Opinion ID: 162057
Heading Depth: 2
Heading Rank: 3

Heading: Examination of the Specific Circumstances

Text: 18 We may affirm the district court's decision on any ground adequately supported by the record. Z.J. Gifts D-2, L.L.C. v. City of Aurora, 136 F.3d 683, 685 (10th Cir.1998). We therefore consider whether the specific circumstances in this case preclude jurisdiction over Holmes's claim. 19 As an initial matter, we note that the FCA does not, by its terms, either authorize or preclude all suits by government employees. 4 One of the specific exclusions prevents suits by a former or present member of the armed forces ... against a member of the armed forces arising out of such person's service in the armed forces. 31 U.S.C. § 3730(e)(1). 5 Another exclusion precludes a qui tam suit against a Member of Congress, a member of the judiciary, or a senior executive branch official if the action is based on evidence or information known to the Government when the action was brought. Id. § 3730(e)(2)(A). In effect, this section might preclude government employees from filing qui tam suits against individuals in the named categories, based on the argument that, if a government employee has the information, the government also has it. If government employees were always precluded from pursuing qui tam suits under the FCA, these specific exclusions would be superfluous. We therefore avoid such an interpretation. N.M. Cattle Growers Ass'n v. U.S. Fish & Wildlife Serv., 248 F.3d 1277, 1285 (10th Cir.2001). 20 Although we decline to apply a general jurisdictional bar to federal employees, this conclusion does not necessarily mean that federal employees are always proper qui tam plaintiffs unless section 3730(e) bars jurisdiction. We therefore consider whether a federal employee who is part of an ongoing government investigation may proceed with a qui tam suit based on those allegations. We conclude that a federal employee may not proceed with a qui tam suit in these circumstances. 21 The FCA provides, in a section headed Actions by private persons, that [a] person may bring a civil action for a violation of section 3729 for the person and for the United States Government. 31 U.S.C. § 3730(b)(1). The Act does not make explicit the class of persons eligible to file civil suits under subsection (b). In construing a statute, our overriding purpose is to determine congressional intent. Chickasaw Nation v. United States, 208 F.3d, 871, 878 (10th Cir.2000) (citing. Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)). To determine the statute's plain meaning, we must look to the particular statutory language at issue, as well as the language and design of the statute as a whole. Id. (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988)). Based on our examination of the FCA and its purposes, along with our consideration of federal employees' obligations to avoid conflicts of interest, we conclude that a federal employee who participates in a government investigation pursuant to her job duties is not, as least while the investigation is ongoing, a person entitled to bring a civil action under section 3730(b). 22 We acknowledge that, in reaching this conclusion, we take a position that conflicts directly with the Eleventh Circuit's view. That court has held that a former government employee is not barred from pursuing a qui tam action based upon information he acquired during the course of his government employment, regardless of whether the government is engaged in an active investigation of the alleged fraud. United States ex rel. Williams v. NEC Corp., 931 F.2d 1493, 1496 n. 7, 1502 (11th Cir.1991). Our approach is quite different from that of the Williams court. The Eleventh Circuit focused its analysis on the public disclosure bar, id. at 1499-1500, and extra-statutory arguments against jurisdiction, id. at 1501-04. In contrast, we start with the FCA's initial grant of jurisdiction and conclude that not all government employees fall within the group of persons otherwise eligible to file a qui tam action. Much of the Eleventh Circuit's reasoning addresses the FCA's failure to preclude all government employees' qui tam actions. It is our view, however, that while the Act does not explicitly authorize or preclude all such actions, it may allow some and disallow others. In determining which government employees are excluded from the category of eligible plaintiffs, we consider the employee's duties and whether there is an ongoing government investigation. We conclude that allowing a qui tam action to proceed where the relator is a government employee acting as part of an ongoing investigation 6 would destroy the statute's distinction between the government and relator, would contravene the purpose of the FCA, and would create impermissible conflicts of interest for federal employees pursuing such suits. 23
24 We first observe that the concept of a qui tam action assumes a distinction between the government and the individual qui tam plaintiff. When the FCA permits a private suit, the person filing it brings the action for the person and for the United States Government. 31 U.S.C. § 3730(b)(1). The term qui tam derives from the Latin phrase, qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means who as well for the king as for himself sues in this matter. Black's Law Dictionary 1262 (7th ed.1999). This distinction between relator and government is not present, however, when a federal employee obtains information about fraud in the pursuit of his or her particular duties as a government employee. In effect, that person obtains the information as the government. At least with respect to an ongoing government investigation, a federal employee who is involved in the investigation pursuant to employment duties is the government. Therefore, we hold that such an employee cannot file an action under section 3730(b) for the person and for the United States Government. 7 25 Holmes is such an employee in this case. Holmes first encountered the CIG employees in her capacity as postmaster at the post office in Poncha Springs, Colorado. To determine whether CIG was entitled to the bulk rate it sought, she consulted with the postmaster at Howard, where CIG was supposedly receiving that rate. Though the Howard postmaster confirmed that CIG got the bulk rate, Holmes ultimately denied CIG that rate, based on her determination that the mailing did not meet weight requirements. It is undisputed that, at all times during this progression of events, Holmes acted in her capacity as postmaster. 