BOGGS, Circuit Judge.
Appellant Sally Summers ("Summers") appeals an order of the district court denying
Summers filed the complaint in this case on March 20, 2009. According to the complaint, Summers was, in 2008, employed as a physical therapist by the appellee LHC Group, Inc. ("LHC"), a corporation engaged in the business of providing in-home health services to patients insured by Medicare. The complaint further alleged that LHC routinely continued to recommend, provide, and bill Medicare for health services for patients even after staff members informed their managers that such care was no longer needed. Summers alleged that she herself had repeatedly complained to LHC management that these actions were fraudulent, but was told "not to mention the word fraud" and that LHC management took no action to address her concerns. She further claimed that, on December 10, 2008, LHC employed a pretextual reason to terminate her employment and that the real reason for her termination was her complaints about LHC's fraudulent actions.
Summers's complaint pled federal jurisdiction over her claims via the FCA, in that "[t]he aforementioned acts committed by the LHC management and employees constituted fraud against the United States Government in violation of 31 U.S.C. § 3729-3733 et seq., `The False Claims Acts.'" In her prayer for relief, she requested that the United States be served with process and that she be permitted to prosecute the case on its behalf if it should choose not to be a party.
According to an affidavit filed by Summers's counsel, shortly after the filing he was contacted by an employee of the clerk's office who inquired as to whether the complaint should be placed under seal. During that conversation, Summers alleges, counsel was told that the complaint "would not be logged into the [Electronic Case Filing] system until [counsel] and the Clerk's Office had discussed the proper filing method." Appellant's Br. at 6. On March 23, 2009, that same employee of the clerk's office allegedly left counsel a voicemail message informing him that, in order to file the complaint under seal, he needed to send her an email making that request. However, when counsel called the clerk's office to confirm the relevant email address, he was told by another employee there that an email would not suffice, and instead that he would be required to file a motion to seal the case.
On March 24, 2009, prior to Summers's counsel's filing any motion to seal, the complaint was posted on PACER, the publicly-accessible Internet-based portal providing access to court filings; thus, it was available to anyone with a PACER account who was willing to pay the applicable fee for accessing court documents online. On March 26, 2009, Summers's counsel received a call from an Assistant United States Attorney informing him that the U.S. Attorney's Office had seen the case on PACER. Ibid. Finally, on March 27, 2009, counsel filed a motion to seal the
On April 15, 2009, LHC moved to dismiss the complaint. As a basis for its motion, LHC argued, pursuant to Federal Rule of Civil Procedure 12(b)(1), that the failure of Summers's counsel to file the complaint under seal violated the requirements of the FCA, leaving the court without subject matter jurisdiction. LHC also argued in the alternative that, pursuant to Federal Rule of Civil Procedure 12(b)(6), Summers had failed to state a claim on which relief could be granted.
The district court granted LHC's motion to dismiss on June 11, 2009. United States ex rel. Summers v. LHC Grp. Inc., No. 3:09-CV-277, 2009 WL 1651503 (M.D. Tenn. June 11, 2009). In so doing, the court found it unnecessary to reach the question of whether a failure to meet the FCA's in camera filing requirements presented a jurisdictional bar, instead holding that "the failure in this case to file [the] complaint in camera and under seal is a fatal deficiency that requires dismissal of this action with prejudice as to the relator... both because her failure to comply with the statute deprives her of the ability to pursue the remedy created by the statute, and because the same failure incurably frustrates the underlying purposes of the procedural requirements."
This timely appeal followed.
Although we generally review a denial of a motion to alter or amend a judgment for abuse of discretion, we address questions of law presented in such proceedings de novo. Huff v. Metro. Life Ins. Co., 675 F.2d 119, 122 n. 5 (6th Cir. 1982). Moreover, we specifically review de novo the district court's statutory interpretation of the FCA. See United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 641 (6th Cir.2003). Where, as here, "a statutory right is being pursued... and the defense raised is that the plaintiff or defendant does not come within the purview of the statute, the judicial acceptance of this defense, however it is accomplished, is the death knell of the litigation and has the same effect as a dismissal on the merits." Rogers v. Stratton Indus., Inc., 798 F.2d 913, 917 (6th Cir.1986).
The False Claims Act imposes liability on "[a]ny person who ... knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a)(1) (2006) (amended 2009).
Id. at § 3730(b)(2) (footnote omitted). Thus the statute that creates the cause of action at issue and authorizes qui tam plaintiffs to pursue it also specifies that the complaint be filed under seal.
