United States v. Health Possibilities, P.S.C. ( 2000 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0100P (6th Cir.)File Name: 00a0100p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
;

UNITED STATES OF AMERICA,

Plaintiff-Appellant,


No. 99-5259
JOHN L. DOYLE, III, M.D.;

MARIANN DOYLE, >
Plaintiffs-Appellees, 



v.


HEALTH POSSIBILITIES,
P.S.C.; URGENT TREATMENT 
CENTERS OF KENTUCKY, INC.; 


BARRY BURCHETT, M.D.;
JOHN DOES, sued as unknown 
JOHN LANGEFELD, M.D.;
persons; PHYSICIANS OF UTC, 

P.S.C., 
Defendants-Appellees. 
1
Appeal from the United States District Court
for the Eastern District of Kentucky at Lexington.
Nos. 96-00485—Karl S. Forester, District Judge.
Argued: January 27, 2000
Decided and Filed: March 22, 2000
1
2 United States, et al. v. Health No. 99-5259
Possibilities, et al.
Before: JONES, NORRIS, and SILER, Circuit Judges.
_________________
COUNSEL
ARGUED: Matthew M. Collette, U.S. DEPARTMENT OF
JUSTICE, CIVIL DIVISION, APPELLATE STAFF,
Washington, D.C., for Appellant. Thomas W. Miller,
MILLER, GRIFFIN & MARKS, Lexington, Kentucky,
Richard F. O’Malley, Jr., SIDLEY & AUSTIN, Chicago,
Illlinois, for Appellees. ON BRIEF: Mark B. Stern, U.S.
DEPARTMENT OF JUSTICE, CIVIL DIVISION,
APPELLATE STAFF, Washington, D.C., for Appellant.
Thomas W. Miller, MILLER, GRIFFIN & MARKS,
Lexington, Kentucky, Richard F. O’Malley, Jr., SIDLEY &
AUSTIN, Chicago, Illlinois, Stephen L. Barker, Douglas L.
McSwain, STURGILL, TURNER, BARKER & MALONEY,
Lexington, Kentucky, Hiram Ely III, GREENEBAUM, DOLL
& McDONALD, Louisville, Kentucky, for Appellees.
_________________
OPINION
_________________
NATHANIEL R. JONES, Circuit Judge. Raising an issue
of first impression in this circuit, this case requires that we
determine whether the Attorney General’s consent is required
before a private plaintiff may settle or otherwise dismiss an
action under the qui tam provisions of the False Claims Act
(“FCA”), 31 U.S.C. § 3730(b)(1). The district court
concluded that the consent provisions of the FCA apply only
to attempts to dismiss qui tam actions prior to the
government’s initial intervention decision, and that when the
government affirmatively declines to intervene, a private
plaintiff can settle a qui tam action notwithstanding the
government’s disapproval. We hold, however, that a qui tam
plaintiff may not seek a voluntary dismissal of any action
under the False Claims Act without the Attorney General’s
No. 99-5259 United States, et al. v. Health 3
Possibilities, et al.
consent. Accordingly, we VACATE the district court’s
judgment and REMAND this case for further proceedings.
I.
Plaintiffs-Appellees Dr. John and Mariann Doyle were
formerly employed by Defendant-Appellee Health
Possibilities, P.S.C. Health Possibilities is a medical services
provider that staffed various health clinics in Lexington,
Kentucky, including a number of clinics owned and operated
by Defendants-Appellees Urgent Treatment Centers of
Kentucky, Inc. (“UTC”), Dr. Barry Burchett, and Dr. John
Langefeld. Dr. Doyle, Mariann’s husband, worked as a
physician, while Mrs. Doyle was a physician’s assistant. The
Doyles’ dispute with Defendants began in February 1996,
when a co-worker allegedly stated that Dr. Doyle had
committed adultery and used drugs. In May of that year, Dr.
