Lead Opinion
BOGGS, J., delivered the opinion of the court, in which McKEAGUE, J., joined. KEITH, J. (pp. 299-301), delivered a separate opinion concurring in the result.
OPINION
Appellant Sally Summers (“Summers”) appeals an order of the district court deny
I
Summers filed the complaint in this case on March 20, 2009. According to the complaint, Summers was, in 2008, employed as a physical therapist by the appellee LHC Group, Inc. (“LHC”), a corporation engaged in the business of providing in-home health services to patients insured by Medicare. The complaint further alleged that LHC routinely continued to recommend, provide, and bill Medicare for health services for patients even after staff members informed their managers that such care was no longer needed. Summers alleged that she herself had repeatedly complained to LHC management that these actions were fraudulent, but was told “not to mention the word fraud” and that LHC management took no action to address her concerns. She further claimed that, on December 10, 2008, LHC employed a pretextual reason to terminate her employment and that the real reason for her termination was her complaints about LHC’s fraudulent actions.
Summers’s complaint pled federal jurisdiction over her claims via the FCA, in that “[t]he aforementioned acts committed by the LHC management and employees constituted fraud against the United States Government in violation of 31 U.S.C. § 3729-3733 et seq., ‘The False Claims Acts.’” In her prayer for relief, she requested that the United States be served with process and that she be permitted to prosecute the case on its behalf if it should choose not to be a party.
According to an affidavit filed by Summers’s counsel, shortly after the filing he was contacted by an employee of the clerk’s office who inquired as to whether the complaint should be placed under seal. During that conversation, Summers alleges, counsel was told that the complaint “would not be logged into the [Electronic Case Filing] system until [counsel] and the Clerk’s Office had discussed the proper filing method.” Appellant’s Br. at 6. On March 23, 2009, that same employee of the clerk’s office allegedly left counsel a voice-mail message informing him that, in order to file the complaint under seal, he needed to send her an email making that request. However, when counsel called the clerk’s office to confirm the relevant email address, he was told by another employee there that an email would not suffice, and instead that he would be required to file a motion to seal the case.
On March 24, 2009, prior to Summers’s counsel’s filing any motion to seal, the complaint was posted on PACER, the publiely-aecessible Internet-based portal providing access to court filings; thus, it was available to anyone with a PACER account who was willing to pay the applicable fee for accessing court documents online. On March 26, 2009, Summers’s counsel received a call from an Assistant United States Attorney informing him that the U.S. Attorney’s Office had seen the case on PACER. Ibid. Finally, on March 27, 2009, counsel filed a motion to seal the
On April 15, 2009, LHC moved to dismiss the complaint. As a basis for its motion, LHC argued, pursuant to Federal Rule of Civil Procedure 12(b)(1), that the failure of Summers’s counsel to file the complaint under seal violated the requirements of the FCA, leaving the court without subject matter jurisdiction. LHC also argued in the alternative that, pursuant to Federal Rule of Civil Procedure 12(b)(6), Summers had failed to state a claim on which relief could be granted.
The district court granted LHC’s motion to dismiss on June 11, 2009. United States ex rel. Summers v. LHC Grp. Inc., No. 3:09-CV-277,
This timely appeal followed.
Although we generally review a denial of a motion to alter or amend a judgment for abuse of discretion, we address questions of law presented in such proceedings de novo. Huff v. Metro. Life Ins. Co.,
III
A
The False Claims Act imposes liability on “[a]ny person who ... knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1) (2006) (amended 2009).
[a] copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the Government pursuant to Rule 4(d)(4) of the Federal Rules of Civil Procedure. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.
Id. at § 3730(b)(2) (footnote omitted). Thus the statute that creates the cause of action at issue and authorizes qui tam plaintiffs to pursue it also specifies that the complaint be filed under seal.
