Summary
accepting in theory that relator may prosecute claim against official in personal capacity, but granting defendant's summary judgment motion based on other flaws in subject matter jurisdiction
Summary of this case from United States ex rel. McVey v. Board of Regents of University of CaliforniaOpinion
Cause No. IP96-0714-C-T/G
September 19, 2000
ENTRY ON PENDING MOTIONS
The Plaintiff, Garry Coleman, brings this action under the qui tam provisions of the False Claims Act ("FCA"). The Defendants have filed a motion for summary judgment.
They contend that the court lacks subject matter jurisdiction due to the jurisdictional bar outlined in 31 U.S.C. § 3730 (e)(4)(A). The Plaintiff has filed his own motion for summary judgment. The United States of America filed an amicus brief in response to the Defendants' summary judgment motion, and the Defendants filed a Motion To Disregard The Relator's Statement of Material Facts and For Relief From Having To Respond Thereto And To Deem Relator's Motion Unsupported. Having considered the parties motions and supporting memoranda and evidentiary submissions, the court is prepared to rule.
I. Background
Mr. Coleman alleges that Defendants have acted fraudulently when implementing the Older Americans Act ("OAA") state plan. From 1978 until 1992, Mr. Coleman provided services to the elderly in various capacities, including case management. (Defs.' App. K, at 9.) Mr. Coleman owned his own company called Beowulf Enterprises ("Beowulf") from 1982 to 1992. (Id. at 9.) Beowulf had contracted with the Central Indiana Council on Aging ("CICOA") to provide homemaker services from 7/1/90 thru 12/31/92. (Pl.'s Ex. 14 at 1-3.)
Case management essentially refers to the matching of services to an individual's needs. (Def. App. D, at 171.) Case management generally includes: screening and assessment to determine an individual's eligibility and need for a given service or program; development of a plan of care specifying the types and amounts of care to be provided; authorization and arrangement for delivery of services; and monitoring and reassessment of the need for services on a periodic basis. See id.
Indiana has designated the Indiana Bureau of Aging and In-Home Services (BAIHS), a bureau of the Division of Disability, Aging and Rehabilitative Services (DDARS), as the agency to develop and implement the OAA State Plan. See IND. CODE § 12-10-1-3. Within Indiana there are 16 planning and service areas, each served by an Area Agencies on Aging ("AAA"). (Defs.' App. C, ¶ 22.) The AAAs provide in-home services to older adults and persons with disabilities through the use of funds granted by various federal, state and local sources.
Historically, responsibility for managing in-home services was fragmented among several divisions in the state government. (Id. at ¶ 10.) This fragmented system led to confusion and duplication of paperwork and inefficiency. (Id. at ¶ 11.) As part of the State's effort to streamline government, the Indiana Family and Social Services Administration ("FSSA") was created to coordinate services for children and families. (Id., Ex. 4, at 6.) A comprehensive Strategic Action Plan was formulated to integrate the funding for services to the aging and disabled and to increase local level access. (Id. at ¶ 13; Id., Ex. 4, at 6.) Beowulf was subcontracted to provide case management until Indiana gave the AAAs the authority to do the contracting directly.
In order to implement a revised case management system, the Department of Human Services (DHS), the predecessor agency to FSSA, changed department policies and procedures. (Defs.' App. E, Hornyak Decl. ¶ 5.) In a memorandum to current providers, dated April 7, 1988, the DHS announced that case management contracts would be written only with area agencies. In a memorandum to current providers of community and home care services Jean Merritt, the Commissioner of DHS indicated:
One substantive change will be the separation of Case Management from the remaining services. . . . Contracts for this service will be written only with each Area Agency on Aging, even if the provider of Case Management is not the Area Agency at the present time. This change is necessitated by the implementation of CHOICE and the need to separate Case Management from direct services. . . .
For the coming fiscal year, any Area Agency currently engaged in the delivery of direct services may continue providing the service(s). By July 1, 1989, however, the Area Agencies must divest themselves of ALL SSBG funded services with the exception of transportation. (Hornyak Decl., Ex. 1 at 1.)
DHS's State Plan for Aging Services for October 1, 1989 through September 30, 1991 which was submitted to the United States Administration on Aging ("AoA") stated as a goal for case management: to "[i]nsure accessibility to aging services through a single-entry case management system within each area agency on aging." (Defs.' App. C, Ex. 1, at 26.) The Plan stated as one of the objectives to attain this goal: to "[i]ntegrate case management and pre-admission screening within each area agency on aging." (Id.) In addition, the State Plan indicated that another objective is to "[p]rovide training to area agency case management staff. . . ." (Id.) The Plan contained an express assurance of compliance with the provisions of sections 305 and 307 of the Older Americans Act and with regulations 45 C.F.R. § 1321 which pertain to the Act." (Id. at 1.)
As indicated by a letter from Eli Lipschultz, Regional Program Director of the AoA to the DHS, dated April 23, 1990, the AoA was aware that AAAs would directly provide case management under the case management system. (Defs.' App. E, Ex. 6, at 2.) The letter accompanied a summary report of an on-site program review conducted in March 1990. The report was "informative rather than prescriptive." (Id. at 1.) The letter made the following recommendation: "The plan format must provide for a waiver for case management if case management is to be billed as a service rather than an administrative activity." (Id.)
In 1990, DHS, through George Brown, then-director of the Aging Services Division, ordered additional procedural changes to centralize contracting in the AAAs and to permit AAAs to provide case management directly. (Id., Ex. 2, at 1; Id., Ex. 4, at 1-2; Id., Ex. 5, at 2.) In December 1990, DHS Commissioner Jeff Richardson notified the AoA of Indiana's intent to extend its 1990-91 State Plan on Aging through fiscal year 1992. (Defs.' App. C, Ex. 11.) The AoA regional program director acknowledged receipt of this notice by letter dated February 28, 1991. (Id., Ex. 12.) In addition, during an on-site AoA review, Geneva Shedd and Bob Hornyak presented an overview of the "single point of entry case management system for all funding sources." (Defs.' App. E, Ex. 8, at 2.)
