Filed: Feb. 14, 2017
Latest Update: Mar. 03, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2145 UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY WHITESIDES, Plaintiffs – Appellants, v. AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE, INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE MANAGEMENT SERVICE, INC.; AGAPE COMMUNITY HOSPICE, INC.; AGAPE NURSING AND REHABILITATION CENTER, INC., d/b/a Agape Rehabilitation of Rock Hill, a/k/a Agape Senior Post Acute Care Center-Rock Hill, a/k/a Ebene
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2145 UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY WHITESIDES, Plaintiffs – Appellants, v. AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE, INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE MANAGEMENT SERVICE, INC.; AGAPE COMMUNITY HOSPICE, INC.; AGAPE NURSING AND REHABILITATION CENTER, INC., d/b/a Agape Rehabilitation of Rock Hill, a/k/a Agape Senior Post Acute Care Center-Rock Hill, a/k/a Ebenez..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2145
UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY
WHITESIDES,
Plaintiffs – Appellants,
v.
AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE,
INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE
MANAGEMENT SERVICE, INC.; AGAPE COMMUNITY HOSPICE, INC.;
AGAPE NURSING AND REHABILITATION CENTER, INC., d/b/a Agape
Rehabilitation of Rock Hill, a/k/a Agape Senior Post Acute
Care Center-Rock Hill, a/k/a Ebenezer Senior Services, LLC;
AGAPE SENIOR FOUNDATION, INC.; AGAPE COMMUNITY HOSPICE OF
ANDERSON, INC.; AGAPE HOSPICE OF THE PIEDMONT, INC.; AGAPE
COMMUNITY HOSPICE OF THE GRAND STRAND, INC.; AGAPE
COMMUNITY HOSPICE OF THE PEE DEE, INC.; AGAPE COMMUNITY
HOSPICE OF THE UPSTATE, INC.; AGAPE HOSPICE HOUSE OF HORRY
COUNTY, INC.; AGAPE HOSPICE HOUSE OF LAURENS, LLC; AGAPE
HOSPICE HOUSE OF THE LOW COUNTRY, INC.; AGAPE HOSPICE HOUSE
OF THE PIEDMONT, INC.; AGAPE REHABILITATION OF CONWAY,
INC.; AGAPE SENIOR SERVICES FOUNDATION, INC.; AGAPE
THERAPY, INC.; AGAPE HOSPICE; HOSPICE PIEDMONT; HOSPICE
ROCK HILL; CAROLINAS COMMUNITY HOSPICE, INC.,
Defendants – Appellees,
v.
UNITED STATES OF AMERICA,
Party-in-Interest – Appellee.
--------------------------------
SAVASENIORCARE ADMINISTRATIVE SERVICES, LLC; AMERICAN
HEALTH CARE ASSOCIATION; AMERICAN HOSPITAL ASSOCIATION;
CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES,
Amici Supporting Defendants – Appellees.
No. 15-2147
UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY
WHITESIDES,
Plaintiffs,
v.
AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE,
INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE
COMMUNITY HOSPICE, INC.; AGAPE NURSING AND REHABILITATION
CENTER, INC., d/b/a Agape Rehabilitation of Rock Hill,
a/k/a Agape Senior Post Acute Care Center-Rock Hill, a/k/a
Ebenezer Senior Services, LLC; AGAPE MANAGEMENT SERVICE,
INC.; AGAPE COMMUNITY HOSPICE OF ANDERSON, INC.; AGAPE
HOSPICE OF THE PIEDMONT, INC.; AGAPE SENIOR FOUNDATION,
INC.; AGAPE COMMUNITY HOSPICE OF THE PEE DEE, INC.; AGAPE
COMMUNITY HOSPICE OF THE UPSTATE, INC.; AGAPE COMMUNITY
HOSPICE OF THE GRAND STRAND, INC.; AGAPE HOSPICE HOUSE OF
LAURENS, LLC; AGAPE HOSPICE HOUSE OF THE LOW COUNTRY, INC.;
AGAPE HOSPICE HOUSE OF HORRY COUNTY, INC.; AGAPE
REHABILITATION OF CONWAY, INC.; AGAPE SENIOR SERVICES
FOUNDATION, INC.; AGAPE HOSPICE HOUSE OF THE PIEDMONT,
INC.; AGAPE HOSPICE; HOSPICE PIEDMONT; AGAPE THERAPY, INC.;
CAROLINAS COMMUNITY HOSPICE, INC.; HOSPICE ROCK HILL,
Defendants – Appellants,
v.