Doyle responded by filing a defamation suit in state court
against the co-worker, a supervisor, and Defendants. Around
the same time, the Doyles began to believe that Defendants
were submitting false Medicare claims to the Department of
Health and Human Services. The Doyles eventually filed a
separate federal court action under the “qui tam” provisions
of the False Claims Act, 31 U.S.C. §§ 3729, 3730(b), which
allow private parties to recover damages for fraud committed
against the United States.1 The Doyles claimed that
Defendants had violated the FCA by illegally seeking
reimbursement for physician assistant services that were not
“incident to” physician services. See J.A. 21-28.
As required by § 3730(b)(2) of the FCA, the Complaint and
a subsequent First Amended Complaint were filed under seal.
1
“‘Qui tam’ is an abbreviation for the Latin phrase ‘qui tam pro
domino rege quam pro si ipso in hae parte seqintur,’ which means ‘who
sues on behalf of the King as well as for himself.’” United States ex rel.
Branhan v. Mercy Health System of Southwest Ohio, No. 98-3127, 1999
WL 618018, at *4 n.5 (6th Cir. Aug. 5, 1999) (unpublished opinion)
(citing Black’s Law Dictionary 1251 (6th ed. 1990)).
4 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 17
Possibilities, et al. Possibilities, et al.
The sealed complaint procedure grants the United States sixty before a voluntary dismissal motion is properly presented to
days to investigate the claims of a qui tam plaintiff, who is the court.
called a “relator,” to determine whether it wants to intervene.
See 31 U.S.C. § 3730(b)(2). In January 1997, the government Appellees’ mootness contention is also misplaced. Their
declined to intervene in the Doyles’ suit, and the Complaint2 mootness argument fails to appreciate that a relator acts on
was subsequently served on Defendants. See J.A. at 35. the government’s behalf, acts to vindicate governmental
After extensive discovery, the Doyles filed a Second interests, and that the government is the real party in interest.
Amended Complaint in May 1998. The Second Amended See supra. As noted before, the relator would not have
Complaint added new allegations, claiming that Defendants standing to bring an FCA claim if it were not clear that she
had fraudulently inflated their Medicare bills by “upcoding,” acted in the government’s stead. Thus, if the government’s
or using billing codes that signified services that were more interests are adverse to those reflected in a putative settlement
expensive than the services Defendants actually provided.3 agreement, a live controversy undoubtedly exists.
Shortly after filing the Second Amended Complaint, the III.
Doyles and Defendants reached a settlement agreement.
Under the agreement, the qui tam suit was settled in In sum, we find nothing in the structure of § 3730,
conjunction with Dr. Doyle’s pending state court defamation legislative history, or policy that suggests that we should
action. Regarding the qui tam suit, the Doyles agreed to ignore the undeniably clear and plain language of
release Defendants from all claims “of any . . . kind or nature § 3730(b)(1). The Searcy court concluded that:
whatsoever” that related to their submission of Medicare
claims, or claims under any other federal health care For more than 130 years, Congress has instructed courts
to let the government stand on the sidelines and veto a
voluntary settlement. It would take a serious conflict
2
The district court deemed this refusal to intervene to apply to the within the structure of the False Claims Act or a
charges lodged in both the original complaint and the First Amendment profound gap in the reasonableness of the provision for
Complaint. J.A. at 6. us to be able to justify ignoring this language. We can
3 find neither.
The Second Complaint was apparently served on the government
and Appellees simultaneously, and therefore was not filed under seal so Searcy, 117 F.3d at 160. We agree with this conclusion, and
as to trigger the 60-day intervention period. See Gov’t Br. at 7; J.A. at 13.
