Court Opinion

ID: 9494205
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:32:01.761144+00
Date Added: 2024-06-11T17:56:16.804105
License: Public Domain

RONALD M. GOULD, Circuit Judge,
dissenting:
I respectfully dissent. Barajas is not entitled to any proceeds from the Air Force Agreement because debarment is not an “administrative proceeding to determine a money penalty” nor otherwise an “alternate remedy” for an FCA claim. See 31 U.S.C. § 3730(c)(5) (“[T]he Government may elect to pursue its claim through any alternate remedy available to the Government, including any administrative proceeding to determine a money penalty.”).
The party-plaintiff in an FCA action is the United States. FCA claims asserting fraud against the United States may be brought by the Attorney General through the Department of Justice directly, or by a relator indirectly for the United States. In contrast, a debarment proceeding is brought by the contracting agency pursuant to regulations relating to federal government contracting. 48 C.F.R. § 9.406-3. A debarment proceeding may indeed be based on any cause that affects the present responsibility of a government contractor or subcontractor, and need not be based on commission of fraud. 48 C.F.R. § 9.406-2(c).
Here, the initial FCA claims were asserted for the United States by the Attorney General; the debarment proceedings were initiated by the United States Air Force, which purchased the flight data transmitters for cruise missiles. Even if the Air Force may be considered part of the “Government,” it nonetheless is incorrect and ill-advised to conclude that the Air Force in a debarment proceeding is “pursuing its [the Government’s] claim through [an] alternate remedy available to the Government....” Stated another way, the Air Force in a debarment proceeding helps to preserve national security by ensuring a responsible contractor; it does not pursue a “money penalty” or “alternate remedy” to compensate the government for a fraud claim that could have been pursued in FCA litigation.
The purpose of a debarment proceeding is to exclude a government contractor from participating (for a designated period of time) in any procurement or nonprocurement activity with a federal agency where that contractor has acted improperly. 15A Fed. Pro., L.Ed. § 39.1334, at 785 (West 1998). Although a contractor’s agreement to make full restitution and to pay all criminal, civil, and administrative liability for the improper activity, including any investigative or administrative costs, is considered a mitigating factor, 48 C.F.R. § 9.406.1(a)(5), the recovery of such costs is not the essential purpose of a debarment proceeding. I would hold that the debarment process is not an “alternate remedy” to FCA proceedings even where, as here, the debarment process pertains to the same subject matter as an existing or potential FCA claim.
The majority opinion creates an unworkable and unmanageable precedent. Although Barajas, before us, has limited his claim to the monies recovered by the government, nothing in the majority opinion would preclude a qui tam plaintiff from seeking to recover part of the value of the entire debarment settlement between the government and its contractor. Settlements made to resolve debarment proceedings may be difficult, if not impossible, to value.1
*1015In addition to these valuation difficulties, the precedential effect of the majority’s opinion adds a complexity that may interfere with debarment resolutions and could impede relationships between the Department of Defense and its contractors. This may have an unintended negative impact on national defense contracting and the underlying national security and safety concerns. Congress could establish that FCA alternate remedies include settlements gained through debarment proceedings, but has not done so. We should not by interpretation expand the FCA in a way that may interfere with national defense contracting.
Finally, I recognize that the majority may be motivated by a concern that the result is unfair to Barajas, where the United States through the Air Force received restitution on a claim that Barajas tried unsuccessfully to pursue under the FCA. But, even if we were to consider fairness as a tool to interpret the FCA, I see nothing unfair here. Barajas’s failure to collect a share on the damping fluid claims is the result of his own choice to accept settlement of the false testing qui tam action. Had he objected to the prior settlement as insufficient, in view of damping fluid claims, a court might have addressed his concerns before the settlement was final. After the settlement became final, he belatedly recognized that res judicata barred his farther FCA claims relating to damping fluid. His attempt to avoid the res judicata effects of the earlier agreement through a strained construction of “alternate remedy” should not be credited by this court.
Finally, the majority opinion challenges the following “sequence of events” {my comments follow in Italics): (1) the Department of Justice settled an initial qui tam action (but Barajas interposed no objection ); (2) it was therefore “impossible for Barajas to proceed with [the] second action” (but this was a legal consequence determined by us, not some other part of the government, in an earlier appeal); (3) the Air Force “brought a suspension or debarment proceeding that allowed it to achieve essentially the same result it could have achieved by intervening in Barajas’ second action” {but in fact, the Air Force suspension or debarment proceeding gave it many options to ensure a viable supplier, and an incidental money remedy was only part of relief gained); and (4) the “consequence of this sequence is that the government now hopes to avoid paying Barajas the relator’s share to which he would have been entitled” had his second qui tam action proceeded {but, whatever the government “hopes to avoid paying, ” it certainly has the right and indeed the duty to defend against contested claims that ultimately are paid by taxpayer dollars ). There is no support in the record showing a coordination between the Department of Justice and the Air Force to frustrate a qui tam claim by Barajas, nor does the majority really suggest any bad faith. Merely describing independent agencies of the United States as “the government” does not prove a design to deprive Barajas of something to which he claims to be entitled.2

. For example, what is the value of new or revised review and control procedures and ethics training programs?

. And, as I have earlier explained, Barajas’ preclusion from a second qui tam action with its consequences is something which he could have addressed by objecting to the first qui tam settlement.