26 Several years later, Holmes went to the Howard post office to provide training to the acting postmaster. It is undisputed that Holmes undertook this task within the scope of her employment as a postmaster. Holmes states in her affidavit that she provided this training with the approval of her manager, and her complaint states that she was assigned temporarily to the Howard post office. She makes no claim that the training itself was outside the scope of her employment. The affidavit of Marsha Boyle, a labor relations specialist who serves as a representative and advisor to the U.S. Postal Service, states that, under Postal Service regulations, postmasters may be designated and certified as postmaster trainers. 27 Holmes states in her affidavit that, during lunch with the acting postmaster when she was in Howard to provide training, she asked about CIG's bulk rate and learned that it was getting the rate she had denied it two years earlier. She and the acting postmaster discussed the matter and together examined CIG's latest mailing statement. Holmes claims that she had no other business than curiosity to inquire about the rates CIG was getting at the Howard post office, and that she had no authority over the Howard office and had not been assigned to check into bulk mailings. Even if she had no specific duty to inquire ask about CIG's rates, however, she made the inquiry and obtained the relevant information in her capacity as postmaster. 28 Moreover, Holmes had a duty as a postmaster to report information about this type of fraud. Regulation 224.3 in the Postal Service's Administrative Support Manual requires a postmaster to report by memorandum [f]ailure to pay postage, violation of franking privilege, misuse of penalty mail, depositing of advertising material in mailboxes without payment of postage, and similar schemes to evade payment of postage.  (Emphasis added). Holmes does not dispute that this regulation applies to her. Nothing in the regulation limits its scope, and Holmes has provided no evidence to suggest that its scope is limited to fraud conducted or discovered at her home post office. 8 In fact, she concedes its applicability when she states in her brief that she could have met her job description responsibility to report suspected fraud by simply sending a memorandum to the Postal Inspection Service. 29 Holmes argues that she did more than what was required of her. We are not persuaded. According to her affidavit, Holmes first reported the fraud to her superior after her trip to Howard in August 1997, rather than immediately submitting a written memorandum to her local postal inspector in charge, as the postal regulations require. In December 1997, she had not yet heard anything about an investigation by the postal inspectors. She therefore sent a letter to the Inspector General's office. In early March 1998, the Inspector General's office notified Holmes by letter that it had reviewed the information and referred [her] concerns to the appropriate Office of Inspector General Director for action deemed warranted. Holmes had little confidence that anything would be done, and she therefore told a postal systems coordinator about the fraud allegations. Soon after, however, an agent from the Inspector General's office contacted Holmes about its investigation. This course of events, as described by Holmes, demonstrates that, while she certainly reported the information, she did not follow the procedure outlined in the postal regulations. Moreover, it is undisputed that, when it became aware of the fraud allegations, the Postal Inspection Service investigated them. Thus, we cannot find that Holmes's actions so exceeded her duties as to entitle her to pursue a qui tam action. 30 Inasmuch as Holmes's duties as a federal employee are an important element in our analysis, our reasoning bears some similarity to the First Circuit's reasoning in United States ex rel. LeBlanc v. Raytheon Co., 913 F.2d 17, 20 (1st Cir.1990). We emphasize, however, that our approach differs significantly from the First Circuit's. The LeBlanc court held that a government employee who has a duty, as a condition of his employment, to uncover fraud does not qualify as a qui tam relator, because this duty prevents him from qualifying as an original source. Id. at 20. In contrast, we find it unnecessary to reach the original source question where there has been no public disclosure. 9 Instead, our analysis revolves around the meaning of Congress's statement that [a] person may bring a civil action ... for the person and for the United States Government, 31 U.S.C. § 3730(b)(1), an issue that logically precedes the public disclosure and original source inquiries. A federal employee who is not precluded for the reasons we outline in this opinion would still be subject to the public disclosure bar, and if public disclosure had occurred, there would be no jurisdiction unless the employee could qualify as an original source. 31
32 The purposes of the FCA's qui tam provisions and its 1986 amendments further support our conclusion that jurisdiction is lacking. Congress instituted the qui tam provisions of the FCA to encourage private citizens to expose fraud that the government itself cannot easily uncover. United States ex rel. Fine v. Sandia Corp., 70 F.3d 568, 572 (10th Cir.1995). Moreover, the 1986 amendments' expansion of jurisdiction over qui tam actions reflects Congress's concern that the government was not pursuing known instances of fraud. Ramseyer, 90 F.3d at 1520 (quoting MK-Ferguson Co., 861 F.Supp. at 1551). The statute as amended aims (1) to encourage private citizens with first-hand knowledge to expose fraud; and (2) to avoid civil actions by opportunists attempting to capitalize on public information without seriously contributing to the disclosure of the fraud. Id. at 1519-20 (quoting Precision, 971 F.2d at 552). The public disclosure bar manifests and serves these purposes by requiring that, if information exists in one of the enumerated sources, and if that information has been publicly disclosed, only an original source of the information may sue. Consideration of the circumstances at issue here reveals several reasons that exercising jurisdiction would not serve the FCA's purposes of encouraging exposure of fraud or preventing parasitic suits. 