Conflicts of Law and the False Claim Act

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TABLE OF CONTENTS

INTRODUCTION .......................................................................................................... The Second Circuit Asked Whether Thirty or Sixty Days Should Be Allowed to File an Appeal For an False Claims Act Action And Whether A Pro Se Litigant Can File a False Claims Act Action And Represent The Government. ............................................................................................................

THE HISTORICAL DEVELOPMENT OF QUI TAM ....................................................

QUI TAM IN AMERICA ................................................................................................ The FCA Cannot be Used to Sue States ............................................................... The Supreme Court Excluded States as Defendants in FCA Actions. ............. Cities Are Still Considered Persons Under The FCA. ......................................... The Original Action Alleged That The City Of New York Violated the FCA. .....

THE RESPONSE TO THE SECOND CIRCUIT ORDER REQUESTING BRIEFS ARGUING WHAT TIME LIMIT SHOULD BE APPLIED TO FILE AN APPEAL UNDER THE FCA, WHEN THE GOVERNMENT IS NOT AN ACTIVE PARTICIPANT. .............................................................................................................

The Sixty-Day Period Should Be Allowed When Filing An FCA Appeal. .......... Statement Regarding Oral Argument ................................................................... Opinion Below ......................................................................................................... Statement of the Issues ......................................................................................... Statement of Facts .................................................................................................. Summary of the Arguments ...................................................................................

I. The Fifth, Seventh and Ninth Circuits Allow Sixty-Days To File A Notice Of Appeal, While the Tenth Circuit Only Allows

Thirty-Days When The Government Is Not Actively Involved In An Action. ....................................................................................................

A. This Court Should Use The Sixty-Day Standard When Allowing Appeals In Qui Tam Actions Where The Government Is The Party In Interest. ................................................................................................................ B. The Petrofsky Court, In Opposition To The Other Courts, Said That When The Government Is Not An Active Party Only Thirty-Days Are Allowed To File An Appeal. ................................................................................

II. The First Through Ninth Circuits Have Asserted That The Government Is The Primary Party In Interest In A Qui Tam Action. ........................................

A. Many Federal Courts Have Identified The United States As The Primary Beneficiary In Qui Tam Actions, And Have Found The United States The Party Who Benefits Most From A Qui Tam Action. ......................

1. The Eighth Circuit Said The United States Is The Primary Party. ..........

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2. The United States Supreme Court, the Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, and D.C. Circuits Consider The Government The Primary Party In Interest in FCA Actions. .............................................

III. The Statute Clearly Makes The United States A Primary Party In Interest In All Phases Of The Qui Tam, Even When It Does Not Participate. .................

A. The Sections Of The Statute Show That There Is A Need For The Government To Participate In Qui Tam Actions. ...................................................................................

1. 31 U.S.C. § 3729 - Definitions And Limits Of The FCA Showing That The Government Controls Many Aspects Of An FCA Action. .................... 2. 31 U.S.C. § 3730 - Civil Actions For False Claims Are Allowed By A Relator For The Government, But The Government Is The Only Party That May Intervene. ......................................................................................... 3. 31 U.S.C. § 3731. False Claims Procedures and Statute of Limitations. ....................................................................................................... 4. 31 U.S.C. § 3733. Civil Investigative Demands (CID) Require Approval By The Attorney General. ...............................................................

IV. The Intent Of The Qui Tam Statute Is To Encourage Individuals To Assist The Government In Detecting And Prosecuting Fraud. ......................... A. Relators Should Be Given Sixty Days to File Appeals. ...............................

THE FEDERAL APPELLATE COURT, SUA SPONTE, ORDERED BRIEFS FOR ANOTHER UNRESOLVED QUESTION ASKING WHETHER NON-ATTORNEYS COULD REPRESENT THE FEDERAL GOVERNMENT IN FCA ACTIONS. .............

I. The City’s Response Brief To The First Court Order Raised New Issues. ....... A. The City Questioned If A Non-Attorney Pro Se Litigant, Could Represent The Federal Government In An FCA Action. ...................................................................

II. The First Level Of Review Would Require A Review Of The Statute To Determine Limitations. ...............................................................................................

III. The False Claims Act Requires That The Justice Department Review Actions To Determine Whether The United States Will Intervene. .............................................................

A. The Second Order Of The Second Circuit Was Not Exact Or Precise. .... B. Conclusion in Response to the Second Court Order. ............................

WHERE DO WE GO FROM HERE? ...........................................................................

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INTRODUCTION

The False Claims Act (“FCA”)1 is a federal law that allows a party to bring an

action on behalf of the Federal Government alleging fraud against the government.

Many of us are familiar with the story of Robin Hood and the Sheriff of Nottingham.

When the Sheriff was trying to capture Robin Hood, he was acting on behalf of the king.

Robin was shooting deer on the king’s land, and this was considered to be stealing from

the king. Similarly, the False Claims Act was passed so that parties could not steal from

the Federal Government (the sovereign.) The FCA allows a person (relator) to bring

an action on behalf of the sovereign.2

This paper is based upon orders issued by the Second Circuit Federal Appellate

Court. The Appellate Court requested that briefs be filed to resolve a circuit split in the

way that a section of the FCA is interpreted.3 Before reviewing the issue raised by this

paper, background and historical information about the FCA4 will be given. Next, the

paper will review several United States Supreme Court decisions.5 The first of these

decisions is United States ex rel. Stevens v. Vt. Agency of Natural Res.6 The Stevens

decision is being reviewed because the court decided that states could not be sued

under the FCA but said that a relator7 had standing when bringing an FCA action. The

1 31 U.S.C. §§ 3729-3733(1986)(hereinafter FCA).2 Some successful FCA actions can be reviewed on the Taxpayers Against Fraud web site. This web site has information related to FCA actions available within states, Federal Government actions, and other information related to FCA actions. (http://www.taf.org http://www.taf.org/quarterlypdf.htm visited on 11/04/07)). 3 Although the current FCA statute has not been modified in more than twenty years, at least three cases related to the FCA have been before the Supreme Court in the last six years. Qui tam and FCA are used interchangeably in this paper. 4 The False Claims Act is codified as 31 U.S.C. §§ 3729-3733 and the latest modification was passed in 1986. 5 Other cases will also be reviewed but emphasis will be placed on the Supreme Court cases. 6 United States ex rel. Stevens v. Vt. Agency of Natural Res., 529 U.S. 765 (2000). 7 A relator is a person who files a FCA action on behalf of the United States. If the government does not want to prosecute, they may give the authority to the relator and the relator becomes the equivalent of a private attorney general.

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next decision that will be reviewed is United States ex rel. Chandler v. Cook County.8

This decision is being reviewed because the Supreme Court found that cities and

subdivisions of states were considered persons under the FCA and they are not

immune from an FCA action. Finally, a decision related to the Privileges and

Immunities Clause of the Constitution9 will be reviewed. In Lunding v. State of New

York Tax Appellate Authority10 the Supreme Court determined that a state could not

treat non-citizens of a state differently than citizens of a state when applying tax laws.

In Lunding, the Supreme Court determined that New York State had violated the

Privileges and Immunities Clause of the Constitution.11

This paper will briefly describe the causes of action included in the complaint that

was filed in the District Court. The Court, in a decision that was about twenty pages,

dismissed the complaint after taking more than three years to review the complaint and

responses. The author of this paper appealed the decision and after several

communications with the Federal Appellate Court (Second Circuit), the Court issued its

first order. This order requested that the parties brief the issue related to the timeliness

of filing an appeal when the United States is not an active participant in a FCA action.

Next, after reviewing the briefs that were submitted, the Court issued a second order

and appointed a pro bono counsel to brief two issues. The first issue remained the

same, the Court required that the parties brief: 1) what is deemed a timely filing for an

appeal when the United States is not an active participant in a FCA action; and 2)

whether a party who is not an attorney can bring an FCA action on behalf of the Federal

8 United States ex rel. Chandler v. Cook County, 538 U.S. 119 (2003).9 U.S. Const. art. § 4, cl. 2. (“The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.”)10 Lunding v. State of New York Tax Appellate Authority, 522 U.S. 287 (1998).

11 U.S. Const. art. § 4, cl. 2 (Privileges and Immunities).

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Government .12

The Second Circuit Asked Whether Thirty or Sixty Days Should Be Allowed to File an Appeal For a False Claims Act Action And Whether A Pro Se Litigant Can File a False Claims Act Action And Represent The Government.13

The order of the court issued in 2007 stated:

IT IS HEREBY ORDERED that the motion to dismiss is referred to the panel that will decide the appeal; pro bono counsel shall be appointed for pro se appellants' only for purposes of the motion to dismiss to brief the two issues raised: (1) whether the 30 day time limit and Federal rules of appellate procedure 4(a)(1)(A) for filing a notice of appeal or the 60 day time limit and rule 4(a)(1)(B), applies to a qui tam action in which the United States declines to intervene; and (2) whether a litigant may bring a qui tam action pro se.14

12 In addition to questioning the standing of a non-attorney to bring an action and represent the United States, the Court also asked if a non-attorney could represent others in a false claims action. Although the issues raised sua sponte by the Federal Appellate Court have existed for a period of time, the court decided to raise them with a non-attorney. Rather than review the merits of the claim, the court “selectively” decided to raise issues of law that were not related to the complaint and were not raised in the lower Court by either party or the Court. The court did not request briefing of other issues related to the Courts interpretation of the FCA. As an example, the appellant requested that the court review the interpretation of 31 U.S.C. § 3730(b)(1). This section says “The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.” 13 The Second Circuit really wanted to address if non-attorneys could file an FCA action since lawyers frequently bring actions on their own behalf, pro se. Lawyers frequently represent relators in FCA actions. 14 The original order was issued in December of 2006, by the United States Court of Appeals for the Second Circuit. It said:

Appellant seeks to appeal the district court's order dismissing his qui tam action brought on behalf of the United States. However, the appellant filed a notice of appeal fifty-four days after the district court's entry of judgment. Upon due consideration, the parties and the United States are ordered to brief the issue of whether the thirty-day time limit for filing a notice of appeal, pursuant to Federal Rule of Appellate Procedure 4(a)(1)(A.), or the sixty-day time limit for filing a notice of appeal, pursuant to Rule 4(a)(1)(B), which applies when the United States is a party, applies to a qui tam action with the United States declines to intervene in the proceedings. See United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304, 308 (5th Cir. 1999) (holding that the sixty-day time limit applies); United States ex rel. Lu v. Oh, 368 F.3d 773, 775 (7th Cir. 2004) (same); United States ex rel. Haycock v. Hughes Aircraft Co., 98 F.3d 1100, 1102 (9th Cir. 1996) (same); but see United States ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327, 1329 (10th Cir. 1978) (applying the thirty-day time limit)….

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THE HISTORICAL DEVELOPMENT OF QUI TAM

It is best to start with English common law since that is the basis of the False

Claims Act, and also the basis of similar laws that existed in several of the original

colonies. The history of false claim actions covers about eight hundred years.

The FCA15 is the modern codification of the Lincoln Law,16 and that in turn is

based upon qui tam laws. Qui tam is an abbreviation of "qui tam pro domano rege

quam pro se ipso in hac parte sequitur."17 The translation of this expression is, "who as

well for the king as for himself sues in this matter." The person who is bringing the

action does so for the King (the sovereign) as well as for his own private interests.18

Usually, there is a reward that is given to the person who brings the action and is

successful (the relator19).

Qui tam actions were brought over from English common law to the American

colonies. The action contained or consolidated a royal interest and a private interest.