On January 14, 1992, the establishment of the statewide In-Home Services Program was announced and became effective as of July 1, 1992. (Defs.' App. C, Ex. 7, at 3.) The funding for this program brings together finances from the CHOICE program, Title III of the OAA, Social Service Block Grant, Older Hoosiers Account, United States Department of Agriculture, four Home and Community-Based Medicaid Waivers and local funds to pay for in-home services for the elderly and individuals with disabilities. (Id., Ex. 7, at 3; Id. at ¶ 16.)
Generally, to provide a direct service, AAAs must complete an application for a waiver. However, in 1990, the DHS determined ". . . [t]he requirement for a waiver applies to all CHOICE, Title III and SSBG Aging Services except case management." (Defs.' App. E, Ex. 4, at 1.) Specifically, in 1992 the Division of Aging Services stated:
CASE MANAGEMENT: Case management is the exercising of administrative and supervisory direction of a plan of care for a given individual. Therefore, even though funding sources dictate that it be reimbursed as a service, DHS considers case management as an administrative function. As such, case management shall be provided directly by an area agency and will not require a waiver.
(Id., Ex. 10, at 3.) AAAs are required to submit funding and staff information about case management on a form that also collects information on waivers. (Defs.' App. C, Shedd Decl. ¶ 24.).
In 1992 Indiana submitted to the AoA its State Plan for 1993-96. The Plan identified the following as a case management goal for in-home services "[t]o assist individuals in need of in-home services to receive those services through a fully integrated case management system." (Id., Ex. 2, at 17.) The Plan noted that the State would accomplish this goal with funding from CHOICE, SSBG, Medicaid Waivers, Title III (of the OAA) funds, and local support. (Id.) Two identified objectives in furtherance of this goal were to establish and provide uniform training to area agency case managers. (Id.) The Plan contains assurances required by the AoA, and it was approved by the AoA in a letter dated December 23, 1992. (Id., Ex. 2, at 2.)
In April 1992, Beowulf submitted a formal complaint to FSSA "concerning CICOA's failure to comply with the requirements of the [OAA]. . . [a]nd SSBG" with respect to case management. (Pl.'s Ex. 6 at 98.) In July 1992, Beowulf submitted a proposal to provide homemaker services to CICOA. (Pl.'s Ex. 15 at 2.) CICOA chose not to enter the contract. (Defs.' App. A, ¶¶ 13-19.) Beowulf appealed this denial to the DDARS which along with the administrative law judge, upheld the denial of the contract. (Id. at ¶¶ 21-22; Defs.' App. K (Coleman Dep.), Ex. 10.)
Beowulf filed suit in federal district court on May 24, 1993, against CICOA, its officers and directors, and Bobby Conner, then-Director of the DDARS, claiming with respect to Beowulf's 1993 homemaker proposal, that the Defendants failed to promulgate procurement standards as required by IC 4-22-2-44, (Defs.' App. A, at ¶ 24), and arbitrarily applied procurement standards, (Defs.' App. A, ¶ 29.) Count I of the Complaint references the competitive bidding requirements of 45 C.F.R. Appendix G. (Id. ¶ 23.).
The federal district court dismissed that suit on June 28, 1994. (Defs.' App. K, Dep. Ex. 29.)
The case was captioned, "Beowulf Enterprises, Inc. v. Bobby L. Conner, et al., IP93-678-C.
While the suit was pending, Beowulf wrote to CICOA informing it of "Beowulf's intention to submit a bid to provide [c]ase [m]anagement services for 1994-95. . . ." (Defs.' App. K, Dep. Ex. 14.) The President of CICOA responded by letter that "the [c]ase [m]anagement contract is not available for bid and . . . any questions . . . [should be directed to] the [DDARS]." (Defs.' App. K, Dep. Ex. 15.)
During the summer of 1993, Mr. Coleman came to believe that the OAA statutes and regulations required all services provided through the AAAs be made available for public bid. (Pl.'s Ex. 5, Answer to Interrog. 20.) After reviewing documents provided by the State, State Plans, Area Plans, state policies and procedures, he determined that all 16 of Indiana's AAAs provided case management services directly, and that the AAAs had not obtained waivers for the direct provision of case management and other services. He also believed that the AAAs did not comply with the OAA's competitive bidding requirement and they provided case management and other services to individuals younger than 60 years of age. Mr. Coleman believed that all of this violated state law and federal law. (Defs.' App. K, at 53-55; Id., Dep. Ex. 42, Answer to Interrog. 20.)
In November 1993, Mr. Coleman wrote Geneva Shedd, now a defendant in this case, claiming that the AAAs' direct provision of case management and provision of services to persons under the age of 60 violated state and federal law. (Id. at 130-31; Id., Dep. Ex. 13.) Additionally in November, he and his brother-in-law, Alan Updike, also a service provider, repeated these claims to Indiana State Senator Teresa Lubbers. On November 23, 1993, Senator Lubbers wrote to Ms. Shedd seeking information about competitive bidding of case management. (Id., Dep. Ex. 18, at 1.) Mr. Coleman helped draft Senator Lubber's letter, which stated in part:
Mr. Updike produced documents from the Attorney General's office which indicate that CICOA's current case management contract ends on 12/31/93 and that CICOA does not have a waiver to provide 1994 case management services. No waiver has been issued to suspend the federal requirement that case management funds be competitively bid. The Division's own policies prohibit the area agency from providing case management services ". . . unless a direct service is necessary to assure an adequate supply. . . ." State law provides the area agency can provide case management services only if ". . . there is no alternative agency capable of delivering services. . . ." (IC 12-10-10-7.)
(Defs.' App. K (Coleman Dep.), Dep. Ex. 18, at 1-2.)
