Filed: Feb. 25, 2016
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-1148 UNITED STATES ex rel. LYLE BEAUCHAMP; UNITED STATES ex rel. WARREN SHEPHERD, Plaintiffs – Appellants, v. ACADEMI TRAINING CENTER, LLC., f/k/a U.S. Training Center Inc., f/k/a USTC, Defendants – Appellees, and XE SERVICES LLC, f/k/a EP Investments LLC, d/b/a Blackwater Worldwide; U.S. TRAINING CENTER INC., (“USTC”); USTC HOLDINGS LLC, Defendants. Appeal from the United States District Court for the Eastern District of Vir
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-1148 UNITED STATES ex rel. LYLE BEAUCHAMP; UNITED STATES ex rel. WARREN SHEPHERD, Plaintiffs – Appellants, v. ACADEMI TRAINING CENTER, LLC., f/k/a U.S. Training Center Inc., f/k/a USTC, Defendants – Appellees, and XE SERVICES LLC, f/k/a EP Investments LLC, d/b/a Blackwater Worldwide; U.S. TRAINING CENTER INC., (“USTC”); USTC HOLDINGS LLC, Defendants. Appeal from the United States District Court for the Eastern District of Virg..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1148
UNITED STATES ex rel. LYLE BEAUCHAMP; UNITED STATES ex rel.
WARREN SHEPHERD,
Plaintiffs – Appellants,
v.
ACADEMI TRAINING CENTER, LLC., f/k/a U.S. Training Center
Inc., f/k/a USTC,
Defendants – Appellees,
and
XE SERVICES LLC, f/k/a EP Investments LLC, d/b/a Blackwater
Worldwide; U.S. TRAINING CENTER INC., (“USTC”); USTC
HOLDINGS LLC,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. T. S. Ellis, III, Senior
District Judge. (1:11-cv-00371-TSE-TRJ)
Argued: October 29, 2015 Decided: February 25, 2016
Before TRAXLER, Chief Judge, and AGEE and DIAZ, Circuit Judges.
Vacated and remanded by published opinion. Judge Agee wrote the
opinion, in which Chief Judge Traxler and Judge Diaz joined.
ARGUED: William Edgar Copley, III, WEISBROD MATTEIS & COPLEY
PLLC, Washington, D.C., for Appellants. Tara Melissa Lee, DLA
PIPER LLP(US), Reston, Virginia, for Appellees. ON BRIEF: Janet
L. Goetz, Susan M. Sajadi, William E. Jacobs, WEISBROD MATTEIS &
COPLEY PLLC, Washington, D.C., for Appellants. Joseph C. Davis,
Reston, Virginia, Courtney G. Saleski, Philadelphia,
Pennsylvania, Paul D. Schmitt, DLA PIPER LLP(US), Washington,
D.C., for Appellees.
2
AGEE, Circuit Judge:
Lyle Beauchamp and Warren Shepherd (“Relators”) filed a
complaint alleging that Academi Training Center, Inc.
(“Academi”) knowingly submitted false claims to the United
States under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-
3733, in connection with a government contract to provide
security services in Iraq and Afghanistan. Citing the FCA’s
public-disclosure bar, which generally prohibits FCA suits based
on allegations that have already entered the public domain, 31
U.S.C. § 3730(e)(4), the district court dismissed the complaint.
The primary question presented on appeal is whether the district
court correctly applied § 3730(e)(4) when the sole public
disclosure it found preclusive, a magazine article, was
published more than a year after Relators first pled the alleged
fraud. For the reasons that follow, we find the public-
disclosure bar inapplicable in this case. Accordingly, we
vacate the judgment of the district court and remand the case
for further proceedings.
I.
To place the controversy before us in context, we start
with the relevant statutory framework. Enacted during the Civil
War to prevent fraud by military contractors, the FCA imposes
civil liability on persons who knowingly submit false claims for
3
goods and services to the United States. 31 U.S.C. § 3729; see
also U.S. ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d
645, 649 (D.C. Cir. 1994) (discussing the statute’s history).
To encourage the disclosure of fraud that might otherwise escape
detection, the FCA permits private individuals, denominated as
relators, to file qui tam 1 actions on behalf of the government
and collect a bounty from any recovery. See 31 U.S.C.
