United States Ex Rel. Bennett v. Biotronik, Inc.United States Ex Rel. Bennett v. Biotronik, Inc.
Lead Opinion
Dissent by Judge Siler
OPINION
I.
Where an individual has information regarding a fraud perpetrated on the Federal Government, the False Claims Act (FCA),
But the right to bring qui tam suits is not absolute.
First, there are restrictions to allow the Government to determine whether the relator’s claims are worthy enough to engage federal resources. The qui tam complaint is sealed initially for sixty days. § 3730(b)(2). The Government is required to investigate, § 3730(a), but, if unable to complete its investigation within sixty days, can seek to extend the seal period. § 3730(b)(3). After it completes the investigation, the Government must notify the court if it will proceed with the action. This is referred to as “intervening.” § 3730(b)(4)(A). If the Government declines to intervene, the relator may proceed. § 3730(b)(4)(B). If the Government does intervene, the Government will control the action. It may prosecute the action, settle it, or dismiss it.
Second, even if the Government does not intervene and take over the action, the FCA still does not allow every relator to bring a suit, but rather contains a series of “bars” to such suit. Section 3730(d)(3) prohibits a suit by a relator convicted of criminal conduct arising from his role in the fraud against the government. Another bar, § 3730(b)(5)—the “fírst-to-fíle bar”— prohibits suits from relators when another relator’s qui tam action regarding the same conduct is pending. A third bar, § 3730(e)(4)(A)—the “public-disclosure bar”—prohibits a relator from bringing a suit based upon' information which has been publicly disclosed in a different proceeding. Finally .there is § 3730(e)(3)—the “government-action bar”—which prohibits a relator from bringing a qui tam suit “based upon allegations or transactions which are the subject of a civil suit.. .in which the Government is already a party.”
In a matter of first impression, we are asked to determine the reach of the government-action bar.
II.
On December 31, 2009, Brian Sant filed an FCA qui tam action against Biotronik, a medical device supplier.
Sant alleged that Biotronik engaged in a series of wrongful acts including, among other things, (1) the promotion of unapproved and unnecessary medical devices, (2) bribes to physicians in the form of paid, but useless, speaking 'engagements, (3) the creation of “advisory boards” meant to funnel illegal payments to physicians, and (4) the payment of bribes to physicians in the form of sports tickets, gift cards, Broadway plays, extravagant dinners and travel, and opera tickets. Sant also asserted (5) that Biotronik used sham clinical studies to provide kick-backs for physicians who prescribed its pacemakers and implantable' cardiac defibrillators. The “quid” of these benefits to physicians was alleged to procure the “quo” of physicians’ use or endorsement of Biotronik’s medical devices.
The United States investigated Sant’s charges for nearly four years. Finally, on May 14, 2014, the United States intervened in Sant’s case and informed the court that it had reached a settlement agreement with Biotronik and Sant on claims related to. certain “covered conduct.” This .conduct included Biotronik’s payment for doctors’ meals at expensive restaurants and to doctors for membership on a physician advisory board for which proper documentation about specific work performed Was not maintained, all in return for the doctors’ use of Biotronik devices. The “covered conduct” did not include any of the other ¿negations, and therefore did not include the alleged sham clinical studies. The case was dismissed in June 2014 with prejudice With respect to Sant. With respect to the United States, the case was dismissed with prejudice as to the “covered conduct,” and without prejudice with respect to any other conduct.
On March 31, 2010, three months after Sant’s complaint was filed, and more than three years before Sant’s case was dismissed, Bennett filed a qui tam complaint jn Nevada federal district court that substantially mirrored the complaint filed earlier by Sant. Bennett worked at Biotro-nik from 2004 until 2010 as a product manager, business development manager, district sales manager, and regional sales manager before being terminated. Upon an ex parte motion by the United States, the Nevada district-court transferred-Bennett’s case to the Eastern District of California because it overlapped significantly with the complaint filed, by Sant. The United States .did not intervene in.Bennett’s first complaint, and on April 30, 2014, Bennett’s case was dismissed without prejudice upon Bennett’s request.
On October 14, 2014, Bennett filed the qui tam complaint at issue in this appeal on behalf of the United States. The action also included twenty-eight state-law claims based upon certain state-law versions of the.,FCA, and a claim on behalf of the District of Columbia based upon the District of Columbia Procurement Act,
Biotronik filed a motion to dismiss in October 2015. The district court granted the motion on the basis of
. - The district court-made two.rulings regarding Bennett’s' argument that the use of the present tense in
In addition to its findings regarding
This appeal followed.
