UNITED STATES of America, ex rel. Mary L. HOLMES, Plaintiff-Appellant, and United States of America, Movant-Appellee, v. CONSUMER INSURANCE GROUP; John R. Hightower, Defendants.
No. 01-1077.
United States Court of Appeals, Tenth Circuit.
Feb. 10, 2003.
319 F.3d 1199
Charles W. Scarborough, Appellate Staff Civil Division, Department of Justice, (Robert D. McCallum, Jr., Assistant Attorney General; John W. Suthers, United States Attorney; Douglas N. Letter, Appellate Staff Civil Division, Department of Justice with him on the brief) Washington, D.C., for the Movant-Appellee.
Before TACHA, Chief Judge, SEYMOUR, EBEL, KELLY, HENRY, BRISCOE, MURPHY, LUCERO, HARTZ, and O’BRIEN, Circuit Judges.
BRISCOE, Circuit Judge.
Relator Mary L. Holmes appeals the district court’s dismissal, for lack of subject matter jurisdiction, of her claims under the False Claims Act (FCA),
I.
Since 1985, Holmes has served as the postmaster in Poncha Springs, Colorado. In October 1995, Cameron Benton and Henry Modrejewski, employees of defendant Consumer Insurance Group (CIG), inquired at the Poncha Springs post office about the cost of bulk mailing. After Holmes calculated the cost of CIG’s intended mailing, Modrejewski told Holmes “that was not the rate they were being charged for the same type [of] mailing at the Howard, Colorado post office.” App. at 101. More specifically, Holmes was informed that CIG was being charged “per pound,” rather than “per piece,” at the Howard post office. Id. at 10. The “per pound” rate, which is significantly lower than the “per piece” rate, applies if each individual piece of mail weighs in excess of 3.3062 ounces. Holmes called Jenny McKinnon, the Howard postmaster, who confirmed that CIG was receiving the “per pound” rate at the Howard post office. Assuming that McKinnon was correct, Holmes accepted CIG’s bulk mailing at the “per pound” rate.
After further checking, Holmes conclud
Nearly two years later, in August 1997, Holmes was training an acting postmaster, Al Ferguson, at the Howard post office concerning how to “close out the books and make sure everything balanced for the year.” Id. at 85. During a lunch break, Holmes asked Ferguson the rate CIG was being charged for bulk mailings. According to Holmes, she was curious whether McKinnon had corrected the bulk mail rates for CIG because CIG was trucking all of its mail to the Howard post office. Ferguson told Holmes that CIG was still being charged the “per pound” rate. Upon returning to the Howard post office, Holmes and Ferguson “did some calculations and determined that the CIG mailings were . . . being undercharged by about $200,000 per year.” Id. at 86. Holmes also discovered that CIG had been falsely certifying that its bulk mailings weighed in excess of 3.3062 ounces per piece. Holmes reported her findings concerning CIG’s bulk mailings to her manager, who oversaw both the Poncha Springs and Howard post offices.
In December 1997, after allegedly hearing nothing from postal inspectors, Holmes wrote to the Inspector General’s Office in Washington, D.C., and reported the problem concerning CIG’s bulk mailings. The Inspector Genеral’s Office responded by letter in March 1998, stating, in pertinent part, that Holmes’ “information” had been “reviewed . . . and referred . . . to the appropriate Office of Inspector General Director for action deemed warranted,” and that Holmes would “be contacted if additional details [we]re needed.” Id. at 54. As Holmes was allegedly concerned that the Inspector General’s Office would take no action, she also reported the problem to a postal systems coordinator.
In late March 1998, the Postal Inspection Service began an administrative investigation into Holmes’ allegations regarding CIG’s bulk mailings. On April 1, 1998, postal inspector James Hayson (the lead agent), accompanied by three other postal inspectors, a postal inspector general agent, and two revenue assurance analysts, spent a week at the Howard post office collecting and reviewing documents concerning CIG’s mailings. “During the subsequent months,” Hayson “located and interviewed at least ten individuals including current and former employees of [CIG] and current and former employees of the Postal Service.” Id. In particular, Hayson interviewed Benton and Modrejewski, who no longer worked for CIG. Hayson also interviewed Jim Benbrook, a current employee of CIG who acknowledged transporting many of the mailings at issue to the Howard post office. Benbrook initially denied knowledge of the alleged fraud, but evidence subsequently obtained by the government “suggests that [he] was an active participant in the fraud.” Govt. Br. at 10. During all of the interviews, Hayson “disclosed the Government’s suspicions that CIG had knowingly underpaid postage based on false mailing statements . . . and that John Hightower[, CIG’s owner,] knew the mailing statements were false.” App. at 35.
