($250,000) for each offense under subsection (b).

C. Other Acts Barred

(a) Conspiracy to Defraud the Medicaid Program
Any person who conspires with another to defraud the Government and commits a violation of any of the provisions of this Act in order to obtain or cause another to obtain an unauthorized payment or benefit under the Medicaid Program shall be guilty of a felony and punished by imprisonment for a fixed term of three (3) years. If there are aggravating circumstances, the fixed punishment may be increased to up to five (5) years; if there are mitigating circumstances, the punishment may be reduced to a minimum of two (2) years.
(b) Obstruction of an Investigation Initiated by the Unit
Any person who willingly obstructs a criminal investigation initiated by the Unit of a violation of this Act shall be guilty of a felony and be punished by imprisonment for a fixed term of three (3) years. If there are aggravating circumstances, the fixed punishment may be increased to up to five (5) years; if there are mitigating circumstances, the punishment may be reduced to a minimum of two (2) years.
(c) Acquisition of Property by Third Parties
Any person who entered in an agreement or arrangement to conspire with or on behalf of a
person accused or convicted for violations of this Act, who in violation of the provisions of this statute acquires or attempts to acquire any property under subsection (b) of Section 3.08, which has been seized or is subject to forfeiture, shall be punished by imprisonment for a fixed term of ten (10) years. If there are aggravating circumstances, the fixed punishment may be increased to up to fifteen (15) years; if there are mitigating circumstances, the punishment may be reduced to a minimum of five (5) years.
(d) Destruction of Documentary Material
The destruction, mutilation, concealment, removal, or damage of any documentary material
requested by the Secretary for purposes of an investigation on Medicaid Fraud shall constitute a felony and be punished by imprisonment for a fixed term of three (3) years. If there are aggravating circumstances, the fixed punishment may be increased to up to five (5) years; if there are mitigating circumstances, the punishment may be reduced to a minimum of two (2) years.

D. Referral to the Office of the Insurance Commissioner

If the Unit determines that there is a potential violation of this Act by a company under the
jurisdiction of the Office of the Commissioner of Insurance, the Unit shall be required to refer
such determination to the Insurance Commissioner for the appropriate administrative action.
Depending on the seriousness of the violation, the Office of the Commissioner of Insurance may
suspend the insurance license of such entity.

E. Referral to the Licensing Board

Once a final and binding judgment is entered for a violation of the provisions of this Section, the
Unit shall be required to serve a copy of the judgment to the Licensing Board that regulates the
profession of the convicted person for purposes of any pertinent administrative disciplinary
procedure.

F. Statute of Limitations of the Criminal Action

The statute of limitation of a criminal action arising out of the provisions of this Act shall be:

(1) Ten (10) years for felonies;
(2) Five (5) years for misdemeanors.

a) Upon entering judgment against a person for violations of the criminal provisions of this Act,
the Court shall order, in addition to the imposition of any punishment under this Act, the forfeiture of all the property described below:

(1) Any interest that the person has acquired or held in violation of the provisions of this
Act;
(2) Any interest on, guarantee, claim against, or right to property or contractual interest of
any kind that constitutes an influence on any business that the person has established,
operated, controlled, or participated in the direction thereof, in violation of this Act; and/or
(3) Any property that constitutes, or has been received, directly or indirectly, as a result of
a criminal act, or the unlawful collection of a debt, or is the product of an unlawful act, as defined
in this Act.

b) The property subject to forfeiture under this Section shall include real and personal property,
including rights, privileges, interests, claims, and securities.
c) All right, title, and interest in property described in subsection (b) vests in the Government
upon the commission of the act giving rise to forfeiture under this Section. Any such property
that is subsequently transferred to a person other than the defendant may be ordered forfeited
to the Government, unless the transferee establishes that he is a bona fide purchaser of such
property who at the time of purchase was reasonably without cause to believe that the property
was subject to forfeiture under this Section.
d) In cases where the nature of the property so warrants, and following the seizure of property
ordered forfeited, the Secretary shall direct the disposition of the property by sale or any other
commercially feasible means, making due provision for the rights of any innocent persons. Any
property right or interest exercisable by, or transferable for value to, the Government shall expire
and shall not revert to the defendant, nor shall the defendant or any person acting in concert
with him or on his behalf be eligible to purchase forfeited property at any sale held by the
Government.                                                                                                                                                       (e) The proceeds from the sale or any other disposition of the property ordered forfeited under
this Section, as well as any forfeited money, shall be used to allocate funds to the operations of
the Unit, as well as to offset any expenses incurred in the forfeiture and sale, including expenses
incurred in the seizure, maintenance, and custody of the property until its subsequent
disposition, notices, fees, and expenditures incurred in connection with the proceeding, at the
discretion of the Director of the Unit, upon previous consultation with the Secretary.
(f) With Respect to Property Ordered Forfeited, the Secretary is authorized to:

