Source: https://openjurist.org/470/f3d/914/united-states-bly-magee-v-premo
Timestamp: 2017-08-24 08:53:36
Document Index: 154625717

Matched Legal Cases: ['§ 3730', '§ 3730', '§ 504', '§ 794', '§ 721', '§ 725', '§ 725', '§ 3730', '§ 3730', '§ 3730']

470 F3d 914 United States Bly-Magee v. Premo | OpenJurist
470 F. 3d 914 - United States Bly-Magee v. Premo
Charlotte Rae BLY-MAGEE, Plaintiff-Appellant,
Brenda PREMO; Catherine Campisi; Jim Kay; Warren Hayes, a/k/a Ronald E. Glousman, MD; Keith S. Foster; Edna Larson; Kenneth Smedberg; Verne Albright; Los Angeles County Department of Mental Health, e/s/a County of Los Angeles; Los Angeles County Office of Education, Defendants-Appellees.
Bly-Magee has not demonstrated by a preponderance of the evidence that she was the original source of the information upon which these allegations were based. See Harshman, 197 F.3d at 1018. Her employment at Southern California Rehabilitation Services and her claim that she conducted her own investigation are insufficient to show that she had direct knowledge of a scheme to submit false claims. See 31 U.S.C. § 3730(e)(4)(B) (defining an "original source" as "an individual who has direct and independent knowledge of the information on which the allegations are based ...."). Bly-Magee submitted a declaration to the district court that provided a lengthy explanation of her involvement with Southern California Rehabilitation Services and her investigation, but her recital is fatally short of specifics on the most material point: she still failed to show direct and independent knowledge of the information underlying her complaint. Thus, Bly-Magee did not establish that she was the original source of the allegations publicly disclosed in Bly-Magee II.
Section 3730(e)(4)(A) lists the sources of public disclosure that give rise to a jurisdictional bar when the relator is not an original source of the information. The listed sources can be divided into three categories: (1) "a criminal, civil, or administrative hearing"; (2) "a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation"; and (3) "the news media." Id. The California audit report would appear to fall under category (2) as an "administrative ... report [or] audit." Some doubt arises, however, because the other sources in category (2), such as congressional reports or reports of the Government Accounting Office, refer exclusively to federal agency materials.
This court has not previously addressed whether an administrative report, audit, or investigation prepared by a state entity (as opposed to the federal government) qualifies as a source of public disclosure under the second category.3 Two circuits that have addressed the question have reached opposite conclusions. In United States ex rel. Dunleavy v. County of Delaware, 123 F.3d 734, 745 (3d Cir.1997), the Third Circuit applied the doctrine of noscitur a sociis and held that, because the word "administrative" is placed between "congressional" and "Government Accounting Office," when read with the word "report" it "refers only to those administrative reports that originate with the federal government." Id. In Hays v. Hoffman, 325 F.3d 982, 988 (8th Cir.2003), the Eighth Circuit rejected Dunleavy and concluded that Medicaid audits prepared by a state agency are public disclosures within the meaning of the Act. We agree with the Eighth Circuit and now hold that the second category of sources includes non-federal reports, audits, and investigations.4
Even when it is read literally, the language of § 3730(e)(4)(A) does not compel a conclusion that "administrative" in category (2) means "federal administrative"—a phrase that Congress could have used but did not. The words "congressional" "administrative" and "Government Accounting Office" are separated by commas and the conjunction "or." Id. Accordingly, each word may be read as a separate modifier for the nouns that follow. See generally Flora v. United States, 362 U.S. 145, 150, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960) (confirming that grammar can be relevant to statutory interpretation). As long as this reading of the plain language produces a reasonable interpretation consistent with the rest of the statute, it should control. See Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (explaining that the process of statutory interpretation ceases if the language is plain and "`the statutory scheme is coherent and consistent'") (citation omitted).
This interpretation is consistent with our holding in A-1 Ambulance that state and local administrative hearings are sources of public disclosure. 202 F.3d at 1244. Indeed, the statute would seem to be inconsistent if it included state and local administrative hearings as sources of public disclosures and then, in the next breath, excluded state administrative reports as sources. The purpose of requiring public disclosures to come from these sources is to deter opportunistic relators from filing qui tam suits based on information already known to the federal government. See Wang v. FMC Corp., 975 F.2d 1412, 1418-19 (9th Cir.1992) (explaining the history of the 1986 amendments to the False Claims Act that created these categories). The federal government is no less likely to obtain information from a state administrative audit than it is from a state administrative hearing.
