Opinion ID: 757662
Heading Depth: 1
Heading Rank: 2

Heading: Constitutional Balance of Federal and State Powers

Text: 6 The University argues that, to subject States to liability under the False Claims Act, Congress must have clearly stated its intent to do so in the language of the statute. The Supreme Court has held that if Congress intends to alter the 'usual constitutional balance between the States and the Federal Government,' it must make its intention to do so 'unmistakably clear in the language of the statute.'  Will v. Michigan Dep't of State Police, 491 U.S. 58, 65, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989) (citations omitted). We thus examine whether suit by a qui tam relator, in which the United States has intervened, effects such an alteration. 7 We first hold that, in an action under the False Claims Act, the United States is the real party in interest because of its significant control over the course of the litigation and its dominant share of the proceeds thereof. The qui tam provisions of the Act state: Actions by Private Persons--(1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government.... 31 U.S.C. § 3730(b). The action may be dismissed only with the consent of the Attorney General, and the government may intervene in the action. Id. If the government intervenes, as it has in this case, it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action. 31 U.S.C. § 3730(c)(1). Section 3730(c)(2)(A) and (B) give the government considerable control over the dismissal and settling of the case, as well as the participation of the relator in it. Further, the government receives the lion's share of any recovery: where it has intervened, between 75% and 85% of the proceeds of the claim. 31 U.S.C. § 3730(d). 8 Even in cases where the United States has declined to intervene, the structure of the qui tam procedure, the extensive benefit flowing to the government from any recovery, and the extensive power the government has to control the litigation have been held to weigh heavily for holding that it remains the real party in interest. United States ex rel. Milam v. University of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.1992). See also Searcy v. Philips Electronics N. America Corp., 117 F.3d 154 (5th Cir.1997); United States ex rel. Hall v. Tribal Dev. Corp., 49 F.3d 1208, 1212 (7th Cir.1995); United States ex rel. Killingsworth v. Northrop Corp., 25 F.3d 715 (9th Cir.1994); Minotti v. Lensink, 895 F.2d 100 (2d Cir.1990); United States ex rel. Long v. SCS Business & Technical Inst., 999 F.Supp. 78 (D.D.C.1998). In this structure, the relator has no interest in the matter whatever except as [a common informer]. Marvin v. Trout, 199 U.S. 212, 225, 26 S.Ct. 31, 50 L.Ed. 157 (1905) (explaining that qui tam actions have been in existence for hundreds of years in England, and in this country ever since the foundation of our Government). Especially where the government has intervened, then, it must be recognized as the real party in interest. The relator is essentially a self-appointed private attorney general, United States ex rel. Milam, 961 F.2d at 49, whose involvement in a representational capacity does not raise Eleventh Amendment concerns. In fact, this Court holds, in an opinion filed today, that a State has no Eleventh Amendment immunity against a qui tam suit filed under this statute, even when the United States has chosen not to intervene. United States ex rel. Rodgers v. Arkansas, 154 F.3d 865 (8th Cir.1998). 9 As the real party in interest, the federal government's power to sue a State is well within the usual constitutional balance of federal and state powers. The consent of the States to suit by the United States is inherent in the [plan of the constitutional] convention, Blatchford v. Native Village of Noatak, 501 U.S. 775, 785, 111 S.Ct. 2578, 115 L.Ed.2d 686 (1991), and nothing in [the Eleventh Amendment] or any other provision of the Constitution prevents or has ever been seriously supposed to prevent a State's being sued by the United States. United States v. Mississippi, 380 U.S. 128, 140, 85 S.Ct. 808, 13 L.Ed.2d 717 (1965). Contrary to the University's assertion, the Supreme Court's decision in Seminole Tribe v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), does not put this principle in question. Seminole Tribe addressed the question of whether Congress could authorize an Indian tribe, a private party, to sue a State. It explicitly distinguished, however, the power of the federal government to do so. Id. at 71 n. 14, 116 S.Ct. 1114 ([T]he Federal Government can bring suit in federal court against a State, see, e.g., United States v. Texas, 143 U.S. 621, 644-45, 12 S.Ct. 488, 36 L.Ed. 285 (1892) (finding such power necessary to the 'permanence of the Union').). As the Fourth Circuit has explained, Seminole Tribe does not change our analysis that the States have no Eleventh Amendment immunity against the United States ab initio. Therefore, there is no reason Congress would have displaced it in the False Claims Act. United States ex rel. Berge v. Board of Trustees of the University of Alabama, 104 F.3d 1453 (4th Cir.1997) (quoting United States ex rel. Milam, 961 F.2d at 50 n. 3). 10 Nor does application of the False Claims Act to States constitute coercion, thereby disrupting the usual balance of power between the United States and the States. There is no coercion in subjecting States to the same conditions for federal funding as other grantees: States may avoid these requirements simply by declining to apply for and to accept these funds. But if they take the King's shilling, they take it cum onere. In a case considering the application of the Hatch Act to the political activities of federally funded State employees, the Supreme Court found no violation of state sovereignty, because the State could follow the 'simple expedient' of not yielding to what she urges is federal coercion.... The offer of benefits to a state by the United States dependent upon cooperation by the state with federal plans, assumedly for the general welfare, is not unusual. Oklahoma v. Civil Service Comm'n, 330 U.S. 127, 143-44, 67 S.Ct. 544, 91 L.Ed. 794 (1947). Here, the only cooperation asked of States is honesty, a mild requirement in light of the fact that the Tenth Amendment allows even the indirect achievement of objectives which Congress is not empowered to achieve directly, through conditional federal funding. South Dakota v. Dole, 483 U.S. 203, 210, 107 S.Ct. 2793, 97 L.Ed.2d 171 (1987) (upholding the conditioning of federal highway funding on State enforcement of a certain minimum drinking age). Accordingly, we reject the University's suggestion that the False Claims Act's remedies impermissibly commandeer the legislative processes of the States. New York v. United States, 505 U.S. 144, 161, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992) (citation omitted). Further, the University should not have needed explicit notice of the basic understanding that the grants were to be obtained and administered without fraud. 11 The University argues that the False Claims Act's remedies alter the usual constitutional balance of federalism because they are extracompensatory. Though the ability of private citizens to recover more than compensatory damages from state defendants has been limited in some instances--see, e.g., Employees of Dep't of Public Health and Welfare v. Dep't of Public Health and Welfare, 411 U.S. 279, 93 S.Ct. 1614, 36 L.Ed.2d 251 (1973), we do not understand the federal government to be so restricted. In any case, the Supreme Court has determined that 'the Government is entitled to rough remedial justice, that is, it may demand compensation according to somewhat imprecise formulas, such as reasonable liquidated damages or a fixed sum plus double damages....' ... We do not see how the treble-damages provision of the False Claims Act is different ... and we hold that the [False Claims Act] civil case was compensatory rather than punitive. United States v. Brekke, 97 F.3d 1043, 1048 (8th Cir.1996) (citations omitted) (holding that a False Claims Act suit did not bar subsequent criminal prosecution), cert. denied, 520 U.S. 1132, 117 S.Ct. 1281, 137 L.Ed.2d 356 (1997). 12 We hold that a False Claims Act action against a State falls within the usual constitutional balance between the States and the Federal Government. Will, 491 U.S. at 65, 109 S.Ct. 2304 (citations omitted). Therefore, Congress's intent to include States as liable parties need not be manifest in unmistakably clear language. Id.