In July 1998, Hayson referred the case to the United States Attorney’s Office for the District of Colorado, which began working on the case jointly with the Postal Inspection Service. In August 1998, the Postal Inspection Service served an administrative subpoena on CIG demanding pro
On April 2, 1999, Holmes filed this qui tam action under seal. The government intervened and moved to dismiss Holmes as a party for lack of subject matter jurisdiction pursuant to
II.
Holmes contends that the district court erred in dismissing her from the case for lack of subject matter jurisdiction pursuant to
(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or 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 has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.
When, as here, a court’s subject matter jurisdiction depends upon the same statute that creates the substantive claims, the jurisdictional inquiry is necessarily intertwined with the merits. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.1995). More specifically, the jurisdictional question of whether a “public disclosure” has occurred arises out of the same statute that creates the cause of action. United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1518 (10th Cir.1996). We have determined that these “intertwined” jurisdictional inquiries should be resolved under
Generally speaking, the jurisdictional inquiry under
In concluding that it lacked subject matter jurisdiction over Holmes’ qui tam claims, the district court acknowledged, but did not ultimately apply, the four-part inquiry. According to the district court, the four-part inquiry is applicable only “where the government is not actively investigating the alleged wrongdoing.” App. at 125. The district court concluded that the purpose of the four-part inquiry under such circumstances is to determine “whether the government is ‘capable’ of pursuing the suit itself.” Id. The court further concluded that, in situations where the “government is actively pursuing the alleged wrongdoing when the qui tam actiоn is sought,” the four-part inquiry is unnecessary “because it is clear that the government has already identified the problem.” Id. (internal quotation and citation omitted). Applying this unique analytical framework, the district court concluded that it lacked subject matter jurisdiction over Holmes’ qui tam claims:
In this case, it is undisputed that, prior to the filing of the qui tam complaint by Holmes, the OIG [Office of Inspector General] and PIS [Postal Inspection Service] were involved in an active administrative investigation of the matters at issue in this suit and had identified the probable offenders. When the investigation substantiated fraud by CIG, Holmes was publicly commended and received a $500 bonus from her employer for her service. In July of
1998, prior to the filing of Holmes’ Complaint, the matter was referred to the Attorney General’s office and accepted for civil action. Between 1998 and the time the Complaint was filed, the Attorney General’s office continued to build a case against CIG. Because the PIS and OIG investigation and their subsequent referral of the matter to the Attorney General set the government “squarely on the trail of the alleged fraud,” it would therefore “be contrary to the purposes of the FCA to exercise jurisdiction over [the relator’s] claim.” Because my fundamental task in interpreting the FCA is “to give effect to the intent of Congress,” I must grant the United States’ Motion to Dismiss Holmes. It makes no difference that Holmes, as part of her role as postmaster, initially alerted the PIS and OIG to the alleged wrongdoing and spurred them to investigate.
Id. at 126 (internal citations omitted).
We reject the district court’s analysis. Applicability of the four-part jurisdictional inquiry set forth in
The government asserts we can affirm the district court’s judgment on alternative grounds. Focusing on parts two and four of the four-part inquiry, the government argues that a “public disclosure” occurred when government investigators questioned the three current and former CIG employees,2 and, in any event, Holmes does not qualify as an “original source” because she was obligated to report the alleged fraud (and thus did not “voluntarily” report it). Because we conclude that no “public disclosure” occurred, under Fine we do not proceed to address the “original source” question. The government also argues that a government employee who obtains information about fraud in the scope of his or her employment, and who is required to report that fraud, is not a “person” entitled to bring a civil action under
Public disclosure
The term “public disclosure” is not defined in the FCA. In Ramseyer, we held that the term “signifies more than the2
The mere possession by a person or an entity of information pertaining to fraud, obtained through an independent investigation and not disclosed to others, does not amount to “public disclosure.” Rather, public disclosure occurs only when the allegations or fraudulent transactions are affirmatively provided to others not previously informed thereof.
Id. at 1521 (emphasis added).
Applying these principles to the case at hand, we conclude that a public disclosure did not occur when, during the course of their administrative investigation, government investigators questioned Benbrook, Benton, and Modrejewski. It is uncontroverted that all three individuals participated, to some degree, in the alleged fraudulent scheme, and thus were “previously informed” of the fraudulent scheme prior to their respective interviews with government investigators.3
The government concedes “there is some support” in Ramseyer and its progeny for the notion that, in order for there to be a public disclosure, the recipient of the disclosed information must be a stranger to the fraud. Govt. Br. at 22. Notwithstanding this concession, however, the government attempts to distinguish these cases by arguing that they “do not address the different situation where there have been no disclosures to strangers to the fraud, but the Government is fully aware of the allegations and is actively pursuing its own investigation.” Id. Although the government’s argument is not exactly clear, it appears the government is effectively asking us to modify the “public disclosure” test if the government is aware of the allegations, actively pursuing an investigation into the allegations, and respоnsible for the disclosure(s).
