Opinion
Civil Action No. 99-D-665
December 20, 2000
ORDER
THIS MATTER comes before the Court upon review of the file. There are four pending motions: Plaintiff United States' Motion to Dismiss Relator filed October 14, 1999; Defendant Hightower's Motion to Dismiss filed February 23, 2000; Defendant Hightower's Motion to Stay Proceedings Pending Determination of Whether Relator Remains in the Case filed February 23, 2000; and Defendant Hightower's Motion for Leave to File Brief filed February 23, 2000.
Background
Relator Mary L. Holmes is an employee of the U.S. Postal Service. Since 1985 she has served as the postmaster of the Poncha Springs, Colorado post office. In her Complaint, Holmes alleges that in October 1995, Defendant Consumer Insurance Group ("CIG") applied for a bulk mailing permit at the Poncha Springs post office. They told Holmes that CIG should receive the "per pound" rate as it was already receiving this rate at the Howard post office. The "per pound" rate is significantly lower than the per piece" rate but is only available if the individual pieces of mail weigh less than 3.3062 ounces. On further inspection, Holmes learned that each piece in CIG's mailing weighed less than 3.3062 ounces so the "per pound" rate was not available. Holmes also notified the Howard post office that CIG was not entitled to the "per pound" rate.
In August 1997 Holmes was temporarily at the Howard post office. While there, she discovered that CIG had been certifying in forms submitted to the post office that its bulk mailings weighed in excess of 3.3062 ounces per piece. On December 2, 1997, Holmes reported this information to the Postal Service, Office of the Inspector General ("OIG"). Holmes also informed the Postal Systems Examiner; this prompted an administrative investigation by the Postal Inspection Service ("PIS"). In July 1998, PIS referred the case to the US Attorney's Office which accepted the matter for civil action. Holmes was rewarded with a $500 cash bonus and letter of appreciation. From December 1998 through March 1999, the US Attorney's Office and PIS continued to build a case against CIG. In March 1999, Holmes (Relator) filed her Complaint, a qui tam action under the False Claims Act, 31 U.S.C. § 3729-3733, to recover damages sustained by the US Postal Service due to an alleged fraud committed by Defendant. The United States moved to dismiss Holmes for lack of jurisdiction on October 14, 1999 and subsequently filed a Notice of Election to Intervene in the suit on November 23, 1999.
Plaintiff United States' Motion to Dismiss Relator filed October 14, 1999
The United States seeks dismissal of the qui tam relator, Holmes, for lack of jurisdiction. In considering a motion to dismiss, the court "`must accept all the wellpleaded allegations as true and must construe them in the light most favorable to the plaintiff.'" David v. City and County of Denver, 101 F.3d 1344, 1352 (10th Cir. 1996), cert. denied, 118 S.Ct. 157 (1997) (quoting Gagan v. Norton, 35 F.3d 1473, 1474 n. 1 (10th Cir. 1994). "A complaint may be dismissed pursuant to Fed.R.Civ.P. 12 (b)(6) only "if the plaintiff can prove no set of facts to support a claim for relief.'" Id. (quoting Jojola v. Chavez, 54 F.3d 488, 490 (10th Cir. 1995).
The relator in a qui tam action under the False Claims Act ("FCA") bears the burden of alleging facts establishing jurisdiction. See United States ex. rel. Fine v. Advanced Sciences, 99 F.3d 1000, 1004 (10th Cir. 1996). The FCA itself imposes jurisdictional requirements for such private qui tam suits. See id. These requirements provide that no court has jurisdiction over a private qui tam lawsuit based upon the public disclosure of allegations of wrongdoing unless the relator is an "original source" of the information. See Id.; 31 U.S.C. § 3730 (e)(4)(A). The purpose behind this jurisdictional bar is to achieve "the golden mean between adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own." United States ex. rel. Fine v. Sandia Corporation, 70 F.3d 568, 571 (10th Cir. 1995) (quotation omitted). This purpose is not served by allowing qui tam relator's to recover where the government has already identified the problem and has an easily identifiable group of probable offenders. See id. at 572-73. As a result, a relator's claim should be analyzed "in the context of Congress' "twin goals of rejecting suits which the government is capable of pursuing itself, while promoting those which the government is not equipped to bring on its own.'" See United States ex. rel. Fine v. Advanced Sciences, 99 F.3d 1000, 1004 (10th Cir. 1996) (quotation omitted). My fundamental task in interpreting the FCA is "to give effect to the intent of Congress," United States v. American Trucking Ass'ns, 310 U.S. 534, 542 (1940).
In light of the Congressional intent and legal background of the jurisdictional bar to qui tam suits, it is apparent that there are two situations to which the jurisdictional bar may apply. The first is where a government is actively pursuing the alleged wrongdoing when the qui tam action is sought. In such a situation, there is no need to determine whether the alleged wrongdoing has been publicly disclosed because it is clear that the government "has already identified the problem." Sandia, 50 F.3d at 572. The second situation is where the government is not actively investigating the alleged wrongdoing. In this situation, the appropriate inquiry for the purposes of the jurisdictional bar is whether the government is "capable" of pursuing the suit itself. This "capability" inquiry requires determination of whether the complaint is "based upon" a "public disclosure" within the meaning of 31 U.S.C. § 3730 (e)(4)(A). Such a determination requires consideration of four separate questions:
(1) whether the alleged "public disclosure" contains allegations or transactions from one of the listed sources; (2) whether the alleged disclosure has been made "public" within the meaning of the False Claims Act; (3) whether the relator's complaint is "based upon" this "public disclosure"; and if so, (4) whether the relator qualifies as an "original source" under section 3730(e)(4)(B).Advanced Sciences, 99 F.3d at 1004 (citing United States ex. rel. Fine v. MK-Ferguson Company, 99 F.3d 1544, 1545 (10th Cir. 1996)).