The royal interest later became the sovereign’s interest. The first actions were brought

in England as early as the thirteenth and fourteenth centuries. The qui tam was a

common law writ, and later it was codified to limit its scope. One reason that individuals

brought qui tam actions was that it allowed them to have their cases heard in the royal

courts. These courts were considered to be of a higher caliber, so rather than have

15 31 U.S.C. §§ 3729-3733. 16 In 1863, during the Civil War, Congress and President Lincoln passed the first Federal False Claims Act. Hence, the name the Lincoln Law. It was passed in order to allow citizens to report fraud against the Federal Government. During the war, many manufacturers failed to meet their obligations and delivered shoddy goods. 17 Black's Law Dictionary, 1282 (8th ed. 2004). 18 Id. 19 The relator is the person who brings the false claim case on behalf of the government. This is denoted by “ex rel.” in the caption of the case. An example would be United and States ex rel. John Doe v. the defendant. In this example, the sovereign is the United States and the relator is John Doe.

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unpredictable results; individuals would look for a cause of action that included the

sovereign.20

There were several types of qui tam actions. One type included the person who

alleged that they suffered a wrong, while the other type was an action that was brought

by a common informer. The common informer was a bounty hunter who brought the

action in order to be rewarded with part of the amount that was recovered.21

The use of qui tam actions expanded for several reasons. They allowed the

royal courts to expand their jurisdiction. They allowed aggrieved individuals to

prosecute both civil and criminal actions when there were not sufficient law enforcement

officials to protect the public’s interests.22 They allowed individuals who had not been

harmed to bring actions based upon sharing in the rewards of recovery.23 If the private

prosecutors were successful, they received part of the recovery and either the king, or a

public entity would also recover a penalty.24

There were some difficulties with qui tam actions where there was collusion

between a party and the private prosecutor. A private prosecutor could settle an action

with the defendant for amounts that were significantly lower than the penalties that

should have been awarded, or alternatively failed to succeed in an action.25 Some

20 NOTES, THE HISTORY AND DEVELOPMENT OF QUI TAM, WASHINGTON UNIVERSITY LAW QUARTERLY, VOL. 1972(NOTES, the HISTORY): at 81-83. It is suggested that for a more complete history of qui tam actions that the reader review this article. Justice Scalia quotes from this Note in the Stevens decision. 21 NOTES, the HISTORY at 84-85. Today, the federal FCA bases recovery on several factors. It allows the informer/ relator to recover as much as thirty percent of the amount recovered and may also include legal fees for the successful relator.22 This is one reason that Congress continues to support the FCA. Actions during the last ten years, most prosecuted by the Attorney General, have recovered billions of dollars. 23 NOTES, The HISTORY at 86-87. 24 NOTES, The HISTORY at 87. 25 NOTES, The HISTORY at 89. Current law prevents a relator (private prosecutor) from settling an action without the approval of the United States Attorney General’s office. See § 3730(c)(3). The current statute allows the Justice Department to intervene in an action during any part of the proceedings. Section § 3730( c)(3) says in part that the government: “…may nevertheless … intervene at a later date upon a showing of good cause.” Good cause may mean at settlement conferences, or when a relator decides

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relators would bring actions that were vexatious by using laws that were no longer

enforced, or bring actions to harass a defendant.26 To correct these deficiencies in qui

tam actions Parliament imposed penalties, and assessed the defendant’s costs on

informers who acted inappropriately. The laws governing qui tam actions for aggrieved

parties or the sovereign were not as harsh and the procedures were not as difficult to

follow.27

Although qui tam statutes were available, they were not a settled form of law.

Actions could be brought either criminally or civilly, and aggrieved parties frequently did

not know if they had to use qui tam or bring another type of action. This was the law

when the American colonies adopted it from English law.28

QUI TAM IN AMERICA

All American colonies accepted English law in one form or another. However,

there are conflicting opinions about the degree of acceptance of English statutes and

decisions.29 Similarly, there were questions related to the American adoption of qui tam

laws. Many American states adopted qui tam statutes from English law and applied the

same rules to make determinations as the English courts used.30 Additionally, the

Federal Government applied the qui tam principle both in specific laws, and in granting

a general right to bring a private action for an aggrieved party where the United States

was a beneficiary. With the expansion of federalism and federal programs to support to dismiss an action and withdraw. The intervention is to insure that the government’s interests are protected. 26 The current remedy for this is to fine the relators, or hold the relator responsible for reasonable costs of the defendants (See U.S. ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001).) Alternatively, the United States Attorney General’s office can refuse to join the action or can suggest to the court that the action be dismissed. However, the drafter of this paper believes that the Attorney General’s Office is a political entity and some actions that are meritorious are not approved based upon political consequences. 27 NOTES, THE HISTORY at 90.28 NOTES, THE HISTORY at 91.29 NOTES, THE HISTORY at 91-93.30 NOTES, THE HISTORY at 93-97.

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both private organizations and governmental agencies, it has become difficult to monitor

or control the use of funds. In many cases, federal agencies do not have the resources

to monitor funds or to bring actions. This has led to an expansion of the use of qui tam

actions both as a means to bring private causes of action to protect rights, and to collect

bounties against those who commit fraud against the Federal Government.31

The FCA Cannot be Used to Bring Actions Against States.

In United States ex rel. Stevens v. Vt. Agency of Natural Res.,32 the Appellate

Court decision included a history of the FCA starting with 1863. The FCA was passed

during the Civil War to combat the fraud that was occurring when contractors supplied

inferior goods to the Union army.33 The motive for the legislation according to one

sponsor was based “on the old fashioned idea of holding out a temptation, and ‘setting a

rogue to catch a rogue.” This history is an extension of the history from 1863 and

continues until the Stevens case was decided by the United States Supreme Court.34 In

Stevens, the FCA action was against a state agency. In the District Court in Stevens,

the United States filed a notice to decline to intervene in the lower court action. When

the Justice Department35 does not want to prosecute an action, they have several

alternatives available.36 One alternative is to allow the relator37 to prosecute the action

31 Although this review concentrates on a federal cause of action, many states and even large cities and counties have passed laws to allow qui tam actions to insure that contractors perform properly. 32 United States ex rel. Stevens v. Vt. Agency of Natural Res., 162 F.3d 195 (2d Cir. 1998). This decision describes the issues associated with allowing the false claims act to be applied to states. It includes a dissent by Judge Jack Weinstein where the history of the Eleventh Amendment, the fundamentals of federalism, constitutional provisions and the separation of powers are discussed.) (Judge Weinstein was sitting by designation ( E.D.N.Y).33 Stevens, 162 F.3d at 221. ("For sugar [the government] often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols, the experimental failures of sanguine inventors, or the refuse of shops and foreign armories. ")34 United States ex rel. Stevens v. Vt. Agency of Natural Res., 529 U.S. 765 (2002). 35 The United States Attorney in the district that the action is brought (when an FCA action is filed, the relator must send a copy to the Justice Department in Washington, and in the district where the action is brought. . 36 Some reasons to decline prosecution include likelihood of success, degree of difficulty, cost benefit ratio, etc.37 A private citizen who brings the action.

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as a private attorney general who functions on behalf of the United States

government.38 When this happens, the Justice Department usually requests that:

it be served with copies of all pleadings filed in the case; it reserve[s] the right to order transcripts of depositions; and it expressly reserve[s] the right to intervene against the state, for good cause shown, at a later time. The government also request[s] that it be given notice and an opportunity to be heard in the event that the [relator] or the [defendant] sought to have the action dismissed, settle, or otherwise discontinued.39

In addition to standing on the sidelines, the Justice Department can intervene and

prosecute on behalf of the United States, or can suggest that the action be dismissed by

the district court. The Justice Department can respond using several alternative

positions. Some of the alternative positions available to the Justice Department are

defined in the statute.40 The first comprehensive FCA statute was passed by Congress

in 1863, and was titled “An Act to prevent and punish frauds upon the Government of

the United States.41 “The impetus for enactment of the 1863 Act was stopping the

massive frauds perpetrated by large contractors during the Civil War.”42

The 1863 Act was later codified in 1943 as part of Title 31 of the United States

Code and it has been amended several times. In 1986, the code was amended again in

order to clarify certain sections and to allow the government to make the act easier to

"recover losses sustained as a result of fraud" committed against the Federal

Government. One modification in the 1986 amendment changed the wording so that

38 Stevens, 162 F.3d at 219. The dissent suggests that “assigning the federal government's decision to sue a state to private qui tam plaintiffs-who are accountable to no one and motivated primarily by the hope of financial gain-prevents congresspersons from fulfilling their representative function of interceding on behalf of their home states in disputes with the federal government and interferes in the cooperative relationships between state agencies and their federal counterparts.”39 Stevens, 162 F.3d at 199. See also 31 U.S.C. § 3730. 40 See 31 U.S.C.. §§ 3729-3733 ( § 3730(c) includes many of the alternative choices.)41 Stevens, 162 F.3d at 205. 42 Stevens, 162 F.3d at 205.

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"any person" could be held liable under the act. This very wording later came into play,

and has been interpreted by the Supreme Court to exclude states as defendants.43

Another change made in 1986 included a civil investigative demand (CID).44 This

section allows the United States Attorney General to issue a subpoena anywhere in the

United States, against any person or state or political subdivision. The FCA was also

modified to allow for triple damages that may be punitive in nature.45 The Second

Circuit Appellate Court found that a state was a person that could be sued by a relator

using the FCA. However, Stevens was appealed to the United States Supreme Court.

The Supreme Court Excluded States as Defendants in FCA Actions.

With Justice Scalia writing the opinion, the Supreme Court reversed the decision

of the Second Circuit in the Stevens case.46 The opinion bypassed ruling on most

constitutional issues47 by saying that Congress failed to say that states are persons as

defined in the FCA. The decision did not address any issues related to either the

“Appointment Clause”48 or the “Take Care” Clause49 of Article II,50 but said relators had

43 Stevens v. Vt. Agency of Natural Res., 529 U.S. 765 (2002). 44 See 31 U.S.C. § 3733 (a) (1). Parts of 31 U.S.C. § 3733 include definitions to clarify the extent and scope of investigations(CID). 45 Stevens, 162 F.3d at 207. 46 Stevens, 529 U.S. 765 (2002). 47 Stevens, 529 U.S. at 777-778. The court found that the relator had Article III standing as the “statutorily designated agent” for the United States. The Court did not address any issues related to Article II of the Constitution. 48 Article II of the U.S. Constitution enumerates those powers vested in the executive branch, and the U.S. Const. art. II, § 2, cl. 2 - delegates to the president the power to appoint people to serve in the federal government. This power, however, requires “the Advice and Consent of the Senate,… [to] appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law…” 49 See U.S. Const. art. II, § 3 “…he shall Take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.” 50 529 U.S. at 778. For a more detailed discussion on the Constitutionality of the FCA - See - Kathryn Feola, Bad Habits: The Qui Tam Provisions Of The False Claims Act Are Unconstitutional Under Article II, 19 J. Contemp. Health L. & Policy 154 2002-2003. This Comment reviews the FCA’s conflict with both the Appointments Clause, and the Take Care Clause of Article II. One prong of the attack suggests that the relator’s role violates the Appointments Clause by allowing the Congressional Act to allow the appointment of relators in violation of the

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standing under Article III. In order to bypass any constitutional determinations, the

Court ruled that Congress explicitly failed to say that the statute eliminated the Eleventh

Amendment immunity under § 5 of the Fourteenth Amendment.51 Therefore, States are

generally immune from suits by individuals under the Eleventh Amendment, but that is

not always “a hard and fast rule.”52 There must be “some affirmative showing of

statutory intent” by Congress before this immunity may be disregarded.53

Justice Ginsburg wrote a concurring opinion that agreed with the court, but

added that the issue of the United States bringing an action against a state under the

FCA had not been resolved by this decision.