UNITED STATES OF AMERICA,
Party-in-Interest – Appellee.
--------------------------------
2
SAVASENIORCARE ADMINISTRATIVE SERVICES, LLC; AMERICAN
HEALTH CARE ASSOCIATION; AMERICAN HOSPITAL ASSOCIATION;
CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES,
Amici Supporting Defendants – Appellants.
Appeals from the United States District Court for the District
of South Carolina, at Rock Hill. Joseph F. Anderson, Jr.,
Senior District Judge. (0:12-cv-03466-JFA)
Argued: October 26, 2016 Decided: February 14, 2017
Before KING, KEENAN, and DIAZ, Circuit Judges.
Affirmed in part and dismissed in part by published opinion.
Judge King wrote the opinion, in which Judge Keenan and Judge
Diaz joined.
ARGUED: Mario A. Pacella, STROM LAW FIRM, Columbia, South
Carolina, for Appellants. William Walter Wilkins, NEXSEN PRUET,
LLC, Greenville, South Carolina, for Appellees. Charles W.
Scarborough, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee United States of America. ON BRIEF: T.
Christopher Tuck, Catherine H. McElveen, Mt. Pleasant, South
Carolina, Daniel Haltiwanger, Terry E. Richardson, Jr.,
RICHARDSON, PATRICK, WESTBROOK & BRICKMAN, LLC, Barnwell, South
Carolina; Christy M. DeLuca, CHRISTY DELUCA, LLC, Mt. Pleasant,
South Carolina; Jessica H. Lerer, STROM LAW FIRM, Columbia,
South Carolina, for Appellants. Deborah B. Barbier, DEBORAH B.
BARBIER ATTORNEY AT LAW, Columbia, South Carolina; Kirsten E.
Small, Mark C. Moore, William C. Lewis, NEXSEN PRUET, LLC,
Greenville, South Carolina, for Appellees Agape Senior
Community, Inc., et al. Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Michael S. Raab, Civil Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; William
N. Nettles, United States Attorney, Elizabeth C. Warren,
Assistant United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Columbia, South Carolina, for Appellee United States
of America. James F. Segroves, Kelly A. Carroll, David J.
Vernon, HOOPER, LUNDY & BOOKMAN, PC, Washington, D.C., for
Amicus SavaSeniorCare Administrative Services, LLC. Melinda
3
Reid Hatton, Maureen Mudron, AMERICAN HOSPITAL ASSOCIATION,
Washington, D.C.; Lisa Gilden, THE CATHOLIC HEALTH ASSOCIATION
OF THE UNITED STATES, Washington, D.C.; Jessica L. Ellsworth,
Washington, D.C., Thomas P. Schmidt, HOGAN LOVELLS US LLP, New
York, New York, for Amici American Hospital Association and
Catholic Health Association of the United States. Colin E.
Wrabley, M. Patrick Yingling, REED SMITH, LLP, Pittsburgh,
Pennsylvania, for Amicus American Health Care Association.
4
KING, Circuit Judge:
In this qui tam action under the False Claims Act (the
“FCA”), defendant Agape Senior Community, Inc., and the twenty-
three other defendants (collectively, “Agape”) are affiliated
entities that operate elder care facilities throughout South
Carolina. 1 The relators, Brianna Michaels and Amy Whitesides,
are former Agape employees who allege that Agape fraudulently
billed Medicare and other federal health care programs for
services to thousands of patients — services that were not
actually provided, or that were provided to patients who were
not eligible for them. The United States Government was
entitled, but declined, to intervene.
To establish liability and damages, the relators sought to
rely on statistical sampling. The district court determined,
however, that using statistical sampling to prove their case
1 In addition to Agape Senior Community, Inc., the
defendants are Agape Senior Primary Care, Inc.; Agape Senior
Services, Inc.; Agape Senior, LLC; Agape Management Service,
Inc.; Agape Community Hospice, Inc.; Agape Nursing and
Rehabilitation Center, Inc.; Agape Senior Foundation, Inc.;
Agape Community Hospice of Anderson, Inc.; Agape Hospice of the
Piedmont, Inc.; Agape Community Hospice of the Grand Strand,
Inc.; Agape Community Hospice of the Pee Dee, Inc.; Agape
Community Hospice of the Upstate, Inc.; Agape Hospice House of
Horry County, Inc.; Agape Hospice House of Laurens, LLC; Agape
Hospice House of the Low Country, Inc.; Agape Hospice House of
the Piedmont, Inc.; Agape Rehabilitation of Conway, Inc.; Agape
Senior Services Foundation, Inc.; Agape Therapy, Inc.; Agape
Hospice; Hospice Piedmont; Hospice Rock Hill; and Carolinas
Community Hospice, Inc.