Originally, the FCA was enacted in 1863 to respond to rampant fraud in Civil War defense contracts. Am. Textile Mfrs. Inst., Inc. v. The Ltd., Inc., 190 F.3d 729, 733 (6th Cir.1999); S.Rep. No. 99-345, at 8 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5273. At the time of its passage, enforcement of a statute via the creation of a qui tam cause of action had been a long-accepted practice dating from at least the thirteenth century. Note, The History and Development of Qui Tam, 1972 Wash. U.L.Q. 81, 83 (1972) (citing 3 W. Blackstone, Commentaries on the Laws of England
Senator Howard's remarks proved prescient, most notably in 1941 when the Supreme Court decided that so-called "parasitic" qui tam suits under the FCA—that is, suits filed by private citizens utilizing knowledge of the alleged fraud that the relator had gleaned from criminal indictments based on the very same actions—were nevertheless permitted by the statute. See United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943). In response to Hess, Congress amended the FCA in 1943 to provide that the Government's prior knowledge of the allegations in the complaint was a jurisdictional bar to qui tam suits. United States ex rel. La Valley v. First Nat'l Bank of Boston, 707 F.Supp. 1351, 1354-55 (D.Mass.1988).
The FCA did not require that the relator's complaint be filed under seal, however, until the passage of amendments to the Act by the 99th Congress in 1986. At that time of the 1986 amendments, the Senate Committee indicated that its "overall intent in amending the qui tam section of the False Claims Act [was] to encourage more private enforcement suits," but gave several other reasons for imposing the specific requirement that a qui tam False Claims Act complaint be filed under seal. S.Rep. No. 99-345, at 23-24, 1986 U.S.C.C.A.N. 5266, 5288-89. Most prominently, it noted that the under-seal requirement gave the Government the chance to determine "whether it was already investigating the claims stated in the suit and then to consider whether it wished to intervene" prior to the defendant's learning of the litigation. Erickson ex rel. United States v. Am. Inst. of Biological Sciences, 716 F.Supp. 908, 912 (E.D.Va. 1989) (citing S.Rep. No. 99-345, at 24, 1986 U.S.C.C.A.N. 5266, 5289); United States ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 998 (2d Cir.1995). Relatedly, the requirement served to "prevent alleged wrongdoers from being tipped off that they were under investigation." Erickson, 716 F.Supp. at 912. Consistent with these rationales, the Senate Report on the 1986 amendments specified that "[n]othing in the statute ... precludes the Government from intervening before the 60-day period expires, at which time the court would unseal the complaint and have it served upon the defendant...." S.Rep. No. 99-345, at 24, 1986 U.S.C.C.A.N. 5266, 5289. Thus the primary purpose of the under-seal requirement is to permit the Government sufficient time in which it may ascertain the status quo and come to a decision as to whether it will intervene in the case filed by the relator.
The statutory purpose of the under-seal requirement is of particular importance to this case, because the appellant argues that the logic of the Erickson decision, which the district court found persuasive, misconstrued that purpose. In Erickson, a district court dismissed an FCA complaint where the relator failed to file the complaint under seal, both because "a party pursuing a statutory remedy must comply with all the procedures the statute mandates" and, separately, because
Id. at 911 (quoting United States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157, 162, 34 S.Ct. 550, 58 L.Ed. 893 (1913)) (second ellipsis in Erickson).
As to the "sound policy" justification, the Erickson court held that the provisions of the FCA were adopted to permit the Government to determine in private whether it was already investigating the claims at issue, while at the same time preventing defendants from learning they were under investigation.
Summers argues that Erickson incorrectly construed the intent behind the sealing requirements, and that therefore, by relying on the logic of Erickson, the district court in this case erred on a matter of law. According to Summers, Erickson's reliance on non-qui tam cases to divine Congressional intent was inapposite, because Congress had specifically indicated that their purpose in passing the seal requirements was to balance the needs of law enforcement with the private-law-enforcement nature of the qui tam provisions—a specific balance not at issue in other statutes. Appellant's Br. at 23-24.
