Court Opinion

ID: 2996269
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:26:57.62406+00
Date Added: 2024-06-11T11:45:29.031322
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 01-3806
UNITED STATES OF AMERICA
EX REL. RICHARD FEINGOLD,
                                                   Plaintiff-Appellant,
                                  v.

ADMINASTAR FEDERAL, INC., et al.,
                                               Defendants-Appellees.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
              No. 98 C 4392—Ronald A. Guzmán, Judge.
                          ____________
    ARGUED OCTOBER 17, 2002—DECIDED MARCH 27, 2003
                          ____________

  Before EASTERBROOK, MANION, and KANNE, Circuit Judges.
  MANION, Circuit Judge. Richard Feingold brought a qui
tam action under the False Claims Act. On a motion for
summary judgment, the district court concluded that it
lacked subject matter jurisdiction because the informa-
tion upon which Feingold based his suit was publicly
disclosed and he was not the original source of that infor-
mation. Although we conclude that the district court had
jurisdiction, we hold that Feingold’s suit fails as a matter
of substantive law and therefore affirm the district court’s
entry of summary judgment.
2                                                No. 01-3806

                              I.
  Appellees Associated Insurance Companies, Inc.,
AdminaStar, Inc., and AdminaStar Federal, Inc. are compa-
nies that contracted with the Healthcare Financing Adminis-
tration (HCFA) to approve or disapprove healthcare equip-
ment providers’ claims for reimbursement under Medicare.
Appellant Richard Feingold is familiar with the approval
process because he recently worked for a medical supply
company and was involved in two other successful qui tam
suits involving improper Medicare reimbursements. During
the relevant time period, adult diapers were an item
for which Medicare would not provide reimbursement.
Feingold suspected that Appellees recklessly approved
claims for diapers that were disguised as being for other,
reimbursable items. Feingold’s suspicions grew after he
obtained and reviewed the following documents: (1) HCFA
and Department of Health and Human Services (HHS)
“fraud alerts” released to the public in 1994; (2) a newspaper
article from July 1998 concerning the criminal indictment
of two people for billing Medicare for diapers; (3) the
criminal indictments of those people; (4) HCFA statistical
reports, created in October 1998, showing the number of
allegedly improper claims approved by appellees; and (5)
papers from his previous litigation. After Feingold con-
cluded that appellees had approved questionable claims
in reckless disregard for their falsity and the govern-
ment declined to pursue the matter, he filed the present
action on July 17, 1998 under the False Claims Act (FCA),
31 U.S.C. §§ 3729-32, and amended the complaint on
February 22, 2000. The district court determined that the
five categories of documents were publicly disclosed and
that Appellees were entitled to summary judgment be-
cause Feingold ran afoul of the FCA’s prohibition of suits
based on publicly disclosed “allegations or transactions”
No. 01-3806                                                  3

where the plaintiff is not the original source of that infor-
mation. Feingold appeals.

                              II.
  This court reviews the district court’s grant of sum-
mary judgment de novo, construing all facts in favor of
Feingold, the nonmoving party. Commercial Underwriters
Ins. Co. v. Aires Envtl. Services, Ltd., 259 F.3d 792, 795 (7th
Cir. 2001). Summary judgment is proper when the “plead-
ings, depositions, answers to interrogatories, and admis-
sions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter
of law.” Fed. R. Civ. P. 56(c). Thus, “[s]ummary judgment
is appropriate if, on the record as a whole, a rational trier
of fact could not find for the non-moving party.” Commer-
cial Underwriters, 259 F.3d at 795. The district court granted
summary judgment because it held, as a matter of law,
that 31 U.S.C. § 3730(e)(4)(A), a provision that Congress
added to the FCA in 1986 to prevent parasitic qui tam
actions, denied the court jurisdiction. Section § 3730(e)(4)(A)
provides as follows:
    No court shall have jurisdiction over an action under
    this section based upon the public disclosure of allega-
    tions or transactions in a criminal, civil, or admin-
    istrative 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.
  Although the statute uses the term “jurisdiction,” and we
have discussed application of § 3730(e)(4)(A) as turning
4                                                 No. 01-3806

on a “jurisdictional bar,” United States ex rel. Mathews v.
Bank of Farmington, 166 F.3d 853, 858 (7th Cir. 1999), the
Supreme Court has held that what we are actually deal-
ing with is an issue of substantive law. Hughes Aircraft Co.
                                               1
v. United States, 520 U.S. 939, 950-51 (1997). We review
a dismissal under § 3730(e)(4)(A) de novo, Mathews, 166 F.3d
at 859, considering:
    (1) whether the relator’s allegations have been publicly
        disclosed;
    (2) if so, whether the lawsuit is “based upon” such
        public disclosures; and
    (3) if so, whether the relator is an “original source” of
        the information contained within the public disclo-
        sures.
Id. at 859.