Nevertheless, the Doyles met with the government in March, 1998 to hold that a qui tam plaintiff may not seek a voluntary
discuss the “upcoding” charges, and the government chose not to act. dismissal of any action under the False Claims Act without
J.A. at 261-262. Appellees appear to argue that there was no need to file the Attorney General’s consent. Accordingly, we VACATE
the amended complaint under seal, as the §3730(b)(2) intervention the judgment of the district court, and REMAND this case for
procedure – allowing the government to intervene as a matter of right – further proceedings.
applies only after the filing of the original complaint. Appellees contend
that thereafter the government is limited to intervening for “good cause”
under § 3730(c)(3), and that it could have done so as new allegations
would certainly constitute “good cause.” See UTC Br. at 11 n. 8. In any
event, we do not reach this issue because the government does not raise
this purported lack of notice as a basis for reversal or for rejecting the
settlement.
16 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 5
Possibilities, et al. Possibilities, et al.
arise if we were to construe § 3730(b)(1) to apply after the reimbursement program. J.A. at 204-205. In exchange,
sixty day period. Appellees contend that such a construction Defendants agreed to pay the Doyles $150,000 in attorneys
would impermissibly enable the Executive Branch to infringe fees and costs, and to implement a corporate compliance
upon the Article III jurisdiction of federal courts, and that program designed to ensure that they prospectively complied
when the relator and the defendant have agreed to a putative with federal and state law governing medical reimbursements.
settlement, mootness problems arise if courts are forced to See J.A. at 263-268. While the Doyles did not receive any
keep these cases on their active dockets. damages for releasing the FCA claims, Dr. Doyle did receive
$150,000 in damages – and $50,000 for attorneys’ fees and
To the extent any separation of powers issues exist, they are costs – for settling the defamation action. See Gov’t Br. at 8;
not abated by limiting the consent provision to the sixty day UTC Br. at 9-10; J.A. at 230. While § 3730(d)(2) of the FCA
period. If the consent provision impermissibly infringes upon ensures that the United States receives at least 70% of any
Article III jurisdiction, the constitutional harm is not cured by FCA settlement, the government did not receive any damages
limiting the infraction to sixty days. In any event, Appellees’ here because the FCA suit was settled for fees and injunctive
contentions are without merit. Our conclusion might be relief.
different if we construed the consent requirement to apply to
involuntary dismissals. However, a number of federal courts Asserting that the settlement did not protect the interests of
have held that the § 3730(b)(1) "consent" provision applies the public, the United States objected to the settlement. The
"only where the plaintiff seeks voluntary dismissal . . . and government contended that § 3730(b)(1) of the FCA plainly
not where the court orders dismissal." Minotti, 895 F.2d at provides that a qui tam action “may be dismissed only if the
103-04; see In re Schimmels, 127 F.3d 875, 883 n. 16 (9th court and the Attorney General give written consent to the
Cir. 1997); Milam, 961 F.2d at 49. This construction is dismissal . . . ,” and therefore a relator cannot settle an FCA
consistent with congressional intent. Prior to the enactment suit without the government’s permission. The United States
of the current "dismissal" language, the FCA provided that further asserted that the language of the statute is
the action could not be "withdrawn or discontinued" without unambiguous, and that such a veto power is essential to
the government’s consent. See 31 U.S.C. § 232(b) (1976); Id. ensuring the vindication of the public interest in qui tam
at 103; see also United States ex rel. Laughlin v. Eicher, 56 actions. Concerning the merits of the settlement, the United
F.Supp. 972, 973 (D. D.C. 1944) (holding that predecessor to States contended that the compliance program was
current consent provision "only refers to voluntary insufficient consideration for an all-encompassing release,
dismissals"). As the Minotti court noted, this language was and that the inadequacy of this consideration was exacerbated
changed to reflect modern terminology and usage, and was by the compliance program’s alleged lack of oversight
not designed to affect a substantive change in the statute’s mechanisms. The United States further objected that all
meaning. See 895 F.2d at 103-04. In the voluntary dismissal monies flowed either to the relators or counsel, and suggested
that the relators essentially channeled damages payments to
context, there are no jurisdictional problems as the consent the defamation action to avoid the settlement division
provision simply requires that the relator receives the requirements of § 3730(d)(2). See J.A. at 229-230.
