Source: http://pogoblog.typepad.com/pogo/2007/01/whistleblower_w.html
Timestamp: 2015-11-30 02:36:29
Document Index: 369150685

Matched Legal Cases: ['§ 3730', '§ 2', '§ 3', '§ 3', '§ 2', '§ 515']

Whistleblower Wins Oil Royalty Lawsuit: $7.5 Million Underpaid by Kerr-McGee
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Oil company Kerr-McGee (now a unit of Anadarko Petroleum) underpaid $7.5 million in royalties according to a jury verdict reached in Denver yesterday in a whistleblower lawsuit filed by former Interior Department auditor, Bobby Maxwell. The verdict is an embarassment to the Interior Department's Minerals Management Service (MMS) which claimed that the case had no merit and is under fire from Congress for a series of debacles.
Anadarko could be liable for “double or triple times” the jury verdict “as well as penalties of up to $11,000 for each of 1,200 false statements that the company is accused of making in its royalty reports to the government,” according to the New York Times. Anadarko claimed it intends to appeal. The lawsuit (pdf) was filed by Bobby Maxwell, a highly decorated auditor with more than two decades of government experience. Mr. Maxwell's case is the first of several filed by government whistleblowers who allege that Interior Department officials told them not to bill oil companies for royalties the companies owed for drilling oil and gas from federal leases. Insiders say the agency's refusal to collect the royalties is part of a pattern of complicity toward the industry.
According to the New York Times (registration req'd), Mr. Maxwell lost his job just one week after his lawsuit was made public in a "reorganization" by the Minerals Management Service. Last week, Senator Ron Wyden raised concerns in a Senate Energy and Natural Resources Committee hearing about possible retaliation against three additional MMS auditors based in Oklahoma who filed similar royalty underpayment lawsuits -- Randy Little, Joel Arnold, and Lanis Morris. In response, Interior Department Assistant Secretary Steve Allred promised that he would not tolerate retaliation against the whistleblowers.
Under rules of the False Claims Act, whistleblowers who mount such cases on their own are eligible for up to 30% of the proceeds of the case, but get less if the government joins the case. According to unconfirmed sources, the Interior Department may have urged the Justice Department not to intevene in the whistleblower suits. The Department of Interior's Inspector General (IG) is currently examining the whistleblower lawsuits as well as conducting a criminal investigation into the MMS' Royalty-in-Kind program. In testimony during the Senate hearing last week, the IG discussed how interest payments made by the oil companies were one area where he believed additional oil company underpayments were occurring. One of the whistleblower lawsuits appears to have brought this problem to light. The IG also made the astonishing statement that collection of oil royalties is "more or less an honor system." Anadarko's Kerr-McGee unit has the distinction of being the oil company which has filed suit to challenge the government's ability to collect any royalties at all on deep water wells in the Gulf of Mexico, arguing that the law never intended it. According to the Government Accountability Office (pdf), if Kerr McGee succeeds, the government would lose $60 billion.
-- Beth Daley Posted at 11:51 AM in Contract Oversight, Energy & Environment | Permalink
Is this what it looks like it is? An attempt to disable the Qui-Tam whistleblower process? -GFS
Special interests can make for strange bedfellows. What do The Boeing Company and Rockwell International have to do with The American Hospital Association? Is it possible that they joined forces to try to disable the Qui Tam provisions in U.S. law allowing whistleblowers to proceed with complaints and discoveries? I could see them tryingto do this through the back door, under the radar, by attaching themselves to and hiding behind a group such as the American Hospital Association. With all of the allegations against at least one of the defense contractors listed, and the numerous investigations ongoing as we speak, perhaps they are trying to cut the legs off their detractors as a preemptive strike before the investigations are complete? Let me know what your take is on this.
From The American Hospital Association, 9-8-09
Our Vision is of a society of healthy communities where all individuals reach their highest potential for health Home Advocacy Legal Amicus Brief Amicus Brief
NOS. 99-1351, 99-1352, 99-1353
UNITED STATES OF AMERICA ex rel. JAMES S. STONE,
ROCKWELL INTERNATIONAL CORP. AND
The Hon. Richard P. Matsch, District Judge
Case No. 89-M-1154
BRIEF OF THE AMERICAN HOSPITAL ASSOCIATION AND NATIONAL DEFENSE INDUSTRIAL ASSOCIATION AS AMICI CURIAE IN SUPPORT OF APPELLANTS AND IN SUPPORT OF REVERSAL OF THE DISTRICT COURT'S DECISION
(202) 626-2301 Counsel of Record
370 Seventeenth Street, Suite 4800
Counsel For Amici Curiae American Hospital Association And
National Defense Industrial Association --------------------------------------------------
Pursuant to 10th Circuit Rule 26.1, counsel for amici curiae American Hospital Association, Electronic Industries Alliance, and National Defense Industrial Association hereby states that none of the amici have a parent company. Furthermore, each of the amici are trade associations, and therefore have no stockholders.