III.
The district court’s legal conclusions are reviewed de novo. United States v. Forrester,
IV.
A.
Both common sense and statutory language demonstrate that the Government remains a “party” even after the cessation of its enforcement action. We therefore hold that the government-action bar applies even when the Government is no longer an active participant in an ongoing qui tarn lawsuit. The result is neither impractical nor impermissible, but rather the most sensible reading of the FCA.
In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.
Bennett reads this language to mean that while “Congress plainly created a bar to qui tarn actions when a Government action over the same allegations or transactions is currently ongoing, [njothing in the text suggests a lingering ban on subsequent qui tarn, actions[.]” Appellant’s Opening Brief (App. Br.) at 12. In other words, Bennett argues that once an action in which the Government is a party has concluded, the government-action bar would no longer prohibit subsequent suits based on the same allegations as those contained in the concluded case. Bennett would have our analysis hinge on what the definition of the word “is” is, and urges us to rule that the Government no longer “is” a party to cases which are not ongoing. Toward that end, Bennett cites numerous cases from the Supreme Court and the Ninth Circuit which relied on the tense of verbs to determine a statute’s temporal reach.
But Bennett is incorrect. The case hinges not on the definition of the word “is,” but rather on the definition of the phrase “is already a party.” Our legal system instructs that a party remains a party even after litigation ends.
Statutory context only buttresses this interpretation. Under
(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party.
Through the phrase “were publicly disclosed,”
. Bennett argues that this interpretation of the statute ignores the work done by the word “already,” as the word “already” bespeaks the present tense on its own. Bennett states in his reply brief that “[whatever it might have intended in
Bennett , is quite right. In “normal language usage,” we would not say that James Madison is already a party to Marbury v. Madison, because James Madison is dead. The Government, however, never dies.
Bennett’s interpretation would be the radical one, as a party maintains rights in civil actions which actions can no longer be described as “pending” or “ongoing.” The Government cannot be ejected from its status as a party to. concluded lawsuits solely due to the subtle addition of the word “already.” ,
Further, within the FCA itself, the statutory language tells us when the lawsuit being described is a “pending;’.’ lawsuit.
Neither would the district court’s interpretation of
But Bennett overstates the nature and significance of the statutory overlap.
There are numerous occasions in which a federal proceeding, or the disclosure which takes place within it,, will not be public. For example, we have concluded that disclosures made in discovery in the course of a civil case, but which have not been filed with the district court, are not “public” for the purposes of the public-disclosure bar. See U.S. ex rel. Schumer v. Hughes Aircraft Co.,
Undeniably, there will be numerous re-lators who are barred both by the government action bar,
It should not be surprising that statutes are not necessarily .written so that one and only one statute can apply at a time. To the contrary, statutes often contain overlapping provisions. The term “belt and suspenders” is sometimes used to describe the common tendency of lawyers to use redundant terms to make sure that every possibility is covered. That some wear a belt and suspenders does not prove the inadequacy of either to hold up the pants, but only the cautious nature of the person wearing the pants ... Because neither of the statutes, as interpreted and applied by the government and. the district court, is entirely subsumed within the other, the two statutes so interpreted coexist in harmony.
(internal citations and quotations omitted). The same can be said with respect to the overlap Bennett identifies.- The statutes do not entirely overlap, and their redundancy does not persuade this court to read the statutory language in an overly narrow manner.
As a'result, we‘find that for purposes of
B.
Bennett argues . that even. if .§. 3730(e)(3) bars relators whose allegations are similar to those raised in concluded lawsuits in which the Government is a party, the Government in Sant declined party status with respect to the claims which it did not settle. As a result, argues Bennett,
The problem with Bennett’s argument is that it relies on an unsupportable interpretation of “party status.” There is nothing in the FCA which indicates that, upon joining and settling a lawsuit, the government becomes a party to the suit with respect only to those claims which it settles, but is not a party to the suit with respect to those claims which it does not settle.
