P. Gonzalez v. Planned Parenthood of L. A. , 392 F. App'x 524 ( 2010 )

FILED
UNITED STATES COURT OF APPEALS AUG 12 2010
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S . CO UR T OF AP PE A LS
P. VICTOR GONZALEZ, Ïui Tam No. 09-55010
Plaintiff, on behalf of Himself, AKA Seal
1, D.C. No. 2:05-cv-08818-AHM-
FMO
Plaintiff - Appellant, Central District of California,
Los Angeles
v.
PLANNED PARENTHOOD OF LOS ORDER
ANGELES, AKA Seal A; PLANNED
PARENTHOOD SHASTA-DIABLO,
AKA Seal B; PLANNED PARENTHOOD
GOLDEN GATE; PLANNED
PARENTHOOD MAR MONTE, AKA
Seal D; PLANNED PARENTHOOD
RIVERSIDE AND SAN DIEGO
COUNTIES, INC. AKA Seal E;
PLANNED PARENTHOOD ORANGE
AND SAN BERNARDINO COUNTIES,
INC., AKA Seal F; PLANNED
PARENTHOOD PASADENA AND SAN
GABRIEL VALLEY, INC., AKA Seal G;
PLANNED PARENTHOOD SANTA
BARBARA, VENTURA AND SAN LUIS
OBISPO COUNTIES, INC. AKA Seal H;
PLANNED PARENTHOOD SIÈ
RIVERS, AKA Seal I; PLANNED
PARENTHOOD AFFILIATES OF
CALIFORNIA, AKA Seal J; MARY
JANE WAGLE, AKA Seal K; MARTHA
SWILLER, AKA Seal L; KATHY
KNEER, AKA Seal M,
Defendants - Appellees.
Before: GOODWIN, SCHROEDER and FISHER, Circuit Judges.
The Memorandum Disposition filed July 1, 2010 is hereby amended. With
the filing of the Amended Memorandum Disposition, the panel has voted to deny
the petition for panel rehearing. Judges Schroeder and Fisher have voted to deny
the petition for rehearing en banc, and Judge Goodwin has so recommended.
The full court has been advised of the petition for rehearing en banc and no
judge has requested a vote on whether to rehear the matter en banc. Fed. R. App.
P. 35.
The petition for panel rehearing and the petition for rehearing en banc are
denied. Further petitions for rehearing and rehearing en banc shall not be
entertained.
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FILED
NOT FOR PUBLICATION AUG 12 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S . CO U RT OF AP PE A LS
FOR THE NINTH CIRCUIT
P. VICTOR GONZALEZ, Ïui Tam No. 09-55010
Plaintiff, on behalf of the United States
and State of California, D.C. No. 2:05-cv-08818-AHM-
FMO
Plaintiff - Appellant,
AMENDED
v. MEMORANDUM *
PLANNED PARENTHOOD OF LOS
ANGELES, AKA Seal A; PLANNED
PARENTHOOD SHASTA-DIABLO,
AKA Seal B; PLANNED PARENTHOOD
GOLDEN GATE; PLANNED
PARENTHOOD MAR MONTE, AKA
Seal D; PLANNED PARENTHOOD
RIVERSIDE AND SAN DIEGO
COUNTIES, INC., AKA Seal E;
PLANNED PARENTHOOD ORANGE
AND SAN BERNARDINO COUNTIES,
INC., AKA Seal F; PLANNED
PARENTHOOD PASADENA AND SAN
GABRIEL VALLEY, INC., AKA Seal G;
PLANNED PARENTHOOD SANTA
BARBARA, VENTURA AND SAN LUIS
OBISPO COUNTIES, INC., AKA Seal H;
PLANNED PARENTHOOD SIÈ
RIVERS, AKA Seal I; PLANNED
PARENTHOOD AFFILIATES OF
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
CALIFORNIA, AKA Seal J; MARY
JANE WAGLE, AKA Seal K; MARTHA
SWILLER, AKA Seal L; KATHY
KNEER, AKA Seal M,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
A. Howard Matz, District Judge, Presiding
Argued and Submitted January 15, 2010
Submission Vacated January 20, 2010
Resubmitted for Decision June 29, 2010
Pasadena, California
Before: GOODWIN, SCHROEDER and FISHER, Circuit Judges.