Justice Stevens, who was joined by Justice Souter, wrote a dissenting opinion in

Stevens saying that the court erred in allowing states to commit fraud. In his view, the

Constitution’s separation of powers. The conflict occurs only when the United States declines to intervene and allows an independent prosecutor, the relator, to control the action. There is minimal control and oversight by the executive branch and this may be in violation of both the Appointment Cause and the Take Care Clause of Article II. The Take Care clause is implicated because there is no control related to how the law is enforced. The Comment then tries to justify this position by saying that about ninety-five percent of all government recovery from the FCA is from actions where intervention by the government occurs (2001). With the appointment clause, there is a power of removal. However, with an independent relator, there is no executive control and the relator may be able to act in ways contrary to the wishes or best interest of the executive branch of government (The relator may not be concerned with political consequences.)

Not only does the FCA allow Congressional determinations related to Article II but it also allows the judiciary to make decisions related to when the government may intervene after the initial decision when the relator is allowed to prosecute the action (the government declines to prosecute.) The FCA allows the government to intervene later if it chose not to do so initially, but it must show the court “good cause” (See 31 U.S.C. § 3730(c)(3).) When the judiciary can determine or limit executive actions it is argued that there is a violation of the Separation of Powers doctrine. The Comment concludes by summarizing and suggesting that other laws have been struck down with similar provisions, saying that even if a law is “efficient, convenient and useful” it still may be questioned when it is in violation of the Constitution (Citing Bowsher v. Synar, 478 U.S. 714, 728-732 (1986). (In Bowsher the court found that Congress retained control of an officer who was responsible for an executive function and that the law violated the Separation of Powers Doctrine.))

The FCA has been in existence for hundreds of years. In the United States it was enacted in 1863 by Congress, but existed within the colonies prior to that enactment. The author of this paper does not believe that the entire law will be found unconstitutional but that sections of the law may be questioned. The basis of this paper is a circuit split related to several provisions of the law. 51 Stevens, 529 U.S. at 779.52 Stevens, 529 U.S. at 781. 53Stevens, 529 U.S. at 781.

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statute allowed discovery against a state54 and this alone suggested that states could be

defendants and treated as persons.55

Cities Are Still Considered Persons Under The FCA.

In United States ex rel. Chandler v. Cook County,56 Justice Souter writing for a

unanimous court determined that local governments could be defendants under the

FCA. The court first determined that local governments and corporations were

susceptible to actions under the FCA. After reviewing the history of the FCA and the

liability of local governments, the court affirmatively decided that local governments

were historically considered persons under Federal Law and specifically the FCA.57

The second issue raised during the Chandler case was if the changes in damages

from double to triple damages was punitive rather than remedial.58 In Stevens,59 the

Court suggested that the triple damages could be considered punitive, but here the

Court said that there were several reasons that the triple damages may not be punitive.

The Court explained that Congress adopted the triple damages as a substitute for

consequential damages. It was a way that the government could recover more than just

the amount lost. There are costs associated with investigation and with recovery in

addition to the amount based upon the fraud against the government. Additionally, the

damages would not always be punitive. In fact, courts may only double the damages

54 In one section of the FCA related to a Civil Investigation Demand (CID) states are defined as persons.(See 31 U.S.C. § 3733 (l) (4) (The term "person" means any natural person, partnership, corporation, association, or other legal entity, including any State or political subdivision of a State.)55 Stevens, 529 U.S. at 792.56 United States ex rel. Chandler v. Cook County, 538 U.S. 119 (2003).57 Chandler, 538 U.S. at 124-129.58 Chandler, 538 U.S. at 129.59 Stevens, 529 U.S. at 785.

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when the defendant cooperates with the government.60

The original action brought under the FCA was an action against the City of New

York. Cities are persons under the FCA and can be sued.61 The action against the City

is based upon a Supreme Court decision that determined that New York State treated

nonresidents differently than residents when applying state taxes. The Lunding62 case

was applied to a section of the City Charter that treated nonresident New York City

employees differently than resident employees.

The Original Action Alleged That The City Of New York Violated the FCA.

The District Court action questioned the legality of Section § 112763 of the Charter

of the City of New York (hereinafter City). Section § 1127 requires nonresident

employees of the City to sign a condition of employment contract that places them in a

position where their net income from City and non-City employment is less than that of

resident City employees who earn the same amount. Enforcing § 1127 results in

discrimination against all nonresident City employees. The complaint alleged that

Section § 1127 resulted in a violation of the Commerce Clause, the Privileges and

Immunities Clause of the United States Constitution, and the FCA.64 An example of the 60 Chandler, 538 U.S. at 130-134.61 See Chandler, supra. 62 Lunding v. State of New York Tax Appellate Authority, 522 U.S. 287 (1998). 63 Section § 1127 of the City Charter contractually requires nonresident employees to pay as a condition of employment the same amount contractually what City employees pay as taxes. It also requires that the condition of employment be applied against any income that is earned outside of the City jurisdiction. 64 The first cause of action was a False Claims Action, and is based upon violation of constitutional rights. Section § 1127 of the City’s Charter authorizes the City to collect an amount as a “condition of employment” from nonresident City employees that is supposed to be equivalent to the taxes that resident City employees pay.

Not only does the City assess this percentage against money that is earned from the City employment, but also against all income that is earned in other jurisdictions by nonresident City employees. City employees who live in the City can deduct their City taxes at a one hundred percent rate against their state or federal income taxes. However, City employees who do not live in the City can only deduct the § 1127 contractual amount as an expense item, not as a tax. The result is that nonresident City employees are always assessed greater taxes and these results in a disparity of income for two different classes of employees based upon where they live.

This City Provision violates the Privileges and Immunities Clause of the United States Constitution because all

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implementation of Section § 1127 might help to clarify the complaint.65 After the action

was dismissed in the District Court, the writer of this paper filed a notice of appeal within

sixty days because the federal government was a party to the action. The Federal

Appellate Court issued two orders asking that the parties brief several issues where

there are circuit splits.

THE RESPONSE TO THE SECOND CIRCUIT ORDER REQUESTING BRIEFS ARGUING WHAT TIME LIMIT SHOULD BE APPLIED TO FILE AN APPEAL UNDER THE FCA, WHEN THE GOVERNMENT IS NOT AN ACTIVE PARTICIPANT.

This section will review the response to the first order from the Second Circuit. This

includes a review of the decisions by several federal circuit courts which have come to

different decisions. Next, the paper cites to courts that treat the government as the

primary party in FCA actions. This will be followed by a review of sections of the FCA

statute that show that the government is the primary party in FCA actions. Finally,

nonresident City employees always pay more in taxes to the state and federal governments, which results in lower incomes. This also results in a reduction in the amount declared as income based on an employment contract. This violates the False Claims Act. This Section of the City Charter also violates the Commerce Clause of the United States Constitution by including income of the nonresident employees earned from activities that have nothing to do with City employment that is earned in other jurisdictions. Employees who earn money outside of the City’s limits are placed in a position where they are not on an equal playing field with other individuals who work outside of the City, who do not have to pay any condition of employment that result in disparate income.

The City knowingly reduces income in violation of the Constitution and the result is that the Federal Government is shortchanged in violation of the FCA. The resulting improper loss in income results in lower taxes being paid to the federal government.65 If two City employees earn $25,000 and one lives in the City and one does not, the taxes that result are very different. A City resident would deduct the City tax of $2,500 from their income, and they would be taxed by both the State of New York, and the Federal Government based upon $22,500. On the other hand, the nonresident could only deduct the $2,500 at an expense rate of about 30% (this is a deduction of $750) and his state and federal income tax is based on an income of $24,250 (The nonresident only receives $22,500 but is taxed on $24,250). The nonresident pays taxes on $1,750 more than the City resident to both the states and Federal Government.

If the City were to use a table to reduce the amount deducted under § 1127 then the expense deduction would be reduced, and nonresident employees would have a greater real income. Both of these factors would result in an increase in state and Federal Taxes paid, and would also reduce the disparity in earnings between City employees who are residents and those who are not residents. This approach could be used to satisfy the discrepancy that currently exists, and would then eliminate the violation of the Privileges and Immunities Clause of the Constitution (Article IV, Section 2). In order to cure the defects in § 1127 that impact the Commerce Clause, the City should procedurally eliminate any earnings from outside the City from this section.

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several of the justifications for the FCA will be listed.

The Sixty-Day Period Should Be Allowed When Filing An FCA Appeal.

The Court asked:

Whether the thirty-day time limit for filing a notice of appeal, pursuant to Federal Rule of Appellate Procedure 4(a)(1) (A), or the sixty-day time limit for filing a notice of appeal, pursuant to Rule 4(a)(1)(B), which applies when the United States is a party, applies to qui tam action where the United States declines to intervene in the proceedings.66

The sections below follow the brief that was filed in response to the first

order of the Second Circuit.

Statement Regarding Oral Argument

As with most appeals, there was a request for oral argument since the

questions presented address important issues regarding procedural and substantive

rights. The rule being interpreted should be addressed legislatively, or by a judicial

conference determination. It has been interpreted by several appellate courts with

different outcomes. The legislation clearly allows the United States Attorney General to

assign to relators the duties of a private attorney general working under the auspices of

the United States Justice Department. The current FCA statute has allowed private

relators to represent the United States since the statute was enacted in 1986.67 The

history of qui tam actions suggests that a relator has always been allowed to represent

the sovereign. At times, however, there were limits on the types of representation

allowed.

66 The District Court opinion questioned if a non-attorney could stand in the place of other non-attorneys. The Appellate Court initially conceded that this is allowed by assigning this brief to the appellant, but then upon receipt of the briefs changed their order and assigned pro bono appellate counsel. See 2006 U.S. Dist Lexis 14944 at 31 (“V. PRO SE REPRESENTATION”.)67 Several appellate courts have limited the appearance of non-attorneys who bring actions on behalf of the Untied States.

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Opinion Below

The issues being briefed did not relate to the opinion below. It is unusual for a

federal appellate court to request that issues not raised below be briefed. Here, the

court requested that two issues not raised below be briefed. Another issue raised by

the appellant is that the FCA statute is unclear about when the Justice Department must

be notified prior to a dismissal.68 In the Second Circuit, the district courts generally

dismiss an action at the pre-pleading stage without getting the Justice Department’s

approval contrary to the plain meaning of the law.69

Statement of the Issues

The issue being raised by this section is the interpretation of Federal Rule of

Appellate Procedure 4(a)(1), when a relator brings an action on behalf of the United

States. The Tenth Circuit has interpreted this rule to mean that the relator must file an

appeal in thirty-days when the government is not an active party in the action (Rule

(4(a)(1)(A)). In contrast, the Fifth, Seventh, and Ninth Federal Circuits have interpreted

the rule to mean that the relator has sixty-days to file an appeal because the

government is a named party in the action.

Statement of Facts

The appellant relator brought a qui tam action on behalf of the government, but the

government decided not to intervene. When the action was dismissed by the District

Court, the appellant filed a notice of appeal within fifty-six days because the government

68 31 U.S.C. § 3730 is not clear at what stage in an action the Justice Department must be notified when there is a dismissal. However, since Justice usually grants permission to proceed with an action, they should be notified when a court is going to dismiss the action. Under 31 U.S.C. § 3730(b)(1) … “The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.”69 The Justice Department interviewed the relator for at least an hour prior to granting permission to pursue the action on behalf of the United States.