(1) grant petitions for mitigation of forfeiture, restore forfeited property to victims of a
violation of this Act, and/or take any other action to protect the rights of innocent persons when in the interest of justice and not inconsistent with the provisions of this Act;
(2) compromise claims arising under this Section;
(3) award compensation to persons providing information resulting in forfeiture under this
Section;
(4) direct the disposition by the Government of all property ordered forfeited by public
sale or any other commercially feasible means, making due provision for the rights of innocent persons; and
(5) take appropriate measures necessary to safeguard and maintain property ordered
forfeited pending its disposition.

(g) No party claiming an interest in property subject to forfeiture may intervene in a trial or
appeal of a criminal case involving the forfeiture of such property under this Section; or
commence an action at law or equity against the Government concerning the validity of his
alleged interest in the property subsequent to the filing of an indictment or information alleging
that the property is subject to forfeiture.
(h) In order to facilitate the identification and location of property declared forfeited and to
facilitate the disposition of petitions for remission or mitigation of forfeiture, after the entry of an
order declaring property forfeited to the Government, the Court may, upon application of the
Prosecutor, order that the testimony of any witness relating to the property forfeited be taken by
deposition and that any designated book, document, record, recording, or other material not privileged be produced in the same manner as provided for the taking of depositions under the
Rules of Criminal Procedure.
(i) Following the entry of an order of forfeiture under this Section, the Secretary shall publish
notice of the order and of its intent to dispose of the property in in a newspaper of general
circulation. The Secretary may also, to the extent practicable, provide notice through certified
mail to any person known to have alleged an interest in the property that is the subject of the
order of forfeiture as a substitute for published notice as to those persons so notified. Any
person, other than the convict, asserting a legal interest in property which has been ordered
forfeited may, within thirty (30) days of the final publication of notice or his receipt of notice
under paragraph (1), whichever is earlier, petition the Court of First Instance for a declaratory
judgment to adjudicate the validity of his alleged interest in the property. The petition shall be
sworn by the petitioner and shall set forth the nature and extent of the petitioner’s right, title, or
interest in the property, the time and circumstances of the petitioner’s acquisition of the right,
title, or interest in the property, any additional facts supporting the petitioner’s claim, and the
relief sought. The hearing on the petition shall, to the extent practicable and consistent with the
interests of justice, be held within thirty (30) days of the filing of the petition. The court may
consolidate the hearing on the petition with a hearing on any other petition filed by a person
other than the convict. In addition to testimony and evidence presented at the hearing, the Court
shall consider the relevant portions of the record of the criminal case which resulted in the order
of forfeiture.  If, after the hearing, the Court determines that the petitioner has established by a
preponderance of the evidence that (A) the petitioner has a legal right, title, or interest in the
property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part
because the right, title, or interest was superior to any right, title, or interest of the convict at the
time of the commission of the acts which gave rise to the forfeiture of the property under this
Section; or (B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the
property and was at the time of purchase reasonably without cause to believe that the property
was subject to forfeiture, the Court shall amend the order of forfeiture. Said amendment shall be made in accordance with the Court’s determination.  Following the Court’s disposition of all petitions filed under this subsection, or if no such petitions are filed following the expiration of the period provided for the filing of such petitions, the Government shall have clear title to property that is the subject to forfeiture and the title thereof shall be recordable in the Property Registry through a court order. The Government may warrant good title to any subsequent purchaser or transferee. The Court of First Instance, San Juan Superior Part, shall have jurisdiction to enter orders as provided in this Section without regard to the location of any property which may be subject to forfeiture under this Section or which has been ordered forfeited under this Section. When the property is located outside of the jurisdiction of the Government, the Secretary shall enforce compliance with the orders entered by the Court.

The Secretary may bring civil action to cancel the certificate of incorporation of any corporation
organized under the laws of the Government or to cancel or suspend any license, permit, or
authorization issued to any foreign corporation doing business or charitable work in Puerto Rico
when the entity has committed violations of this Act and has been subsequently convicted. In
the event of conviction, for businesses other than corporations, the Secretary may petition the
corporation to halt its operations.