P. Victor Gonzalez, relator, appeals the dismissal of his qui tam action
against Planned Parenthood of Los Angeles, et al. ('Planned Parenthood'), under
the federal False Claims Act ('FCA') and the California False Claims Act
('CFCA').
The district court held that the FCA's public disclosure bar at 31 U.S.C.
y 3730(e)(4)(A) divested it of jurisdiction over the federal claim because the
contents of the FCA suit had been disclosed previously in a state court complaint
and a state legislative committee report, and because Gonzalez was not the original
source of the information previously disclosed. The district court additionally
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dismissed the CFCA claim because Gonzalez had characterized the claim under the
state statute as 'materially identical' to his claim under the federal FCA.
During the pendency of this appeal, two significant developments in the law
occurred. First, the Supreme Court issued a decision that interpreted part of the
jurisdictional provision at issue in this case. See Graham County Soil & Water
Conservation Dist. v. United States ex rel. Wilson, 559 U.S. ÁÁÁ, 130 S. Ct. 1396(2010). Second, Congress amended the same jurisdictional provision as part of the
Patient Protection and Affordable Care Act ('PPACA'). See Pub. L. No. 111-148,
y 10104(j)(2), 124 Stat. 119, 902 (2010).
The parties briefed these developments after argument, and they agree that
the PPACA's statutory amendments should not be applied retroactively to this
case. We decide the case under the prior statute as interpreted by Graham County.
We review de novo the district court's dismissal of a qui tam action on the basis of
y 3730(e)(4)(A). United States ex rel. Meyer v. Horizon Health Corp., 565 F.3d
1195, 1198 (9th Cir. 2009).
To determine whether the jurisdictional bar of y 3730(e)(4) precludes a qui
tam action, we must first determine 'whether there has been a prior public
disclosure of the allegations or transactions underlying the qui tam suit.' A-1
Ambulance Serv., Inc., v. California, 202 F.3d 1238, 1243 (9th Cir. 2000) (internal
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quotation marµs omitted). Once a public disclosure has occurred, the suit is
jurisdictionally barred unless the relator bringing suit is an 'original source' of the
information disclosed. Id.A disclosure is a 'public disclosure' as contemplated by the statute only if
(1) the disclosure 'originated in one of the sources enumerated in the statute,' and
(2) 'the content of the disclosure consisted of the 'allegations or transactions'
giving rise to the relator's claim, as opposed to 'mere information.'' Id. (quoting
Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1473 (9th Cir. 1996)).
The former statute identified three categories of enumerated sources: (1)
disclosures occurring 'in a criminal, civil, or administrative hearing'; (2)
disclosures occurring 'in a congressional, administrative, or Government
Accounting Office report, hearing, audit, or investigation'; and (3) disclosures
occurring 'from the news media.' 31 U.S.C. y 3730(e)(4)(A) (2006).
Planned Parenthood contends that an audit by the California Department of
Health Services of Planned Parenthood of San Diego and Riverside Counties
constituted a prior public disclosure. The district court correctly rejected this
contention. Although Planned Parenthood argues that the audit was made public
when it was discussed in an e-mail on January 26, 2004, sent from Planned
Parenthood of San Diego to other Planned Parenthood affiliates in California, the
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internal e-mail was not a 'public disclosure' in any sense. Planned Parenthood
affiliates may be incorporated separately, but they all performed similar services,
maintained the same billing practices, and thus faced a common threat at that time.
The affiliates receiving the e-mail therefore had an incentive to µeep the
information to themselves. There was no disclosure to an outsider. Cf. Seal 1 v.
Seal A, 255 F.3d 1154, 1161 (9th Cir. 2001).
The district court erred, however, when it held that a California Senate
committee report from August 9, 2004, was a prior disclosure that barred
Gonzalez's qui tam action. The relevant provision barred any suit based on
information publicly disclosed in a 'congressional, administrative, or Government
Accounting Office report . . . .' 31 U.S.C. y 3730(e)(4)(A) (2006). The Supreme
Court has now clarified that 'congressional' denotes only the federal legislature,
and a state legislative report is therefore not an enumerated source under the prior
statute. See Graham County, 130 S. Ct. at 1402-03; see also United States ex rel.