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was a party to the action.70 The Second Circuit, in December of 2006, ordered that the

scope of Rule 4 be briefed.71

Summary of the Arguments

This Court should allow relators who act on behalf of the government to file

notices of appeal within the sixty-day time period as defined by Fed. R. App. P. 4(a)(1)

(B), rather than the thirty-day time period as defined by Fed. R. App. P. 4(a)(1)(A). The

False Claims Act, 31 U.S.C. §§ 3729-3733 clearly states and delineates the roles of the

government and the relator. It also allows the government to intercede at almost any

time to take over an FCA action. Finally, the majority of the circuits recognize that the

government is the primary party in interest based upon the recovery, and the controlling

hand that is allowed by law.

I. The Fifth, Seventh and Ninth Circuits Allow Sixty-Days To File A Notice Of Appeal, While the Tenth Circuit Only Allows Thirty-Days When The Government Is Not Actively Involved In An Action.

Fed. R. App. P. 4(a)(1)(B) has been interpreted to allow sixty-days for filing

appeals in qui tam actions when the government is not an active participant by the Fifth,

Seventh, and Ninth Circuits. However, the Tenth Circuit only allows thirty-days to file an

appeal when the government is not an active participant in a qui tam action using Fed.

R. App. P. 4(a)(1)(A).

A. This Court Should Use The Sixty-Day Standard When Allowing Appeals In Qui Tam Actions Where The Government Is The Party In Interest.

In U.S. ex rel. Haycock v. Hughes Aircraft Co.,72 the court determined that the sixty-

70 One reason for the appeal being filed within fifty-six days is that the lower court failed to send the opinion and order to the correct address. The relator moved to Florida to attend law school, and properly filed a notice of an address change. This matter has been before the Appellate Court for about eight months prior to the court issuing any orders. 71 See the summary of the orders issued, supra. 72 U.S. ex rel., Haycock v. Hughes Aircraft Co. 98 F.3d 1100 (9th Cir. 1996).

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day period should be used for the purposes of appeal in qui tam actions because the

government was a party to the action even though it was not an active participant. The

Court said that Fed. R. App. P. 4(a)(1) allowed sixty days to file an appeal when the

government is a party, and concurred with the dissent in U. S. ex rel. Petrofsky v. Van

Cott, Bagley, Cornwall, McCarthy.73

One reason cited for using the sixty-day period was that in cases brought under the

Miller Act (40 U.S.C. §§ 270 et seq.74), where actions must be brought "in the name of

the United States," a sixty-day period is allowed.75 In qui tam actions the government

has a significant monetary interest; however, this interest is not present in Miller Act

cases.

The court quoting from the dissent in Petrofsky said:

It does not matter much whether the unsuccessful party in a qui tam action has a thirty day or a sixty day deadline for filing a notice of appeal. What matters a great deal is that the unsuccessful party in district court be able to figure out which time period applies, easily, without extensive research, and without uncertainty.76

Even though the government is not a party to a qui tam appeal, its name is on all

papers as the plaintiff, as it must be under the controlling statute.77 In U.S. ex rel. Lu v.

Ou, et al.,78 the court said that even though the relator’s notice of appeal, which was

filed forty-five (45) days after the dismissal, was timely filed because the government

was a party. Even though the government did not participate in the action, the Court

73 U. S. ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327 (10th Cir. 1978).74 40 U.S.C. §§ 270 et seq. has been incorporated into other federal codes in 2002.75 See 40 U.S.C. § 270(a); U.S. ex rel. Custom Fabricators, Inc. v. Dick Olson Constructors, Inc., 823 F.2d 370, 371 (9th Cir. 1987). The Miller Act allows a sub-contractor of a government contractor to sue the primary contractor if there is a contractual default. The government in these actions is a party in name only. 76 Petrofsky, 588 F.2d at 1329 (Logan, J., dissenting).77 A person who files a qui tam action does so "for the person and for the United States government." 31 U.S.C. § 3730(b)(1). The action must be brought "in the name of the government." Id. Though a successful qui tam relator is richly rewarded under 31 U.S.C. § 3730(d)(2), the government gets most of the money, and the private relator's reward is in the nature of a bounty.78 U.S. ex rel. Lu v. Ou,, 368 F.3d 773 (7th Cir. 2004).

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determined that the sixty-day period was applicable to actions in which the government

was a party.

The Lu court wrote that both the Fifth79 and Ninth80 Circuits disagreed with the

Tenth81 Circuit as far as the time allowed for an appeal when the government is not an

active party to a qui tam action. The Fifth and Ninth Circuits said:

Even if the government decides not to annex the lawsuit, it still can insist on receiving copies of all pleadings and depositions, 31 U.S.C. § 3730 (c)(3), is free to pursue alternative remedies, § 3730(c)(5), and, most important, receives the lion's share of any recovery regardless of who conducts the litigation. § 3730(d) (1), (2).82

The court determined that if Fed. R. App. P. 4(a)(1) is given a non-literal

interpretation, then it is a “trap for the unwary” and added that the plaintiff could not

litigate a qui tam action if the United States were not a party.83 In conclusion, the court in

Lu found that the sixty-day time limit was timely for relators.

In U.S. ex rel. Russell v. Epic Healthcare Management Group,84 the court

determined, as a matter of first impression, the boundaries of Fed. R. App. P. 4, as it

applies to relators in qui tam actions. The court addressed whether the government is a

party for purposes of Fed. R. App. P. 4(a) when a qui tam plaintiff has brought suit on

behalf of the government, but the United States has declined to intervene in the action.

Rule 4(a)(1) of the Federal Rules of Appellate Procedure provided:

In a civil case in which an appeal is permitted by law as of right from a district court to a court of appeals, the notice of appeal required by Rule 3 must be filed with the clerk of the district court within 30 days after the entry of judgment or order appealed from; but if the United States or officer or agency thereof is a party, the notice of appeal may be filed by any party

79 U.S. ex rel. Russell v. Epic Healthcare Management Group 193 F.3d 304 (5th Cir. 1999).80 U.S. ex rel. Haycock v. Hughes Aircraft Co. 98 F.3d 1100 (9th Cir. 1996).81 U.S. ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327 (10th Cir. 1979) (per curiam).82 U.S. ex rel. Lu at 775.83 U.S. ex rel. Lu at 775. 84 U.S. ex rel. Russell v. Epic Healthcare Management Group, 193 F.3d 304(5th Cir. 1999).

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within 60 days after such entry.85

In Russell, the relator filed an appeal forty-eight days after the notice of judgment.

The court decided that the appeal was filed timely, even though the United States did

not intervene in the action. The court recognized that “[w]hen a False Claims Act suit is

initiated by a private person--a qui tam plaintiff or relator--the action is brought for the

person and for the Government" and is "brought in the name of the Government." 31

U.S.C. § 3730(b)(1).”86

Even if the government decides not to intervene, “the citizen may conduct the action.

See id. § 3730(b)(4)(B).” The government involvement can continue even when there

is no initial intervention. It can request that it be served with papers and depositions

and may intervene at a later time, or alternatively seek other remedies.87 Even when it

does not intervene, the government receives the larger share of any recovery.88 An

action cannot be dismissed without written consent.89

In contrast to the other circuits who ruled on the matter, the Tenth Circuit has

applied the thirty-day period, reasoning that the government's name on the pleadings

was merely a statutory formality and that the relator was not entitled to the longer period

afforded the government.90 The majority rejected the dissent's argument that the

language of the False Claims Act could mislead the parties; the majority held there was

no prejudice because the parties were aware that the government disclaimed

participation.91

85 Russell at 306.86 U.S. ex rel. Russell at 306.87 U.S. ex rel. Russell at 307.88 See 31 U.S.C. § 3730(d).89 U.S. ex rel. Russell at 307.90 United States ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327, 1329 (10th Cir. 1978). 91 United States ex rel. Petrofsky v. Van Cott, Bagley at 1329.

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The Russell court said that the Tenth Circuit failed to address that:

[T]he government is a party albeit represented by the relator. Whether in any sense a relator in a qui tam suit under the False Claims Act is the government or is an agent or independent actor does not control our reading of Rule 4.92

The court said that Rule 4(a)(1) should be interpreted to reduce uncertainty and

that interpretation would allow sixty days for filing an appeal. The Court said when the

United States has declined to intervene in a False Claims Act suit filed by a qui tam

plaintiff, Fed. R. App. P. 4(a)(1) provides the remaining parties sixty days from the entry

of the judgment or order appealed from to file notices of appeal.

92 U.S. ex rel. Russell at 307-8.

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B. The Petrofsky Court, In Opposition To The Other Courts, Said That When The Government Is Not An Active Party Only Thirty-Days Are Allowed To File An Appeal.

In U.S. ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy,93 the court

determined that the United States was not a party and dismissed the appeal that was

filed on the sixtieth-day. It justified allowing the government the additional time because

of the red tape associated with making a decision to appeal that was not present when

an individual appeals.94 Additionally, the court said that “Courts have not hesitated to

apply the thirty-day rule, however, when the United States' interest is tangential or

nominal.”95

II. The First Through Ninth Circuits Have Asserted That The Government Is The Primary Party In Interest In A Qui Tam Action.96

The following section identifies cases where courts have found that the

government is a party to a qui tam action, even when it is not an active participant. This

justifies allowing a relator to file an appeal using the sixty-day time period.

Some of the decisions cited may be questionable because of U.S. ex rel. Sevens

v. Vt. Department of Natural Resources.97 There, the Supreme Court determined that

relators could not sue a state because Congress had not directly specified that the FCA

was meant to abrogate Eleventh Amendment immunity under section 5 of the

Fourteenth Amendment.

93 U.S. ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327 (10th Cir. 1978).94 U.S. ex rel. Petrofskyat 328. 95 U.S. ex rel. Petrofskyat 329.96 Some of the cases refer to district court decisions within the circuits. 97 U.S. ex rel. Sevens v. Vt..Department of Natural Res, 529 U.S. 765 (2000). In this case the Court determined that states were not persons under the FCA so that any prior appellate decisions where a state was a defendant are no longer good law.

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However, some of the concurring opinions and the dissent said that the issue of

allowing an action against the states under the False Claims Act had not been

determined by the Stevens case.98 It was not determined what would occur when the

United States interceded on behalf of a relator. The Court, however, did say that the

United States was the primary party in interest in qui tam actions, and received at least

seventy percent of all money collected.99 These benefits could not be available without

the assistance of relators.100

A. Many Federal Courts Have Identified The United States As The Primary Beneficiary In Qui Tam Actions, And Have Found The United States The Party Who Benefits Most From A Qui Tam Action.

This section will cite to decisions in the majority of circuits that say that the United

States is the real party in interest. Rather than playing a game of musical chairs where

the government may be a party at one point and then is no longer a party, the Second

Circuit should conclude that any case that is remanded would leave the government as

a party in interest. As noted, the Fifth, Seventh, and Ninth Circuits already allow

relators sixty-days to file appeals. This section will suggest that the majority of the other

98 United States ex rel. Stevens 529 U.S. at 788-9 (Justice Ginsburg in a concurrence said:” I read the Court's decision to leave open the question whether the word "person" encompasses States when the United States itself sues under the False Claims Act. “.) ; Id at 789-802 (Justice Stevens dissent argues that a relator as well as the United States can sue a state using the FCA.) 99 The Stevens decision 529 U.S. 765 (2000) said:

“It would perhaps suffice to say that the relator here is simply the statutorily designated agent of the United States, in whose name (as the statute provides, see 31 U.S.C. § 3730(b)) the suit is brought -- and that the relator's bounty is simply the fee he receives out of the United States' recovery for filing and/or prosecuting a successful action on behalf of the Government. This analysis is precluded, however, by the fact that the statute gives the relator himself an interest in the lawsuit, and not merely the right to retain a fee out of the recovery. Thus, it provides that "[a] person may bring a civil action for a violation of section 3729 for the person and for the United States Government," § 3730(b);”….