Mr. Updike also submitted a formal complaint, dated November 30, 1993, based on these claims to the Administrative Rules Oversight Committee of the Indiana General Assembly ("AROC"). (Id., Dep. Ex. 19.) That complaint alleges in part that the DDARS policy which allows AAAs to deliver case management services directly and to provide case management and other services violates state and federal law. (Id., Dep. Ex. 19 at 1.) A memorandum accompanying that complaint specifically states that the OAA prohibits the provision of services to anyone under 60 years of age and that CICOA and the CHOICE program violate that provision. (Id. at 2-3.) It also alleges that CICOA provided case management services directly without obtaining a waiver to provide direct services in violation of federal regulations. (Id. at 3.) It alleges further that the Division has interpreted state law so as to allow AAAs to provide case management services directly without determining whether other agencies are capable of providing the service. (Id. at 4.)
According to Mr. Coleman, this is not a material fact since this formal complaint concerned the state-funded CHOICE program and not OAA and/or SSBG. To the contrary, both CHOICE and OAA are referred to in the memorandum accompanying the complaint. (Id., Dep. Ex. 19.)
On December 20, 1993, Beowulf filed an action for a writ of mandate and prohibition in state court against FSSA and DDARS. (Defs.' App. K (Coleman Dep.), Dep. Ex. 23, at 1.) Beowulf claimed in its complaint that DDARS entered into contracts for homemaker services in violation of the OAA regulations, including competitive bidding requirements. (Id., Count I at ¶¶ 20, 22.) Count II of Beowulf's complaint alleged that DDARS entered into a contract for case management services with CICOA in violation of federal competitive bidding requirements. (Id., Count II at ¶¶ 6-12.)
Mr. Coleman contends that the facts surrounding this previous litigation should be rejected as immaterial. The court disagrees because the prior litigation concerns the public disclosure of the allegations contained in the instant Complaint.
Beowulf voluntarily dismissed this action on October 23, 1995. (Defs.' App. K, Dep. Ex. 41, at 1.)
Beowulf voluntarily dismissed this action on October 23, 1995. (Defs.' App. K, Dep. Ex. 41, at 1.)
In addition, on December 28, 1993, Mr. Coleman submitted to the Indiana State Board of Accounts a complaint requesting an investigation into two contracts between CICOA and the State of Indiana. The complaint requested a determination whether the contracts complied with state and federal laws and regulations, including whether CICOA and the Division complied with the OAA's requirement that it administer programs solely for the elderly, whether they complied with the OAA's restriction on the direct provision of case management services and the provision of case management along with other services, whether CICOA provided case management services after obtaining a waiver as required by state policy and federal regulations, and whether CICOA complied with the federal regulations competitive bidding requirements. (Defs.' App. K (Coleman Dep.), Dep. Ex. 25.)
In August 1994, the AROC held a committee meeting wherein Mr. Updike's complaint against the DDARS regarding competitive bidding of case management services was discussed. (Id., Dep. Ex. 32, at 2.) The DDARS's lack of rules providing for the competitive bidding for home health care services for the elderly and the provision of case management by the AAAs was the topic of legislative debate and press editorials from September 15, 1994 thru December 15, 1994. (Coleman Dep. at 159; 163-66; Id., Dep. Ex. 34-37.)
Whether the competitive bidding in the selection of case management service providers related to the CHOICE program or the OAA is immaterial. It is undisputed that the claim was discussed.
In the State Source Book prepared by the AoA in 1994, the AoA recognized that 16 states had implemented a "single entry point mechanism in their state and three additional states have adopted a single entry portal of entry to the functionally impaired elderly as a strategy." (Defs.' App. C, Ex. 21, at 9.) The Source Book also recognized that 335 AAAs were providing access or case management directly compared to 233 AAAs that subcontracted access or case management. (Id., Ex. 21, at 26.) Specifically regarding Indiana, the AoA's State Source Book shows that in 1994 Indiana had a single entry point concept in place; that Indiana's 16 AAAs provided case management directly and did not subcontract it; and that the funding sources for the single entry point system included funds from Medicaid waiver, OAA, SSBG, and state revenues. (Id., Ex. 21, at 55-56.)
The AoA's 1995 State Program Report for Titles III and IV of the OAA states that:
In certain cases area agencies on aging choose to provide services directly rather than issue a contract with providers. The absence of a viable local provider is often the reason. In other cases, direct service provision helps the area agency on aging ensure a vital feature of home and community-based care is in place. . . .
. . . AAAs are also likely to provide access services directly. Of all the AAAs, 36% are providing some form of case management directly. . . . Looking at AAAs as a percentage of total providers, AAAs represent almost a third of the case management providers (29%). . . .
(Defendants' App. H, at 9-10.)
Indiana's State Plan on Aging and In-Home Services for Fiscal Years 1996-2000 was submitted to the AoA for approval by letter dated August 15, 1995. (Defs.' App. C, Ex. 4, at 2.) The Plan provides in part: "This State Plan for Aging and In-Home Services has been developed in accordance with all Federal statutory and regulatory requirements." (Id. at 2.) Further,
The State Agency agrees to administer the program in accordance with the Act, the State Plan and all applicable regulations, policies and procedures established by the Commissioner or the Secretary.
(Id. at 6.) The Plan indicates that a goal is to "enable area agencies on aging to serve as gatekeepers or service brokers." (Id. at 43.) The program identified to achieve this goal is case management, which is described as "assist[ing] individuals in need of in-home services to receive those services through a fully integrated case management system. — Develop uniform case management program." (Id.) The Plan states that it will "continue the use of single point of entry" for case management. (Id.) The Plan indicates that Indiana intended to serve both individuals over the age of 60 and "individuals of disabilities of all ages who are at risk of losing their independence". (Id. at 33; see also id. at 34-35.) In the cover letter to the AoA, the Governor stated:
In addition to meeting the intent of the Older American Act, the Plan has been developed as a companion to the FSSA Strategic Action Plan. All Aging and In-Home Services Goals that are reflected in the Plan are arranged in accordance with the FSSA Goals.