Subject to subsection (2) of this Section, any person who:

1.

a. Knowingly presents, or causes to be presented, a false or fraudulent claim for
payment or approval of benefits under any Government Program or under a service
contract;

b. Knowingly makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim under any Government Program or
under a service contract;

c. Conspires to commit a violation of paragraphs 1(a) and 1(b), of this Section; and/or

d. 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 Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property, relating to any Government Program or any service contract, as defined in this Act, shall be liable to the Government for a civil penalty of not less than eleven thousand one hundred eighty-one dollars ($11,181) and not more than twenty-two thousand three hundred sixty-three dollars ($22,363). These penalties shall be adjusted automatically every year in accordance with the provisions of the Federal Civil Penalties Inflation Adjustment Act of 2015 to be consistent with those authorized under the Federal False Claims Act, 31 USC §
3729(a). In addition to this civil penalty, said person shall be subject to three (3) times the amount of damages which the Government sustains because of the fraudulent acts of that person.

2. However, if the Court finds that:

a. The person committing the violation of paragraphs 1(a) through 1(d) of this Section,
furnished officials of the Government responsible for investigating false claims violations with all information known to such person about the violation within thirty (30) days after the date on which the date such person first obtained the information;
b. Such person fully cooperated with any state or federal investigation of any violation of paragraphs 1(a) through 1(d) of this Section, as certified by the Department of Justice; and
c. At the time such person furnished the Government with the information about the
violation of paragraphs 1(a) through 1(d) of this Section, no criminal prosecution, or civil action, or administrative action had commenced under this Act, and the person did not have actual knowledge of the existence of an investigation against him for such violations.

In these cases, the Court may reduce from three (3) to two (2) times the amount of damages
which the Government sustains because of such acts.

3. A person violating paragraphs 1(a) through 1(d) of this Section shall also be liable for
attorney’s fees and the costs incurred to recover any such civil penalty and/or damages.

4. Any person who agrees or intends to perform any act described in paragraphs 1(a) through
1(d) of this Section shall be brought before the Court of First Instance, San Juan Part, in a
complaint filed by the Secretary or the person designated by him. Said complaint shall be filed
on behalf of the Government and shall be granted if it clearly shows that the rights of the
Government have been violated by said person or entity and that the Government shall sustain
imminent and irreparable damage, harm, or loss pending a final judgment resolving the dispute,
or that the acts or omissions of such person or entity render inefficient said final judgment. The
Court may enter judgments or orders, including the appointment of a receiver, as necessary to
prevent any of the acts described in paragraphs 1(a) through 1(d) of this Section by any person
or entity, or as necessary to return to the Government any money or real or personal property
that may have been acquired through such acts.

1. If the Secretary or his designee finds that a person has violated or is violating Section 4.01 of
this Act, the Secretary or his designee may bring a civil action against the person.

2.

a. Any person may bring a civil action and file a complaint in his capacity as Relator for a
violation of Section 4.01 of this Act in the name of the Government. All actions shall be brought in the name of the Government. Such action may be dismissed without prejudice only if the Secretary or his designee give written consent to the dismissal and their reasons for consenting.
b. A copy of the complaint and written disclosure of substantially all material evidence
and information the person possesses shall be served on the Government, through the
Secretary, on the filing date thereof, by the person who filed the complaint with the Court on
behalf of and in the name of the Government. The complaint shall be filed with the Court of First Instance, shall remain under seal for at least sixty (60) days, and shall not be served on the defendant until the court so orders. In the complaint, the Relator shall certify under penalty of perjury that he did not obtain information from the persons precluded from filing a complaint under Section 1.02(g) of this Act. The Government may elect to intervene in the process, substitute the complainant and proceed with the action within sixty (60) days after it receives the complaint and the necessary evidence and information for the Secretary to investigate the information reported. The Court may extend the sixty (60)–day term for the Government to issue its decision whether or not it shall intervene; provided, that the Secretary or his designee requests such extension showing good cause to continue the investigation before deciding whether to intervene.
c. Before the expiration of the sixty (60)–day period or of any extension, the Government
may:
i. Proceed with the action, in which case it shall be conducted by the Government.
ii. Notify the Court that it shall not assume jurisdiction of the civil action, in which
case, the person bringing the action shall conduct the action.
iii. The Secretary or his designee shall have full discretion to make a decision of
whether to intervene in any case brought under this Act by any private citizen, and such
decision shall not be subject to judicial review nor challenge by the petitioner.
d. When a private person brings an action, no person other than the Government may
intervene or bring a related action based on the facts underlying the pending action.