100 See United States v. Health Possibilities, P.S.C., 207 F.3d 335, 340 where the court said: Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 949, … (1997). Because the scope of fraud against the government is much broader than the government's ability to detect it, the qui tam provisions allow the government to uncover fraud that it would not otherwise be able to discern. See United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 304 U.S. App. D.C. 347, 14 F.3d 645, 650-51 (D.C. Cir. 1994).

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circuits also consider the United States as the primary party in interest. Based upon the

following decisions, the United States is the primary party in interest.

1. The Eighth Circuit Said The United States Is The Primary Party.

In U.S. ex rel. Rodgers v. Arkansas, 154 F.3d 865 (8th Cir. 1998) the court allowed

a relator to prosecute a case when the United States declined to prosecute. The court

rejected the contention of the State that when the United States declined to prosecute a

violation of the False Claims Act that the State was protected by the Eleventh

Amendment. The court held that the real party in interest in a qui tam action was

always the United States, noting that the United States had absolute power to proceed

with, settle, or dismiss the action, and was not bound by the act of the person bringing

the action. Moreover, the government was to collect no less than seventy percent of

any damage awards, regardless of who prosecuted the action.101

2. The United States Supreme Court, the Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, and D.C. Circuits Consider The Government The Primary Party In Interest in FCA Actions.

Similarly, in U.S. ex rel. Doyle v. Health Possibilities,102 the court found that the

government is the true party in interest. In arriving at this decision, the court quoted

from the decisions of other circuits and from the statute,103 determining that:

[A] qui tam plaintiff may not seek a voluntary dismissal of any action under the False Claims Act without the Attorney General's consent and remanded the case to the district court.104

The government must always insure that a settlement protects the public interest,

101 United States ex rel. Rodgers at 868. 102 U.S. ex rel. Doyle v. Health Possibilities, P.S.C., 207 F.3d 335 (6th Cir. 2000).103 In an issue of first impression, the court had to determine if the Attorney General's consent was 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). Doyle, at 336. The court after analyzing this issue determined that the government is the party in interest and is always involved in the action. 104 U.S. ex rel. Doyle, at 338.

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and therefore can intercede in any settlement. Section § 3730(b)(1) of the FCA provides

that:

A person may bring a civil action for a violation of Section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.105

The Doyle court quoting from a 5th Circuit decision saying that:

[T]he plain language of § 3730(b)(1) is "as unambiguous as one can expect," held that the statute plainly allows the government to veto proposed settlements. Searcy v. Philips Electronics of N. Am. Corp., 117 F.3d 154, 159 (5th Cir. 1997). In reaching this conclusion, the Fifth Circuit found nothing in either legislative history or the statute's structure to negate the language's plain meaning. …We now join the Fifth Circuit … and hold that a relator may not seek voluntary dismissal of any qui tam action without the Attorney General's consent. Section 3730(b)(1) unqualifiedly provides that a qui tam action "may be dismissed only if the court and Attorney General give written consent.106

The Doyle court recognized that limited resources prevent the government

from prosecuting all actions and one justification for the qui tam statute is to allow

others to prosecute on behalf of the government, but the government at all times

remains the party in interest and the named party in the action. The court cited:

U.S. ex rel. Schumer v. Hughes Aircraft Co.,107 …Because the scope of fraud against the government is much broader than the government's ability to detect it, the qui tam provisions allow the government to uncover fraud that it would not otherwise be able to discern.108

After further analysis, the Doyle court recognized that there were sometimes

conflicts of interest and that to insure that the people’s interests were protected, it was

necessary to allow government intervention and control during the course of an action. 105 U.S. ex rel. Doyle, at 338. 106 United States ex rel. Doyle, 207 F.3d at 339.107 U.S. ex rel. Schumer v. Hughes Aircraft Co., 520 U.S. 939, 949 (1997).108 See United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 304 U.S. App. D.C. 347, 14 F.3d 645, 650-51 (D.C. Cir. 1994). See also U.S. ex rel. Doyle, at 340.

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The court said:

However, given that private opportunism and public good do not always overlap, .See Searcy, 117 F.3d at 160; see also … U.S. ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1519 (8th Cir. 1994 (Magill, J., dissenting) (noting that the qui tam provisions "set[s] a rogue to catch a rogue") … and that the harms redressed by the FCA belong to the government; See also , U.S. ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148 (2d Cir. 1993)… [T]he FCA provides a number of mechanisms to ensure that the government retains significant authority to regulate qui tam litigation. See Milam, 961 F.2d at 49 (noting that the government maintains "extensive power" to control the course of qui tam litigation).109

The court recognized that initially, the “government retains absolute authority to

intervene and proceed" with an action during the sixty days after the complaint was

filed. It can also intervene at any time during the litigation (for good cause) using 31

U.S.C. § 3730(c)(3). Additionally, the government still receives at least seventy percent

of any recovery. Id. at § 3730(d)(1)-(2).

The Doyle court expressed that: … The power to veto a privately negotiated settlement of public claims is a critical aspect of the government's ability to protect the public interest in qui tam litigation. The FCA is not designed to serve the parochial interests of relators, but to vindicate civic interests in avoiding fraud against public monies. See…U.S. v. Northrop Corp., 59 F.3d 953, 968 (9th Cir. 1995). …The relator's right to recovery exists solely as a mechanism for deterring fraud and returning funds to the federal treasury."); …[The court stated] that the FCA's qui tam provisions "have been crafted with particular care to maintain the primacy of the Executive Branch in prosecuting false-claims actions, even when the relator has initiated the process")…..110

In Doyle, the court noted that the government will recover at least seventy

percent of the “bounty” and that functions as an incentive for the relator.111 When

the government decides to take over an action, the relator receives no more than

109 U.S. ex rel. Doyle, at 340. 110 United States ex rel. Doyle 207 F.3d at 340-341. 111 See 31 U.S.C. § 3730(d).

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twenty-five percent.112 In some instances, the government must intercede to insure

that private recovery is above board, and the government claim is maximized and

not settled in favor of the relator’s private claims.113 This rationale is also consistent

with the plain meaning of § 3730(b)(1) even when the Attorney General decides to

take a backseat drivers position.114 The majority of courts and circuits have

determined that even when a relator conducts the action, the government is the

real-party-in-interest in qui tam litigation.115

In conclusion, the majority of the appellate forums and the Supreme Court recognize

that a relator acts on the government's behalf, acts to vindicate governmental interests,

and that the government is the real party in interest. As noted supra, the relator would

not have standing to bring an FCA claim if it were not clear that she/he acted in the

government's stead.

112 “31 U.S.C. § 3730(d)(1) If the Government proceeds with an action brought by a person under subsection (b), such person shall, subject to the second sentence of this paragraph, receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action.”113 See Searcy v. Philips Electronics of N. Am. Corp., 117 F.3d 154, 16059 (5th Cir. 1997). (Where a relator tried to profit by combining a FCA claims with personal claims and then tried to settle the personal claim for a greater amount using the FCA as bait of broad claim preclusion to secure large settlements, while steering any monetary recovery to the personal action.114 One of the early problems with qui tam actions was that defendants were able to “make deals” with relators to settle their cases. This prevented them from being tried a second time for the same action. (See NOTES, the HISTORY, supra). 115 See U.S. ex rel. Berge v. The Board of Trustees of the University of Alabama, 104 F.3d 1453, 1457-58 (4th Cir. 1997; U.S. ex rel. Hall v. Tribal Dev. Corp., 49 F.3d 1208,1213 (7th Cir.1995); Kreindler & Kreindler, 985 F.2d 1148, 1154 (2d Cir. 1993);. See also Vt. Agency of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (2000); Evans v. Jeff D., 475 U.S. 717, 726, (1986) ("The power to approve or reject a settlement negotiated by the parties…does not authorize the court to require the parties to accept a settlement to which they have not agreed.") See Milam, 961 F.2d at 50 ("The United States is the real-party-in-interest in any False Claims Act suit, even where it permits a qui tam relator to pursue the action on its behalf."); Searcy, 117 F.3d at 156; U.S. ex rel. Watts v. The First National Bank of Boston 625 F. Supp. 591, 594 (DC NH 1985); Minotti v. Lensink, 895 F.2d 100, 103 (2d Cir. 1990); U.S. ex rel. Givler v. Smith, 775 F. Supp. 172, 176-78 (E.D.Pa. 1991); U.S. ex rel. Berge v. The Board of Trustees of the University of Alabama 104 F.3d 1453, 1457 (4th 1997); U.S. ex rel. Rodgers v. Arkansas, 154 F.3d 865, 868 (8th Cir. 1998); U.S. ex rel. Hyatt v. Northrup Co., 91 F.3d 1211, 1217 (9th Cir. 1996).

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III. The Statute Clearly Makes The United States A Primary Party In Interest In All Phases Of The Qui Tam, Even When It Does Not Participate.

a. The Sections Of The Statute Show That There

Is A Need For The Government To

Participate In Qui Tam Actions.

The government is always a named party in any False Claims Act (FCA). The

government is always involved and can step into the shoes of the relator at almost any

time. This section will review parts of the statute that support the theory that the relator

should be afforded the same time as the Attorney General to file an appeal in

supporting an action on behalf of the government.116 The order of review will be based

upon the sections of the statute.

1. 31 U.S.C. § 3729 - Definitions And Limits Of The FCA Showing That The Government Controls Many Aspects Of An FCA Action.

This section of the statute defines the criteria for the false claim and establishes

penalties. At all times the government collects damages in the form of penalties up to

three times the amount that has been fraudulently acquired, and a fine of $5,500-

$11,000 per occurrence of fraud.117

In some instances, information from a false claim can only be requested using a

freedom of information request and this request must be made to the Federal

Government. In order to insure that some information is protected, requests for

information may be refused.118

116 Fed. R. App. P. 4(a)(1)(B) allows sixty days to file an appeal for any federal party.117 The FCA has a cost of living adjustment built into the statute and the limits are now $5,500 and $11,000. The Supreme Court has determined that the triple damages are not punitive when an action is brought against a subdivision of a state, or a city. (See Chandler, supra.) 118 (d) Exemption from disclosure. Any information furnished pursuant to subparagraphs (A) through (C) of subsection (a) shall be exempt from disclosure under section 552 of title 5. (The Freedom of Information Act

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2. 31 U.S.C. § 3730 - Civil Actions For False Claims Are Allowed By A Relator For The Government, But The Government Is The Only Party That May Intervene.