This dual purpose Plan exemplifies the streamlining and retooling of government which has placed Indiana in a leadership position in providing Aging and In-Home Services through a comprehensive, coordinated alternative to institutional care. Indiana does this through an innovative approach to serving older adults and individuals with disabilities with a single point of entry for services. Indiana's 16 Area Agencies on Aging administer the IN-Home Services Program and other community based services at the local level through a network of service providers.
(Defs.' App. C, Ex. 4, at 2.) By letter dated September 22, 1995, the AoA approved the Indiana State Plan for fiscal years 1996-99. (Defs.' App. C, Ex. 4, at 3.)
Reviews of Indiana's performance were performed by AoA officials. For instance, Fran Wersells, Region V State Liaison, noted in her State Plan Review for FY 1996-1999:
. . . the most notable achievement of the State Agency has been its total involvement in the State's Home and Community Based Care program which has been recognized by AoA as a national model for providing a comprehensive and coordinated alternative to institutional care. Furthermore, the Administration on Aging conducted a comprehensive review of the State's compliance with the Older American Act just prior to implementation of the current State Plan in 1992 and found the State to be in compliance with almost all of the OAA requirements. The areas in variance were relatively minor.
(Defs.' App. C, Ex. 9 at 2.)
On May 17, 1996, Mr. Coleman filed this action under the FCA, alleging that the Defendants violated the OAA in a number of ways. First, he alleges that at the direction of the FSSA and Defendant Shedd, the AAAs failed to obtain direct service waivers for the provision of case management and other services. (Compl. ¶ 16.) He also alleges that the AAAs violate the OAA by providing case management services while providing other services. (Id. ¶ 17.) In addition, the Complaint alleges that Indiana officials, including Ms. Shedd, and the AAAs refused to comply with the OAA requirement that contracts to provide OAA-funded services be submitted to competitive bidding. (Id. ¶ 19.) He also alleges that the State and Ms. Shedd directed the AAAs to provide and the AAAs provided case management and other services to individuals less than sixty years of age. (Id. ¶ 20.) Finally, the Complaint alleges the State falsely represented that it was in compliance with the OAA and falsely certified the AAAs were legally entitled to receive funds for providing case management services. (Id. ¶¶ 21-31.).
II. Summary Judgment and Local Rule 56.1 Standards
Summary judgment practice in this court is governed by Rule 56 of the Federal Rules of Civil Procedure and Local Rule 56.1. Summary judgment is proper under Rule 56 if "the pleadings, depositions, answers to interrogatories and, admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). An entry of summary judgment is mandated if, a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
To oppose a motion for summary judgment, "there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In determining whether a genuine issue of material fact exists, all facts are construed in the light most favorable to the non-moving party and all reasonable inferences are drawn in favor of that party. See Bellaver v. Quanex Corp., 200 F.3d 485, 491-92 (7th Cir. 2000) (citing Anderson, 477 U.S. at 255).
In Celotex, the Supreme Court held that the burden on the a moving party who does not bear the burden of proof, "may be discharged by `showing'. . . that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. Under Rule 56(e), "an adverse party may not rest upon mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e).
Rule 56.1 imposes additional obligations upon parties moving for and opposing summary judgment. The version of the rule in effect at the time the Defendants filed their motion for summary judgment stated in pertinent part: "A party opposing a motion filed pursuant to Fed.R.Civ.P. 56 must . . . serve and file . . . if applicable, a separate Statement of Additional Material Facts that warrant a denial of summary judgment." S.D. Ind. L.R. 56.1(c)(1) (1999). The local rule also provided that "each stated material fact . . . must be substantiated by specific citation to the materials filed. . . ." S.D. Ind. L.R. 56.1(f)(2) (1999).
These provisions are of significant benefit to the court whose role in ruling on a summary judgment motion "is not to sift through the evidence," Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994), and who "often cannot afford to spend the time combing the record to locate the relevant information." Id. at 924. The parties bear the burden of identifying the evidence that will assist the court in deciding the summary judgment motion. Id. at 920. The Seventh Circuit has upheld strict enforcement of the local rules of district courts such as Local Rule 56.1. See id. at 922 (citing cases).
The factual statements and citations to evidence in the record serve the purpose of "alert[ing] the court to precisely what factual questions are in dispute and point[ing] the court to the specific evidence in the record that supports a party's position on each of these questions." Waldridge, 24 F.3d at 923. "They are roadmaps . . . and without them the court should not have to proceed further, regardless of how readily it might be able to distill the relevant information from the record on its own." Id.
III. Analysis
The FCA subjects to liability "[a]ny person who," inter alia, "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," or "knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government." 31 U.S.C. § 3729(a)(1), (2). The Supreme Court recently held that a State and state agency are not subject to liability in an action brought by a private individual under the FCA. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 120 S.Ct. 1858, 1871 (U.S. May 22, 2000) (a state is not a "person" for purposes of qui tam liability under the FCA). Therefore, Mr. Coleman cannot maintain this action against the State of Indiana, its agencies or Ms. Shedd in her official capacity, see, e.g., Kentucky v. Graham, 473 U.S. 159, 169-70 (1985) (holding that a suit against a state official in her official capacity is a suit against the state). The only remaining FCA claim is the claim against Ms. Shedd in her personal capacity, and the discussion which follows pertains only to this sole remaining claim.
A federal court is a court of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Thus, the presumption is that an action lies outside this limited jurisdiction. See id. (citation omitted). The party invoking the court's jurisdiction bears the burden of establishing that jurisdiction exists. See id. (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182-183 (1936)); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995). Any doubt as to the court's jurisdiction should be resolved against jurisdiction. See, e.g., United States ex rel. McKenzie v. BellSouth Telecomm., Inc., 123 F.3d 935, 940 (6th Cir. 1997), cert. denied, 522 U.S. 1077 (1998); United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548, 552 (10th Cir. 1992).