5
would be improper (the “statistical sampling ruling”).
Additionally, the court rejected a proposed settlement between
the relators and Agape, because the Attorney General of the
United States objected to it. In so doing, the court concluded
that the Government — despite not having intervened in an FCA
qui tam action — possesses an unreviewable veto authority over
the action’s proposed settlement (the “unreviewable veto
ruling”).
The district court certified both its statistical sampling
and unreviewable veto rulings for these interlocutory appeals
under 28 U.S.C. § 1292(b). We thereafter granted the petitions
for permission to appeal submitted to this Court by the relators
(seeking an appeal from both rulings) and by Agape (requesting
an appeal from the unreviewable veto ruling only). As explained
below, we affirm the unreviewable veto ruling and dismiss as
improvidently granted the relators’ appeal as to the statistical
sampling ruling.
I.
A.
The FCA, codified at 31 U.S.C. §§ 3729-3733, authorizes a
private individual (i.e., a relator) to initiate and pursue an
action in the name of the United States Government (a qui tam
action) to seek civil remedies for fraud against the Government.
6
See 31 U.S.C. § 3730(b)(1). Pursuant to § 3730(b)(1), the qui
tam “action may be dismissed only if the court and the Attorney
General give written consent to the dismissal and their reasons
for consenting.”
At the outset of the qui tam action, the relator’s
complaint must be served on the Government, filed in camera, and
kept under seal for at least sixty days, with no service of
process on the defendant until the court so orders. See 31
U.S.C. § 3730(b)(2). During the sixty-day period after it
receives the complaint, the Government may elect to intervene in
the qui tam action. Id. Specifically, before the expiration of
the sixty-day period — or any extension thereof under
§ 3730(b)(3) — the Government must either (A) “proceed with the
action” by assuming primary responsibility for the action’s
prosecution, or (B) “notify the court that it declines to take
over the action” from the relator, who will then “have the right
to conduct the action.”
Id. § 3730(b)(4)(A)-(B). If the
Government declines to intervene during the initial sixty-day
(or extended) period, the court may nevertheless permit its
intervention “at a later date upon a showing of good cause.”
Id. § 3730(c)(3).
Once the Government intervenes, the relator retains the
right to continue as a party to the action, subject to certain
limitations. See 31 U.S.C. § 3730(c)(1). For example, the
7
Government is authorized to settle the action over the relator’s
objection, but only “if the court determines, after a hearing,
that the proposed settlement is fair, adequate, and reasonable
under all the circumstances.” Id. § 3730(c)(2)(B).
When the qui tam action is successful, the relator is
entitled to share with the Government in the award. See 31
U.S.C. § 3730(d)(1)-(4). The amount of the relator’s share
depends on whether the Government intervened in the action. If
the Government did not intervene, “the person bringing the
action or settling the claim shall receive an amount which the
court decides is reasonable for collecting the civil penalty and
damages.” Id. § 3730(d)(2) (specifying that such “amount shall
be not less than 25 percent and not more than 30 percent of the
proceeds of the action or settlement”).
B.
Here, the relators served their initial Complaint on the
Government and, on December 7, 2012, filed it under seal in the
District of South Carolina. The district court extended the
Government’s deadline for its intervention decision to March 5,
2013. By its notice of that date, the Government declined to
intervene but called attention to the consent-for-dismissal
provision of § 3730(b)(1), requesting that the relators and
Agape solicit the Attorney General’s written consent before
asking the court to rule on any proposed dismissal. Two days
8
later, on March 7, 2013, the court unsealed the Complaint and
directed the relators to serve it on Agape.
The relators filed their operative Second Amended Complaint
on March 6, 2014, and discovery ensued. 2 Although the relators
and Agape dispute the exact numbers, they agree that Agape
admitted more than 10,000 patients to its facilities in South
Carolina and submitted more than 50,000 claims to federal health
care programs during the relevant time period. The relators
sought to use statistical sampling to prove their case in order
to avoid the cost of reviewing each patient’s chart to identify
which claims were fraudulent — a task that the relators said
would take their experts four to nine hours per patient, at a
rate of $400 per hour, potentially totalling more than $36
million. For its part, Agape opposed the use of any evidentiary
form of statistical sampling. Thus, the district court received
briefing and conducted a hearing on the issue. By Order of
March 16, 2015, the court made its statistical sampling ruling
“that based on the facts of this case, statistical sampling
would be improper.” See United States ex rel. Michaels v. Agape
2
Like the initial Complaint, the Second Amended Complaint
alleges claims under not only the FCA, but also the Anti-
Kickback Statute, 42 U.S.C. § 1320a-7b, and the Health Care
Fraud Statute, 18 U.S.C. § 1347.