Under § 3730(b)(1) of this section, a private person may bring an action on behalf of

the United States Government. This section says:

(b) Actions by private persons.(1) A person may bring a civil action for a violation of section 3729 [31 U.S.C. § 3729] for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.119

Even if the government decides not to intervene, they still remain the only party

who can intervene. This is specified in § 3730(b)(5) which says:

(b) Actions by private persons (5) When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.120

The statute clearly delimits the rights of the relator and government. If the

government proceeds with the action, and then decides to dismiss the action, it must

give notice and allow the originator (the relator) an opportunity to oppose the

government’s actions.

controls the dissemination of information that is gathered by the government.) 119 The relator was never served with the governments consent or reasons for consenting to dismiss in this action. One would expect that all parties to the action would be served with this consent to dismiss. However, contrary to the statute, the Second Circuit has determined that this part of the statute appears not to require the relator or defendants to receive notification when the Government is not an active participant, and the action is dismissed during the initial phase of litigation? 120 Once an action is filed by the United States or by a relator, other parties may not file an action base upon the same set of material facts.

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§ 3730(c)(2)(A) says:

(c) Rights of the parties to qui tam actions. (2) (A) The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.

Additionally, the procedures used for an action are defined by § 3730(c)(3) which

describes what happens when the government elects not to proceed with the action.

This section says:

(3) If the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the Government so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts (at the Government's expense). When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the Government to intervene at a later date upon a showing of good cause.

The government also may request that parts of the action be delayed to prevent

interference with other government cases.121 The delay may be to allow time to

investigate, or to schedule time to review an action, or to protect parties who may be

reviewing other related cases.

In § 3730(d) the methods of funds distribution is reviewed, and costs associated

with the recovery are specified. When a relator is directly involved in the prosecution,

the percentage of recovery increases and the reasonable expenses associated with the

action may also be reimbursed.122

Under § 3730(d)(4)(b), the meaning of “original source” is defined, however, poorly.

121 See 31 U.S.C. § 3730(c )(4).122 See 31 U.S.C. § 3730(d)(1)-(2). If the relator prosecutes the action without the assistance of the Justice Department, he may be entitled to between 25-30% of recovery. If the Justice Department intervenes then the relator may receive between 15 to 25% of the recovery. Additionally, other costs associated with the action may also be reimbursed.

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The statute and courts frequently do not allow for innovative integration of independent

facts or laws that result in money not being tendered to the federal government or in

excessive charges being tendered for services that are not being performed.123 An

example of this type of integration would be when a relator suspects that a hospital is

billing for services not performed. A review of the claims and the supplies required to

perform a procedure may lead to a discovery of fraudulent claims. When the medical

procedures exceed the supplies used during a time period, one must then look into

alternative justifications for the discrepancies.124

3. 31 U.S.C. § 3731. False Claims Procedures and Statute of Limitations.

Because the FCA is a civil action, all elements essential to the cause of action only

require a preponderance of the evidence standard of proof.125 The number of FCA

claims is based on the number of fraudulent acts committed by the defendant, but there

is a statute of limitations that generally limits recovery to a six year window.126 The

number of fraudulent acts has been interpreted to include each fraudulent bill or invoice

that has been submitted to the United States. As an example, when a doctor sees

twenty patients and bills improperly, then the bills for each of the twenty patients is

considered a fraudulent occurrence and can result in an individual fine. If the fine is

$5,000 for each fraudulent act the total fine may be $100,000.

123 It is more difficult to convince both the government and a court that several different sources of information can be used to develop a theory of fraud. One issue is that one must be the original source of information and that may not include or allow for developing a new combined source to show fraud. If the government prosecutes the action then the relator gets a smaller recovery percentage (See supra.)124 Several large corporations have been convicted of cooking the books by maintaining two different sets of books.125 Occasionally, the government will prosecute the fraud criminally and this delays the civil litigation under the FCA.126 See U.S. ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148 (1993).

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4. 31 U.S.C. § 3733. Civil Investigative Demands (CID) Require Approval By The Attorney General.

In order for the relator to gather information he must request a civil information

demand (CID) from the government even though he is prosecuting the action.

Under § 3733 (a)(1)(D) all civil investigative demands must be issued by the United

States Attorney General. In some ways, the government controls discovery even when

they are not actively participating in an action. The statute says in part:

(D) … to furnish any combination of such material, answers, or testimony. The Attorney General may not delegate the authority to issue civil investigative demands (CID) under this subsection. Whenever a civil investigative demand is an express demand for any product of discovery, the Attorney General, … shall cause to be served, in any manner authorized … a copy of such demand upon the person from whom the discovery was obtained and shall notify the person to whom such demand is issued …

Clearly, the above section requires that any request for a CID by a relator

must be issued by the United States, and discovery by a relator is still under the

authority and control of the of the United States.127

When a CID is not complied with, the Attorney General may, under the FCA,

request that the court enforce the demand for information. This would require that

the Attorney General act on behalf of a relator. This procedure is included in the

FCA under § 3733 (j)(1) which says in part:

(j) Judicial proceedings. (1) Petition for enforcement. Whenever any person fails to comply with any civil investigative demand issued under subsection (a), …. the Attorney General may file, in the district court of the United States for any

127 The authority to issue the CID was delegated by Congress in 1986. Justification for the CID is to insure that the relator gets discovery because defendants are less likely to refuse discovery from the United States. Additionally, by requiring the CID to be issued and served by the Justice Department Congress may have intended to limit discovery so that abuses by untrained relators was limited. The CID may be issued anywhere within the United States.

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judicial district in which such person resides … and serve upon such person a petition for an order … for the enforcement of the civil investigative demand.

It should be clear that even when the government does not actively participate in a

qui tam action, it is still involved. The statute does not allow a relator to function

independently and the government may continue to participate prior to an appeal,

during an appeal and on remand. Because the government does participate, it is

strongly suggested that the sixty-day period for filing an appeal that applies to actions

when the government is a party should be applicable.

IV. The Intent Of The Qui Tam Statute Is To Encourage Individuals To Assist The Government In Detecting And Prosecuting Fraud.

Historically, qui tam laws were passed by legislators and sovereigns to encourage

citizens to assist the government in preventing corruption and fraud. The first federal

statute was passed during the Civil War to rein in fraud against the government. Some

suggest that “it takes a thief to catch a thief.” An alternative suggestion is that a

government technocrat (federal, state, or local) is less likely to report fraud when he was

initially responsible for letting out the contract or has participated in a questionable

act.128

The history of the statute has always been to allow citizens to prosecute for the

government. There are too many reasons to list all justifications for allowing an

individual to prosecute on behalf of the government, and for granting that individual

128 Relator, the author, has a great amount of respect for Judge Weinstein (EDNY) and the Supreme Court but suggests that both erred in the Stevens case (529 U.S. 765 (2000 )) where the states were released from responsibility for fraudulent acts against the Federal Government under the 11th Amendment. The decision suggests that it is correct for a State not to be accountable to the populous and that fraud may be committed unless the federal government catches it or prosecutes it (The Stevens case did not determine what would happen when the United States sued a state, or when the United States decided to prosecute on behalf of a relator.)

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some government privileges. Some of the reasons follow:

1. The government does not have endless resources, and uses relators to prosecute actions that are not ironclad.

2. Some actions that are innovative or may have political repercussions are more likely to be brought by relators who do not have to worry about billing hours or political consequences.129

3. Relators may have access to otherwise privileged information, and have reasons to prosecute that would not be present in a government prosecution (revenge, or a sense of duty).

4. Many relators take risks at work that may impact their jobs because they believe that there is fraud against the government.130

5. The statute is complex, and many individuals are not aware of the intricacies related to bringing a qui tam action. Sometimes lawyers are not aware of some of the requirements. Certainly, non-attorneys should be given more leeway.131

6. The government does not always follow all sections of the statute.132

7. The law, and public policy, suggests that the Justice Department is a guiding light with the ability to intervene at any time on behalf of the people, but initially do not want to expend the resources.

8. The politics associated with bringing an action against a public official may impact a decision with an associated government agency, but not with a relator.133

9. There are cost savings to the government when they are not involved in prosecuting an action, and these savings can be used in other pursuits.

It has been suggested that the FCA be expanded to allow civil prosecution of public

corruption, but that review must wait for another day.134 Judicial gymnastics is

129 The United States Senate has just revised Rules of Ethics based upon the embarrassment caused by public disclosure of questionable acts by members of Congress. 130 Although the statute offers some protection against retaliation, many relators suffer consequences associated with filing their actions. 131 The relator of this action had to explain to the clerk of the S.D.N.Y. that the action had to be filed under seal. He has had to remind opposing counsel that all papers must be filed with the Justice Department if that department so requests. 132 Although sections of the FCA require the government to give written notice before an action can be dismissed, the relator did not receive any notice when the district court dismissed this action. And decisions from this court suggest that no notification is required. 133 The FBI lists public corruption fourth on its list of crimes to prosecute. 134 In a NOTE published in the University of Michigan Journal of Law Reform, How Qui Tam Actions Could Fight Public Corruption, Aaron R. Petty University of Michigan Journal of Law Reform, 2005 – 2006 (U.Mich. J.L.

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sometimes appropriate when actions are taken very infrequently, and the rules are not

clear. Similarly, in this action, where the rule is clear, the court should follow the plain

meaning of the legislation and allow for the longer appellate filing period. An alternative

is to suggest that Congress clarify the statute, rather than have courts legislate from the

bench.

Reform 851 2005-2006,VOL.39:4) the author argues for the expansion of FCA actions by modifying current criminal codes related to public corruption to allow relators to prosecute them civilly first. Evidently, corruption in government is listed forth on the the FBI's list of top 10 priorities. The Note argues that public corruption is rampant and by allowing civil prosecution some of the corruption can be weeded out. (Note at 867).

It is suggested that many people know of the public corruption but failed to report it. The author of the note believes that incentives are needed to encourage early detection of public corruption. One suggestion is that the federal statutes currently used to prosecute, be modified so that individuals would have an incentive to bring an action on their own. (Note at 852-863).

Congress has created private rights of actions in several different areas. (Note 154, 155 p870 ) The question raised is whether a similar right or action can be raised against public officials, including state officials, who commit fraud? although, Stevens determined that Congress had expressly limited the FCA, the author proposes modification to current criminal statutes along with the corresponding FCA sections to allow FCA actions against both state and local actors who act fraudulently.

If FCA statutes were amended, it would relieve the federal, state, and local governments of the costs, analysis, and time required to gather information and to prosecute FCA actions. Allowing civil actions to be brought by citizens may also have an impact on corruption since the government can then use the same information to bring the parallel criminal action. It is understood that the criminal actions require a higher standard of proof, but this level may be discovered during the investigatory stages of the civil actions. There is an inducement to the relators because they have more control over an action and would usually not have any control in a criminal action (Note at 870.)

Justice Brandeis, in Olmstead v. U.S., 277 US 438, 485 (1928), in a dissenting opinion, said “if the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.” (note at 872. ) There is very little incentive to bringing an action but losing ones job and having no means of support during the years that actions progress through the courts. Insiders, however, can lead to successful litigation and that must be weighted in public arenas as well as against corporate America. Insiders allow better prosecution when they become prosecution witness, and are usually more credible than others without any knowledge. If local and state governments are accountable for settlements, then more money might be made available by these local governments, legislatively, to prevent corruption. (Note at 875.)

Although there are many problems that would have to be resolved, the Note certainly takes an innovative approach to opening up and suggesting alternative ways to prosecute corruption in governments. Many Constitutional clauses could not be used in justifying a new FCA statute that would or could be applied against state governments. The author proposes the use of the Spending Clause as one approach since any acceptance of federal government money can be used to limit immunities in state governments. Using the Spending Clause States can refuse federal funds, but most accept and place themselves under the auspices of the Federal government.

Another alternative suggested for enforcing federal FCA types of laws is the Guarantee Clause (U.S. Const., art. IV, §4, cl. 1.)(Note at 881.) This clause says that “The United States shall guarantee to every State in this Union a Republican Form of Government.” The author justifies using the Guarantee Clause by proposing that corrupt

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A. Relators Should Be Given Sixty Days to File Appeals.