Instead, Summers urges us to adopt a balancing test adopted by the Ninth Circuit in United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242 (9th Cir. 1995). In Lujan, an employee of the defendant brought a qui tam action under
The Ninth Circuit reversed. Though it observed that "Lujan clearly violated the seal provision," Lujan, 67 F.3d at 244, it also indicated that "[n]o provision of the False Claims Act explicitly authorizes dismissal as a sanction for disclosures in violation of the seal requirement," and that the district court had erred in concluding that the authorization for such dismissal was implicit in the purpose of the seal requirement. Id. at 245. Instead, the Ninth Circuit held that, when the seal provisions are broken, the balance between the purposes of qui tam actions and law enforcement needs must be evaluated in light of the facts and circumstances of the case. Ibid. Specifically, the Ninth Circuit held that three factors should be considered when determining whether dismissal is an appropriate sanction for a violation of the sealing requirements: (1) the extent to which the Government had been harmed by the disclosure; (2) the nature of the violation in terms of its "relative severity"; and (3) the presence or absence of bad faith or willfulness on the relator's part. Id. at 246. Finding that an evaluation of the facts of Lujan's case as they pertained to those factors seemingly argued against dismissal, the Ninth Circuit remanded for further consideration of whether dismissal was appropriate. Ibid.
LHC responds to Lujan primarily with a side-step: they argue that Lujan is inapposite because, in that case, the relator did file her complaint under seal, and only violated the sealing provisions after a significant portion of the sealing period had elapsed. In so doing, they point to language in Lujan emphasizing the factual differences between that case and Erickson and Pilon:
Lujan, 67 F.3d at 246.
The distinction between Lujan's after-filing violation and Summers's failure to file under seal at all makes for a tempting target. Certainly, it would be rational to
However, the reasoning of Lujan itself appears to make such a distinction illusory. Rather, in evaluating the question of whether damage had been done to the Government's interest in conducting investigations without "tipping off" the defendant, the Ninth Circuit observed that
Lujan, 67 F.3d at 245-46. Thus one critical event, in the Ninth Circuit's view, was a disclosure that occurred even before the FCA lawsuit had been filed. Presumably, then, the Ninth Circuit would have reached the same conclusion even if the complaint had never been filed under seal, as long as nothing contained therein could have prompted any action by Hughes by
Perhaps even more importantly, the questions of which factors to weigh and how to weigh them were, in the Lujan court's view, subsequent to a determination that a facts-and-circumstances analysis was required in order to preserve the balance Congress intended in the first place. Tellingly, the language cited by the Appellees distinguishing the facts of Lujan from those of Erickson and Pilon comes from a section of Lujan discussing the question of how severe the breach might have been—an inquiry the court would never even reach if a facts and circumstances analysis were not appropriate. Thus the Lujan court had moved on from the question presented here to an application of its newly-fashioned test.
This circuit has never addressed the question of whether a violation of the sealing provisions applicable to qui tam relators under the FCA precludes recovery by the relator.
We do so for several reasons. Most prominently, a Lujan-style balancing test would, in our opinion, represent a form of judicial overreach. In fashioning the FCA's procedural requirements, Congress clearly identified the factors it found relevant and considered the tension between them, and decided that a sixty-day in camera period was the correct length of time required to balance those factors. The Senate Committee on the Judiciary, in explaining the decision to impose the under-seal requirement, reported that
Two other features of the requirement support the conclusion that Congress's selection of sixty days was intended to represent its own judgment as to how to balance those interests. First, the Committee explicitly indicated that "[n]othing in the statute ... precludes the Government from intervening before the 60-day period expires, at which time the court would unseal the complaint and have it served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure." Ibid. In other words, Congress understood that it was possible for circumstances to arise that would obviate the need for the full sixty-day period, and further demonstrated that it knew how to provide for them. The only such circumstance it appears to have found relevant, however, was one in which the Government had already decided to intervene and had acted on that decision. The exception is thus entirely within the Government's discretion, consistent with Congress's intent to provide it with a window in which it might "determine both if that suit involves matters the Government is already investigating and whether it is in the Government's interest to intervene and take over the civil action." Ibid. No such exception is found in the statute or in its legislative history for situations in which a relator simply fails to abide by the under-seal requirement.
Second, the statute also demonstrates Congress's intent by providing for a mechanism under which the Government may petition a court for extensions of the original sixty-day evaluatory period and the time during which the complaint remains under seal. However, such
Id. at 24-25, 1986 U.S.C.C.A.N. 5266, 5289-90.
If Congress knew how to provide for the extension of the sixty-day in camera period in circumstances where the Government could show good cause, it surely knew how to provide for the abbreviation of that period when one of the other parties affected by the requirement—in this case, the relator—could show good cause. The fact that Congress did not do so is not ours to gainsay. See Bryant v. Dollar Gen. Corp., 538 F.3d 394, 402 (6th Cir. 2008) ("Established principles of statutory interpretation caution against ... an interpretation inconsistent with the intent of Congress.") (citation and internal quotation marks omitted).
