FORTUNATO P. BENAVIDES, Circuit Judge:
This appeal is from the grant of partial summary judgment in favor of the United States in a qui tam action under the False Claims Act. The two relators filed the instant suit against their former employers, alleging that the defendants had defrauded the Government by filing tens of millions of dollars in fraudulent Medicare and Medicaid claims. Prior to the filing of this qui tam suit, the Government had criminally prosecuted the instant defendants for fraud and obtained a multi-million dollar award of restitution. The sole issue on
The two relators, Samuel Babalola and Kayode Samuel Adetunmbi, had practiced medicine in Nigeria before immigrating to the United States. The relators worked as medical assistants for the defendants, Dr. Arun Sharma and Dr. Kiran Sharma, at the defendants' two medical clinics located in Baytown and Webster, Texas. During their employment, the relators witnessed the Sharmas filing fraudulent claims with Medicare, Medicaid, and private insurance companies. In 2007, based on their observations, the relators drafted an anonymous letter setting forth details of the fraudulent claims the Sharmas submitted to Medicare, Medicaid, and various private insurance companies. The relators sent this letter to various government agencies.
Subsequently, the Government conducted a criminal investigation with respect to the allegations in the letter. On July 16, 2009, a federal grand jury indicted the Sharmas, charging them with 64 counts of conspiracy, healthcare fraud, and other federal crimes. Thereafter, in the course of the investigation, the Government contacted the relators and asked them whether they had worked for the Sharmas and had any information with respect to the allegations of fraud in indictment. The relators met with the representatives from the FBI, DEA, and the United States Attorney's Office regarding the allegations. The relators agreed to testify at trial against the Sharmas. However, on April 26, 2010, the Sharmas both pleaded guilty to conspiracy to commit healthcare and mail fraud and one substantive count of health care fraud in violation of 18 U.S.C. §§ 371 and 1347. In February 2011, at their sentencing, the district court ordered the Sharmas to pay over $43 million in restitution to Medicare, Medicaid, and certain private insurers. The Sharmas appealed, and this Court vacated the restitution order and remanded the case to the district court for a recalculation of restitution because the "amount exceeded the insurers' actual losses by millions of dollars." United States v. Sharma, 703 F.3d 318, 327 (5th Cir.2012), cert. denied, ___ U.S. ___, 134 S.Ct. 78, 187 L.Ed.2d 30 (2013).
Meanwhile, on November 17, 2011, while the Sharmas' direct criminal appeal was pending, the relators filed the instant suit against the Sharmas under both the False Claims Act ("FCA"), 31 U.S.C. 3729 et seq., and the Texas False Claims Act based on the same fraudulent claims that the relators had set forth in the anonymous letter (and also the basis of the Sharmas' criminal convictions). Both the Government and Texas
The Government filed a motion for partial summary judgment, arguing that, as a matter of law, the relators were not entitled to a share of the restitution that was awarded in the Sharma's criminal case prior to the filing of the instant FCA action. The district court granted the motion, holding that because there was no valid FCA complaint in existence at the time the restitution was awarded to the Government, the criminal proceeding did not constitute an "alternate remedy" under 31 U.S.C. § 3730(c)(5), and thus, the relators had no right to share in that recovery. The relators then filed a motion to certify a permissive interlocutory appeal, and the district court granted it. 28 U.S.C. § 1292(b). This Court subsequently granted the relators leave to appeal from the interlocutory order on April 5, 2013.
On June 6, 2013, in the criminal proceedings, the district court resentenced the Sharmas, and ordered restitution in the amount of $37,636,436.39. The Sharmas appealed the amended judgment, including the order of forfeiture and restitution, and that appeal is currently pending before this Court. United States v. Sharma, et al., 13-20325.
The relators contend that the district court erred in granting the Government's motion for partial summary judgment. This Court reviews a district court's ruling on summary judgment de novo, applying the same standard as the district court. See, e.g., Hirras v. Nat'l R.R. Passenger Corp., 95 F.3d 396, 399 (5th Cir.1996). Summary judgment is proper if the record reflects "that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
The FCA makes liable any person who presents the Government with false or fraudulent claims for payment or approval. 31 U.S.C. § 3729. Section 3730(a) provides that the "Attorney General may bring a civil action under this section against the person" who violates § 3729. Section 3730(b), the qui tam provision, 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).
We must determine whether the district court properly construed the FCA to require a pending qui tam action in order for another proceeding to constitute an alternate remedy.