The Defendants' motion for summary judgment first challenges the court's subject matter jurisdiction over this action. The Defendants contend this action is barred by 31 U.S.C. § 3730 (e)(4)(A), which provides in pertinent part:
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 person bringing the action is an original source of the information.31 U.S.C. § 3730(e)(4)(A). The court makes a three part inquiry when determining whether it has jurisdiction over an action under the FCA such as this: (1) whether the allegations have been "publicly disclosed"; (2) if so, whether the action is "based upon" those publicly disclosed allegations; and, (3) if so, whether the plaintiff is an "original source" of the information upon which the allegations are based. See United States v. Bank of Farmington, 166 F.3d 853, 859 (7th Cir. 1999); see also Hindo v. University of Health Sciences/The Chicago Med. Sch., 65 F.3d 608, 613 (7th Cir. 1995) (jurisdictional bar arises when each component of section 3730(e)(4)(A) is met).
In response to a summary judgment motion challenging the court's jurisdiction, the party invoking the court's jurisdiction must come forward with "competent proof" that jurisdiction exists. See NLFC, Inc., 45 F.3d at 237. Mere conclusory allegations of jurisdiction are insufficient. See U.S. ex rel. Hafter D.O.v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1162 (10th Cir. 1999). Mr. Coleman, therefore, bears the burden of proving that the FCA's jurisdictional bar does not preclude this action.
A. "Public Disclosure"
"The threshold inquiry is whether there has been public disclosure." See Bank of Farmington, 166 F.3d at 859. The court concludes that allegations that the AAAs directly provide case management services without first obtaining direct service waivers, that they provide case management services while providing other services, that they provide case management and other services to individuals less than 60 years of age and that contracts to provide OAA-funded services are not submitted to competitive bidding were publicly disclosed on a number of different occasions before Mr. Coleman commenced this qui tam action.
The FCA's reference to "criminal, civil, or administrative hearing" includes state administrative proceedings and state court actions. See, e.g., A-1 Ambulance Serv., Inc. v. California, 202 F.3d 1238, 1244 (9th Cir. 2000), cert. denied, United States ex rel. A-1 Ambulance Serv. v. County of Monterey, ___ U.S. ___, 120 S.Ct. 1833 (2000) (holding local agency proceedings constitute "administrative hearing"); U.S. ex rel. Hafter, 190 F.3d at 1161 n. 6 ("hearing" includes state civil suits). In A-1 Ambulance Service, the court held that public agency proceedings conducted by counties constituted "administrative hearings" under § 3730(e)(4)(A). See A-1 Ambulance Serv., 202 F.3d at 1243-44. The court concluded that the official actions of an agency are administrative in nature. Id. It explained that "hearing" was synonymous with "proceeding," and encompassed "publicly-filed documents, `even if they are not the subject of a hearing.'" Id. (quotation omitted).
The allegations raised by Mr. Coleman's Complaint in the instant action were publicly disclosed in state administrative proceedings. Mr. Updike's complaint and accompanying memorandum submitted to the AROC contain allegations that the DDARS allows AAAs to deliver case management services directly and provide case management and other services in violation of state and federal law, that CICOA and CHOICE violate the OAA prohibition on the provision of services by an AAA to anyone under 60 years of age, and that CICOA provided case management services directly without obtaining a direct services waiver. AROC subsequently held a committee meeting wherein Mr. Updike's competitive bidding allegations were discussed. In addition, Beowulf's complaint to the FSSA in 1992 alleged that CICOA failed to comply with the OAA's requirements respecting case management. Mr. Coleman's complaint with the State Board of Accounts requested an investigation into CICOA's compliance with competitive bidding requirements, CICOA and DDARS's administration of programs solely for the elderly, the direct provision of case management services by AAAs without a waiver, and the provision of case management and other services by the AAAs. These various complaints to state agencies and the AROC meeting fall within the ambit of "administrative hearing." See A-1 Ambulance Serv., 202 F.3d at 1243-44 (hearing encompasses publicly-filed documents and public agency proceedings).
In addition, allegations that DDARS entered into a contract for case management services with CICOA in violation of the OAA competitive bidding requirements were raised in prior state and federal litigation: Beowulf's May 1993 federal suit against CICOA and Beowulf's state court action for writ of mandate and prohibition against FSSA and DDARS.
These lawsuits constituted the public disclosure of the allegations in a "civil hearing" under 31 U.S.C. § 3730 (e)(4)(A). See Houck v. Folding Carton Admin. Comm., 881 F.2d 494, 504 (7th Cir. 1989). Finally, allegations regarding the DDARS's lack of competitive bidding for home health care services for the elderly and the direct provision of case management by the AAAs also were discussed in newspaper articles and editorials in late 1994. The court therefore finds that the allegations giving rise to Mr. Coleman's qui tam action were publicly disclosed in civil hearings, administrative hearings and from the news media.
Moreover, the information upon which this action is based previously had been disclosed directly to the AoA in the State Plans. Disclosure to the AoA is a public disclosure within the meaning of section 3730(e)(4)(A). See United States v. Bank of Farmington, 166 F.3d 853, 861-62 (7th Cir. 1999) (holding disclosure of information to Farmers' Home Administration official about alleged false claim against government by bank was a public disclosure under FCA). As the Seventh Circuit reasoned:
The point of public disclosure of a false claim against the government is to bring it to the attention of the authorities, not merely to educate and enlighten the public at large about the dangers of misappropriation of their tax money. Disclosure to the public at large is a step in lowering the jurisdictional bar precisely because it is likely to alert the authorities about the alleged fraud. . . . [D]isclosure to the public official responsible for the claim effectuates the purpose of disclosure to the public at large. . . .