9
Senior Cmty., Inc., No. 0:12-cv-03466, at 2 (D.S.C. Mar. 16,
2015), ECF No. 255 (the “March 2015 Order”).
Meanwhile, the relators, Agape, and the Government had
mediated unsuccessfully in November 2014, and the relators and
Agape had mediated again — without the Government’s knowledge —
in January 2015. The proposed settlement between the relators
and Agape emerged from the second mediation. Relying on
§ 3730(b)(1), the Attorney General objected to the proposed
settlement. The Government has not, however, sought permission
pursuant to § 3730(c)(3) to intervene in this action, thus
standing by its initial decision under § 3730(b)(2)-(4) to
decline intervention.
In objecting to the proposed settlement, the Attorney
General protested in part that the settlement amount was
appreciably less than $25 million, the Government’s estimate of
total damages based on its own use of statistical sampling. The
various bases for the Attorney General’s objection were stated
and discussed during a series of status conferences conducted by
the district court in an effort to determine if this action
could be settled. 3
3 To protect the confidentiality of the settlement
negotiations, the district court sealed transcripts and other
documents in which details of the proposed settlement were
revealed. We thus do not specify herein the amount of the
(Continued)
10
Agape eventually filed a motion to enforce the proposed
settlement over the Attorney General’s objection, and the
Government filed a response opposing that motion. By Order of
June 25, 2015, the district court rendered its unreviewable veto
ruling and thereby sustained the Attorney General’s objection to
the proposed settlement. See United States ex rel. Michaels v.
Agape Senior Cmty., Inc., No. 0:12-cv-03466 (D.S.C. June 25,
2015), ECF No. 296 (the “June 2015 Order”). The June 2015 Order
also expounded on the statistical sampling ruling that had been
made in the March 2015 Order. Additionally, the June 2015 Order
certified sua sponte both the unreviewable veto and statistical
sampling rulings for these interlocutory appeals under 28 U.S.C.
§ 1292(b).
The district court prefaced its analysis in the June 2015
Order with a description of the “unique dilemma” that it faced:
The Government, claiming an unreviewable veto right
over the tentative settlement in this case, objects to
a settlement in a case to which it is not a party,
using as a basis of its objection some form of
statistical sampling that this Court has rejected for
use at the trial of the case.
See June 2015 Order 6. In rendering its unreviewable veto
ruling, the district court rejected the argument supporting the
proposed settlement or the Attorney General’s other grounds for
objection.
11
proposed settlement that the relators and Agape jointly advanced
in reliance on the Ninth Circuit’s decision in United States ex
rel. Killingsworth v. Northrop Corp., 25 F.3d 715 (9th Cir.
1994). Their argument was that, because the Government had
declined to intervene herein, the Attorney General’s objection
to the proposed settlement was subject to the district court’s
reasonableness review. The district court instead agreed with
the Government — as well as the Fifth Circuit in Searcy v.
Philips Electronics North America Corp.,
117 F.3d 154 (5th Cir.
1997), and the Sixth Circuit in United States v. Health
Possibilities, P.S.C.,
207 F.3d 335 (6th Cir. 2000) — that the
Attorney General possesses an absolute veto power over voluntary
settlements in FCA qui tam actions. In so ruling, the district
court explained that it was adhering to the plain language of 31
U.S.C. § 3730(b)(1), which “provides no limitation on the
Attorney General’s authority, and no right of [a court] to
review the Attorney General’s objection for reasonableness.”
See June 2015 Order 6-7.
Nevertheless, the district court noted that, if it “did
have the authority to review an objection by the Attorney
General for reasonableness in a case of this nature, a
compelling case could be made here that the Government’s
position is not, in fact, reasonable.” See June 2015 Order 10.
Such a compelling case would include that the relators “could be
12
looking at an expenditure of between $16.2 million and $36.5
million in pretrial preparation alone for a case that the
Government values at $25 million.” Id. at 11. Moreover, as the
court observed, although “the Government has admitted that
statistical sampling of the entire universe of claims played a
major part in its calculation of the value of this case,” it
resisted (with the court’s reluctant approval) discovery
requests seeking specific details about its calculation.