The government argues that, at a minimum, its “disclosures to the two former CIG employees [Benton and Modrejewski] during its investigation [in this case] should trigger the public disclosure bar, even though it turned out that they were not strangers to the fraud.” Id. at 34. However, the government does not clearly explain why the disclosure to these two individuals should be deemed sufficient to constitute a “public disclosure.” Apparently, the government finds significant the fact that the two men no longer work for CIG. However, it offers no principled distinction between these two men and the one man (Benbrook) who still works for CIG, since all three men had prior knowledge of the alleged wrongdoing. Further, the government cites no case where a court has held that a disclosure to a person familiar with the fraud constitutes a “public disclosure” for purposes of
The government makes several other perplexing, and at times disingenuous, arguments in an effort to demonstrate why a “public disclosure” has occurred within the3
Here, . . . the allegations of fraud were not just potentially accessible to strangers, they were actually divulged to strangers to the fraud, namely the innocent employees of John Doe Corp. While the search warrant was being executed, the investigators spoke to numerous employees of John Doe Corp., some of whom knew of the fraud. But, more importantly, many of these individuals knew nothing about defendants’ ongoing scheme; they were strangers to the fraud. These people were neither targets of the investigation nor potential witnesses. The government may have hoped that these individuals were potential witnesses, but it is clear that they were not.
960 F.2d at 322-23.4 Thus, contrary to the government’s assertions, the decision in Doe supports the conclusion that no public disclosure occurred in this case when the government interviewed persons who were involved in, or had prior knowledge of, the alleged wrongdoing.5
One other aspect of Doe requires mention. Throughout its “public disclosure” discussion, the government repeatedly cites Doe for the proposition that the purpose of the “public disclosure” test “was to ‘prod the government into action, rather than allowing it to sit on, and possibly suppress, allegations of fraud when inaction might seem to be in the best interest of the government.’” Govt. Br. at 25 (quoting Doe, 960 F.2d at 323). A careful review of the Doe decision demonstrates that the government is again misconstruing what was stated. Importantly, the language quoted by the government does not refer to the “public disclosure” test implemented by the 1986 amendments, but rather to the 1986 amendments in general. See 960 F.2d at 323 (“One reason for the 1986 amendments was to prod the government into action.”). We agree that “prodding” the government into action was obviously Congress’ impetus for jettisoning the pre-1986 “government knowledge” standard, under which qui tam actions were barred if the federal govеrnment already possessed information upon which a qui tam action was based. That does not
The government suggests that if we do not accept its position, it will be forced “to make disclosures of relevant allegations to ‘innocent’ third parties in order to satisfy the public disclosure bar—and ensure that opportunistic qui tam suits will be barred.” Govt. Br. at 31. We reject the government’s argument for two reasons. First, we question its blanket characterization of qui tam suits filed by government employees as “opportunistic.” While it is certainly possible for a government employee to file a parasitic qui tam action (e.g., based on knowledge obtained secondhand through other employees), that is not always the case. Here, for example, we do not view Holmes’ action as parasitic or opportunistic.7 Rather, Holmes has direct and independent knowledge of the fraud allegedly committed by CIG, since she is the person responsible for ferreting it out in the first place. Second, we believe the test we have adopted for determining whether a “public disclosure” has occurred is sound, and we are not persuaded there is an alternative test that accurately reflects the statutory language of
The government next complains that a rule requiring disclosure “to individuals with no prior knowledge of the fraud would necessitаte a bizarre mini-trial concerning the state of mind of various witnesses.” Govt. Br. at 31-32. Obviously, a court faced with a public disclosure question may have to make factual findings regarding when and to whom a disclosure occurred. Nothing in the FCA suggests this is inappropriate. In any event, nothing of the sort was required in this case, where the government has conceded that
Finally, the government argues that the “stranger-to-the-fraud” test “is flawed on its own terms because not all ‘strangers’ have incentives to disseminate information about fraud, and some individuals who have prior knowledge of fraud may have compelling incentives not to further publicize it.” Govt. Br. at 33. In other words, the government complains that “[t]he stranger-to-the fraud theory assumes that only those who have no prior knowledge of fraud are likely to make information about fraud public.” Id. Although the government is undoubtedly correct that different people may have varying incentives to publicize information, that factor, in our view, is not relevant in determining whether a “public disclosure” has occurred within the meaning of the FCA. Moreover, the government has not offered a convincing test that could adequately replace the “stranger-to-the-fraud” rule.
We conclude that the government’s disclosure of information to the three witnesses did not result in a “public disclosure” for purposes of
Original source
Having concluded that no “public disclosure” occurred within the meaning of
“Person” entitled to bring action under 31 U.S.C. § 3730(b)(1)
In its en banc brief, the government contends for the first time that Holmes cannot qualify as a potential relator under the FCA’s general qui tam provision,
“As in all cases involving statutory construction, our starting point must be the language employed by Congress, . . . and we assume that the legislative purpose is expressed by the ordinary meaning of the words used.” American Tobacco Co. v. Patterson, 456 U.S. 63, 68 (1982) (internal quotations and citations omitted). “Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980).
