Erickson v. American Institute of Bio. Sciences, Civ. A. No. 88-1022-A.

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Citation716 F. Supp. 908
Docket NumberCiv. A. No. 88-1022-A.
PartiesDr. James M. ERICKSON, ex rel. UNITED STATES of America, Plaintiffs, v. AMERICAN INSTITUTE OF BIOLOGICAL SCIENCES, Defendant.
Decision Date07 July 1989

Charles G. Aschmann, Jr., Alexandria, Va., for Erickson.

Paula P. Newett, Asst. U.S. Atty., and Robert Salcido, Civil Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

Alan H. Yamamoto, Fairfax, Va., for American Institute of Biological Sciences.

MEMORANDUM OPINION

ELLIS, District Judge.

INTRODUCTION

This is a qui tam action.1 It is brought by a government employee who claims to be an "independent source" of evidence proving that the defendant submitted false claims to a government agency in violation of 31 U.S.C. § 3729 (1986). Because the relator, as qui tam plaintiffs are called, is a government employee and because a preexisting qui tam suit brought by another relator (this defendant) involves, in part, the same subject matter, this action raises novel and important questions concerning the recently revised federal qui tam statute, 31 U.S.C. § 3730 (1986). Also raised is a question concerning failure to comply with the statute's filing and service requirements. Specifically, the questions presented are:

(1) Must this action be dismissed because the Complaint was not filed and maintained under seal for at least 60 days nor was service on defendant postponed until ordered by the court, all in contravention of 31 U.S.C. § 3730(b)(2)?
(2) Can a government employee maintain a qui tam action based on information learned in the course of his or her employment?
(3) Does a pre-existing qui tam action by another relator bar this suit where it is based, in part, on the same allegations?

The first two of these questions originally came before the Court on defendant's motion to dismiss. While the motion was pending, the United States sought a 60 day extension of time to consider whether to intervene and assume the prosecution of the suit as permitted by 31 U.S.C. § 3730(b)(3) and (4).2 The Court granted the United States' request for additional time, rejected defendant's challenge based on improper filing and service of the complaint, and postponed question No. 2 above as it might have been mooted, at least in part, had the government chosen to intervene.

Ultimately, the government chose not to intervene and assume prosecution of the suit. Following this, defendant renewed its motion to dismiss on all grounds, including the charge of improper filing and service of the complaint. At oral argument on defendant's motion, the government, with leave of Court, filed a brief amicus curiae, arguing that the legislative history of the federal qui tam statute shows that government employees may not bring qui tam actions. The government also raised for the first time whether a prior qui tam action barred plaintiff's suit. At the conclusion of the argument, the Court again rejected the attack based on the service and filing of the complaint, gave plaintiff leave to file a response to the government's brief and took the remaining matters under advisement. Since then, the Court, sua sponte, has concluded that its previous ruling on the service and filing of the complaint should be vacated and the issue reconsidered. Accordingly, defendant's motion to dismiss, presenting the three potentially dispositive questions set forth here, is now ripe for decision.

The Court concludes, on the basis of all the briefs and arguments, that the motion to dismiss should be granted on the ground that the relator failed to comply with the qui tam statute's mandatory filing and service requirements. Although this ruling is dispositive, the Court, in the interests of judicial economy, sets forth here its views on the remaining questions in the event the matter is appealed. As to the second question presented, review of the language, structure and history of the qui tam statute points persuasively to the conclusion that Congress, in its 1986 amendments, did not intend a blanket exclusion of government employees from the scope of the qui tam statute. Rather, Congress chose to exclude from the class of permissible qui tam relators only limited groups of persons in certain, defined circumstances. None of the exclusions applies here. Indeed, the fourth exclusion indicates that qui tam suits may be brought by plaintiffs who are "original sources." See 31 U.S.C. § 3730(e)(4)(B). Where, as here, the relator appears to fit the definition of "an original source", threshold dismissal is unwarranted. But threshold dismissal of some portions of this action would be required in response to the last question. The qui tam statute requires dismissal of those portions of the instant action that are based on facts underlying the pre-existing qui tam action brought by another relator.