Originally, the FCA was enacted in 1863 to respond to rampant fraud in Civil War defense contracts. Am. Textile Mfrs. Inst., Inc. v. The Ltd., Inc.,
Senator Howard’s remarks proved prescient, most notably in 1941 when the Supreme Court decided that so-called “parasitic” qui tam suits under the FCA — that is, suits filed by private citizens utilizing knowledge of the alleged fraud that the relator had gleaned from criminal indictments based on the very same actions— were nevertheless permitted by the statute. See United States ex rel. Marcus v. Hess,
The FCA did not require that the relator’s complaint be filed under seal, however, until the passage of amendments to the Act by the 99th Congress in 1986. At that time of the 1986 amendments, the Senate Committee indicated that its “overall intent in amending the qui tam section of the False Claims Act [was] to encourage more private enforcement suits,” but gave several other reasons for imposing the specific requirement that a qui tam False Claims Act complaint be filed under seal. S.Rep. No. 99-345, at 23-24, 1986 U.S.C.C.A.N. 5266, 5288-89. Most prominently, it noted that the under-seal requirement gave the Government the chance to determine “whether it was already investigating the claims stated in the suit and then to consider whether it wished to intervene” prior to the defendant’s learning of the litigation. Erickson ex rel. United States v. Am. Inst. of Biological Sciences,
B
The statutory purpose of the under-seal requirement is of particular importance to this case, because the appellant argues that the logic of the Erickson decision, which the district court found persuasive, misconstrued that purpose. In Erickson, a district court dismissed an FCA complaint where the relator failed to file the complaint under seal, both because “a party pursuing a statutory remedy must comply with all the procedures the statute mandates” and, separately, because
[i]n general, a party pursuing a statutory remedy must comply with all the procedures the statute mandates. As the Supreme Court put it ..., if a statute “creates a new liability and gives a special remedy for it, ... upon well-settled principles the limitations upon such liability become a part of the right conferred, and compliance with them is made essential to the assertion and benefit of the liability itself.”
Id. at 911 (quoting United States ex rel. Texas Portland Cement Co. v. McCord,
As to the “sound policy” justification, the Erickson court held that the provisions of the FCA were adopted to permit the Government to determine in private whether it was already investigating the claims at issue, while at the same time preventing defendants from learning they were under investigation.
Summers argues that Erickson incorrectly construed the intent behind the sealing requirements, and that therefore, by relying on the logic of Erickson, the district court in this case erred on a matter of law. According to Summers, Erickson’s reliance on non-gm tam cases to divine Congressional intent was inapposite, because Congress had specifically indicated that their purpose in passing the seal requirements was to balance the needs of law enforcement with the private-law-enforcement nature of the qui tam provisions — a specific balance not at issue in other statutes. Appellant’s Br. at 23-24.
Instead, Summers urges us to adopt a balancing test adopted by the Ninth Circuit in United States ex rel. Lujan v. Hughes Aircraft Co.,
The Ninth Circuit reversed. Though it observed that “Lujan clearly violated the seal provision,” Lujan,
LHC responds to Lujan primarily with a side-step: they argue that Lujan is inapposite because, in that case, the relator did file her complaint under seal, and only violated the sealing provisions after a significant portion of the sealing period had elapsed. In so doing, they point to language in Lujan emphasizing the factual differences between that case and Erickson and Pilón:
For example, in Erickson, the relator completely failed to comply with any of the requirements of § 3730(b)(2). Similarly, in Pilón, counsel failed to file the complaint in camera, failed to serve the United States with a copy of the complaint and a written disclosure of the underlying evidence, and, several hours after filing, arranged for an extensive interview with a reporter.
Lujan,
The distinction between Lujan’s after-filing violation and Summers’s failure to file under seal at all makes for a tempting target. Certainly, it would be rational to
However, the reasoning of Lujan itself appears to make such a distinction illusory. Rather, in evaluating the question of whether damage had been done to the Government’s interest in conducting investigations without “tipping off’ the defendant, the Ninth Circuit observed that
[w]e have reason to doubt whether the Government actually suffered any harm in this case. Both parties refer in their briefs to Hughes’ deposition of Lujan in her state court proceedings; the deposition took place before her qui tarn case was filed and before any seal existed. The deposition transcript excerpts presented by Lujan indicate Hughes was aware of Lujan’s intent to file a qui tam action and of the nature of her allegations. In light of the fact that Lujan’s disclosure to the Times gave only general descriptions of her claims in contrast to the very detailed answers Lujan gave Hughes’ attorney during her deposition, there is a strong inference that Hughes did not learn anything from the Times articles that it did not already know. If Hughes learned nothing from the Times articles, then the articles alone could not have prompted any action by Hughes, and the Government’s investigation could not have been hampered by the articles.