The government also directs our attention to
We also reject any assertion that the word “person” can be uniquely defined on the basis of a “scrivener’s error.” Under the doctrine of “scrivener’s error,” a court may “give an unusual (though not unheard-of) meaning to a word which, if given its normal meaning, would produce an absurd and arguably unconstitutional result.” United States v. X-Citement Video, Inc., 513 U.S. 64, 82 (1994) (Scalia, J., dissenting). Although there may be valid public policy rеasons why certain government employees should be precluded from availing themselves of the qui tam provisions of the FCA, it cannot be said that defining the word “person” as encompassing all individuals, including government employees, would produce an “absurd and arguably unconstitutional result.” Nor can it be said that the interpretation now urged by the government was “genuinely intended [by Congress] but inadequately expressed.” Id. In enacting the 1986 amendments to the FCA, it appears clear that Congress did not consider the question of whether government employees should be
Finally, the government argues that a federal employee who discovers fraud in the course of his or her employment and who is required to report it, is not a “person” entitled to bring a civil action under
In our view, the dissent reads too much into the phrase “for the person and for the United States Government.” As we read it, the phrase simply indicates that the relator functions as the partial assignee of the United States and emphasizes that both the relator and the government have an interest in the lawsuit and both will benefit should any recovery occur. See generally Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 772-74 (2000). To suggest that the phrase also limits the term “person” by imposing a “distinctness” requirement stretches the phrase too far. Further, if Congress intended to exclude some or all federal government employees from the class оf persons able to file suit under
The dissent’s attempted narrowing of the term “person” flies in the face of the principle that “identical words used in different parts of the same act are intended to have the same meaning.” Dep’t of Revenue v. ACF Indus., Inc., 510 U.S. 332, 342 (1994) (internal quotations omitted). Not only is the term “person” used in other provisions of
The dissent charges us with construing
Finally, we believe that the history of the FCA’s qui tam provision clearly rebuts the dissent’s position. As originally enacted in 1863, the qui tam provision provided: “Such suit may be brought and carried on by any person, as well for himself as for the United States.” Act of March 2, 1863, ch. 67, § 4, 12 Stat. 696 (emphasis added). The Supreme Court interpreted this language in a broad fashion, stating:
Neither the language of the statute nor its history lends support to the contention made by respondents and the government. “Suit may be brought and carried on by any person,” says the Act, and there are no words of exception or qualification such as we are asked to find. The Senate sponsor of the bill explicitly pointed out that he was not offering a plan aimed solely at rewarding the conspirator who betrays his fellows, but that even a district attorney, who would presumably gain all knowledge of a fraud from his official position, might sue as the informer.
United States ex rel. Marcus v. Hess, 317 U.S. 537, 546 (1943) (footnote omitted). Obviously, the Court found no exception or qualification in the phrase “as well for himself as for the United States.” Although the statutory phrase was altered by Congress in 1982 to read “for the person and for the United States Government,”
III.
In a fall-back argument, the government offers several public policy reasons why federal employees should not be allowed to maintain qui tam actions based upon information obtained during the course of their employment. According to the government, “[p]ermitting Holmes to pursue a qui tam action on the facts here would be inconsistent with her specific duty as a United States Postmaster to report fraud and with numerous legal duties imposed on all federal employees.” Govt. Br. at 43. For example, the government argues, рermitting Holmes to proceed as a relator would be contrary to federal regulations prohibiting “the use of public office for private gain,” “the use of Government property or time for personal purposes,” “the use of ‘nonpublic Government information’ to further private interests,” and “the holding of any financial interests that may conflict with the impartial performance of Government duties.” Id. at 44-45. The government further argues “there is no intent expressed in the [FCA] to permit qui tam suits by federal employees whose job it is to report fraud when they encounter it,” and in fact “the legislative history of the 1986 amendments to the FCA reveals an intent to ‘encourage more private enforcement suits,’ . . . not to encourage suits by public employees seeking to capitalize on information learned during the course of their federal employment.” Id. at 45. Finally, the government argues that “permitting qui tam suits by federal employees who are already under an obligation to disclose fraud would, as a practical matter, create perverse incentives for Government employees.” Id. at 45-46.