3. If the Government proceeds with the action, it shall have the primary responsibility for
prosecuting the action, and shall not be bound by an act of the person who originally brought the
action.

a. The Government may dismiss the action at any time pursuant to subsection 2(a) of this
Section notwithstanding the objections of the person initiating the action. A copy of the
motion stating the reasons for the dismissal of the action must be served on the person
who brought the action. Upon notice of the motion, the person who brought the action
shall have fifteen (15) days to oppose the dismissal of the action. In this case, the Court shall hold a hearing within a term of twenty (20) days after the objection of the person
who brought the action is received and notified.
b. The Government may settle the action with the defendant notwithstanding the
objections of the person bringing the action if the court determines, after a hearing, that the
proposed settlement is fair, adequate, and reasonable.
4. If the Government elects not to proceed with the action, the Secretary may allow the person who initiated the action to conduct the action before the Court on behalf and in favor of the Government. If the Relator is authorized to proceed with the action, he shall not be authorized to settle the claim on behalf of the Government, until the settlement proposal or motion to dismiss is filed with the Secretary or his designee for approval. Any payment for a Transaction shall be made to the name of the Secretary of the Treasury of Puerto Rico. Any compensation awarded to a Relator shall be subject to agreement between the Relator and the Government. If the Government elects not to proceed and allows the Relator to continue with the litigation, the Secretary may require to be served of all pleadings filed and be supplied with copies of all the evidence presented, including deposition transcripts at the Relator’s expense. If the Relator prevails in the action, in addition to the compensation awarded to him for the referral and transaction, the Relator may request the reimbursement of necessary and reasonable expenses which he has incurred and have not been awarded by the Court as attorney fees and costs. If the Government elects not to proceed and the Relator continues with the litigation, the Government shall not be liable to the Relator nor the defendant for any attorney fees. Once the cause of action is initiated, the Court may permit the Government to intervene at a later date upon showing good cause and through an express request from the Secretary or his designee. The Court shall not have jurisdiction to require the Secretary or his designee to intervene in certain action. Likewise, the Government may request the Court to limit the number of the Relator’s witnesses, testimonies, and cross-examination if the Government believes that the Relator’s unrestricted participation would affect a criminal investigation related thereto or if it
believes that not doing so would result in repetitious or irrelevant testimonies or would unduly delay the process. Whether or not the Government or the person who brought the action proceeds with the action, the Court, at the request of the Government, may stay discovery for a period of not more than sixty (60) days if the Government shows that all or part of discovery would interfere with an investigation or prosecution of a criminal or civil matter arising out of the same or similar facts.  The hearing to request the stay of discovery shall be held in camera. The sixty (60)–day period may be extended at the request of the Government if the Court determines that it has acted in good faith and that continuing with discovery shall interfere with other ongoing investigations.

1. If the Government proceeds with an action, the person who brought the complaint or the
Relator shall be entitled to receive at least fifteen percent (15%) but not more than twenty-five
percent (25%) of the proceeds of the action received by the Government for violations of the
Government Program or service contract, as the case may be. Provided, that the Relator shall
be entitled to such compensation once the Government enforces the judgment or settlement
agreement and has received the payment. Until the Government receives payment, the Relator
shall not be entitled to collect his share of the proceeds. Absent an agreement between the
Government and the Relator, the Court shall establish the percentage of the proceeds set forth
in this Section that the person who brought the complaint shall receive.

2. If the Court finds that the participation of the person who brought the action or the Relator was
based on information readily accessible to any person rather than a rigorous investigation, it
may fix a compensation of ten percent (10%) of the amount received by the Government under
the judgment or settlement agreement.

3. Any payment to the person bringing the action on behalf of the Government shall be made
from the proceeds of the judgment or settlement agreement. Except that, if the Government
receives partial payments under a judgment or settlement agreement, the Relator may only be
entitled to receive the percentage awarded as compensation from the payment received. The
Court may impose additional fees to the defendant for reasonable additional costs which the
person bringing the action had incurred, such as attorney fees. The person bringing the action
shall file with the Court an itemization of the expenses incurred, within fifteen (15) days after the date of the judgment or settlement agreement.

4. If the Government does not proceed with an action, the Relator shall receive not less than
twenty-five percent (25%) and not more than thirty percent (30%) of the amount of the judgment
as determined by the Court, in addition to any reasonable and necessary expenses incurred in
the litigation, under the same collection parameters for the Government stated in the above
subsection. The Relator shall file with the Court an itemization of such expenses, within fifteen
(15) days after the date of the judgment or settlement agreement.