In compliance with Federal Rule of Appellate Procedure 32(a)(7), counsel for amici curiae American Hospital Association and National Defense Industrial Association hereby certifies that this brief contains __________ words, as calculated by the word processing system used to prepare the brief.
I. THE FCA’S QUI TAM PROVISIONS VIOLATE PRINCIPLES OF SEPARATION OF POWERS *
A. Relators Act In The Capacity Of Officers Of The United States But Are Not Properly Appointed Under The Appointments Clause *
B. The Qui Tam Provisions Deny The Executive Meaningful Control Over The Initiation, Prosecution and Termination Phases Of The Litigation, And Thereby Exceed The Outer Boundary Of Executive Encroachment As Defined In Morrison v. Olson *
C. The Impermissible Delegation To Relators Of The Executive’s Appointment And Execution Power Has Produced Cases That Are Meritless And Adverse To The Government’s Interests *
II. QUI TAM RELATORS LACK THE INDIVIDUATED INJURY IN FACT REQUIRED BY ARTICLE III *
A. Even A Plaintiff Acting As A Private Attorney General Must Have An Individuated Injury In Fact *
B. A Relator’s Potential Bounty Does Not Satisfy The Requirements For Standing *
ROCKWELL INTERNATIONAL CORP. AND BOEING NORTH AMERICAN, INC., et al.,
Nos. 99-1351, 99-1352,
99-1353
CERTIFICATE OF INTEREST OF THE AMICI CURIAE
The undersigned counsel of record certifies the following:
The American Hospital Association ("AHA") is the primary national membership organization for hospitals and health care institutions in this country. The AHA’s mission is to promote high quality health care and health services through leadership and assistance to hospitals in meeting the health care needs of their communities. AHA’s approximately 5,000 members deliver to millions of Americans health care services which are funded in whole or in part by the federal government.
The National Defense Industrial Association ("NDIA") is a national organization consisting of nearly 900 corporations and 26,000 individual members dedicated to maintaining a close working relationship between American industry and the government in pursuit of national security. NDIA’s members provide a wide variety of goods and services to the government and include some of the nation’s largest defense contractors.
Amici have a compelling interest in the resolution of the fundamental issue presented in this case – whether the qui tam provisions of the amended False Claims Act ("FCA"), which allow private non-appointed individuals with no individuated injury to litigate on behalf of the United States, are constitutional.
Counsel for Plaintiffs/Appellees United States of America and James S. Stone, and Defendants/Appellants Rockwell International Corp. and Boeing North American, Inc. have consented to the filing of this brief.
These representations are made in order that the judges of this court may evaluate possible disqualification or recusal.
The challenge to the constitutionality of the qui tam provisions of the 1986 Amendments to the False Claims Act ("FCA") implicates a cascading set of constitutional issues which have made their way, in at least two other cases, to the Supreme Court. The constitutional dilemma begins with the lack of standing of those who would bring such actions, purportedly on behalf of the government; proceeds to their self-appointment to Executive Branch authority; continues through their nexus with that Branch, implicates a myriad of issues relating to the inability of the Executive Branch to control their conduct and comes - ultimately - to rest on the Judiciary which is cast in the role of supervising a cacophony of diverse interests emanating from a supposedly unitary Executive.
No matter what the justification for such a diversion of Executive Branch authority, the public interest has not been served by renegade prosecutors. We outline the following constitutional law concepts, all of which sit under the umbrella of separation of powers and therefore cannot be isolated from each other:
Standing – Relators cannot be cloaked with the interests, i.e., the injury, of the government. To hold otherwise would be to invite persons entirely outside the government to share the Article II powers and duties.
Appointments Clause – Concededly, there has been no appointment, notwithstanding that such appointment is the first line of control over the execution function of the Article II branch.
Execution ("Take Care" Clause) – The Constitution precludes ceding the execution function in someone not only totally outside the Article II branch but also not in any manner subject to its control.