Although the government’s arguments have some appeal, the fact is that nothing in the FCA expressly precludes federal employees from filing qui tam suits. Prior to 1986, the FCA “precluded jurisdiction where the action was based upon information in the possession of the United States or any of its employees at the time of the suit.” United States v. A.D. Roe Co., 186 F.3d 717, 722 n. 5 (6th Cir.1999). Thus, “government employees effectively were prohibited from bringing claims under the qui tam provision.” Id. The 1986 amendments to the FCA, however, revised the qui tam provision to allow any “person” to bring such a suit. See id.;
Post-1986 congressional activity suggests that Congress views the FCA as allowing federal employees to file qui tam actions.10 “In 1990, the Subcommittee on Administrative and Governmental Relations of the House Judiciary Committee held the first oversight hearings on the Act.” Virginia C. Theis, Government Employees as Qui Tam Plaintiffs: Subverting the Purposes of the False Claims Act, 28 Pub. Cont. L.J. 225, 238 (1999). During those hearings, “[t]he Justice Department, the Inspector General of the Department of Health and Human Services, and John R. Phillips, an attorney who participated in drafting the amendments . . ., proposed limits on federal employees seeking to bring [FCA] actions.” Id. “In 1992, Congress introduced two bills intended, in part, to address the issue of government employee relators.” Wallace, supra, at 22. The first bill, H.R. 4563, “would have established limitations on government employees who file[d] qui tam suits based on information gained during the course of their employment.” Theis, supra, at 238-39. The second bill, S. 2785, proposed banning “all qui tam suits brought by government employees who base[d] their actions on information obtained during the course of their government employment.” Wallace, supra, at 23. Both bills had critics, and neither ultimately became law.
Consistent with this history, “no court has acceptеd the argument that government employees per se can never be relators in a qui tam action.” Burns, 186 F.3d at 722 n. 5. Although some judges from the Ninth Circuit have criticized the practice of allowing federal employees to bring qui tam actions, see United States ex rel. Fine v. Chevron, U.S.A., Inc., 72 F.3d 740, 747 (9th Cir.1995) (Trott, J., concurring); id. at 749 (Hawkins, J. concurring), the court has, at least in one instance, allowed a federal employee to proceed as a relator in a qui tam action. See Hagood v. Sonoma Co. Water Agency, 81 F.3d 1465, 1476 (9th Cir.1996). Likewise, the First Circuit has held that
In our view, the most persuasive discussion of the issue comes from the Eleventh Circuit in United States ex rel. Williams v. NEC Corp., 931 F.2d 1493 (11th Cir.1991). There, the relator was an attorney for the United States Air Force who, “[d]uring the course of his employment with the government, . . . became aware of bidrigging on the part of a corporation seeking telecommunications contracts with the United States.” Id. at 1494. The district court dismissed the suit on the grounds that the FCA contained a jurisdictional bar against suits brought by government employees based upon information acquired in the course of their employment. On appeal, the Eleventh Circuit initially determined that no public disclosure had occurred prior to the relator filing suit, and thus concluded that it was unnecessary for the relator to establish that he was an “original source” of the information on which his suit was based. Id. at 1499-1501. The court then rejected the government’s argument that “the comprehensive bar against
We recognize that the concerns articulated by the United States may be legitimate ones, and that the application of the False Claims Act since its 1986 amendment may have revealed difficulties in the administration of qui tam suits, particularly those brought by government employees. (Footnote omitted.) Notwithstanding this recognition, however, we are charged only with interpreting the statute before us and not with amending it to eliminate administrative difficulties. The limits upon the judicial prerogative in interpreting statutory language were well articulated by the Supreme Court when it cautioned:
Legislation introducing a new system is at best empirical, and not infrequently administration reveals gaps or inadequacies of one sort or another that may call for amendatory legislation. But it is no warrant for extending a statute that experience may disclose that it should have been made more comprehensive. “The natural meaning of words cannot be displaced by reference to difficulties in administration.” Commonwealth v. Grunseit, [(1943) 67 C.L.R. 58, 80]. For the ultimate question is what has Congress commanded, when it has given no clue to its intentions except familiar English words and no hint by the draftsmen of the words that they meant to use them in any but an ordinary sense. The idea which is now sought to be read into the [Act] . . . is not so complicated nor is English speech so poor that words were not easily available to express the idea or at least to suggest it. Addison v. Holly Hill Fruit Prods., 322 U.S. 607, 617-18 (1944). Congress could have certainly indicated its desire to prevent government employees from filing qui tam suits based upon information acquired in the course of their government employment. (Footnote and citations omitted.) The False Claims Act is devoid of any statutory language that indicates a jurisdictional bar against government employees as qui tam plaintiffs. We also note an absence of any clear indication that Congress intended such a bar to be implied in spite of the plain language of the statute. Therefore, we decline to judicially create an exception where none exists.
Id. at 1503-04.
For these same reasons, we reject the government’s public policy arguments and decline to hold that government employees are per se precluded from filing qui tam actions based upon information obtained during the course of their employment. Although there may be sound public policy reasons for limiting government employees’ ability to file qui tam actions, that is Congress’ prerogative, not ours.11
We conclude that Mary Holmes was entitled to proceed as a relator under
TACHA, Chief Circuit Judge, dissenting, with whom KELLY and LUCERO, Circuit Judges, join.