5. Regardless of whether it was the Government or the Relator that conducts the action, if the
Court finds that evidence was presented indicating that the Relator conspired, participated, or
aided in the commission of the violation of the Government Program or service contract, the
share from the proceeds of the judgment or settlement agreement shall be reduced by five
percent (5%). If, as a result of the conspiracy, participation, or aid in the commission of the
violation of the Program or service contract, the Government files criminal charges against the
person bringing the action, the Relator shall be dismissed from the action as the Government’s
representative and shall not receive any share of the proceeds of the judgment or settlement
agreement arising from his referral. The Government may, however, continue with the cause of
action at the discretion of the Secretary or his designee.

6. If the Government does not proceed with an action and the Court finds that it lacks merit, the
Court shall impose fees for recklessness, as necessary, on petitioner. The defendant shall have
fifteen (15) days from the date the Court enters or dismisses the action to submit to the Court an
itemization of the reasonable fees and expenses incurred.

7. The Government shall never be liable for expenses incurred by the Relator in bringing the
action or conducting the action in benefit of the Government. If the Relator prevails in the action,
the Relator may be reimbursed such necessary and reasonable expenses in connection with the
action, excluding any sums for attorney’s fees incurred by the Relator which shall not be
reimbursable by the Government.

8. No Relator shall be compensated by the Government for having referred a fraud or false
statements for investigation, which has not been brought in Court as a Qui Tam action.

1. In no event may a person bring an action which is based upon allegations or transactions
which are or were the subject of a civil suit or an administrative civil money penalty proceeding
in which the Government was already a party.

a. The court shall dismiss an action if the allegations or transactions as alleged in the
action or claim, series of events, or actors are substantially the same. In these cases, the
Government may bring the action at its discretion.

Any person, employee, contractor, or agent shall be entitled to bring a complaint as Relator if he
knows of the existence of a violation of this Chapter of this Act, unless expressly prohibited by
Section 1.02(g) of this Act. If such employee, contractor, or agent is discharged, demoted,
suspended, threatened, or otherwise discriminated against in the terms and conditions of
employment for bringing an action, such employee shall be entitled to the protections of Title IV
of Act No. 2–2018, known as the “Anti-Corruption Code for a New Puerto Rico,” and the
applicable Federal Laws.

1. A subpoena requiring the attendance of a witness at a proceeding arising from the provisions
of this Act may be served in Puerto Rico or any other state or territory of the United States of
America, as provided in the Puerto Rico Rules of Civil Procedure.

2. A civil action under the provisions of this Act may not be brought:

a. Six (6) years after the date on which the violation of the Government Program or the
service contract is committed, in accordance with the provisions of this Act.

b. Within three (3) years after the date when the allegations of potential violations are
known by the Government, regardless of the fact that the six (6)–year term of paragraph (a) has elapsed, but in no event more than ten (10) years after the date on which the violation is
committed.

c. If evidence is presented indicating that the violation constituting fraud or a false
statement occurred during a conspiracy, the statute of limitations shall begin to elapse when the last act of the conspiracy takes place.

A civil action under the provisions of this Act shall not preclude the Government from bringing a
criminal action based on the same facts of the civil action or to proceed with administrative
remedies before the concerned government entities.

The Court of First Instance, Superior Part of San Juan, shall be the primary and exclusive forum
where criminal actions shall be brought by the Medicaid Fraud Control Unit. In addition, it shall
be the forum where complaints for violations of Government Programs or service contracts shall
be brought under the provisions of this Act, regardless of the judicial region where the fraud or
false statement occurred.

If any clause, paragraph, subparagraph, sentence, article, provision, section, subsection,
chapter, subchapter, heading, or part of this Act were held to be null or unconstitutional, the
ruling, holding, or judgment to such effect shall not affect, impair, or invalidate the remainder of
this Act. The effect of said holding shall be limited to the part of this Act thus held to be null or
unconstitutional. If the application to one person or circumstance of any part of this Act were
held to be null or unconstitutional, the ruling, holding, or judgment to such effect shall not affect
or invalidate the application of the remainder of this Act to such persons or circumstances where it may be validly applied. It is the express and unequivocal will of this Legislative Assembly that
the courts enforce the provisions and application thereof to the greatest extent possible, even if
it renders ineffective, nullifies, invalidates, impairs, or holds to be unconstitutional any part
thereof, or even if it renders ineffective, nullifies, invalidates, impairs, or holds to be
unconstitutional any of its parts, or even if it renders ineffective, invalidates, or holds to be
unconstitutional the application thereof to any person or circumstance. This Legislative
Assembly would have approved this Act regardless of any determination of severability that the
Court may make.

This Act shall take effect immediately after its approval. However, the provision s of Chapter IV
on False Claims shall take effect one hundred eighty (180) days after the approval of this Act.
Act No. 154, approved July 23, 2018.