Court Opinion

ID: 185032
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:26:51+00
Date Added: 2024-06-11T13:13:13.986781
License: Public Domain

198 F.3d 913 (D.C. Cir. 1999)
United States of America ex rel. Earl S. Settlemire, Appellantv.The District of Columbia, Appellee
No. 98-7180
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 8, 1999Decided December 21, 1999

[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of Columbia(No. 96cv00568)
Joyce E. Mayers argued the cause and was on the briefs  for appellant.  Pamela J. Bethel entered an appearance.
Donna M. Murasky, Assistant Corporation Counsel, argued the cause for appellee. With her on the briefs were John  M. Ferren, Corporation Counsel at the time the main brief  was filed, Jo Anne Robinson and Robert R. Rigsby, Interim
Corporation Counsel at the time supplemental briefs were  filed, and Charles L. Reischel, Deputy Corporation Counsel.
Douglas N. Letter, Attorney, U.S. Department of Justice,  argued the cause for the United States as amicus curiae. With him on the brief were David W. Ogden, Acting Assistant  Attorney General, Michael F. Hertz and David M. Gossett,  Attorneys, and Wilma A. Lewis, U.S. Attorney.
Before:  Edwards, Chief Judge, Sentelle and Randolph,  Circuit Judges.
Opinion for the Court filed by Circuit Judge Sentelle.
Sentelle, Circuit Judge:

1
Appellant-relator Earl S. Settlemire brought this qui tam action against the District of  Columbia, alleging that the District spent funds appropriated  by the United States for purposes other than those intended  by Congress, thereby violating the False Claims Act ("FCA"  or "Act"), 31 U.S.C. §§ 3729-3733 (1994).  The district court  dismissed the action for lack of subject matter jurisdiction. We agree with the district court that Settlemire's allegations  fall within the Act's jurisdictional bar against actions based on  publicly disclosed information.  See 31 U.S.C.  3730(e)(4)(A).Because we further hold that Settlemire has not satisfied the  original source exception to the jurisdictional bar, we affirm  the district court's dismissal of this action.

I. Background

2
Under the FCA, a private party may bring suit for fraud  committed against the United States.  The ability to bring  such actions is limited by the "public disclosure" provision of  the Act, which divests courts of jurisdiction over claims  "based upon the public disclosure of allegations or transactions" in specified types of public proceedings, "unless ... the  person bringing the action is an original source of the information."  31 U.S.C.  3730(e)(4)(A).  An original source is a  plaintiff with "direct and independent knowledge" of the  relevant facts who has revealed his knowledge to the Government before public disclosure and before filing suit.  31  U.S.C.  3730(e)(4)(B);  see United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 690 (D.C. Cir.),  cert. denied, 118 S. Ct. 172 (1997).  This creates a two-step  process in which a court decides whether the action is based  on publicly disclosed information, and if so, whether the  plaintiff may still proceed because he is an original source of  that information.

3
Settlemire brought suit under the FCA alleging the following facts.  In 1989, the government of the District of Columbia requested federal financial assistance in order to increase  the officer strength of the Metropolitan Police Department  ("MPD").  Congress subsequently enacted the District of  Columbia Police Authorization and Expansion Act of 1989,  Pub. L. No. 101-223,  2, 103 Stat. 1901, 1901-02 ("Expansion  Act") (codified at D.C. Code Ann.  47-3406(c) (1997 repl.)),  which authorized the appropriation of funds for fiscal years  1990 through 1994 for "salaries and expenses (including benefits) of 700 additional officers and members of the Metropolitan Police Department of the District of Columbia."  Id.   2(c)(1).  Under the statute, these funds were to be available  only to pay for "officers and members of the [MPD] in excess  of 4,355 officers and members (and supplies, equipment, and  protective vests for reserve officers of the [MPD])."  Id.   2(c)(2).