Lujan,
Perhaps even more importantly, the questions of which factors to weigh and how to weigh them were, in the Lujan court’s view, ■ subsequent to a determination that a facts-and-circumstances analysis was required in order to preserve the balance Congress intended in the first place. Tellingly, the language cited by the Appellees distinguishing the facts of Lujan from those of Erickson and Pilón comes from a section of Lujan discussing the question of how severe the breach might have been — an inquiry the court would never even reach if a facts and circumstances analysis were not appropriate. Thus the Lujan court had moved on from the question presented here to an application of its newly-fashioned test.
This circuit has never addressed the question of whether a violation of the sealing provisions applicable to qui tam relators under the FCA precludes recovery by the relator.
We do so for several reasons. Most prominently, a Lujan-style balancing test would, in our opinion, represent a form of judicial overreach. In fashioning the FCA’s procedural requirements, Congress clearly identified the factors it found relevant and considered the tension between them, and decided that a sixty-day in camera period was the correct length of time required to balance those factors. The Senate Committee on the Judiciary, in explaining the decision to impose the under-seal requirement, reported that
[t]he initial 60-day sealing of the allegations has the same effect as if the qui tam relator had brought his information to the Government and notified the Government of his intent to sue. The Government would need an opportunity to study and evaluate the information in either situation. Under this provision, the purposes of qui tam actions are balanced with law enforcement needs as the bill allows the qui tam relator to both start the judicial wheels in motion and protect his own litigative rights. If the individual who planned to bring a qui tam action did not file an action before bringing his information to the Government, nothing would preclude the Government from bringing suit first and the individual would no longer be considered a proper qui tam relator. Additionally, much of the purpose of qui tam actions would be defeated unless the private individual is able to advance the ease to litigation. The Committee feels that sealing the initial private civil false claims complaint protects both the Government and the defendant’s interests without harming those of the private relator.
Two other features of the requirement support the conclusion that Congress’s selection of sixty days was intended to represent its own judgment as to how to balance those interests. First, the Committee explicitly indicated that “[njothing in the statute ... precludes the Government from intervening before the 60-day period expires, at which time the court would unseal the complaint and have it served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure.” Ibid. In other words, Congress understood that it was possible for circumstances to arise that would obviate the need for the full sixty-day period, and further demonstrated that it knew how to provide for them. The only such circumstance it appears to have found relevant, however, was one in which the Government had already decided to intervene and had acted on that decision. The exception is thus entirely within the Government’s discretion, consistent with Congress’s intent to provide it with a window in which it might “determine both if that suit involves matters the Government is already investigating and whether it is in the Government’s interest to intervene and take over the civil action.” Ibid. No such exception is found in the statute or in its legislative history for situations in which a relator simply fails to abide by the under-seal requirement.
Second, the statute also demonstrates Congress’s intent by providing for a mechanism under which the Government may petition a court for extensions of the original sixty-day evaluatory period and the time during which the complaint remains under seal. However, such
[ejxtensions will be granted ... only upon a showing of “good cause”. The Committee intends that courts weigh carefully any extensions on the period of time in which the Government has to decide whether to intervene and take over the litigation. The Committee feels that with the vast majority of cases, 60 days is an adequate amount of time to allow Government coordination, review and decision. Consequently, “good cause” would not be established merely upon a showing that the Government was overburdened and had not had a chance to address the complaint.
Id. at 24-25, 1986 U.S.C.C.A.N. 5266, 5289-90.