permission of the government, on whose behalf the relator
acts, before she can voluntarily dismiss a qui tam action. The district court rejected the government’s argument that
Thus, the relator’s obligation to receive the Attorney § 3730(b)(1) provides the Attorney General with an absolute
General’s consent is a precondition that must be satisfied veto of any proposed qui tam settlement. The district court
6 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 15
Possibilities, et al. Possibilities, et al.
held that the “consent” provision applies only to attempts to of the United States to veto a settlement purportedly made on
settle or dismiss actions prior to the expiration of the 60-day its behalf is entirely consistent with an intention to foster qui
initial intervention period, and that to the extent the United tam litigation. By providing financial incentives and limiting
States wanted to challenge a settlement after it had already the opportunity for the government to completely take over a
declined intervention, it had to seek “good cause” intervention qui tam action after the initial sixty-day period, the 1986
under § 3730(c)(3). In so holding, the district court further amendments certainly "encouraged more private
ruled that the government constructively consents to any enforcement" of the Act. Indeed, nowhere in the legislative
prospective dismissal when it decides not to intervene. history relied upon by the Killingsworth court, or anywhere
Finding that the government had “good cause” to object to the else in the 1986 amendments, does Congress evince an
breadth of the waiver provisions, the district court allowed the intention to limit the § 3730(b)(1) "consent" provision to the
government to intervene to challenge that portion of the sixty-day period. Without such a clearly expressed purpose,
settlement, but rejected its challenge to the monetary terms. we cannot amend the plain language of a statute. See St.
Martin Evangelical Lutheran Church v. South Dakota, 451
The Doyles and Defendants subsequently twice modified U.S. 772, 788 (1981) ("[I]ndefinite congressional expressions
the release language. The final language provided that all cannot negate plain statutory language and cannot work a
civil claims, whether judicial or administrative, would be repeal or amendment by implication."); Morton v. Mancari,
released in exchange for the previously approved fees 417 U.S. 535, 550 (1974) ("In the absence of some
payments and the corporate compliance plan. J.A. at 310. affirmative showing of an intention to repeal, the only
The district court thereafter approved the settlement and permissible justification for a repeal by implication is when
dismissed the action, reiterating its earlier holding that after the earlier and later statutes are irreconcilable.").6
the government declines intervention, a relator may settle a
§ 3730 suit without the Attorney General’s consent. The Finally, Appellees assert that because § 3730(b)(1) requires
United States now appeals the dismissal. the Attorney General’s consent for "dismissal," and not just
settlements, separation of powers and mootness issues would
II.
This appeal turns entirely on the scope of the FCA’s
6
command that qui tam suits may not be dismissed without the We also reject the district court’s conclusion, which the Appellees
Attorney General’s consent. Section § 3730(b)(1) of the FCA do not raise on appeal, that the government’s decision not to intervene
provides as follows: was “tantamount to consent by the Attorney General to have the action
dismissed.” J.A. at 282 (citation omitted). There is absolutely no
A person may bring a civil action for a violation of statutory authority for the proposition that simply because the government
decides not to expend the resources to proceed with an action itself, it
Section 3729 for the person and for the United States thereby authorizes the relator to settle the government’s claims in
Government. The action shall be brought in the name of whatever manner he wishes. See United States ex rel. McGough v.
the Government. The action may be dismissed only if the Covington Technologies Co., 967 F.2d 1391, 1397 (9th Cir. 1992)
court and the Attorney General give written consent to (holding that the government’s initial decision not to intervene is not
the dismissal and their reasons for consenting. equivalent to § 3730(b)(1) “consent”). Indeed, such a construction would
only force the government to unnecessarily intervene in qui tam cases and
thereby frustrate the efficacy of the qui tam framework. Cf. Berge, 104
31 U.S.C. § 3730(b)(1) (emphasis added). We review the F.3d at 1458 (noting that there is “little purpose” to qui tam framework if
district court’s construction of this language de novo. See government is forced to pursue all meritorious claims).
14 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 7
Possibilities, et al. Possibilities, et al.