4
Congress first appropriated funds under the Expansion Act  for fiscal year 1990, in the amount of $17,630,000.  See  District of Columbia Appropriations Act, 1990, Pub. L. No.  101-168, 103 Stat. 1267, 1267-71 (1989).  The Conference  Report accompanying this act recognized that it would be  impossible for the District to hire and train enough new police  officers above the 4,355 threshold to use all of the appropriated funds.  See H.R. Conf. Rep. No. 101-270, at 5-6 (1989).Thus the report stated that the "first priority" of Expansion  Act funds was for the hiring of additional officers, but provided that if the funds were not so expended, they "may be used  to purchase goods and services in the non-personal object  classes including support and other materials as well as  capital items."  Id.

5
A similar sequence of events occurred for fiscal year 1991.Congress again appropriated funds, and the Conference Report contained the same language.  See District of Columbia  Appropriations Act of 1991, Pub. L. No. 101-518, 104 Stat.  2224, 2224-29 (1990);  H.R. Conf. Rep. No. 101-958, at 10-11  (1990).1

6
On May 7, 1990, the District claimed that the police department had reached a staffing level of 4,355 and began to access  the Expansion Act funds.  A number of Congressional hearings occurred in 1990 and 1991 which included discussions  about the use of Expansion Act funds.

7
First, a subcommittee of the Senate Committee on Appropriations held hearings on May 24, 1990.  See Hearings  Before the Senate Subcomm. of  the Comm. on Appropriations, District of Columbia Appropriations for Fiscal Year  1991, 101st Cong. (1990).  Mayor  Marion S. Barry, Jr. testified  as to what was happening to the Expansion Act monies. In his submitted statement he declared:  "Now that we are  able to access the $17 million we will be using some of those  funds for overtime as well as to continue the hiring of the 700  police officers."  Id. at 50.  During his oral testimony, he  explained why the MPD's overtime spending was over budget:

8
Why did we spend it?  Because we wanted to demonstrate our commitment.  We knew we were going to access the $17 million.  We knew it did not require are programming.  Only that, as I understand it, we had toreach a police officer level of 4,355 before we could access the $17 million for the police department

9
.....

10
Congress gave us $17.6 million.  When you take [the District's other funds] and add it to the $17.6 million that would give us enough overtime money to finish the rest of this year.

11
Id. at 68-69.

12
Isaac Fullwood, Jr., Chief of Police, testified to similar  effect:

13
We were spending that money as if we already had access to it.

14
We knew that once we reached a police officer strength of 4,355 that we would have direct access to the funds.  It was our understanding that no reprogramming would be required.  The money was virtually unencumbered in the way that the Congress intended us to use it, as long as it was used specifically for law enforcement purposes.

15
Id. at 71.

16
On May 22, 1991, a House subcommittee held budget  hearings regarding District appropriations for the 1992 fiscal  year.  See Hearings Before a Subcomm. of the Comm. on  Appropriations:  Subcomm. on District of Columbia Appropriations, Fiscal Year 1992, 102d Cong. (1991).  Chairman  Julian Dixon questioned District representatives about the  use of Expansion Act funds:

17
When the Mayor sent up her [budget] reductions of $216million, a major part of that was a reduction of some$12.5 million in the police department.

18
From my way of looking at it, it was a reduction of money that you had already received.  Is that correct? In other words, you got $17.6 million in fiscal year 1991to hire additional police officers.  You have that money in your pocket, and when the Mayor sent up the budget, she said I am going to cut $12.5 million in the police department.  My response would be that you already have that money so you are not cutting anything--you are just keeping our money but you are not spending it for the purpose it was intended.

19
Id. at 1160.

20
While Expansion Act funds were being appropriated by  Congress, appellant headed the budget branch of the MPD's Office of Finance and Resource Management.  He claims that  he had access to reports that detail how the District spent  Expansion Act funds on items other than for additional  officers beyond the 4,355 threshold.  He filed the instant  action in the district court on March 22, 1996 under seal, as  required by the FCA.  See 31 U.S.C.  3730(b).  After the  U.S. Department of Justice notified the district court that it  did not wish to intervene, the seal was released, and the  complaint served on the District.