Id. at 861. The Plans indicate that Indiana employs single-entry case management integrated within each AAA. (See Defs.' App. C, Ex. 1 at 26; Ex. 2, at 17; Ex. 3 at 20; Ex. 4 at 6, 43.) In addition, Ms. Shedd and Mr. Hornyak presented an overview of the "single point of entry case management system for all funding sources" during an on-site AoA review. (Defs.' App. E, Ex. 8, at 2.) The State Plans also identify the objective of providing training to "area agency case management staff". (Id., Ex. 1 at 26; id., Ex. 2, at 17.) The State Plan for 1996-2000 indicates the intent to serve both individuals over the age of 60 and "individuals of disabilities of all ages who are at risk of losing their independence". (Id., Ex. 4 at 33; see also id. at 34-35.) Thus, the Plans indicate that the AAAs directly provide case management and that the AAAs intend to serve individuals under the age of 60. That the AAAs were directly providing case management infers the fact that case management was not being competitively bid. Furthermore, the record establishes that just prior to implementation of the current State Plan, the AoA conducted a comprehensive review of the compliance with the OAA and "found the State to be in compliance with almost all of the OAA requirements. The areas in variance were relatively minor." (Defs.' App. C, Ex. 9 at 2.)
Mr. Coleman argues that the State Plans did not expressly disclose that the AAAs were not required to obtain waivers. Although the absence of waivers was not expressly discussed in the plans, all information that would put the federal reviewers on notice regarding the need for waivers was disclosed.
He also argues that the State Plans were not explicit enough in revealing that the AAAs would directly provide case management. The court disagrees. The Plans state that Indiana uses single point of entry case management and that case management is to be integrated within each AAA. Mr. Coleman may quarrel with the words used, but the State Plans are clear.
Furthermore, though the State Plans themselves do not constitute "administrative reports" within the meaning of the OAA's jurisdictional provision, the record establishes that the AoA approved these plans. The AoA's letters approving the plans did not expressly adopt or incorporate the State Plans, but in the court's view, the use of such magic words is not necessary. The court concludes that the AoA's letters approving the State Plans constitute administrative reports. See United States ex rel. Mistick PBT, 186 F.3d at 383-84 (something is "administrative" if it originates in a department of the federal government and constituted official federal government action and is a "report" if it gives information or notification). The letters originated in the AoA, constituted official action of the federal government and provided notification of the AoA's approval of the State Plans.
Another source — the AoA's State Source Book-specifically recognized that in 1994 Indiana had a single entry point concept in place; that Indiana's 16 AAAs provided case management directly and did not subcontract it; and that the funding sources for the single entry point system included funds from Medicaid waiver, OAA, SSBG, and state revenues.
The Source Book constitutes an administrative report since it was published by the AoA of the federal government and it conveyed information. Thus, the allegations that the AAAs directly provided case management and thus did not competitively bid case management and served individuals under age 60 were not only publicly disclosed but also directly disclosed to the AoA.
Because the record establishes that the allegations or transactions were publicly disclosed and the information upon which this action is based had been provided to the AoA, the court proceeds to decide whether the instant action is based upon that public disclosure.
B. "Based Upon"
The Seventh Circuit has held "that a claim which both depends essentially upon publicly disclosed information and is actually derived from such information is `based upon' a public disclosure" of allegations or transactions for purposes of the FCA's jurisdictional bar. See Bank of Farmington, 166 F.3d at 864; see also id. at 863 ("It is irrelevant for purposes of the jurisdictional bar that Mathews' claim states the same information that the Bank divulged to the government unless Mathews got the information on which her claim is based from the Bank's divulgence.") Defendants contend that Mr. Coleman's claim is actually derived from information that was publicly disclosed, and that the public disclosure is essential to his claim.
The Bank of Farmington court did not reach the question of whether the jurisdictional bar applies to quit tam actions based "in any part" rather than "solely" upon publicly disclosed information. See Bank of Farmington, 166 F.3d at 863-64. However, dicta in the opinion suggests that the bar would be applied in such a case:
In Houck [v. Folding Carton Administration Committee, 881 F.2d 494 (7th Cir. 1989)], we said that "the Act . . . does not allow a qui tam plaintiff to bring an action based solely upon publicly disclosed transactions." Houck, 881 F.2d at 504. This does not say, however, that the jurisdictional bar only applies where a plaintiff's information is based wholly upon public disclosures. It is consistent with saying that a qui tam plaintiff may not bring an action based in any part on such transactions.
Id. (citations omitted) Other circuit courts of appeal have held that qui tam actions based in any part upon public disclosures are subject to the jurisdictional bar. See United States ex rel. McKenzie v. BellSouth Telecomm., Inc., 123 F.3d 935, 940 (6th Cir. 1997), cert. denied, 522 U.S. 1077 (1998); Federal Recovery Servs., Inc. v. United States, 72 F.3d 447, 451 (5th Cir. 1995); Cooper v. Blue Cross Blue Shield of Fla., Inc., 19 F.3d 562, 567-68 (11th Cir. 1994); United States ex rel. Kreindler Kreindler v. United Tech. Corp., 985 F.2d 1148, 1158 (2nd Cir. 1993); United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548 (10th Cir. 1992).
The Tenth Circuit in Precision first looked to the FCA statutory language to find support for the conclusion that the jurisdictional bar applies to quit tam actions based "in any part" upon publicly disclosed allegations or transactions:
[T]he plain, unambiguous language of § 3730(e)(4)(A) states a qui tam action may be barred only if the action is "based upon" the public disclosure of "allegations or transactions." Precision would have us read this provision to apply only to actions based "solely" upon publicly disclosed information. We cannot countenance Precision's interpretation.
. . . [A]n FCA qui tam action even partly based upon publicly disclosed allegations or transactions is nonetheless "based upon" such allegations or transactions. Congress chose not to insert the adverb "solely", and we cannot, because to do so would dramatically alter the statute's plain meaning.
Precision, 971 F.2d at 552. The court next considered that "statutes conferring jurisdiction on federal courts are to be strictly construed, and doubts resolved against federal jurisdiction." Id. (quotation omitted). It continued:
To insert the term `solely' into § 3730(e)(4)(A) would impermissibly expand federal jurisdiction by allowing qui tam plaintiffs to avoid the more exacting `original source' requirement simply by asserting an additional count. In other words, with a little artful pleading, all qui tam plaintiffs could pass the jurisdictional threshold by fashioning complaints only `partly based' upon publicly disclosed allegations or transactions.