Historically, the qui tam has been prosecuted on behalf of the sovereign and in the

name of the sovereign. The statute and common law are both clear that a FCA action is

being prosecuted for the government, and that the government is the recipient of the

majority of the proceeds. For all of the foregoing reasons, the Second Circuit should

find that relators be granted sixty-days to appeal to avoid confusion, and because the

action is brought on behalf of the United States.

After briefing the first issue raised by the Appellate Court’s order, the Court issued

another order and raised a second issue. That issue will be the focus of the next

section.

state or local government undermines all republican forms of government (Note at 882.)

In order to abrogate state sovereign immunity Congress must “create statutory language” that is unambiguous. In the U.S. ex rel Stevens case, the Court said that Congress failed to be specific in making a state a person (defendant.) The Court, however, did not preclude the United States from bringing an action against a state. This type of action would be one sovereign against another. In Stevens, the Court did not preclude Congress from amending the language of the FCA. However, some scholars suggest that would shift the Constitutional balance of power. In Will v. Mich. Dept. of State Police, 491 U.S. 58, 65 (1989), the Court noted that to change the balance of power and impact state sovereign immunity Congress must be “unmistakably clear.” The Note concludes by saying that public corruption at the state and local levels is a continuing serious problem, and one way to limit this would be by expanding the scope of the FCA (Note at 888.)

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THE FEDERAL APPELLATE COURT, SUA SPONTE, ORDERED BRIEFS FOR ANOTHER UNRESOLVED QUESTION ASKING WHETHER NON-ATTORNEYS COULD REPRESENT THE FEDERAL GOVERNMENT IN FCA ACTIONS.

After receiving the brief of the City of New York, the court determined that another

issue should be briefed. The City’s response to the first question raised by the

Appellate Court asked if a non-attorney should be able to represent the government in

FCA actions. Even though this was not raised below, the Appellate Court requested

that this issue be briefed. Even if the court now wants this issue briefed, it fails on the

merits. The plain meaning of the FCA statute is clear. Congress’ intent was to allow a

pro se litigant to prosecute an FCA action. During the time that the FCA has been in

existence, Congress did not find the need to clarify the statute to limit FCA actions to

only relators who were represented by attorneys.

It is very rare for a court to request briefs on issues not raised or preserved in the

district court, and it is usually done only when there are special circumstances (See the

Waiver Doctrine, supra.) Although the court ordered that a pro bono attorney be

assigned to brief this issue, appellant responded to some of the issues raised in the

City’s response and to the second question raised by the Court. The Court asked

whether a pro se plaintiff 135 could represent the government in a qui tam action.

Rather than resolving the questions raised by their orders, the Second Circuit also

requested that the merits of the action be briefed. This does not appear to be

consistent with judicial economy, since no merit briefs would be required if the action

135 Since plaintiff is not an attorney, he believes the court wanted to address whether a non-attorney acting pro se could represent the government or other parties in an FCA action. The order was ambiguous because attorneys can also bring actions pro se.

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was dismissed on either of the questions raised by the Second Circuit. The Court

appears to have an agenda related to resolving conflicts of law in interpreting the FCA

statue. Is Court is acting outside of the boundaries of the judiciary and contrary to the

Separation of Powers Doctrine?136

I. The City’s Response Brief To The First Court Order Raised New Issues.

The first brief submitted by the City to the Appellate Court failed to follow the

directions in the Court’s order, and raised issues not raised in the district court. The

Circuit Court used part of the City’s brief to raise a second issue to be briefed, and

appointed a pro bono counsel to brief both issues. The appellant suggested that the

court also review the justification of allowing district courts to dismiss actions without the

written consent of the Justice Department as provided by statute.137

a. The City Questioned If A Non-Attorney Pro Se Litigant, Could Represent The Federal Government In An FCA Action.

The City argued that a pro se litigant who is not an attorney may not represent the

interests of another party, including the government in an FCA action. The City appears

to be interpreting federal statutes that have a long history of allowing relators to bring

actions on behalf of the government. In several different actions, the United States

Supreme Court has allowed members of a group to assist other members in court

136 “The germ of destruction of our nation is in the power of the judiciary, an irresponsible body - working like gravity by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief over the field of jurisdiction, until all shall render powerless the checks of one branch over the other and will become as venal and oppressive as the government from which we separated.” Thomas Jefferson, 1821137 See 31 U.S.C. § 2730, Supra. The Statute requires a written justification for dismissal by both the court and the Justice Department. However, there is no mention in the statute as to when this statute applies. The courts of the Second Circuit have interpreted this statute to apply only during litigation and not during initial motion practice. However, before an action can proceed, the Justice Department must release the action with their recommendations.

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actions.138

II. The First Level Of Review Would Require A Review Of The Statute To Determine Limitations.

The statue does not require that a person retain an attorney to bring a claim

based upon a violation of the FCA. The act allows a person to bring an action for the

person and for the United States.139 There are built in procedural safeguards that

protect the United States and require the Attorney General’s approval of any

settlements, and the intervention of the Attorney General if it is not the best interest of

the government.140

The starting point of statutory interpretation is the language of the statute. If the

plain meaning of a statute is clear, courts must not look any further but must use the

statute’s plain meaning.141 There is a long history of decisions where the Supreme

Court has determined that it is a coequal partner with the legislative branches, and that

the Court’s duty is to interpret the plain meaning of statutes.142 The federal courts must

recognize that Congress and the courts are coequal members of our federal system,

and one branch must not encroach on the duties of its sister branch.143 In this action,

the statute does not require and does not say that a non-attorney must hire an attorney

to prosecute on his behalf. Any interpretation by the courts beyond this point is nothing

138 See some of the Supreme Court cases, Infra. 139 See 31 U.S.C. § 3730(b)(1).140 See the section titled “THE STATUTE CLEARLY MAKES THE UNITED STATES A PRIMARY PARTY…. “, supra.

141 See the amicus brief submitted in Scheidler, v. National Organization For Women, 2005, on behalf of 47 Members Of The United States Congress As Amici Curiae In Support Of Respondents

142 Id. ("In our constitutional system, it is widely assumed that federal judges must act as Congress's faithful agents. On that assumption, if Congress legislates within constitutional boundaries, the federal judge's constitutional duty is to decode and follow its commands, particularly where they are clear." John F. Manning, Textualism and the Equity of the Statute, 101 Colum. L. Rev. 1, 5 (2001)).143 Id.

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more than an encroachment, and would be contrary to the Separation of Powers

Doctrine.144

i.The False Claims Act Requires That The Justice Department Review Actions To Determine Whether The United States Will Intervene.

The appellant was allowed to bring this action on behalf of the federal government

based upon approval by lawyers who work for the Justice Department. Neither the City,

nor the district judge questioned appellants standing during the more than three years

that the action was before the district court. The other parties in the action could not

individually afford an attorney, but their causes of action mirror those of the class

plaintiff. Each individual’s action would contain the same common nucleus of operative

facts. Each plaintiff is a City employee who lives outside of the City limits and is

impacted by § 1127145 of the City Charter. Each plaintiff must pay a condition of

employment that is based on both income earned from their City job, and any money

earned in another jurisdiction. Each must treat the money paid to the City under § 1127

as an expense item, rather than as a local tax when computing federal or state income

taxes.146 In the interest of judicial economy, these similar actions should be brought

together.

The appellant requested that the District Court consider the constitutional issues

raised and find that class status was appropriate. If the District Court granted class

144 See the amicus brief submitted in Scheidler, v. National Organization For Women, 2005, on behalf of 47 Members Of The United States Congress As Amici Curiae In Support Of Respondents. See e.g., United States v. Goldenberg, 168 U.S. 95, 102-03 (1897) ("The primary and general rule of statutory construction is that the intent of the lawmaker is to be found in the language that he has used. . . . The courts have no function of legislation, and simply seek to ascertain the will of the legislator.").145 See the explanation of this section of the City Charter, Supra. 146 The basis of the action is that non-resident employee’s rights are violated under the Privileges and Immunities Clause, and the Commerce Clause of the Constitution.

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status, then the relator would have interviewed class counsel on issues pertaining to the

Constitutional questions.147 The appellants plead in the alternative by first bringing the

action under the FCA, and then raising constitutional issues. If the FCA action was

dismissed, then a class counsel could be hired if the Court determined that there were

violations of constitutional law that impact an entire class.

Another part of the City’s brief said that the appeal was not filed within the thirty-day

time limit required by Fed. R. App. P. (4)(a)(1)(A). However, this issue was not raised

independently by the City. Only after the Second Circuit requested briefs on this issue

was this point raised by the City. Appellant contends that the appeal was filed timely. It

was filed within sixty-days because the United States is a party in the action. This

conforms to Fed. R. App. P. Rule (4)(a)(1)(B).148 On the notice of appeal, the issue of

timeliness was included as a footnote.149 It is obvious that appellant was following the

plain meaning of the rule rather than a local judicial construction. It took the District

Court more than three years to draft a twenty page opinion. The Appellate Court

appears to be concerned with fewer than thirty-days and a statute that other circuits

have interpreted to allow sixty-days to file an appeal.150

Another interesting legal theory was presented in the City’s brief. The brief

included the following:

… [A]n attorney admitted to practice before the federal courts has the ability

147 It is very difficult to get an attorney to take a case on a contingency basis when there are constitutional issues raised. Effectively, a decision in this case requiring an attorney to represent a relator will be a denial to non-attorneys to access the courts in violation of the First Amendment, and the FCA statute. 148 One reason for the filing time was the failure of the District Court to send the order and decision to the correct address. Appellant submitted a change of address card but the court sent the papers to the old address. 149 The instructions from the Clerk of the District Court says that if the United States is a party then an appeal must be filed within sixty days. 150 The first sua sponte order from the Second Circuit was mailed during the Christmas season and did not arrive until after the hearing date. Appellant responded to the order noting that “Due Process” requires timely notice and an opportunity to be heard. The second order from the Second Circuit was delivered by email and was available the same day! The court also left a message on appellant’s telephone.

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to determine, without extensive research and without uncertainty, that when the government has not intervened in a qui tam action, the litigants have thirty days to file a notice of appeal.

Mind reading has not been offered as a class in the curriculum of any law school to

my knowledge. It may be given in schools attended by Harry Potter, but it is not given

in law schools. However, the City’s attorneys believe that they can interpret

congressional legislation, or court rules better than the Second Circuit. One reason for

the request for briefs is that there is a circuit split, and “reasonable minds can, and do

differ.”151 Does the City’s counsel argue in court with a wand in their hand and a

magician’s hat on their head?