21
After discovery, both parties filed motions for summary  judgment. The District additionally moved for dismissal for  lack of subject matter jurisdiction based upon the jurisdictional limitation of the FCA which bars suits based upon  publicly disclosed transactions.  See 31 U.S.C.  3730(e)(4).The district court concluded that Settlemire's claims were  precluded by the jurisdictional bar, and that Settlemire did  not fall under the "original source" exception.  Because of  these conclusions, the district court dismissed for lack of  subject matter jurisdiction.  Settlemire has appealed the  dismissal.

22
Prior to oral argument, we requested additional briefing on  the relevance of United States ex rel. Long v. SCS Business  & Technical Inst., 173 F.3d 870 (D.C. Cir.) (holding that a  state is not a "person" subject to suit under the FCA),  supplemented by, 173 F.3d 890 (D.C. Cir.), petition for cert.  filed, 68 U.S.L.W. 3116 (U.S. Aug. 2, 1999) (No. 99-213).  The  United States submitted an amicus brief and participated in  oral argument on that matter.  As explained below, we do not  reach the issue.

II.

23
Since its original enactment in 1863, the FCA has allowed  any private party to bring suit, on behalf of the United States  government, based on that party's knowledge of fraud committed against the government.  See Findley, 105 F.3d at  679-81 (reviewing the history of and amendments to the Act);see also 31 U.S.C.  3729(a) (defining the underlying conduct  that constitutes a false claim).  As an incentive to bring such  qui tam suits, the FCA allows a plaintiff to receive a portion of the funds that were the subject of the false claim.  See 31  U.S.C.  3730(d).

24
A number of amendments have been made to the Act over  the years, including the 1986 amendments, which restricted  the subject matter jurisdiction of these qui tam actions in  cases where the suit is based on publicly disclosed information:

25
(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

26
(B) For purposes of this paragraph, "original source"means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

27
31 U.S.C.  3730(e)(4).  Under this regime, jurisdiction is  lacking "whenever the relator files a complaint describing  allegations or transactions substantially similar to those in the  public domain, regardless of the actual source for the information in the particular complaint."  Findley, 105 F.3d at  682;  see also United States ex rel. Mistick PBT v. Housing  Auth. of the City of Pittsburgh, 186 F.3d 376, 388 (3d Cir.  1999).  Although a qui tam plaintiff may be able to present  "allegations or transactions" with copious detail, we inquire  only as to whether the publicly disclosed information " 'could  have formed the basis for a governmental decision on prosecution, or could at least have alerted law-enforcement authorities to the likelihood of wrongdoing.' "  United States ex rel.  Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 654  (D.C. Cir. 1994) (quoting United States ex rel. Joseph v.  Cannon, 642 F.2d 1373, 1377 (D.C. Cir. 1981)).  We have  expressed this inquiry in a formula:

28
[I]f X + Y = Z, Z represents the allegation of fraud and X and Y represent its essential elements.  In order to disclose the fraudulent transaction publicly, the combination of X and Y must be revealed, from which readers orlisteners may infer Z, i.e., the conclusion that fraud has been committed .

29
Springfield Terminal, 14 F.3d at 654.

30
Once it is determined that "public disclosure" has occurred,  the court considers whether the relator is an "original  source."  See id. at 651.  Under 31 U.S.C.  3730(e)(4)(B),  two elements must be shown.  First, the relator must show  "direct and independent knowledge of the information on  which the publicly disclosed allegations are based";  such  information must be firsthand and cannot depend on the  public disclosures.  See Findley, 105 F.3d at 690.  Second,  the relator must voluntarily disclose his information to the  federal Government before filing his lawsuit.  Such voluntary  disclosure must occur prior to the public disclosures which  invoke the jurisdictional bar.  See id.