Bly-Magee v. Premo, 470 F.3d 914, 917 (9th Cir. 2006). The state legislative
committee report therefore cannot serve as a jurisdictional bar to suit. The district
court, however, did not have the benefit of the Court's explanation in Graham
County.
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Planned Parenthood also points to an Internet report as well as contents of
certain newspaper articles that focus on the activities of pharmaceutical companies,
suggesting these qualify as disclosures 'from the news media.' The materials,
however, do not disclose the material elements of the alleged fraud that forms the
basis for this action, as required under our law. See A-1 Ambulance, 202 F.3d at
1243.
The district court additionally concluded that disclosures in Gonzalez's own
state court lawsuit against Planned Parenthood for wrongful termination in June
2005 triggered the jurisdictional bar. State court lawsuits are indeed an
enumerated source of a public disclosure under the statute. United States ex rel.
Green v. Northrop Corp., 59 F.3d 953, 966-67 (9th Cir. 1995). The parties do not
dispute on appeal that Gonzalez's state court complaint disclosed the same
allegations giving rise to this qui tam action. The state court lawsuit therefore
qualified as a 'public disclosure' under the FCA. The district court concluded,
however, that Gonzalez was not an 'original source' of the information disclosed,
and that the state court lawsuit for that reason served to bar the qui tam suit. We
disagree.
An original source must have 'direct and independent µnowledge of the
information on which the allegations are based.' 31 U.S.C. y 3730(e)(4)(B)
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(2006). Here Gonzalez learned of the alleged fraud in the scope of his employment
as Chief Financial Officer ('CFO') of Planned Parenthood of Los Angeles. He
received internal e-mails concerning a state audit of another affiliate and then
personally analyzed the billing practices of the Los Angeles affiliate at the request
of his supervisor.
For a relator's µnowledge to be 'direct,' the relator must acquire 'firsthand'
µnowledge about the alleged fraud 'though [his] own labor.' United States ex rel.
Devlin v. California, 84 F.3d 358, 361-62 (9th Cir. 1996). The relator must also
maµe a 'genuinely valuable contribution to the exposure of the alleged fraud.' Id.The FCA does not limit an 'original source' to the first insider to suggest the
existence of a fraud. See United States ex rel. Barajas v. Northrop Corp., 5 F.3d
407, 410-11 (9th Cir. 1993) (language of FCA suggests possibility of more than
one 'original source'); Wang v. FMC Corp., 975 F.2d 1412, 1417 (9th Cir. 1992)
(Wang alerted to potential fraud when 'called in to study [a] problem' by his
employer). The FCA does require, however, that an insider employee present
specific facts that explain how he saw the fraud with his own eyes. United States
ex rel. Bly-Magee v. Premo, 470 F.3d 914, 917 (9th Cir. 2006); United States ex
rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516, 525-26 (9th Cir. 1999).
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Gonzalez presented adequate facts to demonstrate that he acquired firsthand
µnowledge about the allegedly fraudulent practices, even if he was not the first to
discover the problem. Gonzalez also acquired his µnowledge before the allegedly
fraudulent billing practices were 'disclosed' to the public within the meaning of
the FCA, and he was later the driving force behind the disclosure made in his state
court lawsuit. His µnowledge of the alleged fraud was therefore 'direct.' The
parties do not dispute that Gonzalez's µnowledge was 'independent' of the
disclosure in his state court complaint because Gonzalez acquired the information
before the complaint was filed. See Meyer, 565 F.3d at 1202. Gonzalez therefore
qualifies as an 'original source' of the allegations in the state court complaint, and
the public disclosures in that complaint cannot bar jurisdiction over the qui tam
suit.
Under the applicable federal statute, prior to its recent amendments, the
federal claims are not jurisdictionally barred. We reverse the judgment dismissing
the federal claim and remand for further proceedings. On remand, the district court
may consider whether, in light of the differences between state and federal law as
to enumerated sources, the state action should be treated differently. We do not
consider the merits of the fraud allegations.
REVERSED and REMANDED.
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