The original FCA provided a version of the current consent Vergos v. Gregg’s Enterprises, Inc., 159 F.3d 989, 990 (6th
requirement, but provided no mechanism for government Cir. 1998). The starting point in a statutory interpretation
intervention. See Act of March 2, 1863, ch. 67, 12 Stat. 696; case is the language of the statute itself. See Group Life &
Searcy, 117 F.3d at 159. Although Congress enacted the Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 210 (1979);
original FCA in 1863, it did not grant the government any Vergos, 159 F.3d at 990. In construing federal statutes, we
intervention authority until the statute was amended in 1943, presume that the ordinary meaning of the words chosen by
see Pub.L. No. 78-213, ch. 377, 57 Stat. 608 (1943), and it did Congress accurately express its legislative intent. See Mills
not allow "good cause" intervention until the statute was re- Music, Inc. v. Snyder, 469 U.S. 153, 164 (1985). Thus, "if the
amended in 1986. See False Claims Amendments Act of words of the statute are unambiguous, the judicial inquiry is
1986, Pub.L. No. 99-562, 100 Stat. 3153, 3154 (1986); see at an end, and the plain meaning of the text must be
also Searcy, 117 F.3d at 159. Thus, the original FCA would enforced." Hudson v. Reno, 130 F.3d 1193, 1199 (6th Cir.
obviously not suggest that the consent requirement is limited 1997). Our inquiry into legislative meaning is additionally
to the sixty day period, as at the time the statute was enacted, aided by contemporaneous legislative history and the
no sixty day intervention period existed. statutory context of the pertinent language. See Walton v.
Hammonds, 192 F.3d 590, 594 (6th Cir. 1999).
Moreover, there is no specific indication that any of the
amendments to the FCA were intended to limit the "consent" While the interpretation of the “consent “ requirement’s
requirement to the sixty-day intervention period. It is true, as breadth presents an issue of first impression in this Court,4two
the Killingsworth court noted, that the 1986 amendments of our sister circuits have directly confronted this issue. In
were designed "to encourage more private enforcement" of Killingsworth v. Northrop Corp., the Ninth Circuit held that
the Act by "increas[ing] incentives, financial and otherwise, the “consent” provision is not absolute, but applies only when
for private individuals to bring suits on behalf of the the United States is contemplating its initial intervention
Government." See S. Rep. No. 99-345, at 23-24 (1996), decision. 25 F.3d 715, 722 (9th Cir. 1994). The Ninth
reprinted in 1986 U.S.C.C.A.N. 5266, 5288-89; see also Circuit held that when the Attorney General declines to
Killingsworth, 25 F.3d at 721. The 1986 amendments also intervene, the relator no longer needs her consent to settle,
indicate that the provision allowing government intervention and the government is restricted to challenging the settlement
for "good cause" after the initial sixty-day period expands on for “good cause” under § 3730(c)(3). See id. at 722-23.
the "limited opportunity for government involvement" in qui Analyzing the legislative history of the FCA and relevant
tam actions. Id. at 5266, 5291-92. The Killingsworth court amendments, the Killingsworth court found that Congress
relied on this legislative history in concluding that Congress intended “to place full responsibility for False Claims Act
intended "to place full responsibility for False Claims Act litigation on private parties.” Id. at 722. The Ninth Circuit
litigation on private parties" and that an absolute right to veto concluded that this intent is “fundamentally inconsistent” with
settlement agreements was inconsistent with this intention.
Killingsworth, 25 F.3d at 722. 4
Other appellate courts have discussed issues that implicated the
However, simply because Congress intended to provide scope of the consent requirement, see United States ex rel. Milam v.
more incentives to private parties to bring qui tam actions University of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.
1992); Minotti v. Lensink, 895 F.2d 100, 104 (2d Cir. 1990), but only the
does not signal that it intended to strip away the government’s Fifth and Ninth circuits have definitively addressed whether it applies
power to consent to settlements made in its name. The right after the 60-day intervention period.