The likelihood that the information will be brought to the federal government's attention is heightened in cases like this where the audited program is connected significantly to federal regulations and funds. See Hays, 325 F.3d at 989 (noting that a state investigation into Medicaid fraud can lead to federal enforcement actions because Medicaid is a heavily regulated federal program). CDR primarily administers the Vocational Rehabilitation Program, supported by both federal and state funds and authorized by the federal Rehabilitation Act of 1973, 29 U.S.C. § 504, as amended 29 U.S.C. § 794. California is required to submit annual reports to the federal government on the administration of the program. 29 U.S.C. § 721(a)(15). California also must create a State Rehabilitation Council, id. § 725(a)(1), that provides progress reports to the federal government. Id. § 725(c)(2)(B). Essentially, CDR's operation depends on federal funding and compliance with federal regulations. It thus is similar to the Medicaid program in Hays. See 325 F.3d at 989 (explaining the significant federal regulation and cooperation for Medicaid). In light of the federal government's significant involvement with the Vocational Rehabilitation Program, it is just as likely that the government would become aware of fraud through a state audit as through a state hearing.
Finally, our interpretation of § 3730(e)(4)(A) does not create the anomalous situation feared by the court in Dunleavy. See 123 F.3d at 745. There, the Third Circuit expressed concern that state and local governments that are committing fraud might artfully craft reports or audits sufficient to constitute disclosure under the False Claims Act but insufficient to alert the federal government to the fraud. Id. The court feared that legitimate qui tam suits thus could be barred on the ground that the allegations were disclosed in reports or audits produced by the entity accused of fraud. Id. This fear is unfounded in this case because the State Auditor is an entity independent of CDR. The fear is unfounded in general because it is unlikely that an agency trying to cover up its fraud would reveal the requisite "allegations or transactions" underlying the fraud in a public document. The public disclosure of "mere information" relating to the claims is insufficient to trigger a jurisdictional bar to a False Claims suit; the "material elements of the allegedly fraudulent `transaction'" must be disclosed. A-1 Ambulance, 202 F.3d at 1243 (quoting Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1473 (9th Cir.1996)). Even if such a fear were well-founded, it would extend equally to state administrative hearings, which can be sources of public disclosure under the first category. Thus, the concern that doctored state reports will bar legitimate qui tam actions is an insufficient basis for distinguishing between state hearings and state audits, reports, and investigations.
We accordingly reverse the dismissal of those portions of the complaint alleging the making of false claims after June 30, 1999. We remand for further proceedings regarding those allegations. We note that the complaint's allegations of false claims made after June 30, 1999, are exceedingly general, and our remand does not foreclose the district court from further actions to clarify the complaint and to ensure that false claims made after this date are indeed subjects of the complaint. We also express no opinion regarding the sufficiency of the allegations under Fed.R.Civ.P. 9(b)—a question not reached by the district court.
The False Claims Act provides for a privatequi tam complaint, which asserts a claim in the name of the Government, to be served on the Government and filed under seal for at least 60 days. During that period (or extensions of it), the Government may elect to intervene and conduct the litigation, or may decline and leave the conduct of the litigation to the private relator. See 31 U.S.C. § 3730(b)(2), (3) & (4).
Bly-Magee has the burden of establishing subject matter jurisdiction by a preponderance of the evidenceUnited States ex rel. Harshman v. Alcan Elec. & Eng'g, Inc., 197 F.3d 1014, 1018 (9th Cir.1999).
We have held that state and local administrative hearings can qualify as sources of public disclosure under the first categoryA-1 Ambulance, 202 F.3d at 1243-44.
In holding inA-I Ambulance that category (1) included state and local administrative hearings as sources of disclosure, we distinguished Dunleavy as dealing with category (2). 202 F.3d at 1244-45. We did state, however, that Dunleavy buttressed our conclusion because one may presume that Congress intended different contexts in repeating "administrative" in the two clauses. See id. at 1245. We nevertheless did not purport to construe category (2) authoritatively in A-1 Ambulance, but simply observed that if Dunleavy was correctly decided that circumstance would lend additional support to the statutory interpretation adopted in A-1 Ambulance.
Our recent decision inUnited States ex rel. Haight v. Catholic Healthcare West, 445 F.3d 1147 (9th Cir.2006), has no bearing on this holding. In that case, we observed in a footnote that the first and second categories in § 3730(e)(4)(A) are "a form of work product originating with the government" and that "[t]he contents of those sources is expected to be well-known to the government." Id. at 1153 n. 3. Although the government at issue in Haight was the federal government, the question of whether these categories were limited to federal government work products was not before the Haight panel.