A. Were the allegations or transactions publicly dis-
   closed?
  We have explained extensively the historical underpin-
nings of the FCA in Mathews, see id. at 857-59, and shall not
repeat them here. For our purposes, it suffices to reiter-
ate that the function of a public disclosure is to bring to
the attention of the relevant authority that there has been
a false claim against the government. Id. at 861. Where

1
   That this analysis is one of substantive law, and not juris-
diction, mattered in Hughes Aircraft because there the disposi-
tive question was whether the jurisdictional exception to the
presumption against retroactivity applied. See Hughes, 520 U.S.
at 950. No such consideration is relevant to this case; there-
fore, that § 3730(e)(4)(A) is substantive rather than jurisdic-
tional does not materially affect our analysis.
No. 01-3806                                                 5

a public disclosure has occurred, that authority is already
in a position to vindicate society’s interests, and a qui
tam action would serve no purpose. Id. Where, on the
other hand, a transaction or an allegation of fraud has
not been publicly disclosed, society benefits by creating
a monetary incentive for a knowledgeable person, called
a relator, to identify the problem, present his information
to the government, and, where the government declines
to prosecute, proceed with a qui tam action under the
FCA. Id. at 857-58. With those purposes in mind, we shall
ascertain the meaning of the term “public disclosure” in
the statute.
   When interpreting the meaning of a statute, we look
first to the text; the text is the law, and it is the text to
which we must adhere. See, e.g., Miller Aviation v. Milwau-
kee County Bd. of Supers., 273 F.3d 722, 730 (7th Cir. 2001);
United States v. Evans, 148 F.3d 477, 483 n.8 (5th Cir. 1998).
This tenet of statutory interpretation leads us to join two
of our sister circuits in holding that a “public disclosure”
exists under § 3730(e)(4)(A) when the critical elements
exposing the transaction as fraudulent are placed in the
public domain. United States ex rel. Rabushka v. Crane Co.,
40 F.3d 1509, 1512 (8th Cir. 1994); United States ex rel.
Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 654 (D.C.
Cir. 1994). This definition makes sense both when stand-
ing alone as a matter of diction and when read in relation
to the remainder of the statute.
  We begin with diction. Congress enacted § 3730(e)(4)(A)
in 1986. Contemporaneous definitions of “disclose” include:
“to open up”; “to expose to view”; and “to make known
or public.” Webster’s Ninth New Collegiate Dictionary
360 (1987). Although “public” has several definitions, the
most germane to this topic is “accessible to or shared by
all members of the community.” Id. at 952. These defini-
6                                                No. 01-3806

tions comport with our holding here that a public disclo-
sure happens when the critical elements exposing the
transaction as fraudulent are placed in the public domain.
   Similarly, this concept of what constitutes a public
disclosure makes sense when read in the context of the
entire statute because it is consistent with § 3730(e)(4)(A)’s
function of prohibiting parasitic lawsuits. It also com-
ports with the FCA’s broader goal of encouraging law-
suits based on information that is not available to the
public, and thus not available to the governmental au-
thorities with direct responsibility for the claim in ques-
tion. See Mathews, 166 F.3d at 858. This definition of “pub-
lic disclosure” is consistent with our holding in Mathews.
There, when analyzing discovery materials produced to
a private litigant, this court concluded that until discov-
ery materials are filed with the court, the discovery proc-
ess conducted between litigants does not itself constitute
a public disclosure within the ambit of § 3730(e)(4)(A).
See Mathews, 166 F.3d at 860 (citing United States ex rel.
Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1521
(10th Cir.1996)).
   We now must consider whether the five categories of
documents upon which Feingold based this suit placed
the critical elements of his allegations of fraud in the pub-
lic domain. Feingold admits that the first three of those
categories, the newspaper article, the criminal indict-
ments, and the fraud alerts, were publicly disclosed in-
formation. Feingold maintains that the fourth category,
the HCFA documents, was not publicly disclosed. As to
the fifth and final category, papers from Feingold’s pre-
vious FCA litigation, Feingold stipulates that the litiga-
tion documents that were filed were publicly disclosed,
but argues in a footnote that “suppliers’ claims contain-
ing patient medical information were not filed in . . .
No. 01-3806                                                 7