Id. at
12.
Turning to its earlier statistical sampling ruling, the
district court spelled out its rationale for concluding that it
would be improper to use statistical sampling evidence to prove
the relators’ case. In sum, the court explained that
statistical sampling can be appropriate “where the evidence has
dissipated, thus rendering direct proof of damages impossible.”
See June 2015 Order 13-14 (citing example of FCA qui tam action
where defendant allegedly defrauded Government in moving
household belongings of military personnel by artificially
bumping weight of shipments that had since been completed).
Here, however, “nothing has been destroyed or dissipated . . . .
The patients’ medical charts are all intact and available for
review by either party.” Id. at 14.
Finally, in certifying its unreviewable veto and
statistical sampling rulings for these interlocutory appeals,
13
the district court observed that the relators and Agape “face a
trial of monumental proportions, involving a staggering outlay
of expenses by the [relators] and a significant drain of [court]
resources.” See June 2015 Order 18. The court deemed it to “be
much more judicially efficient to have a ruling on both of the
questions before, rather than after, such a monumental trial.”
Id. Echoing the requirements of 28 U.S.C. § 1292(b), the court
also stated that each ruling involves “a controlling question of
law as to which there is substantial ground for difference of
opinion, and that an immediate appeal . . . may materially
advance the ultimate termination of this litigation.”
Id. at
19. Because we granted the relators’ and Agape’s subsequent
petitions for permission to appeal, we possess jurisdiction
pursuant to § 1292(b). 4
II.
A.
We first assess the district court’s unreviewable veto
ruling. Because the interpretation of 31 U.S.C. § 3730 presents
4Briefs were separately filed in these appeals by the
relators (challenging both the unreviewable veto and statistical
sampling rulings), Agape (challenging the unreviewable veto
ruling and defending the statistical sampling ruling), and the
government (defending the unreviewable veto ruling without
addressing the statistical sampling ruling). Each participated
in oral argument of these appeals.
14
a pure question of law, our review is de novo. See United
States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 804
F.3d 646, 654 (4th Cir. 2015). Our focus, of course, is on
§ 3730(b)(1), which provides in full:
A person may bring a civil action for a violation of
[the FCA] 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.
31 U.S.C. § 3730(b)(1) (emphasis added).
1.
The question presented — the extent of the Attorney
General’s power under § 3730(b)(1) to veto the voluntary
settlement of an FCA qui tam action in which the Government
declined to intervene — is not one that we have heretofore
squarely confronted. 5 Thus, it is helpful to begin with a
discussion of the three courts of appeals decisions debated in
the district court: United States ex rel. Killingsworth v.
5We observed in a 1992 decision that, “[e]ven where the
government allows the qui tam relator to pursue the action, the
case may not be settled or voluntarily dismissed without the
government’s consent.” See United States ex rel. Milam v. Univ.
of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.
1992). There, however, we were not called on to decide the
extent of the Attorney General’s veto power. Rather, the issue
before us was “whether the inapplicability of the Eleventh
Amendment to suits brought by the United States extends to
actions brought on the United States’ behalf by qui tam
relators.”
Id. at 47 (ruling “that it does”).
15
Northrop Corp., 25 F.3d 715 (9th Cir. 1994); Searcy v. Philips
Electronics North America Corp.,
117 F.3d 154 (5th Cir. 1997);
and United States v. Health Possibilities, P.S.C.,
207 F.3d 335
(6th Cir. 2000).
In the Killingsworth decision, the Ninth Circuit determined
that § 3730(b)(1)’s consent-for-dismissal provision is limited
by § 3730(b)(2)-(4), which delineates the initial sixty-day (or
extended) period during which the Government may elect to
intervene, as well as by § 3730(c)(3), which authorizes the
court to permit later intervention upon a showing of good cause.
See 25 F.3d at 722. The Killingsworth court ruled that “the
consent provision contained in § 3730(b)(1) applies only during
the initial sixty-day (or extended) period.”
Id. Thereafter,
the Government’s settlement-related authority depends on whether
it has intervened, i.e., whether the Government or the relator
is empowered to control the litigation.
Id. When the
Government has not intervened, Killingsworth merely permits the
Attorney General to object with “good cause” to a proposed
settlement and obtain a hearing on whether the settlement is
“fair and reasonable.”
Id. at 723-25 (cobbling standard from
§ 3730(c)(2)(B), § 3730(c)(3), and other aspects of § 3730).