We also find unpersuasive the argument that "[t]he mere possibility that the Government might have been harmed by disclosure is not alone enough reason to justify dismissal of the entire action." Lujan, 67 F.3d at 245. The mere possibility that the Government might be harmed by disclosure is, in fact, the point of the in camera requirement. The legislative history of the 1986 amendments reveals that Congress was concerned not with punishing plaintiffs for publicizing the claims, but rather with ensuring that the Government
It is perhaps true that in some cases a disclosure might turn out to be relatively benign. Such an outcome, however, would be affected in large measure by information to which the plaintiff has no access, including the state of any investigation already undertaken by the Government and its own internal investigative priorities, and the extent to which a defendant may have guessed that a qui tam suit was coming and that defendant's tolerance for risk in the face of such a possibility. For that reason, even disclosures that cause little or no harm to the Government's interest do so through no particular virtue of the plaintiff. Requiring violations of the FCA's under-seal requirement to be subjected to a balancing test thereby both misses the point of the requirement itself and potentially encourages plaintiffs to comply with the FCA's under-seal requirement only to the point the costs of compliance are outweighed by the risk that any given violation would turn out to be severe enough to require dismissal of an FCA claim. Under such a regime, plaintiffs would be encouraged to make disclosures in circumstances when doing so might particularly strengthen their own position, such as those in which exposing a defendant to immediate and hostile media coverage might provide a plaintiff with the leverage to demand that a defendant come to terms quickly. In other words, the extent of a plaintiff's compliance with the FCA's under-seal requirement would become subject to the same risk analysis as any other litigation tactic, an analysis in which it would be the plaintiff's, not the Government's, interests that were paramount. Given that the very existence of the qui tam right to bring suit in the name of the Government is created by statute, it is particularly appropriate to have the right exist in a given case only with the preconditions that Congress deemed necessary for the purpose of safeguarding the Government's interests. Summers's arguments that the cases relied upon by LHC did not themselves involve the particular balance addressed by Congress vis-a-vis the FCA are irrelevant. As a matter of statutory construction, those cases stand for the proposition that the procedural requirements imposed by a statute reflect the compromise between competing interests in the manner intended by Congress, and thus condition the plaintiff's cause of action, without regard to factors we might otherwise consider pertinent. An FCA plaintiff who cannot satisfy those conditions, like Summers, cannot bring suit in the name of the Government and has no basis for recovery.
Summers attempts to present a second issue in her brief on appeal, inasmuch as she argues that "the nature of the violation of section 3730(b)(2) did not warrant dismissal." See Appellant Br. at 20-22. In essence, this is an argument that she made a "good faith attempt to file the complaint under seal" and that her failure to do so was not willful.
These issues did not form a basis for the decision below, and remain immaterial on appeal given our analysis above. Though
Finally, we note that the Government has asked that we clarify that any dismissal of Summers's claims is without prejudice to their ability to bring the same claims against LHC. The district court explicitly held that its dismissal was without prejudice to the United States. United States ex rel. Summers, 2009 WL 1651503, at *1, *6. The appellee has not challenged that determination, and indeed relies upon the fact that the district court's dismissal was without prejudice to the United States to argue that the "prejudice to the Government" element of the Lujan test does not weigh in Summers's favor even if that test were to apply. Appellee Br. at 23-24. As all parties appear to agree with the district court on this issue, we decline to settle a question not in dispute.
Congress has created the qui tam cause of action in False Claims Act cases, and has imposed procedural conditions on that cause of action as it sees fit to balance competing policy goals. We will not second-guess its calculus; without meeting those conditions, a False Claims Act plaintiff has no more right to bring suit in the Government's name than any other private person. The judgment of the district court is
KEITH, Circuit Judge, concurring.
Although I concur in the result the majority reaches, I write separately to provide clarification as to: 1) the current state of the law regarding dismissal of a private citizen's qui tam claim for failure to comply with the False Claims Act's filing procedures; and 2) Congress' intent in creating these procedures.
Although the proper rule to be used when assessing whether to dismiss a relator's improperly filed qui tam complaint is an issue of first impression in the Sixth Circuit, both the Second and Ninth Circuits have addressed the matter. United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242 (9th Cir.1995); United States ex. rel. Pilon v. Martin Marietta Corp., 60 F.3d 995 (2d Cir.1995). Contrary to defendant LHC Group Inc.'s (LHC) and the district court's characterization, however, our sister circuits have adopted an approach that determines whether to dismiss an improperly filed complaint on a case by case basis, as opposed to the per se rule adopted here.