Id.
The Precision court found that its interpretation of "based upon" was consistent with the FCA's two basic goals of: (1) encouraging private citizens with first-hand knowledge to expose fraud against the federal government; and (2) discouraging opportunistic plaintiffs who have not significantly contributed to the disclosure of the fraud. Id.; accord United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1016 (7th Cir. 1998). The court said:
Consistent with these purposes, we believe the threshold "based upon" analysis is intended to be a quick trigger for the more exacting original source analysis. . . . A fair reading of this statute in light of its dual purpose leads us to conclude Congress never intended a qui tam plaintiff to benefit in whole or in part upon publicly disclosed allegations or transactions unless that plaintiff can demonstrate he was an original source as defined by statute.
Precision, 971 F.2d at 552-53 (emphasis in original). Finally, the Precision court determined that practical considerations of judicial economy favored its interpretation. Id. at 553; accord United States ex rel. Ackley v. International Business Mach., 76 F. Supp.2d 654, 661-62 (D.Md. 1999). The court reasoned that to require a court to make a pre-trial jurisdictional inquiry into "the quantity and quality of information in the public domain versus that possessed by the qui tam plaintiff . . . would be onerous, impractical and ultimately would serve neither the interests of the parties nor the court." Precision, 971 F.2d at 553. For all these reasons, the Precision court concluded that a qui tam action "based in any part upon publicly disclosed allegations or transactions is subject to the `original source' jurisdictional requirement." Id.
The undersigned finds the Precision court's reasoning persuasive and adopts it here. Thus, Mr. Coleman's qui tam action will be subject to the jurisdictional bar if it is based in any part upon publicly disclosed allegations or transactions. Though Mr. Coleman's qui tam action is partly based on his own experience through Beowulf in bidding for case management services, the instant action is based in large part on publicly disclosed allegations and information and the public disclosure is essential to his claim.
When asked in an interrogatory to "[s]tate all facts upon which you base your contention that you are the original source of the information upon which allegations are based," (Defs.' App. K, Ex. 42.), Mr. Coleman responded in part as follows:
Plaintiff has spent a great deal of time securing, reviewing, investigating and analyzing State Plans, Area Plans, State policies and procedures, and claims forms and numerous other documents which establish FSSA and the AAAs were engaged in a Case Management bid-rigging scheme and submitted false claims to receive federal funds to which they were not entitled.
(PL's Answer to Interrog., ¶ 20 (12)). As explained, these sources constitute public disclosure within the meaning of 31 U.S.C. § 3730(e)(4)(A). Mr. Coleman's answer to the interrogatory establishes that though some of the information relied upon by him was gathered through his first-hand experiences regarding his bid submission, he derived the information on which his claims are based from these sources. Therefore, his claims both depend essentially upon publicly disclosed information and is actually derived from such information. Thus, the court proceeds to determine whether the record establishes that Mr. Coleman qualifies as an "original source."
According to Mr. Coleman, when responding to Interrogatory 20, he was not identifying information upon which his FCA allegations or transactions were based. He claims that the Interrogatory was unclear and that defendants had failed to identify the "contention" and "allegations" to which they were referring. The court finds that the interrogatory is not unclear. Based on Mr. Coleman's answer, he understood the context of the interrogatory, and it is apparent he was not confused by the question.
It is noted that any information obtained by Mr. Coleman through his own bid submission merely duplicates that in the State Plans and Indiana Code that case management is considered an administrative function performed directly by the AAAs and not up for public bidding. Thus, any knowledge gained from Mr. Coleman's own experience would add little if anything to the federal government's awareness of the alleged violations.
C. "Original Source"
Since Mr. Coleman has based his qui tam action in part upon publicly disclosed information, the court may exercise jurisdiction over this action only if he is an "original source of the information." 31 U.S.C. § 3730(e)(4)(A). The FCA expressly defines "original source":
"[O]riginal source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.31 U.S.C. § 3730(e)(4)(B); see Houck v. Folding Carton Admin. Comm., 881 F.2d 494 (7th Cir. 1989). To be an "original source" a plaintiff has to be a "source" as well as an "original source". See United States v. Bank of Farmington, 166 F.3d 853, 865 (7th 1999).
To be a "source" a plaintiff "must have voluntarily provided the information to the Government before filing an action. . . ." Bank of Farmington, 166 F.3d at 865 (quotation omitted). To be an "original source" the plaintiff's knowledge of the information on which the claim is based has to be direct and independent. See Bank of Farmington, 166 F.3d at 864; Houck, 881 F.2d 494.
Defendants do not address whether Mr. Coleman's knowledge was "direct." Because the court has an independent obligation to determine whether it may exercise subject jurisdiction, the Defendants' failure to argue that Mr. Coleman lacks direct knowledge does not constrain the court's analysis. See, e.g., Gillespie v. City of Indianapolis, 13 F. Supp.2d 811, 816 (S.D.Ind. 1998) (recognizing the district court's "independent obligation to determine subject matter jurisdiction . . . regardless of the parties' arguments or waivers"), aff'd, 185 F.3d 693 (7th Cir. 1999), cert. denied, 120 S.Ct. 934 (2000).
Courts, including the Seventh Circuit, have interpreted the term "direct" as meaning "first-hand." See Lamers, 168 F.3d at 1017 ("There is no question that Lamers had `direct' knowledge of the way GBT was implementing its tripper service. He observed GBT buses in action firsthand."); United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 690 (D.C. Cir. 1997); Houck, 881 F.2d at 504-05 (indicating that plaintiff's knowledge was direct because of his involvement in assisting claimants with filing claims from a fund and where he alleged the payment of claims from the fund constituted false claims); cf. United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 656 (D.C. Cir. 1994) (stating that "direct" means "marked by absence of an intervening agency"). The Seventh Circuit and other courts have interpreted "independent" to mean that the plaintiff's knowledge does not derive or depend upon the public disclosure. See, e.g., Bank of Farmington, 166 F.3d at 864; Houck, 881 F.2d at 505 (holding the plaintiff's knowledge was not independent where there was no evidence that he would have learned of the information absent public disclosure); Findley, 105 F.3d at 690 (stating that to be "independent" the information known by the relator "cannot depend or rely on the public disclosures"); Springfield Terminal Ry. Co., 14 F.3d at 657. "[A] person who learns of fraud from a public disclosure can never be an `original source.'" Findley, 105 F.3d at 690.