The Ninth Circuit resolved in Killingsworth that the
Government’s position — “that without intervention [the Attorney
General] possesses an absolute right to reject a proposed
16
settlement at any time and for any reason” — cannot comport with
the plain language of § 3730(b)(4)(B), which affords the relator
“the right to conduct the action” once the Government has
declined to intervene. See 25 F.3d at 722. According to the
court, that is because “[t]he right to conduct a qui tam action
obviously includes the right to negotiate a settlement in that
action.”
Id. For that proposition, the court relied on
§ 3730(d)(2), which provides that if the Government has not
intervened, “the person bringing the action or settling the
claim shall receive an amount which the court decides is
reasonable for collecting the civil penalty and damages.” The
Killingsworth decision emphasized the “or settling the claim”
language of § 3730(d)(2), propounding that it “confirms the
relator’s right to settle the action if the government declines
to intervene.”
See 25 F.3d at 722-23.
The Ninth Circuit’s interpretation in Killingsworth of
§ 3730 was subsequently rejected by the Fifth Circuit in its
Searcy decision and the Sixth Circuit in its Health
Possibilities decision. Unlike the Ninth Circuit, those latter
two courts recognized “an absolute veto power over voluntary
settlements in qui tam [FCA] suits,” see Searcy, 117 F.3d at
158, under which a relator “may not seek a voluntary dismissal
of any action . . . without the Attorney General’s consent,” see
Health
Possibilities, 207 F.3d at 336.
17
As the Fifth Circuit explained in Searcy, the language of
§ 3730(b)(1)’s consent-for-dismissal provision “is as
unambiguous as one can expect,” and there is “nothing in § 3730
to negate [that language’s] plain import.” See 117 F.3d at 159.
In particular, the Searcy court confronted those aspects of
§ 3730 utilized in Killingsworth: § 3730(b)(4)(B) (according
the relator “the right to conduct the action” when the
Government declines to intervene), and § 3730(d)(2) (providing a
reasonable amount to “the person bringing the action or settling
the claim”). More specifically, Searcy refuted Killingsworth’s
pronouncements that the § 3730(b)(4)(B) “right to conduct a qui
tam action obviously includes the right to negotiate a
settlement in that action,” and that § 3730(d)(2) “confirms the
relator’s right to settle the action if the government declines
to intervene.” See
Killingsworth, 25 F.3d at 722-23. The
Searcy court expounded that “[a] relator has ‘conducted’ an
action if he devises strategy, executes discovery, and argues
the case in court, even if the government frustrates his
settlement efforts.” See
Searcy, 117 F.3d at 160. Moreover,
the court observed that “the government’s power to block
settlements does not mean that the relator will never be the
person settling the claim.”
Id.
The Searcy court further recognized “that relators can
manipulate settlements in ways that unfairly enrich them and
18
reduce benefits to the government,” including “by bargaining
away claims on behalf of the United States.” See 117 F.3d at
160. Section 3730(b)(1)’s consent-for-dismissal provision,
however, “allows the government to resist [such] tactics and
protect its ability to prosecute matters in the future.”
Id.
Along those same lines, the Sixth Circuit observed in Health
Possibilities 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 207 F.3d at 340.
The Health Possibilities court underscored that “[t]he location
of the consent provision [in § 3730(b)(1)] immediately after the
command that the action be brought in the government’s name
suggests that it is an important component of the government’s
ability to regulate qui tam actions.”
Id. at 342.
Notably, the Fifth, Sixth, and Ninth Circuits considered
the legislative history of the FCA. On the one hand, the Ninth
Circuit discerned a congressional “intent to place full
responsibility for [FCA] litigation on private parties, absent
early intervention by the government or later intervention for
good cause” — an intent that the court deemed to be
“fundamentally inconsistent with the asserted ‘absolute’ right
19
of the government to block a settlement and force a private
party to continue litigation.” See Killingsworth, 25 F.3d at
722.
On the other hand, the Fifth and Sixth Circuits perceived
Congress’s intent to grant the Attorney General full veto
authority that has existed since the original FCA statute was
enacted in 1863 during the Civil War. See Health Possibilities,
207 F.3d at 342-43;
Searcy, 117 F.3d at 159. As those courts
saw it, that intent has endured even through subsequent
amendments to the FCA providing more incentives to relators and
creating and expanding the Government’s power to intervene.
Id.
Those courts thus concluded:
For more than 130 years, Congress has instructed
courts to let the government stand on the sidelines
and veto a voluntary settlement. It would take a
serious conflict within the structure of the [FCA] or
a profound gap in the reasonableness of the [consent-
for-dismissal] provision for us to be able to justify
ignoring this language. We can find neither.