8 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 13
Possibilities, et al. Possibilities, et al.
“the asserted ‘absolute’ right of the government to block a authorize the court to require the parties to accept a settlement
settlement and force a private party to continue litigation.” Id. to which they have not agreed.”).
The court further noted that the statute provides that the
government “proceed[s]” with the action when it decides to In terms of statutory context and structure, we note that the
intervene, yet the relator “conduct[s]” the action when the consent language appears immediately after the provisos
government does not intervene. Id.; see 31 U.S.C. stipulating that a relator acts "for [himself] and for the United
§ 3730(b)(2) & (c)(3). The court construed this framework to States Government," and that "[t]he action shall be brought in
require that, absent intervention for “good cause” under the name of the Government." See 31 U.S.C. § 3730(b)(1).
§ 3730(c)(3), the relator’s right to “conduct” an action These requirements are indispensable to the qui tam
necessarily included the right to settle, and the government framework, as relators have Article III standing to bring FCA
essentially forfeited any veto authority when it decided not to actions only because they act on the government’s behalf.5
“proceed” with the action itself. Id. at 722-23. The location of the consent provision immediately after the
command that the action be brought in the government’s
On the other hand, the Fifth Circuit, concluding that the name suggests that it is an important component of the
plain language of § 3730(b)(1) is “as unambiguous as one can government’s ability to regulate qui tam actions.
expect,” held that the statute plainly allows the government to
veto proposed settlements. Searcy v. Phillips Electronics of Additionally, nothing in the statute’s legislative history
N. Am. Corp., 117 F.3d 154, 159 (5th Cir. 1997). In reaching compels a result contrary to § 3730(b)(1)’s plain meaning.
this conclusion, the Fifth Circuit found nothing in either
legislative history or the statute’s structure to negate the
language’s plain meaning. See id. 5
On appeal, none of the parties raise the threshold issue of whether
We now join the Fifth Circuit in rejecting the Ninth the Doyles have standing to bring an action under the FCA. Even if no
Circuit’s analysis, and hold that a relator may not seek party raises the propriety of a plaintiff’s standing, we “are under an
voluntary dismissal of any qui tam action without the independent obligation to examine [our] own jurisdiction, and standing
‘is perhaps the most important of [the jurisdictional] doctrines.’"
Attorney General’s consent. Section 3730(b)(1) unqualifiedly FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31 (1990) (quoting
provides that a qui tam action “may be dismissed only if the Allen v. Wright, 468 U.S. 737, 750 (1984)). Because the United States is
court and Attorney General give written consent.” This the real-party-in-interest in FCA litigation, and relators are statutorily
language clearly does not limit the consent provision to the empowered to act on the United States’ behalf, relators invoke the
sixty-day intervention period. If Congress wanted to limit the standing of the United States to bring qui tam actions. See United States
ex rel. Barajas v. Northrop Corp., 147 F.3d 905, 910 (9th Cir. 1998);
consent requirement to the period before the United States United States ex rel. Berge v. Board of Trustees of the Univ. of Ala., 104
makes its initial intervention decision, we presume that it F.3d 1453, 1457-58 (4th Cir. 1997); United States ex rel. Hall v. Tribal
knew the words to do so. See Bates v. United States, 118 Dev. Corp., 49 F.3d 1208, 1213 (7th Cir. 1995); Kriendler & Kriendler,
S.Ct. 285, 290 (1997) (“[W]e ordinarily resist reading words 985 F.2d at 1154. See also Vermont Agency of Natural Resources v.
or elements into a statute that do not appear on its face.”); United States ex rel. Stevens, 120 S.Ct.523 (1999) (mem.) (ordering
Keene Corp. v. United States, 508 U.S. 200, 208 (1993) parties in qui tam appeal to brief whether relators have Article III standing
to bring FCA actions). In the instant case, the United States clearly has
(providing that courts have a “duty to refrain from reading a standing to challenge Defendants’ alleged attempt to illegally appropriate
phrase into the statute when Congress has left it out”). federal funds. Therefore, as relators – the statutorily designated agents of
the government – the Doyles also have standing to vindicate the harms
committed against the government.