Rather than dissect the City’s entire brief, appellant will end by suggesting that when

the City says that a non-lawyer cannot represent others, and says that other rules “are

rendered to protect citizens and litigants against the mistakes of the ignorant on the one

hand, and the machinations of unscrupulous persons on the other,”152 it fails to

recognize that many litigants cannot afford attorneys.153 In 1971, Justice Burger of the

United States Supreme Court said "Seventy-five percent of all American lawyers are

incompetent, dishonest or both."154 Is there any way that a court, or the City’s attorney

can assist in identifying competent attorneys? It certainly would be nice to find an

attorney to write the brief justifying the right of pro se plaintiffs to file and prosecute qui

tam actions. Unlike other statutes, the FCA contains provisions that protect the United

States when a pro se relator represents the government. The United States Supreme

151 United States v. Booker, 543 U.S. 220, 249 (2005). 152 Phillips v. Tobin, 548 F.2d 408, 414 (2d Cir. 1976). 153 Although a civil Gideon has been suggested to insure access to justice, attorneys are not available to many Americans. The country did not require that attorneys represent individuals in criminal actions for more than one hundred and eighty years. See http://www.abanet.org/legalservices/sclaid/downloads/06A112A.pdf for a discussion supporting a civil Gideon by the ABA. 8/9/2007.154 Chief Justice Warren E. Burger, Trial Lawyer's Guide, 1971

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Court has allowed individuals and groups to assist others who had a common cause, or

who were denied legal representation by the organized bar.155 In two cases in 2007,

the Supreme Court determined that parents could sue on behalf of their children under

the IDEA.156 Not only can parties represent others in administrative hearings, but in

some instances they have been allowed to join together to protect their rights and to

pursue a common goal.

A. The Second Order Of The Second Circuit Was Not Exact Or Precise.

The Second Circuit order included the following language:

IT IS HEREBY ORDERED that the motion to dismiss is referred to the panel that will decide the appeal; pro bono counsel shall be appointed for pro se Appellants only for purposes of the motion to dismiss to brief the two issues raised: (1) whether the 30-day time limit in Federal Rule of Appellate Procedure 4(a)(1)(B), applies to a qui tam action in which the Untied States declines to intervene; and (2) whether a litigant may bring a qui tam action pro se.

The first question was briefed by the appellant and was submitted to the Court as

requested.157 However, the second question raised by the Second Circuit was not

raised by the appellee in the District Court, and usually would be barred from review by

155 See Brotherhood of Railway Trainmen v. Virginia ex rel Virginia State Bar, 377 U.S. 1, (Members of a group can assist other members in common causes.); See also Johnson v. Avery, 393 U.S. 483 (1969); (Where a prisoner assisted another prisoner when no lawyers were available to assist); See also NAACP v. Button, 371 U.S. 415 (1963) (where members of a group with a common cause could assist other members to protect their civil and constitutional right to vote). 156 In Winkelman v. Parma City School District, the Supreme Court considered the issue of whether the parents of a minor child could bring suit in federal court pro se asserting claims under the Individuals with Disabilities Education Act (“IDEA”). 127 S. Ct. 1994 (2007). Respondents had argued that the prohibition against a non-lawyer representing litigants prevented the parents of the child from proceeding pro se. Id. at 1999-2000. The Supreme Court rejected this argument, holding that because the parents enjoyed rights under the IDEA they could certainly represent their interests in federal court without counsel. Id. at 2006. In Winkelman, the court allowed the parents acting pro se to bring an action for themselves and their son. (Justice Kennedy wrote the 7-2 decisions.) In Board of Education of The City School District of The City of New York, v. Tom F., on Behalf of Gilbert F., A Minor Child, October 10, 2007, an equally divided Supreme Court affirmed a decision of the Second Circuit (Justice Kennedy took no part in the decision). The Second Circuit citing Frank G. v. Bd. of Educ., 459 F.3d 356, allowed the parents of a child to sue on the child’s behalf under the IDEA. In the cited cases, under the IDEA the parents may bring an action for their child (In this case the court awarded legal fees.) 157 See Supra.

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this Appellate Court. The first time that this issue was raised was in the District Court’s

decision dismissing the action. However, the District Court did not use this issue to

dismiss the action, but asserted that the complaint failed to state a claim.158 The Waiver

Doctrine allows an appellate court to raise issues that have not been raised below if

there would be a miscarriage of justice to the parties. Although the Second Circuit may

use the Waiver Doctrine to raise an issue independently, this is not done frequently.159

The first issue has already been briefed.160 The City responded to the first

Appellate Court order with a brief, and the City raised additional issues that were not

requested by the Appellate Court. The City failed to raise these issues in the District

Court.161 The District Court judge, cited to Safir v. Blackwell,162 and said that court, in

dicta, said that a pro se complainant may not be able to bring a qui tam action under the

FCA. Dicta is not law.163 The City’s brief cites to several other cases that were decided

before the FCA was amended in 1986. The legislature did not change the definition of

“person” in the amended statute and did not say that only an attorney could represent

158 See Fed. R. Civ. P. 12(b)(6). 159 See Huber v. Taylor, 469 F.3d 67,75 (3rd Cir.; 2006) where the court said:

“Generally, failure to raise an issue in the District Court results in its waiver on appeal. Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir. 2005). There are exceptions to this rule….even if an issue was not raised, "[t]his Court has discretionary power to address issues that have been waived." Bagot, 398 F.3d at 256. Indeed, we have been reluctant to apply the waiver doctrine when only an issue of law is raised. See, e.g., id.; In re Am. Biomaterials Corp., 954 F.2d 919, 928 (3d Cir. 1992). "This court may consider a pure question of law even if not raised below where refusal to reach the issue would result in a miscarriage of justice or where the issue's resolution is of public importance." Loretangeli v. Critelli, 853 F.2d 186, 189-90 n.5 (3d Cir. 1988).

160 See Supra – where the Circuit split has been analyzed. 161 About three pages of the City’s brief failed to address the issues requested by the Second Circuit’s order of Dec. 2006, but instead raised an issue that was not raised in the district court. Even in law school one learns to respond to the issue raised by the court.162 Safir v. Blackwell, 579 F.2d 742,745 n.4 (2d Cir. 1978), This case was decided prior to the 1986 amendment to the FCA where Congress did not feel the need to change the definition of who could bring an action under the FCA. 163 dicta. 1. Plural of dictum. Often referred to as obiter dicta or obiter, being expressions in an opinion of the court which are not necessary to support the decision. Language unnecessary to a decision; ruling on an issue not raised, or the opinion of a judge which does not embody the resolution or determination of the court, and made without argument or full consideration of the point. Ballentine's Law Dictionary, 3rd Edition (1969).

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the United States in an FCA claim.164 Since 1863, the legislative intent of the FCA

statute in the United States has been to allow those with information about a false claim

to file an action.165 In the last thirty years since the Safir decision,166 the Second Circuit

failed to review this issue, and has allowed non-attorneys to file FCA complaints without

being represented by attorneys. One reason or justification for this is that the United

States Justice Department lawyers review the sealed complaints, and then usually

requests that all parties send all documents to them for review. In fact, the City in its’

brief included 31 U.S.C. § 3730(b)(1) which provides:

(1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.

In the action brought by the relator, the District Court dismissed the action

without receiving the written consent of the Justice Department, and implied that

the Circuit allows this type of dismissal.167 The plain meaning of the statute says

that the United States Attorney General must give their written consent to

prosecute the action, and to insure that a valid action is not dismissed. It

appears that the District Court is actively legislating from the bench in violation of

the Separation of Powers Doctrine. This issue was raised by the City, and

164 The City cites to United States v. Onan, 190 F.2d 1(8th Cir. 1951), and Safir v. Blackwell, 579 F.2d 742 (2d. Cir. 1978) to suggest that non-attorneys could not bring FCA claims. These cases were decided before the FCA was modified without using these recommendations in the redrafted statute. 165 Going back in history, there were very few limits placed on individuals who filed FCA type of actions in England. FCA types of claims were included in English law going back to the 1200’s. Initially, individuals could prosecute actions civilly, or criminally. One of the few limits was to only allow civil and not criminal actions to be filed by relators in FCA claims. See Notes, Development of Qui Tam, Washington University Law Quarterly, Vol. 1972:81 166 Safir v. Blackwell, 579 F.2d 742 (2d Cir. 1978)167 The district court determined that a 12(b)(6) motion will allow dismissal without getting the approval of the Justice Department. However, that is not the clear meaning of the statute.

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should also be briefed since it would nullify any concerns related to a pro se

litigant prosecuting an action on behalf of the government.168 Since the Justice

Department is an oversight department in FCA claims, they can insure that an

action is not dismissed prematurely.

B. Conclusion in Response to the Second Court Order.

In conclusion, The FCA has been amended since the Safir169 decision, and

Congress has not limited the meaning of “person” in the statute. If Congress intended

to limit the statute to require legal representation it could have done so in the Amended

statute.170

Although the Waiver Doctrine is used sparingly by most courts, it appears that the

Second Circuit has found a need to use it twice in the same action without addressing

the merits of the appeal.

The Seventh and Ninth Circuits have, in some instances, denied non-attorneys the

right to prosecute actions on behalf of the United States in particular cases. However,

there does not appear to be a fixed rule. There is circuit split in this area of law, and this

issue should be resolved by a higher authority. The legislative history and historical

background strongly suggest that the FCA allows non-attorneys to prosecute actions on

behalf of the United States.

WHERE DO WE GO FROM HERE?

The False Claims Act has been activated from the mothball fleet to assist the

168 This issue should be raised by the Justice Department not by a defendant in a FCA action.169 Safir v. Blackwell, 579 F.2d 742 (2d Cir. 1978).170 The FCA was amended in 1986 but no change was made in the section that says that any person can prosecute an FCA action.

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government in times of peril. It is a political tool because it allows certain actions by

citizens where politicians fear to tread. The FCA is a powerful weapon that can be used

by energized public prosecutors to hold the executive, judicial and political branches

accountable.

There are several areas that weaken the effectiveness of the FCA. One weakness

is that complications exist that prevent public prosecutors from monitoring actions

between the government and its contractors, and the different branches of the

government. One law journal “Note” proposed that rather than limiting FCA actions, the

legislation should be expanded to allow the FCA to be applied civilly using several

amended criminal statutes. This approach would expand the scope of the FCA and

would act as a governor on not only private contractors, but government organizations

as well.171 The FCA is one of the tools in the public arsenal of our republican form of

171 This topic was raised Supra in response to the first order of the Second Circuit where justifications for allowing relators to prosecute FCA actions was summarized. However, the author at this time would like to summarize issues raised in two law journal articles that review some of the problems with FCA actions. The first article is: Kenneth G. English, Government Complicity And A Government Contractor’s Liability In Qui Tam And Tort Cases. George Washington University Law School. 33 Public Contract Law Journal 649 2003-2004. This article summarizes some of the problems associated with proving scienter, based upon the close relationships between government contractors and a government organization. Sometimes, a government organization will knowingly request that a contractor act in a particular manner to bypass red tape. The contractor acts with tacit government approval. One example is when a contractor is told to use different accounting codes to get money from a different government account. If the government knows of the contractor’s action then it becomes difficult to prove knowledge and fraud. (Id. at 649-655). The next issue raised in the article is the way that courts interpret government contracts. When a contractor follows the specifications of a government agency, especially a military contractor, then the actions are controlled by federal law. (See Boyle v. United Techs. Corp., 47 U.S. 500,503 (1988);(United Techs. Corp. pleaded the military contractor’s defense.)(Id. at 655-57).

The article suggests that when contractors are not directly responsible for their actions, their actions are not as careful, and they have no incentive to reduce risk. Effectively, there is limited product liability when contractors work for the government. When Senator Glenn was an astronaut he was asked what was the most frightening area of the space program. His response was “low bidders.” (Id. at 657-58). Finally, there appears to be a trade-off that is used to rationalize the government’s economic waste. This behavior is supported by several court decisions. The article suggests that the relationships between government and contractors is not associated with economic reality, but with embeddedness. Embeddedness supports long term relationships where expected performances are built on performance without a need for “pure authority relations.” This theory supports and relies upon long-term relationships and ignores normal controls and accountability within the government and within the private contractor. (Id. at 659-57).

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government that should hold both private contractors as well as all branches of

government accountable.

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