Health Possibilities, 207 F.3d at 344 (quoting
Searcy, 117 F.3d
at 160). Here, in rendering its unreviewable veto ruling, the
district court similarly interpreted § 3730(b)(1) and its
consent-for-dismissal provision.
2.
We agree with the district court, and with the Fifth and
Sixth Circuits, that the Attorney General possesses an absolute
veto power over voluntary settlements in FCA qui tam actions.
20
In reaching that conclusion, we rely on the plain language of 31
U.S.C. § 3730(b)(1), “read[ing] the words in their context and
with a view to their place in the overall statutory scheme.”
See King v. Burwell, 135 S. Ct. 2480, 2489 (2015) (internal
quotation marks omitted). Simply put, nothing else in § 3730
leads us to doubt that Congress meant exactly what it said in
§ 3730(b)(1) — that a qui tam action “may be dismissed only if
the court and the Attorney General give written consent to the
dismissal and their reasons for consenting.”
On appeal, neither the relators nor Agape advocate the
Ninth Circuit’s theory that the consent-for-dismissal provision
“applies only during the initial sixty-day (or extended) period”
in which the Government must decide whether to intervene in a
qui tam action. See Killingsworth, 25 F.3d at 722. Somewhat
like the Ninth Circuit, however, Agape contends that the
Government cannot unreasonably withhold its consent to a
settlement. According to Agape, the reasonableness requirement
flows from § 3730(b)(1) itself. See Br. of Agape 20 (“[A]
correct reading of § 3730(b)(1) recognizes that the Government’s
consent to a qui tam settlement cannot be unreasonably
withheld.”). For its part, the Ninth Circuit cobbled a standard
from other aspects of § 3730, including § 3730(c)(2)(B) and
§ 3730(c)(3), limiting the Attorney General to an objection for
“good cause” and a hearing on whether the proposed settlement is
21
“fair and reasonable.” See Killingsworth, 25 F.3d at 723-25.
Both Agape and the Ninth Circuit have reasoned that an unlimited
veto power cannot coexist with § 3730(b)(4)(B) insofar as it
confers on the relator “the right to conduct the action” when
the Government declines to intervene, or with § 3730(d)(2)
insofar as it provides for a share of the award to “the person
bringing the action or settling the claim.”
Of course, as the Fifth Circuit deftly explained, the right
to conduct the action does not necessarily include the right to
settle the claim, although, absent the Attorney General’s
objection, the relator may yet settle the claim. See Searcy,
117 F.3d at 160. That is, § 3730(b)(4)(B) and § 3730(d)(2)
cannot reasonably be understood to create an unfettered right to
settle on the part of the relator.
Furthermore, § 3730(b)(1) and its consent-for-dismissal
provision is not temporally qualified or explicitly limited in
any other manner. Unlike other provisions of § 3730,
§ 3730(b)(1) does not overtly require the Government to satisfy
any standard or make any showing reviewable by the court. A
prime example is § 3730(c)(2)(B), under which the Government may
settle a qui tam action over the relator’s objection, but only
“if the court determines, after a hearing, that the proposed
settlement is fair, adequate, and reasonable under all the
circumstances.” Congress could have readily included similar
22
language in § 3730(b)(1); that it decided against doing so is
enlightening. See Barnhart v. Sigmon Coal Co., 534 U.S. 438,
452 (2002) (“[W]hen Congress includes particular language in one
section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally
and purposely in the disparate inclusion or exclusion.”
(internal quotation marks omitted)).
Finally, we would be remiss not to recognize that the
Attorney General’s absolute veto authority is entirely
consistent with the statutory scheme of the FCA. Even where the
Government declines to intervene, “the United States is the real
party in interest in any [FCA] suit.” See United States ex rel.
Milam v. Univ. of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46,
50 (4th Cir. 1992). Meanwhile, “[a]s a class of plaintiffs, qui
tam relators are different in kind than the Government. They
are motivated primarily by prospects of monetary reward rather
than the public good.” See Hughes Aircraft Co. v. United States
ex rel. Schumer,
520 U.S. 939, 949 (1997). Instead of freeing
relators to maximize their own rewards at the public’s expense,
Congress has granted the Attorney General the broad and
unqualified right to veto proposed settlements of qui tam
actions.
Accordingly, we reject Agape’s interpretation of § 3730 and
conclude today that, under the plain language of § 3730(b)(1),
23
the Attorney General possesses an absolute veto power over
voluntary settlements in FCA qui tam actions. The district
court having concluded the same, we affirm its unreviewable veto
ruling. 6
B.