Separation of Powers Doctrine – Were the Court to allow relators to push aside the lack of individuated injury, the lack of appointment, the lack of control by the Executive branch, there would remain the overriding consideration that the Court had thereby permitted virtually every separation violation conceivable on the part of the Article I and Article II branches acting in seeming concert. We define these as the "sins" of: (a) arrogation of power by Congress in taking an execution power out of the hands of the Executive branch and vesting it in someone more certain to act in the expressly stated interests of Congress; (b) delegation by Congress of a power of execution to someone entirely outside the government, and (c) cession or consent by the Executive branch to the compromise and dilution of its own execution powers. The qui tam provisions are a textbook on violations of the separation of powers.
This Court has not yet considered the constitutionality of the qui tam provisions of the 1986 FCA Amendments. A panel of the Fifth Circuit recently held that the qui tam provisions violate the "Take Care" Clause and the separation of powers doctrine. Riley v. St. Lukes Episcopal Hospital, 196 F.3d 514, 531, reh’g en banc granted, 196 F.3d 561 (5th Cir. 1999). The Supreme Court has pending before it the question of qui tam relator "standing" in Vermont Agency of Natural Resources v. United States ex rel. Stevens, No. 98-1828, though it may not reach that question. To date, three other circuits have upheld the constitutionality of the 1986 Amendments to the FCA’s qui tam provisions, but their decisions are remarkably diverse, inconsistent and untenable when considered against constitutional law principles.
While all of these case involved qui tam actions in which the government never intervened, the same issues are equally relevant here where the government, after initially declining, intervened in part of the case. Indeed, the particular events which have transpired in this action highlight the constitutional flaws in the FCA’s statutory scheme. As discussed herein, the government’s control even over the claims on which it intervened is severely limited under 31 U.S.C. § 3730(c)(3), the provision under which the court allowed intervention. Additionally, the issues pursued solely by Stone present the same constitutional and practical problems as in any qui tam case declined by the government; i.e., meritless claims pursued by an uninjured party and unsupported by the government in whose name they are brought, causing undue burden on the defendant, the court, the government and ultimately the taxpayers.
I. THE FCA'S QUI TAM PROVISIONS VIOLATE PRINCIPLES OF SEPARATION OF POWERS
The FCA’s qui tam provisions constitute an impermissible attempt by Congress to arrogate the authority of the Executive branch by passing legislation that delegates to private non-appointed and uninjured individuals the Executive’s power to initiate, conduct and meaningfully control litigation on behalf of the United States. Apart from the Executive’s willingness to cede its power, the Constitution reserves this power exclusively to the Executive branch and its appointees by the Appointments Clause (Article II, § 2, cl. 2), and the Take Care Clause (Article II, § 3). As the Supreme Court noted in Printz v. United States, 521 U.S. 898, 923 (1997), these two clauses form the basis of the separation of powers doctrine.
Arrogation by Congress of the Executive’s authority was rejected in Buckley v. Valeo, 424 U.S. 1, 122 (1976), in which the Court observed that separation of powers is a "safeguard against the encroachment or aggrandizement of one branch at the expense of the other." In Buckley, the Court held that only the Executive, not Congress, was empowered to appoint members of the Federal Election Commission. Id. at 143. See also, Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252, 276 (1991) (because management of a federally owned airport is an Executive power, Congress was not empowered to create a congressional board of review with veto authority over managerial decisions); Bowsher v. Synar, 478 U.S. 714, 726 (1986) ("To permit the execution of the laws to be vested in an officer [the Comptroller General] answerable only to Congress would, in practical terms, reserve in Congress control over the execution of laws").
Recently, the Supreme Court confirmed that our branches of government do not have the constitutional authority even to consent to cede their authority:
To say the political branches have a somewhat free hand to reallocate their own authority would seem to require acceptance of two premises: first, that the public good demands it, and second, that liberty is not at risk. The former premise is inadmissible. The Constitution’s structure requires a stability which transcends the convenience of the moment. The latter premise, too, is flawed. Liberty is always at stake when one or more of the branches seek to transgress the separation of powers.
Clinton v. New York, 118 S. Ct. 2091, 2108-09 (1998) (Kennedy, J. concurring) (citations omitted). Accordingly, the current Administration’s official acquiescence to the FCA’s infringement of its authority cannot overcome the strictures of the separation of powers. See also INS v. Chadha, 462 U.S. 919, 942 n.13 (1983) ("The assent of the Executive to a bill which contains a provision contrary to the Constitution does not shield it from judicial review").