I. INTRODUCTION
This is the first case in which we have squarely faced the issue of whether a federal employee who (1) has a specific duty to report a specific kind of fraud, (2) discovered the alleged fraud at issue pursuant to her regular job duties, and (3) is participating in an ongoing fraud investigation as part of her job duties may bring a qui tam action based upon the alleged fraud that is the subject of the investigation. Our previous cases have expressly declined to address the question of when a federal employee may bring a qui tam action. United States ex rel. Fine v. MK-Ferguson Co., 99 F.3d 1538, 1541 n. 1 (10th Cir.1996); United States ex rel. Fine v. Advanced Sciences, Inc., 99 F.3d 1000, 1003 n. 1 (10th Cir.1996). Because MK-Ferguson expressly avoided this issue, it is no surprise that the four-part test we articulated there is inapposite here.
The MK-Ferguson test focuses exclusively on the public disclosure bar contained in
ernment or briefed by the parties, we find it unnecessary to resolve the issue at this time.
termine whether and when its scope includes federal employees as potential relators. This latter inquiry logically precedes the question of whether the public disclosure bar applies. I therefore disagree with the majority’s insistence that we rely on the MK-Ferguson test.
In a section titled “Actions by private persons,” the FCA provides that “[a] person may bring a civil action for a violation of
II. DISCUSSION
Federal courts are courts of limited jurisdiction. When considering federal subject-matter jurisdiction, we must presume that jurisdiction is lacking, require the party asserting jurisdiction to prove that it exists, and resolve all doubts against jurisdiction. For several reasons, there is grave doubt as to whether jurisdiction exists in this case, and dismissal is therefore required.
First, a person is only a proper qui tam relator if she is distinct from the government. This requirement follows from the qualifying language in
Second, the Supreme Court has instructed us to employ statutory titles to resolve ambiguity arising from a discrepancy between the title and the text. Such ambiguity is present here, because the statute’s title refers to actions by “private persons,” while the text refers only to “a person.” Per the Supreme Court’s instruction, we must resolve this ambiguity by reading “person” as a reference to the “private persons” referred to in the title and not to persons acting as the government with regards to the fraud at issue.
Third, the ambiguity of the text and the fact that Congress did not expressly speak to the question of federal employee relators require us to consult the purposes of the qui tam provisions. Permitting Holmes’ action would not serve any of the purposes of the FCA and its 1986 amendments and would, in fact, frustrate Congress’ goal of preventing parasitic suits.
Fourth, finding jurisdiction over Holmes’ action is glaringly inconsistent with specific prohibitions requiring federal employees to avoid conflicts of interest. Because the qui tam provisions do not per se exclude federal employee relators, they are necessarily in some tension with conflict of interest rules governing federal employees. The majority’s construction of the initial grant of jurisdiction as plenary maximizes that tension; a properly narrow construction of
A. The Presumption Against Jurisdiction
We must remember, at the outset and throughout our consideration of the statutory language, that federal courts are courts of limited jurisdiction. The first step in our analysis is to presume that the district court lacks jurisdiction and to require the party asserting jurisdiction to allege and prove that jurisdiction exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Montoya v. Chao, 296 F.3d 952, 955 (10th Cir.2002); MK-Ferguson, 99 F.3d at 1543; Precision Co., 971 F.2d at 548, 551 (10th Cir.1992). Moreover, we must strictly construe statutes conferring jurisdiction, resolving any doubts against jurisdiction. Advanced Sciences, 99 F.3d at 1004; MK-Ferguson, 99 F.3d at 1543-44. Thus, a scintilla of doubt as to jurisdiction over Holmes’ suit mandates dismissal.
B. The Distinction Between the Qui Tam Relator and the Government
In construing a statute, “our overriding purpose is to determine congressional intent.” Chickasaw Nation v. United States, 208 F.3d 871, 878 (10th Cir.2000) (citing Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982)). To determine a statute’s plain meaning, “ ‘[we] must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.’” Id. (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988)).
The FCA provides, in a section headed “Actions by private persons,” that “[a] person may bring a civil action for a violation of
The phrase “for the person and for the United States Government” reveals a fundamental assumption about the individuals filing qui tam suits—namely, that they are distinct from the government. The government is not a discrete organism; it exists and acts only through people. The government cannot get up out of its chair and pursue fraud; if it does so at all, it does so through its employees. The phrase, “for the person and for the United States Government,” then, requires that there be some distinction between a potential qui tam relator and the people acting as “the government” with regard to the fraud at issue. I therefore read the statute as authorizing qui tam actions only by those individuals who are distinct from the government.