Turning to the district court’s statistical sampling
ruling, we find it prudent to re-examine whether that aspect of
the relator’s appeal is appropriate for interlocutory review
under 28 U.S.C. § 1292(b). Pursuant thereto, the order being
reviewed must involve “a controlling question of law as to which
there is substantial ground for difference of opinion,” and an
immediate appeal from that order must promise to “materially
advance the ultimate termination of the litigation.” We have
cautioned “that § 1292(b) should be used sparingly and thus that
its requirements must be strictly construed.” See Myles v.
Laffitte, 881 F.2d 125, 127 (4th Cir. 1989).
6Notably, the relators have taken a different tack from
Agape on appeal, conceding that “[i]t may be the case that the
Government has the authority under [§ 3730(b)(1)] to reject a
relator and defendant’s settlement in a typical [FCA] matter in
which the Government has declined to intervene.” See Br. of
Relators 18-19. The relators argue instead that, because the
Government engaged in a so-called “de facto intervention” in
this action, the Attorney General’s objection to the proposed
settlement must be reviewed by the district court for
reasonableness. Id. at 19. Unfortunately for the relators,
their novel theory finds no support in the FCA.
24
Strictly construing § 1292(b), we recognize that it may be
proper to conduct an interlocutory review of an order presenting
“a pure question of law,” i.e., “an abstract legal issue that
the court of appeals can decide quickly and cleanly.” See
Mamani v. Berzain, 825 F.3d 1304, 1312 (11th Cir. 2016)
(internal quotation marks omitted). In other words, § 1292(b)
review may be appropriate where “the court of appeals can rule
on a pure, controlling question of law without having to delve
beyond the surface of the record in order to determine the
facts.” See McFarlin v. Conseco Servs., LLC,
381 F.3d 1251,
1259 (11th Cir. 2004). Such a pure question of law includes the
issue raised in the relators’ and Agape’s appeals from the
district court’s unreviewable veto ruling.
By contrast, § 1292(b) review is not appropriate where, for
example, the question presented “turns on whether there is a
genuine issue of fact or whether the district court properly
applied settled law to the facts or evidence of a particular
case.” See McFarlin, 381 F.3d at 1259; see also Harriscom
Svenska AB v. Harris Corp.,
947 F.2d 627, 631 (2d Cir. 1991)
(“Where, as here, the controlling issues are questions of fact,
or, more precisely, questions as to whether genuine issues of
material fact remain to be tried, the federal scheme does not
provide for an immediate appeal . . . .”). Significantly, there
is “a distinction between a question of law, which will satisfy
25
§ 1292(b), and a question of fact or matter for the discretion
of the trial court.” See McFarlin, 381 F.3d at 1258 (internal
quotation marks omitted).
In its statistical sampling ruling, the district court
determined that the use of statistical sampling evidence can
sometimes be permissible, but is not appropriate here based on
the particular facts and evidence in this case. Moreover, in
their opening appellate brief, the relators clarify that “[t]he
true question for the District Court is not whether statistical
sampling and extrapolation, in and of itself, is appropriate.”
See Br. of Relators 11 (emphasis added). Rather, the relators
insist that the issue is whether their proposed “statistical
sampling is conducted in a scientifically proven and accepted
manner pursuant to the Supreme Court’s ruling in [Daubert v.
Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)].”
Id.
Thus, the relators’ appeal raises the question of whether the
district court may, in its discretion, allow the relators to use
statistical sampling to prove their case. See Bryte v. Am.
Household, Inc.,
429 F.3d 469, 475 (4th Cir. 2005) (“[T]he
district court has broad latitude in ruling on the admissibility
of evidence, including expert opinion, and we will not overturn
Daubert evidentiary rulings with respect to relevance and
reliability absent an abuse of discretion.”).
26
In these circumstances, we are satisfied that, as to the
statistical sampling ruling, the relators’ appeal does not
present a pure question of law that is subject to our
interlocutory review under § 1292(b). Accordingly, although we
understand and appreciate the district court’s desire to obtain
review of its statistical sampling ruling prior to undertaking
complex trial proceedings, we are constrained to dismiss that
aspect of the relators’ appeal as improvidently granted.
III.
Pursuant to the foregoing, we affirm the district court’s
unreviewable veto ruling and dismiss as improvidently granted
the relators’ appeal as to the court’s statistical sampling
ruling.
AFFIRMED IN PART
AND DISMISSED IN PART
27