Notwithstanding that Congress perceived a need to delegate the Executive’s prosecutorial function – a perception which we maintain herein has proved to be sorely misguided – the Supreme Court has made it quite clear that the Constitution rests the prosecutorial function solely with the Executive who is obligated to "take care that the Laws be faithfully executed . . . ." Article II, § 3. See Buckley v. Valeo, 424 U.S. at 138; United States v. Nixon, 418 U.S. 683, 693 (1974) ("the Executive Branch has exclusive authority and absolute discretion to decide whether to prosecute a case"). Central to our tricameral form of government and, in particular, to the carrying out the Executive’s prosecutorial function is the Appointments Clause, which specifies that the President "[s]hall nominate, and . . . appoint . . . officers of the United States . . . ." Article II, § 2, cl. 2. It is only by control of appointments that the Executive can assure the fealty which the Constitution intends. The Take Care Clause and the Appointments Clause, operating together, enable the separation of the powers of lawmaking and execution.
As the Supreme Court noted in Mistretta v. United States, 488 U.S. 361, 374 n.7 (1989), decisions which have permitted the delegation of authority outside the branch to which the authority is assigned have done so on the narrowest of grounds. See, e.g., United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954) (Attorney General’s own regulation delegating his discretionary powers to the Board of Immigration Appeals was permitted because he could reassert his power by amending the regulation); United States v. Nixon, 418 U.S. at 696 (Attorney General retained power to revoke regulation authorizing special prosecutor to obtain discovery and to oppose the Executive’s invocation of Executive privilege); Mistretta, 488 U.S. at 371-79 (1989) (Congress’ delegation of power to an independent Sentencing Commission to promulgate sentencing guidelines was not an excessive delegation of legislative discretion because of the specific guidelines and constraints imposed by Congress on the Commission); but see Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) (improper delegation where Congress, under the depression era National Industrial Recovery Act, delegated certain law-making authority to the Executive branch but without articulating specific standards or "an intelligible principle" for the exercise of discretion by the Executive). See also Morrison v. Olson, discussed in more detail below. Here, of course, Congress delegated the Executive’s prosecutorial discretion to relators with no standards governing the conduct of the relators and no effective control by the Executive.
The FCA commits all three separation of powers sins by turning over prosecutorial controls to qui tam relators with no fealty to the Executive and no duty or interest in assuring faithful execution of the law. A qui tam relator is a government prosecutor who is not subject to Executive appointment or discharge control, and not subject to either the political or the prudential considerations that are encompassed by the notion of prosecutorial discretion. As the Supreme Court has recognized, relators are "motivated primarily by prospects of monetary reward rather than the public good," and therefore the "relator’s interests and the government’s do not necessarily coincide." Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 949 (1997). This conflicting interest between relators, who claim to represent the government, and the government, which is often in an adversarial position with respect to the relator, is perhaps the most apparent flaw that has emerged from Congress’ tampering with the constitutional framework.
A. Relators Act In The Capacity Of Officers Of The United States But Are Not Properly Appointed Under The Appointments Clause
Any individual "exercising significant authority pursuant to the laws of the United States is an ‘Officer of the United States,’ and must, therefore, be appointed in the manner prescribed by [the Appointments Clause]." Buckley v. Valeo, 424 U.S. at 126. See also Edmond v. United States, 520 U.S. 651, 662 (1997) ("The exercise of ‘significant authority pursuant to the laws of the United States’ marks . . . the line between officer and non-officer"). Only a properly appointed officer may conduct litigation on behalf of the United States. Buckley, 424 U.S. at 138. The qui tam provisions permit relators to appoint themselves as prosecutors for the United States – the same significant prosecutorial power which Buckley held was precluded.
The Supreme Court addressed this concept more recently in Printz v. United States, 521 U.S. 898 (1997), where it held that Congress could not properly delegate to state officials the authority to enforce the Brady Act’s rules concerning gun purchasers’ background checks.
The insistence of the Framers upon unity in the Federal Executive – to insure both vigor and accountability – is well known. That unity would be shattered, and the power of the President would be subject to reduction, if Congress could act as effectively without the President as with him, by simply requiring state officers to execute its laws.
Id. at 922 (citations omitted). If the Constitution does not permit such delegation to state officials, it is quite a stretch to suggest that it would permit such delegation to qui tam relators.
DOJ may argue here, as it did in Riley, that relators are not officers of the United States, and therefore do not fall within the purview of the Appointments Clause. If this were true, it would seem that 28 U.S.C. §§ 515 and 543 are unnecessary. This is circular reasoning because if they are not appointed they cannot prosecute. No case holds that