If Congress knew how to provide for the extension of the sXty-day in camera period in circumstances where the Government could show good cause, it surely knew how to provide for the abbreviation of that period when one of the other parties affected by the requirement — -in this case, the relator — could show good cause. The fact that Congress did not do so is not ours to gainsay. See Bryant v. Dollar Gen. Corp.,
We also find unpersuasive the argument that “[t]he mere possibility that the Government might have been harmed by disclosure is not alone enough reason to justify dismissal of the entire action.” Lujan,
It is perhaps true that in some cases a disclosure might turn out to be relatively benign. Such an outcome, however, would be affected in large measure by information to which the plaintiff has no access, including the state of any investigation already undertaken by the Government and its own internal investigative priorities, and the extent to which a defendant may have guessed that a qui tam suit was coming and that defendant’s tolerance for risk in the face of such a possibility. For that reason, even disclosures that cause little or no harm to the Government’s interest do so through no particular virtue of the plaintiff. Requiring violations of the FCA’s under-seal requirement to be subjected to a balancing test thereby both misses the point of the requirement itself and potentially encourages plaintiffs to comply with the FCA’s under-seal requirement only to the point the costs of compliance are outweighed by the risk that any given violation would turn out to be severe enough to require dismissal of an FCA claim. Under such a regime, plaintiffs would be encouraged to make disclosures in circumstances when doing so might particularly strengthen their own position, such as those in which exposing a defendant to immediate and hostile media coverage might provide a plaintiff with the leverage to demand that a defendant come to terms quickly. In other words, the extent of a plaintiffs compliance with the FCA’s under-seal requirement would become subject to the same risk analysis as any other litigation tactic, an analysis in which it would be the plaintiffs, not the Government’s, interests that were paramount. Given that the very existence of the qui tam right to bring suit in the name of the Government is created by statute, it is particularly appropriate to have the right exist in a given case only with the preconditions that Congress deemed necessary for the purpose of safeguarding the Government’s interests. Summers’s arguments that the cases relied upon by LHC did not themselves involve the particular balance addressed by Congress vis-a-vis the FCA are irrelevant. As a matter of statutory construction, those cases stand for the proposition that the procedural requirements imposed by a statute reflect the compromise between competing interests in the manner intended by Congress, and thus condition the plaintiffs cause of action, without regard to factors we might otherwise consider pertinent. An FCA plaintiff who cannot satisfy those conditions, like Summers, cannot bring suit in the name of the Government and has no basis for recovery.
C
Summers attempts to present a second issue in her brief on appeal, inasmuch as she argues that “the nature of the violation of section 3730(b)(2) did not warrant dismissal.” See Appellant Br. at 20-22. In essence, this is an argument that she made a “good faith attempt to file the complaint under seal” and that her failure to do so was not willful.
These issues did not form a basis for the decision below, and remain immaterial on appeal given our analysis above. Though
D
Finally, we note that the Government has asked that we clarify that any dismissal of Summers’s claims is without prejudice to their ability to bring the same claims against LHC. The district court explicitly held that its dismissal was without prejudice to the United States. United States ex rel. Summers,
IV
Congress has created the qui tam cause of action in False Claims Act eases, and has imposed procedural conditions on that cause of action as it sees fit to balance competing policy goals. We will not second-guess its calculus; without meeting those conditions, a False Claims Act plaintiff has no more right to bring suit in the Government’s name than any other private person. The judgment of the district court is AFFIRMED.
Notes
. LHC's motion to dismiss also argued that Summers had failed to plead fraud with particularity, as required by Federal Rule of Civil Procedure 9(b). The district court did not reach this issue, and it is not before us.
. The district court, in a footnote, stated that "if it were required to make an express finding on the issue,” it would hold the requirements to be non-jurisdictional, largely because if they were jurisdictional then a violation would require the complaint to be dismissed with prejudice to both the relator and the United States, thus depriving the United States of its right to pursue the litigation if it so chose. United States ex rel. Summers,
. The FCA also imposes liability on related grounds, such as knowingly making or using false records to obtain payment for false claims, or conspiring to defraud the Government by getting a false claim allowed or paid. See 31 U.S.C. 3729(a)(2)-(3) (2006) (amended 2009). Neither the original complaint nor either version of the amended complaint specify the precise subsections Summers wished to invoke, instead claiming only that LHC's actions violated "Title 31 U.S.C. § 3729-3733 et seq., 'The False Claims Acts.' ” Be that as it may, the issues in this appeal are unaffected by the type of FCA violation Summers's complaint might fairly be read to allege.
. The Erickson court also indicated that, as a secondary goal, Congress intended "to protect the defendant’s reputation from unfounded public accusations." Erickson,
. The district court in this case also cited the Second Circuit's decision in Pilón, in which that court affirmed a district court's dismissal of an FCA case in which the qui tam relators had failed to file their complaint under seal and, in fact, had given an interview about their claims to a newspaper reporter mere hours after filing. Summers attacks Pilón on the grounds that the court in that case inappropriately considered "other interests not addressed by [the] legislative history” (in addition to those explicit in the legislative history) in evaluating whether their conduct frustrated the purposes of the FCA, including the potential damage to a defendant's reputation. See Pilon,
. For its part, the Government has filed a brief asserting that the Lujan test "properly captured how these violations should be handled.” Its discussion of this issue, however, is primarily limited to support for the particular factors considered by the Lujan court; it does not make a developed argument with respect to the predicate question of whether a balancing test ought to be applied in the first instance. Relatedly, we note that although the Government designated itself as an appellee in this case, and in fact was permitted to share time at oral argument with LHC Group, it appears that its real interest in this case is more closely aligned with that of the appellant. Accordingly, we have reformed the party designations as indicated on the above caption. As it has not been argued on appeal, we deliberately refrain from deciding at this time whether the Government has standing to appear as a party on appeal when it has declined to participate in an FCA case in the district court. See United States ex rel. Smith v. Lampers,
. In our nearest approach to this issue, a non-oral-argument panel of the court affirmed dismissal of a putative relator’s FCA claims, noting only that "[s]ummary judgment was also proper on the claim under the False Claims Act, as Hackett complied with none of the requirements for filing a qui tam claim.” Hackett v. Martin Marietta Corp.,
Concurrence Opinion
concurring.