We now turn to the language of the statute. As previously set forth, § 3730(c)(5) provides in part that: "Notwithstanding subsection (b), the Government may elect to pursue its claim through any alternate remedy available to the Government, including any administrative proceeding to determine a civil money penalty." The statute's reference to subsection (b) is to the provision in § 3730 that allows a private person to file a qui tam action. Thus, this first sentence means that, notwithstanding that a private person has filed a qui tam suit, the Government may elect to pursue an alternate remedy to the qui tam suit. Section 3730(c)(5) further provides that: "If any such alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section." Clearly, this language protects the rights of the relators once the Government elects to pursue an alternate remedy and "assumes that the original qui tam action did not continue." United States ex rel. LaCorte
The word "alternate," as used in this context, is defined as "a choice between two or among more than two objects or courses." Webster's Third New International Dictionary (1993) at p. 63. We agree with the district court's reasoning that for a remedy to be "alternate" to the qui tam proceeding, there must have been two proceedings from which to choose. Accordingly, we hold that the qui tam proceeding must have been in existence at the time of the Government's election of the alternate remedy.
Although no circuit court has expressly held that a qui tam action must be filed prior to the alternate remedy, we interpret other circuits' analyses of the alternate remedy provision as implicitly recognizing that a qui tam suit must be filed before there is an alternate remedy. For instance, the Sixth Circuit has addressed the question of whether the district court had properly held that because the Government had not intervened in the qui tam action, the relator was not entitled to a share of the proceeds from the Government's separate settlement with the defendant. United States ex rel. Bledsoe v. Comm. Health Sys., 342 F.3d 634, 647 (6th Cir.2003). The relator contended that the separate settlement constituted an alternate remedy under the FCA. Id. The Sixth Circuit opined that the "answer turns on the proper definition of `alternate remedy,' either as an alternative to judicial enforcement of the FCA once the government has intervened in a qui tam suit, or an alternative to intervening in the qui tam suit entirely." Id. The way the Sixth Circuit framed the issue arguably presumes that a qui tam action is pending. Even if the framed issue does not necessarily presume a pending qui tam action, the Court's ultimate holding implicitly does. The Sixth Circuit held that a "settlement pursued by the government in lieu of intervening in a qui tam action asserting the same FCA claims constitutes an `alternate remedy' for purposes of 31 U.S.C. § 3730(c)(5)." Id. at 649 (emphasis added). See also United States ex rel. LaCorte v. Wagner, 185 F.3d 188, 190 (4th Cir.1999)
For the above reasons, the district court's partial summary judgment is AFFIRMED, and the case is REMANDED for further proceedings.
JAMES L. DENNIS, Circuit Judge, concurring:
I concur in the court's interpretation of the False Claims Act because that interpretation appears to be required by the text of the statute. However, I write separately to say, this interpretation, although apparently the correct one, leads to results that arguably are inequitable and at odds with the purpose of the statute. Thus,
The False Claims Act creates a cause of action for the United States to recover economic losses incurred from fraudulent claims for payment. 31 U.S.C. § 3729. The Attorney General pursues such actions on behalf of the government. Id. § 3730(a). Alternatively, under the statute's "qui tam" provisions, private whistleblowers — "relators" — who have evidence of fraud against the United States may assert the government's claim on its behalf. Id. § 3730(b). As reward for doing so, the relators share in the government's winnings, receiving a bounty of up to thirty percent of the government's proceeds "depending upon the extent to which the person substantially contributed to the prosecution of the action." Id. § 3730(d).
Id. § 3730(c)(5).
The first clause of § 3730(c)(5) provides simply that, notwithstanding the authority granted to relators to pursue qui tam suits under § 3730(b), the government retains authority ("the Government may elect") "to pursue its claim [to recover for fraud] through any alternate remedy available to the Government." In other words, under the first clause, the authority granted in § 3730(b) (the authority of relators to pursue qui tam suits) should not be read as implicitly restricting other similar authority (the authority of the government to pursue available alternate remedies). Cf., e.g., Christensen v. Harris Cnty., 529 U.S. 576, 583, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (discussing the canon of statutory interpretation providing that, "[w]hen a statute limits a thing to be done in a particular mode, it includes a negative of any other mode" (quoting Raleigh & Gaston R.R. Co. v. Reid, 80 U.S. 269, 270, 13 Wall. 269, 20 L.Ed. 570 (1871))).