§ 3730(b). The relator must file his or her complaint under
seal and notify the government, who can either intervene or
allow the relator to proceed alone.
Id.
Although designed to incentivize whistleblowers, the FCA
also seeks to prevent parasitic lawsuits based on previously
disclosed fraud. See U.S. ex rel. Wilson v. Graham Cty. Soil &
Water Conservation Dist.,
777 F.3d 691, 695 (4th Cir. 2015). To
balance these conflicting goals, Congress has set careful limits
on qui tam suits. Pertinent here is the public-disclosure bar,
which disqualifies private suits based on fraud already
disclosed in particular settings -- such as hearings, government
reports, or news reports -- unless the relator meets the
1
“Qui tam” is shorthand in current legal usage for the
Latin phrase “qui tam pro domino rege quam pro se ipso in hac
parte sequitur,” which means “who pursues this action on our
Lord the King’s behalf as well as his own.” Vt. Agency of Nat.
Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 768 n.1 (2000).
4
definition of an “original source” under the FCA. 31 U.S.C.
§ 3730(e)(4).
Two versions of the public-disclosure bar are relevant to
this appeal given the timeframe of the alleged underlying fraud.
In 2007, when the alleged scheme began, the statutory limitation
read as follows:
No court shall have jurisdiction over an
action under this section based upon the
public disclosure of allegations or
transactions in a criminal, civil, or
administrative hearing, in a congressional,
administrative, or Government Accounting
Office report, hearing, audit, or
investigation, or from the news media,
unless the action is brought by the Attorney
General or the person bringing the action is
an original source of the information.
31 U.S.C. § 3730(e)(4)(A) (2005). We interpreted this version
of the public-disclosure bar “as a jurisdictional limitation --
the public-disclosure bar, if applicable, divest[s] the district
court of subject-matter jurisdiction over the action.” U.S. ex
rel. May v. Purdue Pharma L.P., 737 F.3d 908, 916 (4th Cir.
2013).
Congress amended the FCA, effective March 23, 2010, and
revised several parts of the public-disclosure bar. See id. at
914. Post-amendment, the provision provides:
The court shall dismiss an action or claim
under this section, unless opposed by the
Government, if substantially the same
allegations or transactions as alleged in
the action or claim were publicly disclosed—
5
(i) in a Federal criminal, civil, or
administrative hearing in which the
Government or its agent is a party;
(ii) in a congressional, Government
Accountability Office, or other Federal
report, hearing, audit, or
investigation; or
(iii) from the news media,
unless the action is brought by the Attorney
General or the person bringing the action is
an original source of the information.
31 U.S.C. § 3730(e)(4)(A) (2010).
We have described the 2010 amendments as “significantly
chang[ing] the scope of the public-disclosure bar.” May, 737
F.3d at 917. Among other things, the revised statute deleted
the “jurisdiction-removing language previously contained in
§ 3730(e)(4) and replaced it with a generic, not-obviously-
jurisdictional phrase,” making it “clear that the public-
disclosure bar is no longer a jurisdiction-removing provision.”
Id. at 916. Post-amendment, the public-disclosure bar is a
grounds for dismissal -- effectively, an affirmative defense --
rather than a jurisdictional bar. See U.S. ex rel. Osheroff v.
Humana, Inc.,
776 F.3d 805, 810 (11th Cir. 2015) (“We conclude
that the amended § 3730(e)(4) creates grounds for dismissal for
failure to state a claim rather than for lack of
jurisdiction.”).
6
The amended statute also changed the required connection
between the plaintiff’s claims and the public disclosure. Under
the prior version, a qui tam action was barred only if it was
“based upon” a qualifying public disclosure, a standard we
interpreted to mean that the plaintiff must have “actually
derived” his knowledge of the fraud from the public disclosure.
U.S. ex rel. Siller v. Becton Dickinson & Co., 21 F.3d 1339,
1348 (4th Cir. 1994), superseded on other grounds as recognized
in
May, 737 F.3d at 917. “As amended, however, the public-
disclosure bar no longer requires actual knowledge of the public
disclosure, but instead applies if substantially the same
allegations or transactions were publicly disclosed.”