III.
A. Public Disclosure

31
Settlemire asserts that the District spent Expansion Act  money for purposes other than those required by that Act. Regardless of what other purpose the funds were spent on,  any purpose other than those required by the statute could  constitute a false claim against the government.  Here however, District officials disclosed in public Congressional hearings that they were using the funds for purposes beyond  those listed in the Expansion Act.  Of course, their willingness to disclose this information makes it appear that they  thought nothing was improper.  As Chief Fullwood said, the  District believed the funds were "virtually unencumbered in  the way that the Congress intended us to use it, as long as it  was used specifically for law enforcement purposes."  This  disclosure that the District was using and planned to continue  to use Expansion Act funds in ways outside the letter of the  statute, "enable[d] the government to adequately investigate the case and to make a decision whether to prosecute,"  Findley, 105 F.3d at 688.  It therefore publicly disclosed the  alleged false claims as contemplated in  3730(e)(4)(A).

32
The fact that Settlemire is able to provide more specific  details about what happened to the allegedly misspent funds  does not matter.  In Findley, we noted that a relator's ability  to reveal specific instances of fraud where the general practice has already been publicly disclosed is insufficient to  prevent operation of the jurisdictional bar.  See Findley, 105  F.3d at 687-88.  There is no requirement, as Settlemire  appears to contend, that the relevant public disclosures irrefutably prove a case of fraud.  It is sufficient that the  "publicly disclosed transaction is sufficient to raise the inference of fraud."  Id. at 687.

33
Nor is it of any concern that the District had not accessed  all of the Expansion Act funds when the public disclosures  where made.  As we held in Findley, disclosures going back  as far as forty years prior to the relator's lawsuit were  sufficient to disclose the practices which formed the basis of  the relator's suit.  See id. at 685-87.  Cases may arise where  disclosures of a practice are insufficient to be considered  public disclosures of later instances of fraud, as "Congress did  not prescribe by mathematical formulae the quantum or  centrality of nonpublic information that must be in the hands  of the qui tam relator in order for suits to proceed."  Springfield Terminal, 14 F.3d at 653.  But, as here, where we have  before us publicly disclosed information showing how this  same defendant intended to spend monies appropriated under  this same statute, it is clear that public disclosure under   3730(e)(4)(A) has occurred.2

B. Original Source

34
Although the District's practices were publicly disclosed,  that does not end our endeavor.  Settlemire's action may  nonetheless proceed if he can demonstrate that he is an  "original source" of the information as defined by 31 U.S.C.   3730(e)(4)(B).  That is, he must show that he met the  "direct and independent knowledge" requirement and voluntarily disclosed his information to the Government prior to  the public disclosures and the filing of his lawsuit.  He has  not made such a showing.

35
While the District's Rule 12(b)(1) motion properly raised  the original source issue, Settlemire dwelled only on the  independent knowledge element and presented no evidence of  voluntary disclosure.  Only in his reply brief before this court  did Settlemire finally address the voluntary disclosure issue,  relying on his supplemental declaration dated five days prior  to the filing of the reply brief.  In the absence of extraordinary circumstances, Settlemire's failure to assert sufficient  jurisdictional facts in a timely fashion means that he cannot  satisfy the requirements of 31 U.S.C.  3730(e)(4)(B).  See  District of Columbia v. Air Florida, Inc., 750 F.2d 1077, 1084  (D.C. Cir. 1984) (court need not consider issues not presented  to the district court);  United States v. Whren, 111 F.3d 956,  958 (D.C. Cir. 1997) (court need not consider issues that  appellant fails to raise in opening appeal brief although issue  was raised below), cert. denied, 118 S. Ct. 1059 (1998);  National Anti-Hunger Coalition v. Executive Comm. of the  President's Private Sector Survey on Cost Control, 711 F.2d  1071, 1075 (D.C. Cir. 1983) (appellate court will generally not  consider new evidence on appeal).

36
It was completely proper for Settlemire to assert below  that the jurisdictional bar did not apply because, in his view,  the public disclosures did not fall under 31 U.S.C.   3730(e)(4)(A).  Upon losing on this ground however, Settlemire does not have a right to recast his claim on appeal so as  to avoid the consequences of that decision.