The second clause of § 3730(c)(5) provides that, if the government does pursue an "alternate remedy" "in another proceeding," then "the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section." "The person initiating the action" refers to the relator ("the person") who
The issue in this case is whether § 3730(c)(5) affords relators the right to recover a fair share of money recovered by the government in "alternate remedy" proceedings that were instituted before the relators filed their qui tam suit? The court today holds that it does not: that, when the government pursues an "alternate remedy," § 3730(c)(5) affords relators only the "same rights" as they would have had in an existing qui tam suit, not as they would have had in a hypothetical qui tam suit the relators could have filed (but did not) before the government pursued the "alternate remedy." In other words, the court holds that, under § 3730(c)(5), if whistleblowers, like relator-appellants Samuel Babalola and Kayode Samuel Adetunmbi here, provide the government with their evidence of fraud but do not file a qui tam suit, and the government uses that information to pursue recompense for the fraud, the whistleblowers receive nothing from the government's proceeds, even if they later retain an attorney and file a qui tam suit.
Section 3730(c)(5)'s text appears to mandate this result: it grants relators the "same rights" as they "would have had if [their qui tam suit] had continued under this section." (Emphasis added.) A qui tam suit cannot "continue" until it has begun. If a qui tam suit does not begin, it cannot "continue," and, thus, § 3730(c)(5) does not afford any rights.
Furthermore, this interpretation is consistent with § 3730(e)(3), which provides: "In no event may a person bring [a qui tam suit] which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party." Under § 3730(e)(3), if whistleblowers provide the government with evidence of fraud but do not first file a qui tam suit, and the government then uses the whistleblowers' information to file the government's own False Claims Act suit (or other "civil suit" or "administrative civil money penalty proceeding") before the whistleblowers file a qui tam suit, beating the whistleblowers in the "race to the courthouse" the whistleblowers receive nothing under the False Claims Act. See Costner v. URS Consultants, Inc., 153 F.3d 667, 676 (8th Cir.1998) ("If the government files an action to enforce the [False Claims Act], a would-be relator may not later bring any action based on the same underlying facts." (quoting United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 746 (9th Cir. 1993))). The statute gives them no rights ("In no event" may they maintain a qui
Thus, under § 3730(c)(5), as interpreted today, and § 3730(e)(3), if the government begins proceedings to recover recompense for fraud before the relators file a qui tam suit, then the False Claims Act gives the relators no award from the proceeds of the government's action — even if the relators made the government's prosecution possible by uncovering the fraud to the government and further provided substantial assistance in the government's prosecution.
Here, Babalola and Adetunmbi provided the government with evidence that their employers, two Texas doctors, had a long-running scheme of defrauding Medicaid and Medicare and had cost the government and private insurers tens of millions of dollars. Babalola and Adetunmbi could have withheld their information and allowed the fraud to continue while they searched for an attorney to represent their interests in a qui tam suit. But they did not — they took the path of the Good Samaritan and without delay provided the government with the evidence needed to pursue the defrauders. Using Babalola and Adetunmbi's information, the government prosecuted the doctors for criminal fraud and obtained restitution and forfeiture orders from the court requiring the doctors to make recompense for the millions of dollars in losses. In addition to revealing the fraud to the government, Babalola and Adetunmbi further assisted the government's pursuit of recompense by agreeing to serve as witnesses at trial and testify in support of the government's case. For all their efforts, Babalola and Adetunmbi received nothing. Had Babalola and Adetunmbi first filed their qui tam suit before providing their information to the government, then they would have been entitled, under § 3730(d)(1), to an award of between fifteen to thirty percent of the government's proceeds.
We have said before that "[t]he purpose of the False Claims Act, of course, is to discourage fraud against the government, and the whistleblower provision is intended to encourage those with knowledge of fraud to come forward." Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir.1994). But under § 3730(c)(5) and (e)(3), it would be foolish for whistleblowers with knowledge of fraud to "come forward" with their information forthwith instead of withholding it from the government (and allowing the fraud to continue) until they first take however much time is needed, months or even years, to "lawyer up" and file a qui tam suit. If whistleblowers selflessly report fraud to the government at the earliest possible time instead of delaying their action until they "lawyer up" and file their own suit, then, under § 3730(c)(5) and (e)(3), the government can-and, this case shows, will — deny to the whistleblowers the bounty that the False Claims Act otherwise promises and
Although this result is arguably inequitable and illogical, it, nevertheless, appears mandated by the statute's text. It bears consideration whether Congress truly intended and desires this policy.