12 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 9
Possibilities, et al. Possibilities, et al.
no monetary recovery on the FCA claim, but Dr. Doyle did Moreover, we find that the clear import of this language is
manage a $150,000 personal recovery on the defamation strengthened by the FCA’s purpose, structure and legislative
claim. While we make no particular conclusions of the history. Congress’ manifest desire to ensure that the
propriety of the defamation settlement in this case, we merely government retains significant authority to influence the
note that the potential for abuse exists and veto authority is outcome of qui tam actions – even when it decides not to
essential to ensuring the public interest is vindicated. intervene – is entirely consistent with the nature of qui tam
Accordingly, we conclude that the policies served by the veto litigation. The FCA’s qui tam provision is
power are entirely consistent with the conclusion compelled
by § 3730(b)(1)’s plain meaning: that a relator may not settle passed upon the theory, based on experience as old as
any qui tam action without the Attorney General’s consent. modern civilization, that one of the least expensive and
most effective means of preventing frauds on the
This holding is also consistent with other portions of Treasury is to make the perpetrators of them liable to
§ 3730, including the relator’s right to “conduct” a qui tam actions by private persons acting, if you please, under the
suit when the government decides not to intervene. Nothing strong stimulus of personal ill will or the hope of gain.
in the statute suggests that the right to “conduct” an action
provides the relator with unilateral and ultimate settling Hughes Aircraft Co. v. United States ex rel. Schumer, 520
authority. Moreover, as the Searcy court noted, "[a] relator U.S. 939, 949 (1997) (internal quotations and citation
has ‘conducted’ an action if he devises strategy, executes omitted). Because the scope of fraud against the government
discovery, and argues the case in court, even if the is much broader than the government’s ability to detect it, the
government frustrates his settlement efforts." 117 F.3d at qui tam provisions allow the government to uncover fraud
160. Nor does the right to "conduct" the action annul the that it would not otherwise be able to discern. See United
government’s status as the real-party-in-interest in qui tam States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d
litigation. See Milam, 961 F.2d at 50 ("[T]he United States is 645, 650-51 (D.C. Cir. 1994). Pursuant to this goal, the FCA
the real-party-in-interest in any False Claims Act suit, even provides private actors with a variety of incentives to bring
where it permits a qui tam relator to pursue the action on its qui tam actions, and significant influence over the ensuing
behalf."); United States ex rel. Hyatt v. Northrop Corp., 91 development of qui tam suits – including “the right to conduct
F.3d 1211, 1217 n. 8 (9th Cir. 1996) (holding that relators the action” when the government decides not to intervene.
"sue on behalf of the government as agents of the See 31 U.S.C. § 3730(c)(3) (providing right to “conduct the
government, which is always the real-party-in-interest"); action” when government declines intervention); 31 U.S.C. §
Searcy, 117 F.3d at 156 ("[T]he United States is a real party 3730(d) (providing that, even when the government does
in interest even if it does not control the False Claims Act intervene, the relator remains a party to the action and is
suit."); United States ex rel. Rodgers v. Arkansas, 154 F.3d guaranteed at least fifteen percent of any recovery); 31 U.S.C.
865, 868 (8th Cir. 1998) (noting that the United States is § 3730(c)(2)(B) (providing that the relator retains the right to
always the real-party-in-interest in qui tam litigation). The challenge any settlements reached by the government as either
government’s status as the real-party-in-interest renders a unfair, inadequate, or unreasonable); see also Killingsworth,
relator’s unilateral attempt to settle akin to impermissibly 25 F.3d at 720 (“The statutory scheme of the False Claims
bargaining away the rights of a third party. See, e.g., Evans Act provides protection for the rights of both the relator and
v. Jeff D., 475 U.S. 717, 726 (1986) (“[T]he power to approve the government.”).
or reject a settlement negotiated by the parties . . . does not
10 United States, et al. v. Health No. 99-5259 No. 99-5259 United States, et al. v. Health 11
Possibilities, et al. Possibilities, et al.