37
Settlemire moved to supplement the joint appendix at the  same time he filed his reply brief in order to provide evidence  supporting his voluntary disclosure argument.  The District  opposed the motion and also moved to strike the reply brief.We deferred consideration of these motions pending oral  argument.  As additional evidence not presented to the district court is not ordinarily considered on appeal, see National Anti-Hunger Coalition, 711 F.2d at 1075, we will deny  Settlemire's motion to supplement.  There is no need to  strike the reply brief in its entirety, so we will also deny that  motion.  However, we note in passing that even if we were to  consider Settlemire's additional materials, he still does not  allege that he actually disclosed any information to the Government before the public disclosures occurred.

38
After our review of the record, we hold that Settlemire has  not proved himself to be an "original source."  The district  court concluded that Settlemire did not have "direct and  independent knowledge of the information on which the allegations are based."  31 U.S.C.  3730(e)(4)(B).  But as it is  patently clear that Settlemire did not present evidence of  voluntary disclosure, we affirm the district court's holding  that Settlemire cannot qualify as an original source on those  grounds alone.  When the judgment of the court below is  correct as a matter of law, we may affirm on different  grounds.  See, e.g., Haddon v. Walters, 43 F.3d 1488, 1491  (D.C. Cir. 1995).

C. Supplemental Issue

39
Because of our lack of subject matter jurisdiction over this  action, we do not proceed to the claim-for-relief question  posed by the possible application to the District of Columbia  of United States ex rel. Long v. SCS Business & Technical Inst., 173 F.3d 870 (D.C. Cir.) (holding that a state is not a  "person" subject to suit under the FCA), supplemented by,  173 F.3d 890 (D.C. Cir.), petition for cert. filed, 68 U.S.L.W.  3116 (U.S. Aug. 2, 1999) (No. 99-213).  We had ordered  additional briefing sua sponte on the relevance of Long, but  now have no occasion to address that issue and express no  opinion on its merits.  See Steel Co. v. Citizens for a Better  Env't, 118 S. Ct. 1003, 1012-16 (1998);  United States ex rel.  Kreindler & Kreindler v. United Technologies Corp., 985  F.2d 1148, 1155-56 (2d Cir. 1993) (holding that court should  consider 12(b)(1) jurisdictional challenges before 12(b)(6) challenges).3

IV. Conclusion

40
For the reasons set forth above, we conclude that the  allegations of Settlemire's complaint fall within the FCA's  jurisdictional bar against actions based on publicly disclosed  information.  We further hold that Settlemire has not satisfied the original source exception to the jurisdictional bar. Accordingly, the district court's dismissal of this action is

41
Affirmed.

Notes:

1
 The parties dispute whether funds were actually appropriated  under the Expansion Act for fiscal years 1992 and 1993, but we  need not resolve that issue.  See infra n.2.

2
 The parties spend a good deal of time in their briefs arguing  over which years Congress actually appropriated funds under the  Expansion Act.  Settlemire claims that $93,220,000 was appropriated in total for fiscal years 1990 through 1993.  The District asserts  that no funds were provided in fiscal years 1992 and 1993.  Neither  dispute that funds were not appropriated in fiscal year 1994.Settlemire correctly points out that each count of fraud alleged in a  qui tam action is considered separately under the jurisdictional bar  provision.  See United States ex rel. Alexander v. Dyncorp, Inc.,  924 F. Supp. 292, 298-302 (D.D.C. 1996).  However, because the  public disclosures in this case were sufficient to disclose the District's general practices regarding Expansion Act funds for all of  the years in question, it makes no difference whether funds were  appropriated for only two or as many as four years.  This being the  case, we need not decide the issue.

3
 We are aware that the Supreme Court recently expanded the  scope of its review in Vermont Agency of Natural Resources v.  United States ex rel Stevens, 120 S. Ct. 523 (1999), another FCA  qui tam case, to consider whether "a private person [has] standing  under Article III to litigate claims of fraud upon the government."As we have already disposed of this case on other jurisdictional  grounds, we do not address the issue.