In this case, it is undisputed that, prior to the filing of the qui tam complaint by Holmes, the OIG and PIS were involved in an active administrative investigation of the matters at issue in this suit and had identified the probable offenders. When the investigation substantiated fraud by CIG, Holmes was publicly commended and received a $500 bonus from her employer for her service. In July of 1998, prior to the filing of Holmes' Complaint, the matter was referred to the Attorney General's office and accepted for civil action. Between 1998 and the time the Complaint was filed, the Attorney General's office continued to build a case against CIG. Because the PIS and OIG investigation and their subsequent referral of the matter to the Attorney General set the government "squarely on the trail of the alleged fraud, " Advanced Sciences, 99 F.3d at 1004, it would therefore "be contrary to the purposes of the FCA to exercise jurisdiction over [the relator's] claim."Id. Because my fundamental task in interpreting the FCA is "to give effect to the intent of Congress," American Trucking Ass'ns, 310 U.S. at 542, I must grant the United States' Motion to Dismiss Holmes. It makes no difference that Holmes, as part of her role as a postmaster, initially alerted the PIS and OIG to the alleged wrongdoing and spurred them to investigate.
Holmes seeks to bring her claim in the second category of cases to which the FCA's jurisdictional bar may apply, thereby requiring the Court to analyze the claim under the four prong test set forth in Advanced Sciences. Such categorization, however, stands clearly at odds with the stated purpose of the jurisdictional bar. There is no concern here that the government would not have been aware of the alleged wrongdoing had Holmes not initiated this qui tam action. By the time she initiated the action, the government had already investigated and referred the matter to the Attorney General. This is precisely the sort of "opportunistic" suit that the courts seek to inhibit by imposing the jurisdictional bar.
In reaching this decision, I do not consider whether or not Holmes' Complaint might have been proper had it been filed when she first discovered the alleged wrongdoing and before the government initiated and carried out its own investigation.
Holmes relies on Advanced Sciences and MK Ferguson in urging the Court to proceed in analysis as to whether there was public disclosure of the alleged wrongdoing and as to whether or not Holmes qualifies as an original source. It is important to recognize that the factual situations in the cases cited are quite different from the situation here. In both of those cases, the relator reported his concerns about false claims against the government, but the government did not pursue those claims. Here, the government did pursue the claims and referred the matter to the Attorney General. The government's failure to pursue the allegations inAdvanced Sciences and MK Ferguson is further evidenced by the government's decision not to intervene. In this case, the government did intervene in the qui tam suit once it was filed. While jurisdiction was ultimately found lacking in both Advanced Sciences or MK Ferguson, neither case addresses the jurisdictional analysis that is appropriate where the government is actively investigating and pursuing the alleged wrongdoing prior to the qui tam suit. These cases cannot, therefore, be cited as requiring this Court to conduct additional jurisdictional analysis of Holmes' claim. Based on the foregoing analysis, it is appropriate to GRANT Plaintiff United States' Motion to Dismiss relator Holmes.
Defendant Hightower's Motion to Dismiss filed February 23, 2000.
Defendant seeks dismissal of this case for lack of jurisdiction over the relator's claims. As the United States' Motion to Dismiss will be granted, this part of the Motion should be DENIED as moot. Defendant further argues that if the relator is dismissed, the entire matter should be dismissed for lack of subject matter jurisdiction. The United States argues that it may intervene in this qui tam action and litigate it to judgment notwithstanding jurisdictional defects attending the relator's claim.
In this case, the United States first moved to dismiss the relator for lack of jurisdiction and later elected to intervene. Following this election, the United States filed its own Complaint on December 22, 1999. Defendant's Motion to Dismiss the United States' Complaint for lack of jurisdiction must be evaluated in light of the jurisdictional grounds asserted in the Complaint. The Complaint asserts federal question jurisdiction under 28 U.S.C. § 1331, 1345, 1355 and the False Claims Act, 31 U.S.C. § 3731 (a). There is no argument that these statutes are unable to support jurisdiction independent of the qui tam statutes. As a result, despite the dismissal of relator Holmes, the United States' claim may proceed and Defendant's Motion to Dismiss must be DENIED.
Defendant Hightower's Remaining Pending Motions Filed February 23, 2000.
Defendant further seeks a stay of proceedings pending determination of whether the relator remains in the case. As the United States' Motion to Dismiss the relator will be granted, this Motion should be DENIED as moot. Defendant's Motion for Leave to file a Reply Brief to the United States' Motion to Dismiss as well as the Defendant's Motion to Dismiss will be DENIED as moot because these motions are no longer pending.
Accordingly, it is
ORDERED that Plaintiff United States' Motion to Dismiss Relator filed October 14, 1999 is GRANTED. It is
FURTHER ORDERED that Defendant Hightower's Motion to Dismiss filed February 23, 2000 is DENIED. It is
FURTHER ORDERED that Defendant Hightower's Motion to Stay Proceedings Pending Determination of Whether Relator Remains in the Case filed February 23, 2000 is DENIED AS MOOT. It is
FURTHER ORDERED that Defendant Hightower's Motion for Leave to File Brief filed February 23, 2000 is DENIED AS MOOT.