When a federal employee acting pursuant to job responsibilities obtains information about possible fraud, that employee obtains that information as the government. A federal employee who is involved in an ongoing government investigation pursuant to employment duties is the government. The distinction between the individual federal employee and the government disappears in this context. Therefore, such an employee cannot use that information to file an action under
Holmes is such an employee.2 She initially learned of the alleged fraud while
My statutory analysis has been criticized as requiring an unwarranted redefinition of the word “person.” It requires no such thing. We must read the word “person” in context. The relevant inquiry is what the first sentence of
My reading of the statute does not focus on the word “person” or on any other word in isolation. I know of no principle of statutory construction that instructs us—or permits us—to apply the plain meaning of individual words of a statute in isolation, without considering the statutory context. See, e.g., United States Nat’l Bank of Oregon v. Indep. Ins. Agents of America, Inc., 508 U.S. 439, 455 (1993) (“Over and over we have stressed that ‘[i]n expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy.’ ”) (internal citations and quotations omitted). Rather, my analysis seeks to understand from the statutory context what class of persons
The majority construes
By construing the initial grant as plenary, the majority follows the Eleventh Circuit’s analysis in United States ex rel. Williams v. NEC Corp., 931 F.2d 1493 (11th Cir.1991). But the analysis in Williams turns upon the same crucial error made by the majority: instead of applying the entire sentence of
The Williams court makes a fundamental and crucial assumption: that the 1986 amendments begin by conferring jurisdiction upon everyone, then restrict it in the four express exceptions.
In defining the classes of persons eligible to bring qui tam actions, Congress had a choice:
It could have chosen to make eligible as qui tam relators only certain defined groups of persons and exclude all others or it could have chosen to include all persons as eligible qui tam relators with certain specific exceptions. It chose the latter scheme. The statute first permits any “person” to bring a qui tam action, and then specifically excludes four groups. . . . Government employees are included in the general universe of permissible qui tam plaintiffs unless, in the particular circumstances, they fall into one of the four specifically defined excluded groups.
931 F.2d at 1502 (quoting Erickson ex rel. United States v. Am. Inst. of Biological Sciences, 716 F.Supp. 908, 912-13 (E.D.Va.1989)) (emphasis added).
This analysis is rather conclusory and depends completely on the assumption that (1) the statute begins by conferring jurisdiction over “any person” and (2) the rest of
Taking the same view, the majority boldly statеs that the 1986 amendments “revised the qui tam provision to allow any ‘person’ to bring such a suit.” Maj. op., supra, at 1212 (emphasis added). But the statute does not begin by conferring jurisdiction upon “any person.” It says that “a person may bring a civil action for violation of
Reading the words “a person” out of context distorts the meaning of the statute by ignoring the rest of the jurisdictional language. This we may not do. A unanimous Supreme Court recently reminded us that
[statutory] text consists of words living a communal existence . . . the meaning of each word informing the others and all in their aggregate tak[ing] their purport from the setting in which they are used. . . . Over and over we have stressed that [i]n expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy. . . . Statutory construction is a holistic endeavor, and, at a minimum, must account for a statute’s full text.
United States National Bank of Oregon v. Independent Insurance Agents of America, Inc., 508 U.S. 439, 454-55 (1993) (internal citations and quotations omitted) (emphasis added). If, as we must, we assume that Congress intended the entire sentence of
C. The Section Title: “Actions by Private Persons”
The initial grant of jurisdiction in
In other contexts, we have stated that the title of a statute or section can aid in resolving an ambiguity in the legislation’s text. Such analysis obtains in this case as well. The text’s generic reference to “employment” should be read as a reference to the “unauthorized employment” identified in the paragraph’s title.
Id. at 189 (emphasis in original) (internal citations omitted).
Thus, ambiguity resides in (1) the phrase by which Congress qualifies the “person” entitled to bring a qui tam action and (2) the omission from the text of the adjective “private,” which modifies “persons” in the heading. To resolve this ambiguity, the Supreme Court instructs us to read the word “person” in the text as a reference to the “private persons” more specifically identified in
Holmes obtained information of fraudulent activity in the course of her employment; she was required to report that information pursuant to her specific job duties; and she was a participant, as part of her job duties, in the ongoing government investigation of that alleged fraud. She is clearly not a “рrivate person” in this context, and she is therefore not a proper qui tam plaintiff under the FCA.
I strongly disagree with the majority’s assertion that employing
D. The Purposes of the FCA and the 1986 Amendments
It is well established that when statutory language and legislative history are inadequate, suggesting that Congress did not think about a particular problem that might arise when applying a statute, “we must analyze the policies underlying the statutory provision to determine its proper scope.” Rose v. Lundy, 455 U.S. 509, 516-17 (1982); see also, e.g., United States v. Sisson, 399 U.S. 267, 297-98 (1970) (“The axiom that courts should endeavor tо give statutory language that meaning that nurtures the policies underlying legislation is one that guides us when circumstances not plainly covered by the terms of a statute are subsumed by the underlying policies to which Congress was committed”). The majority and I agree that “[i]t is not clear whether Congress intended by the [1986] amendments to allow government employees to bring suit.” Maj. op., supra at 1211 (citation omitted). Congress apparently gave no thought to the issue. Id. We must, therefore, consider the purposes of the FCA’s qui tam provisions to determine the proper scope of
While my analysis remains grounded in the statutory language of
Exercising jurisdiction over Holmes’ action would not serve the FCA’s purposes of encouraging exposure of fraud and would frustrate its goal of preventing parasitic suits. First, where a government employee has a duty to report fraud, as Holmes does as postmaster, the information underlying that employee’s suit does not constitute information that the government would not otherwise uncover. The duty to report itself assures that her information is the government’s information.