May, 737
F.3d at 917. 2
Against this backdrop, we now turn to the case before us.
II.
A.
In 2005, the U.S. Department of State hired Academi to
provide security services for officials and embassy workers
stationed across the Middle East. The agreement required
Academi’s personnel to maintain a certain degree of proficiency
2 We have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.
7
with several firearms and called for Academi to submit
marksmanship scores to the State Department on a regular basis.
Specifically, each security contractor was required to
periodically qualify at a set level of proficiency with (i) the
Glock 19 pistol, (ii) the Colt M4 rifle, (iii) the Remington 870
shotgun, (iv) the M240 belt-fed machine gun, and (v) the M249
belt-fed machine gun.
Relators, both former security contractors with Academi,
filed their complaint in the Eastern District of Virginia in
April 2011. In the initial complaint, Relators alleged that
Academi submitted false reports and bills to the State
Department for contractors employed in positions in which they
did not actually work and also defrauded the State Department by
requesting payment for unissued equipment. The initial
complaint was filed under seal, with notification to the
Government as required by the FCA. See 31 U.S.C. § 3730(b)(2).
Shortly thereafter, on May 24, 2011, Relators filed their
first-amended complaint. Relevant here, Relators added new
allegations of a separate fraudulent scheme that, from April
2007 through April 2011, Academi routinely failed to qualify its
contractors on two of the required weapons -- the M-240 and M-
249 belt-fed machine guns -- and fabricated scorecards showing
proficiency with these firearms for submission to the State
Department. As a result, the first-amended complaint alleged
8
that Academi fraudulently billed the State Department for
security services performed by contractors who had not been
tested for, much less achieved, the requisite marksmanship
scores (hereinafter, the “weapons qualification scheme”).
Relators provided specific dates of the alleged weapons
qualification scheme and maintained that they, personally, were
never certified with these weapons during their deployments.
While Relators’ first-amended complaint remained pending,
two former firearm instructors with Academi, Robert Winston and
Allan Wheeler, contacted Relators’ counsel with additional
information about the weapons qualification scheme. Eventually,
Winston and Wheeler filed a separate lawsuit against Academi
(the “Winston complaint”), alleging they were wrongfully
terminated from their employment with Academi for reporting the
weapons qualification scheme up the chain of command. See
Winston v. Academi Training Ctr., Inc., No. 1:12cv767, ECF No. 1
(E.D. Va. July 12, 2012). The Winston complaint detailed the
State Department contract, the weapons qualification testing
requirements, and Academi’s failure to conduct proper
marksmanship testing. Id. Notably, however, the Winston
complaint was not filed as a qui tam action, so its allegations
were not under seal and were thus available to the public from
the date of its filing.
9
The Winston complaint generated media attention, and on
July 16, 2012, an online news publication, Wired.com, published
a story about the case. See Spencer Ackerman, Mercenaries Sue
Blackwater Over Fake Gun Tests, Wired (July 16, 2012, 4:00 AM),
http://www.wired.com/2012/07/blackwater-lawsuit/. The article
described the Winston plaintiffs’ allegations of retaliation and
the weapons qualification scheme, specifically explaining how
Academi “falsif[ied] dozens of marksmanship tests for [its]
security contractors.” Id. The article also mentioned by name
the Relators’ pending qui tam suit.
Ultimately, the Government declined to intervene in
Relators’ case and it was unsealed. Relators then filed a
second-amended complaint on November 19, 2012, which became the
operative pleading. In addition to inserting non-qui tam claims
that are not relevant on appeal, the second-amended complaint
expanded the allegations as to the weapons qualification scheme
by adding a number of paragraphs from the Winston complaint that
further detailed the State Department contract and Academi’s
alleged failure to meet its weapons testing requirements.
B.
Academi moved to dismiss Relators’ qui tam claims under the
first-to-file and public-disclosure bars, as well as for failing
to meet the pleading requirements of Federal Rule of Civil
Procedure 9(b). See Harrison v. Westinghouse Savannah River
10
Co., 176 F.3d 776, 783–84 (4th Cir. 1999) (explaining that suits
brought under the FCA sound in fraud, and thus are “subject to
Federal Rule of Civil Procedure 9(b), which requires that
claimants plead fraud with particularity”).