The Defendants argue that to qualify as an original source, an individual must inform the government of the alleged fraud before the information has been publicly disclosed. In support they cite to United States ex rel. McKenzie v. BellSouth Telecomm., Inc., 123 F.3d 935, 942 (6th Cir. 1997), which they assert was cited with approval in Bank of Farmington. The latter case did cite McKenzie approvingly, but, nevertheless the Seventh Circuit does not require a relator to provide the information upon which his qui tam action is based to the government before the information is publicly disclosed. See Bank of Farmington, 166 F.3d at 865-66. All that is required is that the plaintiff voluntarily provide the information "before filing her qui tam action. . . ." Id. This conclusion makes sense given the Seventh Circuit's interpretation of "based upon" as meaning dependent on or derived from the public disclosure.
The court finds that Mr. Coleman has not presented evidence which would establish by a preponderance that he qualifies as an original source: He has not established that his knowledge is both direct and independent. Mr. Coleman derived the facts supporting his allegations of fraud from the State Plans, Area plans, state policies and procedures, and state and federal statutes. His only other source of knowledge was his personal experience of submitting bids for his company to provide case management services and being told in response that case management is not up for bid. This information merely duplicates Indiana Code § 12-10-10-1 (defining case management in part as an administrative function conducted by an area agency on aging) and the State Plans, which indicate that case management is an administrative function performed directly by the AAAs and not up for public bid. In addition, by the time CICOA informed Mr. Coleman that his bid was denied, Indiana had already disclosed this fact to the AoA by submitting its State Plans, which called for AAAs to perform case management themselves.
Furthermore, Mr. Coleman has wholly failed to assert as a statement of material fact or statement of additional material fact that he voluntarily provided the information upon which his qui tam claims are based to the Government before filing this action. Although he did respond to the Defendants' Statement of Material Facts and filed a Statement of Additional Material Facts, the Defendants' Statement, his response, and his Statement of Additional Material Facts fail to set forth the facts necessary to support a finding that he qualifies as an "source". Nor has Mr. Coleman made an effort to direct the court to the pieces of evidence in the record needed to establish that he qualifies as an "source" under the FCA. That such evidence may be found in the record does not itself suffice to defeat summary judgment. See Waldridge v. American Hoechst Corp., 24 F.3d 918, 923 (7th Cir. 1994). Without the roadmaps provided by the factual statements and citations to supporting evidentiary materials in the record, the court does not have to venture unguided on its own into the voluminous record like that in the instant case. See id. But as previously stated, even if the court were to forgive these procedural shortcomings, the record does not establish that Mr. Coleman's knowledge of the information on which his qui tam claims are based was both direct and independent.
Thus, even assuming that Mr. Coleman had direct and independent knowledge that case management were not competitively bid, he still has not demonstrated that he is an original source of that information.
Review of the Plaintiff's Statement of Material Facts and Plaintiff's Statement of Additional Material Facts (which is in an improper form), filed in support of Mr. Coleman's own motion for summary judgment likewise do not set forth all of the facts necessary to support a finding that he is an "original source".
As a court of limited jurisdiction, the presumption is that jurisdiction is lacking, see Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994), and any doubts are resolved against exercising jurisdiction. See, e.g., United States ex rel. McKenzie v. BellSouth Telecomm., Inc., 123 F.3d 935, 940 (6th Cir. 1997), cert. denied, 522 U.S. 1077 (1998). The court holds that Mr. Coleman has not discharged his burden of producing evidence that he is an "original source" and that this action clears the FCA's jurisdictional bar.
The court's holding is consonant with the FCA's purpose of encouraging insiders to come forward with information of fraud against the government "where they would otherwise have little incentive to do so.'" United States ex rel. Newsham v. Lockheed Missiles Space Co., 190 F.3d 963, 965 (9th Cir. 1999), cert. denied, 120 S.Ct. 2196 (2000) (quoting United States ex rel. Biddle v. Board of Trustees of Leland Stanford, Jr. Univ., 161 F.3d 533, 538-39 (9th Cir. 1998), cert. denied, 526 U.S. 1066 (1999)). Where the relator brings new information of fraud to the government, he should be rewarded under the FCA because his information is valuable to the government in remedying fraud against it. See United States ex rel. Biddle, 161 F.3d at 539. But where the relator "confers no additional benefit upon the government" and merely repeats information already available to it, he should not be rewarded under the FCA. See id.
The court would find it difficult to conclude that fraud was committed against the federal government where the State Plans submitted to and approved by the AoA provided the information upon which Mr. Coleman's claims are based. Moreover, Mr. Coleman is not an insider with little incentive to come forward. He is, instead, a former contractor of services who is unhappy because the State of Indiana no longer gives him the business it once did. Mr. Coleman brings nothing new to the federal government's attention and therefore should not be rewarded under the FCA. The FCA was not intended to be an enforcement device for the OAA. See generally Lamers, 168 F.3d at 1019-20 (holding that mere technical violations of federal regulation upon which claim is based does not make a claim false).
IV. Conclusion
Mr. Coleman has not come forward with sufficient evidence to create a genuine issue of fact as to whether this court may exercise subject matter jurisdiction over this qui tam action. Therefore, the Defendants' Motion for Summary Judgment will be GRANTED, the Plaintiffs' Motion for Summary Judgment is DENIED, and the Motion to Disregard the Plaintiff's Statement of Material Facts is DENIED AS MOOT. An order of dismissal for lack of subject matter jurisdiction will be entered in accordance with this entry.
ALL OF WHICH IS ORDERED this 19th day of September 2000.