In a case of first impression for the circuit, the 5th Circuit Court of Appeals recently held that government employees who learn of alleged violations of the False Claims Act within the scope of their employment may nevertheless file a qui tam and are not precluded from acting as relators even though their job as a government employee was "to investigate a fraud." Randall Little and Joel Arnold on behalf of the United States v. Shell Exploration and Production Co., et al., Case no. 11-20320, (5th Cir. July 31, 2012).
In this case, the relators were auditors with the Minerals Management Service ("MMS"), an agency of the Department of Interior, and part of the mission of their agency was "to uncover theft and fraud in the royalty programs" for offshore drilling. The relators alleged that Shell failed to pay the United States $19 million in royalties due it from Shell's offshore drilling. The Court noted that it was "undisputed that the Shell allegations came to light during the course" of the relators' "official duties" and that reporting their findings was "a job requirement." The relators reported their requirements and then subsequently filed two different qui tams. The government did not intervene.
Overturning the District Court's grant of summary judgment, the 5th Circuit found that government employees, such as the relators, qualified as "persons" under the False Claims Act. 31 U.S.C. 3730(b)(1)("A person may bring a civil action for a violation of section 3729 . . . "). In making its decision, the Court declined a number of policy and statutory construction arguments offered by the government in an amicus and the defendant as to why government employees cannot be relators, including arguments based on the text of the statute; the "absurdity" of having government employees as relators, and that government employees serving as relators would violate "ethics guidelines" applicable to government employees. The Court also noted that the 10th and 11th Circuits also permit government employees to be relators. U.S. ex rel Williams v. NEC Corp., 931 F.2d 1493, 1501-02 (11th Cir. 1991) and U.S. ex rel Holmes v. Consumer Ins. Grp., 318 F.3d 1199, 1208-12 (10th Cir. 2003); but see U.S. ex rel. LeBlanc v. Raytheon Co., 913 F.2d 17, 19-20 (1st Cir. 1990)(some federal employees may not be qui tam claimants.)
Additionally, the Court remanded the case for the District Court to properly apply the 2006 version of the "public disclosure bar," 31 U.S.C. 3730(e)(4), which has been subsequently amended, as defendants had alleged that the "scheme" alleged by the relators had been the source of several public disclosures. The Court did note, however, that if public disclosure had occurred, the relators cannot be an "original source" and the action must be dismissed. To be an original source, a relator must have "direct and independent knowledge" of the allegations of his or her complaint and must have "voluntarily provided the information to the government." 31 U.S.C. 3730(e)(4). Following other courts, the 5th Circuit held that a relator who was "employed specifically to disclose fraud is sufficient to render his disclosures nonvoluntary."
Overall, this opinion is somewhat of a monument to plain language statutory interpretation. The Court appears to acknowledge that having government employees as relators may be problematic ("we are are of the dilemmas identified"). But, it refuses all invitations on the basis of policy to create an exception to what it characterizes as clear statutory language.
A. Brian Albritton
August 2, 2012