The district court granted Academi’s motion. Specifically,
the court rejected the weapons qualification scheme under the
public-disclosure bar. 3 Using the post-2010 amended version of
the FCA, the court first determined that the Wired.com article
was a “public disclosure” as that term is defined in the
statute. U.S. ex rel. Beauchamp v. Academi Training Ctr., Inc.,
933 F. Supp. 2d 825, 845 (E.D. Va. 2013). With that
prerequisite established, the court then turned to the timing of
the article’s disclosure, noting it must precede Relators’ suit
in order to function as a bar. Id. Because Relators had
amended their complaint several times, the issue became which
was the proper pleading for purposes of the statutory timing
benchmark. Citing Rockwell International Corp. v. United
States,
549 U.S. 457 (2007), the district court determined that
only the most recent complaint was relevant to this analysis.
See
Beauchamp, 933 F. Supp. 2d at 845 (“The public disclosure
bar inquiry applies to ‘the allegations in the original
3
The district court also dismissed Relators’ other claims
on the merits. See Beauchamp, 933 F. Supp. 2d at 841-43.
Relators have not challenged those decisions in this appeal.
11
complaint as amended[,]’ [and thus] ‘courts look to the amended
complaint to determine jurisdiction.’”). Observing that
Relators’ last pleading -- the second-amended complaint --
postdated the Wired.com article, the court concluded that the
article was a qualifying public disclosure so the public-
disclosure bar applied. Id.
The court then considered whether Relators were nonetheless
protected under the original source exception. The court found
this exception inapplicable because Relators failed to disclose
Academi’s fraud to the government in accordance with the
statute.
Id. at 845-46.
In light of those determinations, the district court
declined to address Academi’s Rule 9(b) arguments. See id. at
846 n.40. This appeal followed, and we have jurisdiction under
28 U.S.C. § 1291.
III.
Relators’ appeal is limited to the weapons qualification
scheme and the district court’s application of the public-
disclosure bar. They first argue that the district court erred
when it found the Wired.com article was a qualifying public
12
disclosure. 4 Relators contend this story could not have
triggered the bar because it was published after the first-
amended complaint initially alleged the weapons qualification
scheme. On this point, they specifically dispute the district
court’s conclusion that Rockwell “requir[ed] it to consider only
the most recent complaint to determine when Relators alleged
Academi’s [scheme] for purposes of § 3730(e)(4)(A).” Opening
Br. 32-22. Alternatively, Relators argue that, even if the
district court was correct regarding the Wired.com article, the
public-disclosure bar does not apply here because Relators’ suit
falls under the original source exception. 5
4The phrase “qualifying public disclosure” is a term of art
used to identify a public disclosure that meets the statutory
requirements of § 3730(e)(4)(A) and therefore triggers the bar.
See May, 737 F.3d at 919-20.
5 The parties agreed below, and the district court applied,
the post-amendment public-disclosure bar as the appropriate
statutory framework. Academi now contests its application in
light of intervening precedent holding that the 2010 FCA
amendments should not be employed retroactively. See May, 737
F.3d at 917-18. Academi argues that because its alleged fraud
spans 2010, the district court should “have split the public
disclosure analysis between the current and former versions of
the [public-disclosure bar] depending upon [when the] conduct
occurred.” Response Br. 17-18. Academi concedes that it did
not raise this issue below but contends we should reach it now
by applying, in the first instance, the pre-amendment public-
disclosure bar to the pre-March 23, 2010 allegations.
Ordinarily, Academi’s concession would constitute waiver of
the issue and preclude our review. See United States v. Evans,
404 F.3d 227, 236 n.5 (4th Cir. 2005). However, we do not find
waiver here since there could be jurisdictional implications.
See
May, 737 F.3d at 916 (“Under the prior version of the
statute, § 3730(e)(4) operated as a jurisdictional limitation --
(Continued)
13
A.