Further, the Supreme Court recently ruled that party status is conferred on the Government when it has “exercised its right to intervene in the 'case.” Eisenstein v. City of New York,
Bennett attempts to rescue his argument through a reference to the Supreme Court case, Rockwell Int’l Corp. v. United States,
Bennett here conflates the Government’s decision to settle certain, but not all, of its claims, with the “original source” question described by the Court in Rockwell. The question before this court is not whether some, but not all, of the claims in a case Bennett joined pass muster as presented by Bennett as an original source. The question is whether the statute’s clear language would prohibit Bennett from bringing the case at all, given the fact that the Government was made aware of the claims it ultimately chose not to settle. The existence of multiple claims—some of which the Government settles—has no bearing on the Government’s relationship to the entire action. As described above, the Government becomes a “party” to the suit as a whole when it intervenes. It does not become a “party” to a particular claim or number of claims.
V.
The Government remains a party to suits even after those suits have been settled, and the Government cannot be said “partially” to have intervened in Sant’s lawsuit. Bennett’s suit is barred by
AFFIRMED.
Notes
. The False Claims Act has a long history: a version of it has existed since the height of the Civil War in 1863, when President Lincoln asked Congress to pass a law to help combat fraud by defense contractors. See Sean Ham-er, Lincolns Law: Constitutional and Policy Issues Posed by the Qui Tam Provisions of the False Claims Act, Kan. J.L. & Pub. Pol’y (Winter 1997).
. “Qui tam” is an abbreviation of the Latin phrase "qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “[he] who sues in this matter for the king as well as for himself.”
.' States have developed analog False Claims Acts as well to combat fraud against the individual States. See, e.g., Indiana False Claims and Whistleblower Protection Act,
. The Government’s dismissal of the action may be over the objection of the relator as long as the court gives the relator an opportunity for a hearing.
. Appellee Biotronik’s motion under
. The motion to dismiss advanced six arguments: (1) Bennett’s claims are barred by Sant v. Biotronik and Bennett’s first com- . plaint as a matter of claim preclusion; (2) Bennett’s claims in this case are duplicative of his claims in his earlier case and should be dismissed as an abuse of judicial process; (3) Bennett’s claims are ¡barred by. the government-action bar; (4) another FCA exclusion, the "original source” rule, also bars Bennett’s complaint; (5) Bennett does not plead fraud with specificity, as required by
. See App. Br. at 13-16. (citing Gwaltney of Smithfield v. Chesapeake Bay Foundation,
. Bennett urges that his argument is buttressed by Ninth Circuit and Supreme Court precedent indicating that the present tense of the verb "to be" should be dispositive. But none of the cases he cites applies here, as each involved a situation where the relevant individual’s status was clearly past or present, but not contextually indicated as perpetual. For example, in Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc.,
.
(4)(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially die same allegations or transactions as alleged in the action or claim were publicly disclosed—
(i) in á Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; .or
(iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. •
(B) For purposes of this paragraph, “original source” means an individual who either (i) prior to a public. disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds. to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section. •
31U.S.C.A.
Dissenting Opinion
dissenting:
I respectfuljy dissent for the reasons stated herein. When this case was argued, attorneys for the parties admitted that there was no controlling case either from the Supreme Court or from this court. I am most impressed by the position of the amicus, the United States of America, in interpreting the statute, the False Claims Act (FCA),
In this case, the Sant claim against Bio-tronik was settled and the district court dismissed the case with prejudice as to the United States with respect to the covered conduct described in the settlement agreement, but otherwise without prejudice with respect to the United States. A few months after the United States had settled the Sant case and after Bennett had voluntarily dismissed his first qui tam action, Bennett filed the present action for “uncovered conduct,” including the alleged sham clinical studies, but not including conduct in the settlement with the United States. As the United States suggests, when it intervenes in a qui tam case on only some, but not all, of the claims in a case, it may choose to settle certain claims and not settle others, allowing the court to dismiss the case without prejudice to the government on the declined claims, Thus, it is possible that the government could later pursue the declined claims if further investigation suggests that action.
The district court and the majority in this case suggest that because the word “pending” does not appear in
When the False Claims Act was amended in 1986, Congress sought to discourage parasitic actions and to “walk a fine line between encouraging whistle blowing end discouraging opportunistic behavior.” United States ex rel. Springfield Terminal Ry. Co. v. Quinn,
There are other possible procedures which might preclude recovery by Bennett against Biotronik in the district court. In its motion to dismiss the complaint, Biotro-nik raised several other issues, including preclusion, which the district court could consider if this matter is remanded. Under' that principle, Bennett cannot reassert claims that were settled in Sant’s qui tam suit or already settled by the government.
The United States suggests that the interpretation of