FACTUAL BACKGROUND

Relator, Dr. James Erickson, is an employee of the Agency for International Development ("AID"), an agency of the Department of State. He is currently on leave with pay.3 From March 1982 until April 1987, Erickson served as the Cognizant Technical Officer (CTO) for the AID Malaria Project, a project aimed at producing a vaccine for malaria. In connection with this project, AID had contracted with defendant, American Institute of Biological Science (AIBS).4 As CTO for the project, Erickson was responsible for ensuring that the AID-AIBS contract was properly administered. His approval was also required to authorize AID payment of AIBS's expense vouchers. In the course of the project, AIBS subcontracted for the services of Dr. Espinal of the Instituto Nacional de Salud (INS) in Bogota, Colombia. As part of his CTO duties, Erickson had occasion to review claims made by Espinal and INS to AIBS.

The Complaint alleges that while serving as CTO on the contract, Erickson personally accumulated evidence documenting areas of contract non-performance and misconduct on the part of AIBS. Specifically, Erickson alleges he discovered evidence of the following:

(1) diversion of AIBS checks payable to the Malaria Immunology Unit of INS in Bogota to numbered Swiss bank accounts during 1982-84;
(2) payments of salaries or bonuses to INS employees that were not authorized by the INS Board;
(3) nationalization of scientific equipment by the Government of Columbia under its subcontract with AIBS in violation of the contract provisions regarding ownership of capital equipment. AIBS assisted in this process by paying the legal and administrative costs of the nationalization;
(4) use of Malaria Project funds to pay for AIBS employees' personal entertainment and travel expenses;
(5) use of Malaria Project funds to pay expenses for a conference held in France; and
(6) AIBS entering into subcontracts involving the Malaria Project without receiving prior approval from AID.

In December 1986 Erickson reported these alleged contract violations and misconduct to his direct supervisor and to the AID procurement office. In March 1987, Erickson submitted a written evidence report outlining allegations of impropriety to his superiors and to the AID Procurement Office. Over the following months Erickson continued his investigation and supplied the AID with additional evidence of alleged AIBS misconduct. On February 22, 1988, apparently after an investigation, AID notified AIBS that all collection obligations and program requirements had been met and were fully acceptable. In other words, AID would not pursue the matter.

In 1986, Dr. Espinal had filed suit in the U.S. District Court for the District of Columbia against AIBS for breach of contract. On February 26, 1988, shortly after AID indicated it would not pursue the AIBS matter, AIBS asserted a qui tam counterclaim against Espinal. In that counterclaim, AIBS alleged that Espinal submitted false claims to AIBS for bonus or supplemental payments to himself and other INS employees in the amount of $147,000.

ANALYSIS
A. Compliance with Qui Tam Filing and Service Requirements

Qui tam relators must comply with mandatory filing and service requirements. Specifically, the statute provides that the qui tam complaint "shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders." 31 U.S.C. § 3730(b)(2) (emphasis added). Erickson failed to comply with these statutory requirements. Instead, he followed the pre-1986 qui tam filing and service procedures. These procedures did not include an in camera filing requirement. Instead, only the normal federal rules procedures plus service of the complaint on the government were required. See 31 U.S.C. § 3730(b)(2) (1983). Ericksons's failure to comply with the procedural requirements added by Congress in 1986 warrants dismissal of this action.

In general, a party pursuing a statutory remedy must comply with all the procedures the statute mandates. As the Supreme Court put it in United States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157, 162, 34 S.Ct. 550, 552, 58 L.Ed. 893 (1913), if a statute "creates a new liability and gives a special remedy for it, ... upon well-settled principles the limitations upon such liability become a part of the right conferred, and compliance with them is made essential to the assertion and benefit of the liability itself." In McCord, plaintiff's failure to comply with a procedural requirement that suit be delayed for six months after the completion of a public construction project to give the government an opportunity to intervene proved fatal to its claim under the Heard Act. 33 Stat. 811 (1905) (repealed 1935).5 The same principle was applied by the Second Circuit in Reich v. Dow Badische Co., 575 F.2d 363 (2d Cir.1978). There, plaintiff's failure to comply with statutory notice and filing requirements terminated his right to bring suit under the Age Discrimination in Employment Act.6 The procedural requirements in McCord and Reich...

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