The public-disclosure bar aims “to strike a balance between
encouraging private persons to root out fraud and stifling
parasitic lawsuits” in which a relator, instead of plowing new
ground, attempts to free-ride by merely reiterating previously
disclosed fraudulent acts. Graham Cty. Soil & Water
Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280, 295
(2010). In line with this objective, the bar applies only when
information exposing the fraud has already entered the public
domain prior to the relator’s suit.
Id. at 296 n.16 (explaining
that “parasitic lawsuits” arise when “those who learn of the
fraud through public channels . . . seek remuneration although
they contributed nothing to the exposure of the fraud”). Hence,
courts considering whether the public-disclosure bar applies
must resolve, among other things, when the public disclosure
occurred in relation to the relator’s claims. U.S. ex rel. Gear
v. Emergency Med. Assocs. of Ill., Inc.,
436 F.3d 726, 728 (7th
the public-disclosure bar, if applicable, divested the district
court of subject-matter jurisdiction over the action.”).
Nonetheless, while subject matter jurisdiction issues may exist
in other cases regarding which version of the FCA applies, that
distinction does not affect the resolution of this case. Even
conceding Academi is correct as to bifurcating the analysis of a
claim which spans the amendment of the statute, the district
court’s decision below was erroneous under either version of the
public-disclosure bar. Thus, we need delve no further into
Academi’s arguments on this point.
14
Cir. 2006) (“The first issue, then, is whether the information
on which the complaint is based was already publicly disclosed
when [the relator] filed his complaint.”).
The parties agree that the Wired.com article is a “public
disclosure” as that term is statutorily defined under either the
pre- or post-amendment version of the FCA. 6 See Malhotra v.
Steinberg, 770 F.3d 853, 858 (9th Cir. 2014) (“[T]he existence
of a public disclosure is a threshold condition for application
of the bar.”). We also agree. Thus, if the Wired.com article
came later than the applicable part of Relators’ claims, the
public-disclosure bar has no application here.
It is undisputed that Relators initially pled the weapons
qualification scheme in their first-amended complaint more than
a year before the Wired.com story. Following that article,
however, Relators filed a second-amended complaint that re-
alleged this fraud and added further detail about it gleaned
from the article. Academi argued, and the district court
agreed, that under the Supreme Court’s decision in Rockwell,
6Courts have unanimously construed the term “public
disclosure” to include websites and online articles. See
Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 408
(2011) (“The other sources of public disclosure in
§ 3730(e)(4)(A), especially ‘news media,’ suggest that the
public disclosure bar provides ‘a broa[d] sweep.’”);
Osheroff,
776 F.3d at 813 (concluding that newspapers and publicly
available websites qualified as “news media” under the public
disclosure provision).
15
Relators’ last pleading was the appropriate statutory timing
benchmark when applying the public-disclosure bar. See
Beauchamp, 933 F. Supp. 2d at 845. And because Relators’
second-amended complaint postdated the Wired.com article, the
district court found that story to be a qualifying public
disclosure that triggered the bar. Id. In substance, the
district court concluded that the timing of Relators’ claims for
public-disclosure bar purposes was set by the filing date of
their most recent complaint instead of when the relevant claims
were first alleged.
B.
In adopting the view that only the most recent pleading
should control the public-disclosure bar’s timing, Academi and
the district court misapprehend the factual and legal basis of
the Supreme Court’s decision in Rockwell.
In Rockwell, a nuclear weapons plant attempted to dispose
of hazardous waste by combining it with concrete in solid blocks
called “pondcrete.” 549 U.S. at 461. The Rockwell relator, a
plant engineer, reviewed the plans and stated before the
procedure was undertaken that it would fail because of flaws in
the piping system.
Id. The plant later discovered that many of
the blocks did in fact leak.
Id. When this environmental
violation came to light, the relator filed suit alleging that
faulty piping was to blame and the plant’s claims for payment to
16
the government were therefore fraudulent under the FCA. Id. at
463. During discovery, however, the relator abandoned the
piping-defect allegations, instead claiming for the first time a
new theory of fraud liability: that the leak was the result of
an improper waste mixture.
Id. at 465. The case proceeded to
trial, and the relator prevailed on his new theory.