However, given that private opportunism and public good the public interest would be largely beholden to the private
do not always overlap, see Searcy, 117 F.3d at 160; see also relator, who – absent “good cause” government intervention
United States ex re. Rabushka v. Crane Co., 40 F.3d 1509, – would retain sole authority to broadly bargain away
1519 (8th Cir. 1994) (Magill, J., dissenting) (noting that the government claims.
qui tam provisions “set[] a rogue to catch a rogue”) (citation
omitted), and that the harms redressed by the FCA belong to The recovery division requirements of the FCA provide
the government, see United States ex rel. Kreindler & further incentive for the over-broad release of government
Kreindler v. United Technologies Corp., 985 F.2d 1148, 1154 claims. See 31 U.S.C. § 3730(d) (requiring that the
(2d Cir. 1993), the FCA provides a number of mechanisms to government receive at least seventy percent of any qui tam
ensure that the government retains significant authority to recovery). As the Searcy court recognized:
regulate qui tam litigation. See Milam, 961 F.2d at 49 (noting
that the government maintains “extensive power” to control [R]elators can manipulate settlements in ways that
the course of qui tam litigation). For example, not only does unfairly enrich them and reduce benefits to the
the government retain absolute authority to intervene and government. This case presents a relator who allegedly
“proceed” with an action during the sixty days after the wants to trade on the defendants’ desire to maximize
complaint was filed, it can intervene for “good cause” at any preclusive effects. Plaintiffs ordinarily prefer to keep
time in the litigation. See 31 U.S.C. § 3730(c)(3). Moreover, their options open; agreeing not to bring future suits can
even when the government does not intervene, it nevertheless be costly. In qui tam litigation, however, there is a
receives at least seventy percent of any recovery. Id. at danger that a relator can boost the value of settlement by
§ 3730(d)(1)-(2). bargaining away claims on behalf of the United States [at
little cost to himself].
In our view, the power to veto a privately negotiated
settlement of public claims is a critical aspect of the Searcy, 117 F.3d at 160. The potential for such profiteering
government’s ability to protect the public interest in qui tam is exacerbated when, as here, a relator couples FCA claims
litigation. The FCA is not designed to serve the parochial with personal claims. In these circumstances, a relator can
interests of relators, but to vindicate civic interests in avoiding avoid the FCA’s recovery division requirements by allocating
fraud against public monies. See United States v. Northrop settlement monies to the personal claims. Relators can
Corp., 59 F.3d 953, 968 (9th Cir. 1995) ("[T]he private right thereby use the bait of broad claim preclusion to secure large
of recovery created by the qui tam provisions of the FCA settlements, while steering any monetary recovery to the
exists not to compensate the qui tam relator, but the United personal action. See Searcy, 117 F.3d at 160 (noting that in
States. The relator's right to recovery exists solely as a Killingsworth litigation, relator settled an FCA claim for $1.5
mechanism for deterring fraud and returning funds to the million, but settled a personal wrongful termination claim for
federal treasury."); see also United States ex rel. Taxpayers $ 2.7 million, illustrates manipulation of qui tam suit). See
Against Fraud v. General Elec. Co., 41 F.3d 1032, 1041 (6th also Christopher C. Frieden, Comment, Protecting the
Cir. 1994) (stating that the FCA’s qui tam provisions "have Government’s Interests: Qui Tam Actions Under the False
been crafted with particular care to maintain the primacy of Claims Act and the Government’s Right to Veto Settlements
the Executive Branch in prosecuting false-claims actions, of Those Actions, 47 Emory L.J. 1041, 1071 (1998) (noting
even when the relator has initiated the process"). Without the the use of "sweetheart settlements" to avoid the seventy
power to consent to a proposed settlement of an FCA action, percent allocation). Indeed, in this case, the Doyles received