33 First, where a government employee has a duty to report fraud, as Holmes does as postmaster, the information underlying that employee's suit does not constitute information that the government would not otherwise uncover. The duty to report itself assures that her information is the government's information. Thus, this is a case of fraud allegations that the government is capable of pursuing. 10 34 Second, an ongoing government investigation demonstrates that the government is in fact pursuing the allegations of fraud. This is true even if, until the government actually initiates an enforcement action, there may be uncertainty as to whether it will do so. Holmes participated in the government investigation pursuant to her duties as postmaster. With respect to that investigation, she is part of the governmental entity. Her qui tam action is not prodding the government to pursue fraud it would not otherwise pursue, because the undisputed facts show that the government is engaged in active pursuit. In fact, Holmes's own brief states plainly that this was not the purpose of her suit: After Relator was confident that the government was adequately investigating her information, she filed her lawsuit under the FCA to recover her lawful share of the proceeds. Therefore, permitting Holmes's qui tam suit would not serve this aspect of the FCA's purposes. 35 Third, these circumstances are not ones in which a private person needs to be encouraged to expose fraud. On the contrary, having acquired the information in the course of her duties as a postmaster, Holmes had a specific obligation as a postmaster to report it. Again we note that, in the performance of her duties as a postmaster, she is part of the governmental entity. As such, she acquired the information for the government. Moreover, a federal employee who reports a private company's fraud on the government does not have the same fear of reprisal that a company insider who acts as a whistleblower may have, further reducing the need for financial incentives to encourage them to disclose information about fraud. 11 36 Finally, allowing federal employees' qui tam suits in these circumstances would not serve, and would in fact contradict, Congress's goal of preventing parasitic suits. The purposes we have outlined create a contrast between public and private, between the federal government's information and private citizens' independent knowledge. In Ramseyer, we concluded that the public disclosure bar requires actual, not merely theoretical, disclosure. 90 F.3d at 1519. Underlying our reasoning was the assumption that potential qui tam relators do not have access to governmental information that has not been made public: 37 Information to which the public has potential access, but which has not actually been released to the public, cannot be the basis of a parasitic lawsuit because the relator must base the qui tam suit on information gathered from his or her own investigation. If a specific report detailing instances of fraud is not affirmatively disclosed, but rather is simply ensconced in an obscure government file, an opportunist qui tam plaintiff first would have to know of the report's existence in order to request access to it. 38 Id. at 1520. This rationale, however, does not apply to government employees who know of the allegations because of their jobs. Government employees frequently have access to government information even though it has not been publicly disclosed, as defined in Ramseyer. Thus, there is a potential for parasitic qui tam suits by government employees before public disclosure occurs, just as there is a potential for such suits by private persons following public disclosure. 12
39 Federal employees' obligations to avoid conflicts of interest further distinguish them from others who file qui tam suits. The glaring inconsistency between these limitations on federal employees and allowing federal employees to pursue qui tam suits further supports our conclusion that Congress did not intend to permit federal employees to act as qui tam plaintiffs in these circumstances. 40 The most relevant among the specific prohibitions on federal employees is the prohibition on the use of nonpublic Government information 13 to further any private interest. 5 C.F.R. §§ 2635.101(b)(3), 2635.703(a). Other regulations prohibit participation in a government matter in which the employee has a financial interest, id. §§ 2635.402, 2635.501, 2635.502; the use of public office for private gain, id. §§ 2635.101(b)(7), 2635.702; the use of government property or time for personal purposes, id. §§ 2635.704, 2635.705; and holding a financial interest that may conflict with the impartial performance of government duties, id. § 2635.403. Moreover, Congress has specifically imposed criminal penalties on government employees who participate in matters in which they have financial interests. 18 U.S.C. § 208. 41 Holmes has based her qui tam suit on information that she acquired in the course of her employment as a postmaster and had a specific duty to disclose. At least while the government is conducting an ongoing investigation of the allegations, Holmes's claim for a portion of the proceeds directly reduces the amount that the government may ultimately collect. To allow an employee in Holmes's position to pursue qui tam claims in these circumstances would give a personal stake in the relevant information to any individual whose duties include reporting fraud. Rather than perform their jobs as they are required, government employees obligated to disclose suspected fraud may inappropriately hide fraud from their supervisors while preparing their qui tam actions for filing. United States ex rel. Biddle v. Bd. of Trustees, 161 F.3d 533, 542 (9th Cir.1998) (citation omitted). We cannot conclude that Congress intended to create an incentive for government employees to withhold information about suspected fraud contrary to their specific employment obligations. 14 42 The FCA does not specify how it applies to federal employees. We must assume that Congress intends for federal employees to adhere to applicable statutes and regulations. We have therefore endeavored to construe the FCA in a manner that is consistent with federal employees' obligations. In light of these obligations, along with the statute's evident purposes and its distinction between the government and the private relator, we conclude that Congress did not intend to permit a federal employee's qui tam suit in these circumstances.