The defendant subsequently moved to set aside the verdict
under the public-disclosure bar, asserting that the relevant
fraudulent scheme (the last filed improper-waste-mixture claim)
had been publically disclosed. Id. at 466. The relator
conceded that his successful claim was based on a qualifying
public disclosure, but he argued that he nevertheless qualified
as an “original source.”
Id. at 467. The pre-amendment public-
disclosure bar at issue in Rockwell defined “original source” as
an individual with “direct and independent knowledge of the
information on which the allegations [of the FCA action] are
based.”
Id.
The Rockwell relator, however, did not contend that he had
“direct and independent” information as an original source for
his successful improper-waste-mixture theory. Instead, he
argued that he was an original source for FCA purposes based on
his insider knowledge about the first-pled, but abandoned,
piping-system claim. Thus, the relator argued to the Supreme
17
Court that it should focus on the allegations in the first
complaint to determine his original source status. Id. at 473.
The Supreme Court found the Rockwell relator’s argument
without merit, holding that the original source provision did
not speak in terms of allegations in the original complaint,
“but of the relator’s ‘allegations’ simpliciter.” Id. Simply
put, the FCA inquiry went to the relevant claim before the court
(there, the improper-waste-mixture claim), and evaluating that
claim required review of the pleading that first raised it.
The Supreme Court thus held that the original source
question required consideration of “(at a minimum) the
allegations in the original complaint as amended.” Id.
Accordingly, even though the relator may have been an original
source as to the piping-defect claims asserted in the original
complaint, the Court found those allegations irrelevant because
the relator had abandoned them in favor of a wholly different
fraud theory.
Id. at 475 (declining to “determine jurisdiction
on the basis of whether the relator is an original source of
information underlying allegations that he no longer makes”).
Instead of examining the rationale of the Supreme Court’s
decision in Rockwell, the district court mechanically applied
the statement that “courts look to the amended complaint to
determine jurisdiction.” Id. at 474. As a result, the district
court used Relators’ last pleading, the second-amended
18
complaint, to determine when the weapons qualification scheme
was alleged for purposes of § 3730(e)(4)(A). We find this
application of Rockwell faulty, as it takes the Supreme Court’s
words and holding wholly out of context and fails to analyze the
public-disclosure bar on the basis of the relevant fraud
alleged.
The Supreme Court in Rockwell focused on the relator’s last
pleading only because that was where the relevant fraud, the
improper-waste-mixture theory, had been pled. The Court sought
to match the relevant claim of fraud with the pleading that
raised it to determine whether the relator was an original
source as to that claim. The Supreme Court’s holding
effectively reiterated existing law in the qui tam setting, that
judicial review is based on a claim by claim analysis. See In
re Nat. Gas Royalties, 562 F.3d 1032, 1040 (10th Cir. 2009)
(“Relator correctly points out that we use a claim-by-claim
analysis to determine whether the allegations in a complaint
were publicly disclosed.”).
Here, however, the district court failed to evaluate the
relevant fraud claim, the weapons qualification scheme, under
the pleading that first alleged that fraud: the first-amended
complaint. Relators’ second-amended complaint merely added
further detail about a claim already alleged. On such facts,
Rockwell does not limit our public-disclosure analysis to the
19
latest pleading. Recognizing this limitation, our sister
circuits have been reluctant to expand Rockwell’s last-pleading
rule as the district court did below. See, e.g., U.S. ex rel.
Jamison v. McKesson Corp., 649 F.3d 322, 328 (5th Cir. 2011)
(distinguishing Rockwell and explaining that we “look to [the
relator’s] original complaint . . . to determine whether it was
based on public disclosures of allegations or transactions”);
U.S. ex rel. Branch Consultants, LLC v. Allstate Ins. Co., 782
F. Supp. 2d 248, 261 (E.D. La. 2011) (“[Rockwell] did not
suggest that the original complaint becomes irrelevant for
jurisdictional purposes once an amended complaint is filed. To
the contrary, the Court stated that its holding was consistent
with ‘[t]he rule that subject-matter jurisdiction depends on the
state of things at the time of the action brought.’”).