The district court, in concluding that letter-perfect compliance with the FCA's filing procedures is required to survive a motion to dismiss, relied primarily on Erickson ex rel. United States v. American Inst. of Biological Scis., 716 F.Supp. 908 (E.D.Va.1989). The court in Erickson, lacking any guidance for its interpretation of the then relatively new procedures, concluded that dismissal of improperly filed claims is mandatory. Id. at 911-12. Since then, however, multiple courts have addressed the matter, hesitating to adopt a rule requiring dismissal. See Lujan, 67 F.3d at 245 (setting out a three-part balancing test for the purposes of determining whether the court should dismiss relator's improperly filed qui tam complaint); Pilon, 60 F.3d at 998-99, 1000 n. 5 (examining the impact of filing and service defects
As noted, among the courts that have refrained from adopting a per se rule are both the Second and Ninth Circuits. While the district court and LHC both read the Second Circuit's decision in United States ex rel. Pilon v. Martin Marietta Corp., as requiring dismissal in every instance, a closer reading provides a more nuanced answer. The Pilon court, as opposed to reflexively finding that dismissal was required, engaged in a careful analysis of the impact of the relator's violation on the United States' ability to pursue a potential case against the defendant—Congress' prime motivation in creating the filing procedures. 60 F.3d at 999. Additionally, the court discussed the relator's lack of a good faith in failing to fulfill the procedural requirements. Id. Only after the court completed discussing these points, did it buttress its decision with other cases reaching the same conclusion. Id. at 998-99. See also, Brooks-Ngwenya v. Indianapolis Pub. Schs., 564 F.3d 804, 808 (7th Cir.2009) (interpreting Pilon as requiring dismissal only when the procedural error has caused irreparable harm); Bogart, 414 F.Supp.2d at 544 (citing Pilon for the proposition that the court must consider the impact of the procedural error before dismissing improperly filed complaint).
Taking the Pilon court's analysis and restating it, the Ninth Circuit in United States ex rel. Lujan v. Hughes Aircraft Co., enunciated a three-factor test to determine whether a court should dismiss an improperly filed claim, namely: 1) whether the violation actually harmed the government; 2) the nature and scope of the violation, specifically whether the relator violated all aspects of § 3730(b)(2), as opposed to only some of them; and 3) whether the relator committed the violations willfully or in bad faith. 67 F.3d at 245-247. Finding that the lower court had failed to engage in the proper balancing, the court in Lujan remanded the case for further proceedings in accordance with its decision. Id. at 248. As noted, a number of lower courts have since adopted the Lujan court's approach.
LHC also argues that the imposition of a rule requiring mandatory dismissal is supported by Congress' intent in creating the requirements. LHC argues specifically that Congress, in addition to protecting the government's right to investigate the private citizen's claim, sought to safeguard the defendant's interest in not being improperly defamed. I, like the majority, find little support for LHC's argument.
Congress created the filing requirements for the primary purpose of securing for the government the opportunity to weigh the merits of a private citizen's qui tam claim and, if necessary, investigate the allegations made. See S.Rep. No. 99-345, at 24 (1986) reprinted in 1986 U.S.C.C.A.N. 5266, 5289; see also, e.g., Pilon, 60 F.3d at 998-99 (quoting the Committee report).
While the Committee noted a secondary concern regarding defendants to qui tam suits, it was not the concern that LHC alleges. The Committee's sole concern regarding the rights of defendants was the potential that were the government not allowed to determine whether or not it would intervene first, the defendant may have to file an answer without knowing who it would eventually face in court. S.Rep. No. 99-345, at 24, 1986 U.S.C.C.A.N. 5266, 5289. As the court in Lujan stated, "[n]ever did the Committee discuss, let alone imply that it sought to protect" the defendant from attack. 67 F.3d at 247. In fact, "by providing for sealed complaints, the Committee d[id] not intend to affect the defendant's rights in any way." Id. See also, Pilon, 60 F.3d at 999 (listing a "defendant's reputation" as one of the "other interests not addressed by [the] legislative history" (emphasis added)).
Beyond merely the Committee report, the text of the Act supports this conclusion. As the majority notes, the sole party authorized by the FCA to alter the filing procedures is the Attorney General who may, at his discretion, extend the 60 day in camera period to facilitate a more thorough investigation. 31 U.S.C. § 3730(b)(3). Had Congress intended to protect the defendant's public reputation, it could have given the defendant similar powers or, at a minimum, once the government's investigation was complete, required that it be given notice of the claim before the complaint was made public. Instead, the text of the Act is devoid of any such provisions.
Accordingly, the majority was correct not to impute to Congress an intent to protect the defendant or to rely on such in reaching its conclusion.
Having addressed these matters, I