Although I concur in the result the majority reaches, I write separately to provide clarification as to: 1) the current state of the law regarding dismissal of a private citizen’s qui tam claim for failure to comply with the False Claims Act’s filing procedures; and 2) Congress’ intent in creating these procedures.
I.
Although the proper rule to be used when assessing whether to dismiss a relator’s improperly filed qui tam complaint is an issue of first impression' in the Sixth Circuit, both the Second and Ninth Circuits have addressed the matter. United States ex rel. Lujan v. Hughes Aircraft Co.,
The district court, in concluding that letter-perfect compliance with the FCA’s filing procedures is required to survive a motion to dismiss, relied primarily on Erickson ex rel. United States v. American Inst. of Biological Scis.,
As noted, among the courts that have refrained from adopting a per se rule are both the Second and Ninth Circuits. While the district court and LHC both read the Second Circuit’s decision in United States ex rel. Pilon v. Martin Marietta Corp., as requiring dismissal in every instance, a closer reading provides a more nuanced answer. The Pilón court, as opposed to reflexively finding that dismissal was required, engaged in a careful analysis of the impact of the relator’s violation on the United States’ ability to pursue a potential case against the defendant — Congress’ prime motivation in creating the filing procedures.
Taking the Pilon court’s analysis and restating it, the Ninth Circuit in United States ex rel. Lujan v. Hughes Aircraft Co., enunciated a three-factor test to determine whether a court should dismiss an improperly filed claim, namely: 1) whether the violation actually harmed the government; 2) the nature and scope of the violation, specifically whether the relator violated all aspects of § 3730(b)(2), as opposed to only some of them; and 3) whether the relator committed the violations willfully or in bad faith.
II.
LHC also argues that the imposition of a rule requiring mandatory dismissal is supported by Congress’ intent in creating the requirements. LHC argues specifically that Congress, in addition to protecting the government’s right to investigate the private citizen’s claim, sought to safeguard the defendant’s interest in not being improperly defamed. I, like the majority, find little support for LHC’s argument.
Congress created the filing requirements for the primary purpose of securing for the government the opportunity to weigh the merits of a private citizen’s qui torn claim and, if necessary, investigate the allegations made. See S.Rep. No. 99-345, at 24 (1986) reprinted in 1986 U.S.C.C.A.N. 5266, 5289; see also, e.g., Pilon,
While the Committee noted a secondary concern regarding defendants to qui tam suits, it was not the concern that LHC alleges. The Committee’s sole concern regarding the rights of defendants was the potential that were the government not allowed to determine whether or not it would intervene first, the defendant may have to file an answer without knowing who it would eventually face in court. S.Rep. No. 99-345, at 24, 1986 U.S.C.C.A.N. 5266, 5289. As the court in Lujan stated, “[njever did the Committee discuss, let alone imply that it sought to protect” the defendant from attack.
Beyond merely the Committee report, the text of the Act supports this conclusion. As the majority notes, the sole party authorized by the FCA to alter the filing procedures is the Attorney General who may, at his discretion, extend the 60 day in camera period to facilitate a more thorough investigation. 31 U.S.C. § 3730(b)(3). Had Congress intended to protect the defendant’s public reputation, it could have given the defendant similar powers or, at a minimum, once the government’s investigation was complete, required that it be given notice of the claim before the complaint was made public. Instead, the text of the Act is devoid of any such provisions.
Accordingly, the majority was correct not to impute to Congress an intent to protect the defendant or to rely on such in reaching its conclusion.
III.
Having addressed these matters, I CONCUR in the majority’s decision.