Focusing our inquiry on when the relevant claims first
appeared in the case also aligns with the public-disclosure
bar’s purpose. See Crandon v. United States, 494 U.S. 152, 158
(1990) (“In determining the meaning of the statute, we look not
only to the particular statutory language, but to the design of
the statute as a whole and to its object and policy.”). We have
consistently observed that Congress’s goal with the public-
disclosure bar was to encourage qui tam suits while preventing
only “parasitic” claims “in which relators, rather than bringing
to light independently-discovered information of fraud, simply
20
feed off of previous disclosures of government fraud.” Siller,
21 F.3d at 1347. The weapons qualification scheme was pled in
Relators’ first-amended complaint. It was not a new fraudulent
scheme first introduced after the Wired.com public disclosure.
Where the relevant fraud is first alleged before the public
disclosure, as occurred here, the suit is plainly not
“parasitic.” See Graham
Cty., 559 U.S. at 296 n.16.
We therefore conclude that the determination of when a
plaintiff’s claims arise for purposes of the public-disclosure
bar is governed by the date of the first pleading to
particularly allege the relevant fraud and not by the timing of
any subsequent pleading. See U.S. ex rel. Ackley v. Int’l Bus.
Machs. Corp., 76 F. Supp. 2d 654, 660 (D. Md. 1999) (looking to
the relator’s initial complaint where the fraud was first
alleged); U.S. ex rel. Adams v. Wells Fargo Bank Nat’l Ass’n,
No. 2:11-CV-00535-RCJ-PAL,
2013 WL 6506732, at *6 (D. Nev. Dec.
11, 2013) (same). In Rockwell terms, the relevant fraud here is
the weapons qualification scheme, which predated the Wired.com
article in the first-amended complaint. The contrary position,
adopted by the district court and pressed by Academi, misreads
Rockwell and does not comport with the objectives underlying
§ 3730(e)(4)(A). The district court thus erred in holding the
second-amended complaint was the relevant pleading by which to
measure the public-disclosure bar.
21
C.
Academi further argues that, even if the district court
erred in applying Rockwell, Relators’ second-amended complaint
was “the first [pleading] that describes with specificity the
weapons qualification scheme.” Response Br. 28. Consequently,
Academi posits, the timing of the second-amended complaint still
controls when the weapons qualification scheme was alleged. We
disagree.
In their first-amended complaint, Relators alleged that
Academi did not qualify its employees on the M-240 and M-249
belt-fed weapons as required under the government contract and
intentionally submitted false documents to the State Department
to conceal this failure. See J.A. 39 (“[Academi] fraudulently
billed their services to the Department of State, as none of the
independent contractors [were] qualified to shoot M-240s and M-
249s.”). Relators further provided specific dates on which
Academi falsified their weapons scores, and alleged that this
practice occurred throughout training centers in Afghanistan and
Iraq. See id. (“Mr. Beauchamp’s score cards from October 4,
2010, April 3, 2010, July 23, 2010, . . . and April 8, 2011 are
fraudulent.”). These allegations were sufficient for purposes
of the public-disclosure bar. See United States v. Triple
Canopy, Inc.,
775 F.3d 628, 636 (4th Cir. 2015) (explaining that
a relator “pleads a false claim when [he or she] alleges that
22
the contractor, with the requisite scienter, made a request for
payment under a contract and ‘withheld information about its
noncompliance with material contractual requirements.’”).
At bottom, the public-disclosure bar does not apply here.
Relators sufficiently pled the weapons qualifications scheme in
their first-amended complaint that came well before the
Wired.com article. The district court thus wrongly concluded
that this article was a qualifying public disclosure that
triggered the bar. And without a qualifying public disclosure,
the district court erred by dismissing these claims under either
version of § 3730(e)(4)(A). See, e.g., Walburn v. Lockheed
Martin Corp., 431 F.3d 966, 974 (6th Cir. 2005) (observing that
the existence of a qualifying public disclosure is a threshold
condition for application of the bar). 7
Having concluded that no qualifying public disclosure
occurred within the meaning of the FCA, we do not address
7
To be clear, our holding today does not suggest that a
plaintiff can raise skeletal claims of fraud and then use such a
pleading to avoid the public-disclosure bar when he or she later
files an amended complaint that adds necessary facts gleaned
from the public domain. We agree with Academi that under such
circumstances the initial complaint should not dictate when the
relator’s claims were first brought. Cf. United States v. Educ.