previous qui tam lawsuits and therefore have not been
publicly disclosed.”
  We turn first to the HCFA reports. Those documents were
administrative reports; i.e., they were reports issuing
from the HCFA, an agency of the federal government.
Because the purpose of a public disclosure is to alert
the responsible authority that fraud may be afoot, and
that purpose is served where that authority has itself
issued the reports containing information that sub-
stantiates an allegation of fraud, we hold that the HCFA
reports were placed in the public domain. See United
States ex rel. Mistick PBT v. Housing Auth., 186 F.3d 376, 383
(3d Cir. 1999) (holding that an agency report prepared
in response to a request under the Freedom of Information
Act was publicly disclosed); Gold v. Morrison-Knudsen, Inc.,
68 F.3d 1475, 1477 (2d Cir. 1995) (reasoning that reports
prepared for the Army Corps of Engineers were “publicly
disclosed information”).
   Feingold attempts to avoid this conclusion by arguing
that “the Government—through a Department of Justice
Attorney—represented that it was unaware of any public
disclosure.” This argument misses the mark. Administra-
tive reports are publicly disclosed because, by their very
nature, they establish the relevant agency’s awareness of
the information in those reports. That a particular attor-
ney of that agency may not know of that same informa-
tion is of no moment; what concerns this analysis is wheth-
er the critical information was in the public domain,
not whether one lawyer knew of the data. The district
court was therefore correct when it reasoned that an “al-
legation or transaction can be publicly disclosed under
the FCA even where a representative of the Government
is unaware of any public disclosures.”
8                                             No. 01-3806

  We turn to the fifth and final category of information,
Feingold’s papers from his previous litigation against
his former employer. As noted above, Feingold stipu-
lates that the litigation documents that were filed in the
clerk’s office were publicly disclosed, but perfunctorily
states that “suppliers’ claims containing patient medical
information were not filed . . . in [Feingold’s] previous
qui tam lawsuits and therefore have not been publicly
disclosed.” The problem with Feingold’s argument is that
he does not tell us anything about those papers, nor does
he cite to any part of the record from which we could
examine them. We are thus in no position to know wheth-
er those documents are even of relevance to this case,
and we hold that there is no genuine issue of material
fact as to prong one: all of the information upon which
this suit could have been based was publicly disclosed.

B. Was Feingold’s suit based on publicly disclosed
   information?
   We now turn to prong two of our analysis, asking wheth-
er the lawsuit is based upon public disclosures. Under
§ 3730(e)(4)(A), a lawsuit is based upon public disclo-
sures when it “both depends essentially upon publicly
disclosed information and is actually derived from such
information.” Mathews, 166 F.3d at 864. Because Feingold
points to no evidence upon which this suit depends that
is not publicly disclosed, we hold that Feingold has based
this action on publicly disclosed documents and must
address the third and final prong of analysis, asking
whether Feingold is an “original source” of the informa-
tion contained within the public disclosures.
No. 01-3806                                               9

C. Is Feingold an original source?
   An original source of information under the FCA must
meet two criteria. First, he must be original; i.e., he must
have “direct and independent knowledge of the informa-
tion on which the allegations are based.” Mathews, 166
F.3d at 865 (quoting 31 U.S.C. § 3730(e)(4)(B)). Or, in
other words, he must be “someone who would have
learned of the allegation or transactions independently of
the public disclosure.” Id. Second, he must be a source;
i.e., he must “have voluntarily provided the information
to the Government” before instituting a suit. Id. In his
opening brief, Feingold points to no evidence in the rec-
ord that would allow a reasonable factfinder to conclude
that he would have learned of the allegation or trans-
actions independently of the public disclosures, instead
offering us the conclusory assertion that “through his
own investigation, [Feingold] gathered the information
necessary in order to make the allegations against” Appel-
lees. We therefore find no fault with the district court’s
holding as a matter of law that Feingold was not an orig-
inal source. Feingold simply adduces no evidence that
would allow a factfinder to reach the opposite conclusion.

                            III.
  The district court correctly concluded, as a matter of
law, that Feingold is not an original source and that he
based this qui tam action on publicly disclosed informa-
tion. Section 3730(e)(4)(A) therefore bars this action and
we affirm the entry of summary judgment in appellees’
favor.
10                                           No. 01-3806

A true Copy:
       Teste:

                       _____________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit

                USCA-02-C-0072—3-27-03