Second, a qui tam action by someone in Holmes’ position is not prodding the
Nor are these circumstances ones in which a private person needs to be encouraged to expose fraud. On the contrary, having acquired the information in the course of her duties as a postmaster, Holmes had a specific obligation as a postmaster to report it. Again I note that, in the performance of her duties as a postmaster, she is the government. As such, she acquired the information for the government. Moreover, a federal employee who reports a private company’s fraud on the government does not have the same fear of reprisal as a company insider who acts as a whistleblower, further reducing the need for financial incentives to encourage them to disclose information about fraud.9
Finally, allowing federal employees’ qui tam suits in these circumstances would not serve, and would in fact frustrate, Congress’ goal of preventing parasitic suits. I agree with the majority that “the point of the public disclosure test is to determine whether the qui tam suit is a parasitic one.” Maj. op., supra, at 1207 n. 6. The public disclosure bar, however, does not address the problem of parasitic suits by government employees; it only addresses the problem of parasitic suits by private persons, who have no access to government information that has not been “publicly disclosed.”
Information to which the public has potential access, but which has not actually been released to the public, cannot be the basis of a parasitic lawsuit because the relator must base the qui tam suit on information gathered from his or her own investigation. If a specific report detailing instances of fraud is not affirmatively disclosed, but rather is simply ensconced in an obscure government file, an opportunist qui tam plaintiff first would have to know of the report’s existence in order to request access to it.
Id. at 1520. This rationale, however, does not apply to government employees who know of the allegations because of their jobs. Government employees frequently have access to government information even though it has not been “publicly disclosed,” as defined in Ramseyer. Thus, there is a potential for parasitic qui tam suits by government employees before “public disclosure” occurs, just as there is a potential for such suits by private persons following public disclosure. In my view, Holmes’ suit is a parasitic one for precisely this reason.10 Holmes learned of the alleged fraud while acting in the scope of her employment as a federal employee,
E. Conflict of Interest
Federal employees’ obligations to avoid conflicts of interest further distinguish them from others who file qui tam suits. Clearly, Congress did not intend to adopt a per se ban against federal employee relators—the four express exclusions directed towards federal employees that follow the initial qualified grant of jurisdiction would otherwise be superfluous. Thus, the FCA will at times be in tension with conflict of interest provisions governing federal employees. But the glaring inconsistency between these limitations on federal employees and allowing federal employees to pursue qui tam suits based upon information obtained as part of their job duties, and which their jobs require them to report, supports the conclusion that Congress intended to minimize the extent to which the FCA derogated from the requirement that federal employees avoid conflicts of interest. The majority’s broad reading of the initial grant of jurisdiction maximizes the inherent tension between the qui tam provisions and the conflict of interest rules. We are, however, bound to construe statutes granting federal subject-matter jurisdiction narrowly; such a construction also minimizes the tension between
Holmes based her qui tam suit on information that she acquired in the course of her employment as a postmaster and had a specific duty to disclose. At least while the government is conducting an ongoing investigation of the allegations, Holmes’ claim for a portion of the proceeds directly reduces the amount that the government may ultimately collect. To allow an employee in Holmes’ position to pursue qui tam claims in these circumstances would create a personal financial stake in the relevant information.13 “Rather than perform their jobs as they are required, government employees obligated to disclose suspected fraud may inappropriately hide fraud from their supervisors while preparing their qui tam actions for filing.” United States ex rel. Biddle v. Bd. of Trustees, 161 F.3d 533, 542 (9th Cir.1998) (citation omitted). We cannot conclude that Congress intended to create an incentive for government employees to withhold information about suspected fraud contrary to their specific employment obligations.14
III. CONCLUSION
The words “a person” in the text do not indicate that
Moreover, Holmes has confronted these obstacles in an atmosphere necessarily hostile to jurisdiction, for we must presume that no jurisdiction exists, and we are obliged to strictly construe statutes conferring jurisdiction on the fеderal courts. The burden is on Holmes to prove that the district court had jurisdiction. She has not done so.
For these reasons, I respectfully dissent.
Erdenebileg TSEVEGMID, Petitioner,
v.
John ASHCROFT, United States Attorney General, Respondent.
No. 02-9525.
United States Court of Appeals, Tenth Circuit.
Feb. 11, 2003.