Mgmt. LLC, No. 2:07-cv-461, 2014 WL 2766115, at *2 (W.D. Pa.
June 18, 2014) (“[A]n amended complaint which sets forth a
fundamentally different fraudulent scheme [does] not relate back
in time to the original complaint.”). Conversely, however, an
amended complaint that merely adds detail to a previously pled
cause of action does not reset the clock for when the relator’s
claims were alleged. That is the circumstance in this case.
23
Relators’ alternative arguments that they were original sources
of the information. See U.S. ex rel. Holmes v. Consumer Ins.
Grp., 318 F.3d 1199, 1208 (10th Cir. 2003) (en banc) (“[W]here,
as here, there was no public disclosure, the . . . inquiry under
§ 3730(e)(4) ceases, regardless of whether the relator qualifies
as an original source.”).
IV.
In the final portion of its brief, Academi offers several
alternate grounds for affirmance that do not require extended
discussion.
First, Academi contends that the Winston complaint is
another public disclosure that preempts Relators’ claims under
the public-disclosure bar. We are unpersuaded. As previously
discussed, the Winston complaint was filed after Relators’
first-amended complaint that alleged the weapons qualification
scheme, and therefore it does not trigger the public-disclosure
bar for the same reasons already explained.
Academi next argues that U.S. ex rel. Davis v. U.S.
Training Ctr., Inc., No. 1:08cv1244 (E.D. Va. filed Dec. 1,
2008), another FCA case filed against Academi in some of its
prior corporate forms, also triggered the public-disclosure bar.
The complaint in Davis was unsealed in 2010, and thus the Davis
action undisputedly preceded the instant case. Nonetheless, as
24
the district court correctly noted, the scheme alleged in Davis
was that Academi committed fraud by recruiting persons who
“because of drug use and predilection for violence are . . .
unqualified for employment in ‘shooter’ positions.” Beauchamp,
933 F. Supp. 2d at 839. That fraud claim is distinct and
unrelated to the weapons qualification scheme at issue here, and
thus the disclosures in the Davis litigation also do not trigger
the public-disclosure bar. See U.S. ex rel. Found. Aiding the
Elderly v. Horizon West, Inc., 265 F.3d 1011, 1016 (9th Cir.
2001) (explaining that “unrelated allegations of fraud cannot
trigger § 3730(e)(4)(A)”).
Academi further argues that the Davis case, even if not a
disqualifying public disclosure, is a preclusive first-filed
action under the FCA’s corresponding first-to-file bar. See 31
U.S.C. § 3730(b)(5). In broad strokes, the first-to-file bar
prohibits later-filed FCA actions while an earlier-filed case
based on the same fraud remains pending. See Kellogg Brown &
Root Servs., Inc. v. U.S. ex rel. Carter, 135 S. Ct. 1970, 1974-
79 (2015). Academi contends that because the Davis case was
pending when this action was filed, the first-to-file bar must
apply to preclude Relators’ claims. We again disagree. The
first-to-file bar applies only to “related actions,” and as
noted, the fraud claimed here is not related to the fraud
alleged in Davis. See
Beauchamp, 933 F. Supp. 2d at 837-38.
25
Finally, Academi argues that Relators failed to plead the
weapons qualification scheme with the “particularity” that Rule
9(b) requires for fraud claims, thus rendering these claims
deficient regardless of the foregoing. See Harrison, 176 F.3d
at 783–84. In light of its ruling on the public-disclosure bar,
the district court declined to reach this alternative argument.
Id. at 846 n.40. We deem it more appropriate to allow the
district court to consider Academi’s Rule 9(b) argument, if
necessary, in the first instance on remand. See Davani v. Va.
Dep’t of Transp.,
434 F.3d 712, 720 (4th Cir. 2006).
V.
For the foregoing reasons, we vacate the portion of the
district court’s order dismissing Relators’ weapons
qualification claims under the public-disclosure bar and remand
for further proceedings consistent with this opinion.
VACATED AND REMANDED
26
