U.S. ex rel. Fine v. Sandia Corp., 94-2121

• Decision Date: 21 November 1995
• Docket Number: No. 94-2121,94-2121
• Citation: 70 F.3d 568
• Parties: 40 Cont.Cas.Fed. (CCH) P 76,877 UNITED STATES of America ex rel. Harold R. FINE, Plaintiff-Appellant, v. SANDIA CORPORATION, a foreign corporation, Defendant-Appellee, United States of America, Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 568

70 F.3d 568

40 Cont.Cas.Fed. (CCH) P 76,877

UNITED STATES of America ex rel. Harold R. FINE, Plaintiff-Appellant, v. SANDIA CORPORATION, a foreign corporation, Defendant-Appellee United States of America, Amicus Curiae.

No. 94-2121.

United States Court of Appeals Tenth Circuit.

Nov. 21, 1995.

Maureen A. Sanders, Albuquerque, New Mexico (Duff H. Westbrook of Duff H. Westbrook, P.C., Albuquerque, New Mexico, with her on the briefs), for Plaintiff-Appellant.

John A. Bannerman of Beall, Biehler & Bannerman, Albuquerque, New Mexico, and William D. Hunter of Pettit & Martin, San Francisco, California (T. Scott Hyde of Beall, Biehler & Bannerman, Albuquerque, New Mexico; Lawrence S. Greher of Sandia Corporation, Albuquerque, New Mexico, with him on the brief), for Defendant-Appellee.

Dara A. Corrigan (Michael F. Hertz and Joan E. Hartman, on the brief), Attorneys, Civil Division, U.S. Department of Justice, Washington, D.C., for Amicus Curiae.

Before SEYMOUR, Chief Judge, MOORE and EBEL, Circuit Judges.

SEYMOUR, Chief Judge.

Harold R. Fine filed this qui tam action against Sandia Corporation (Sandia), which operates Sandia National Laboratory under a contract with the United States Department of Energy (DOE). Mr. Fine alleges that Sandia misappropriated nuclear waste funds in violation of the Nuclear Waste Policy Act (NWPA). The district court dismissed the action for lack of subject matter jurisdiction. Because we conclude that this action is based in part upon publicly disclosed allegations and transactions and because Mr. Fine was not an original source of that information, we affirm.

I.

Sandia National Laboratory is one of nine multiprogram laboratories owned by the United States government and operated by private or university contractors under the DOE's administrative oversight. In December 1990, the United States General Accounting Office (GAO) issued a report examining the discretionary research and development (R & D) activities at three of the laboratories, including the Sandia laboratory (GAO report). The report included a section which focused on the "taxing" ¹ of nuclear waste funds by two of the laboratories during fiscal years 1988 and 1989. See U.S. General Accounting Office, RCED-91-18, Energy Management Better DOE Controls Needed Over Contractors' Discretionary R & D Funds 40-41 (December 1990). Concluding that those funds should be used only for research involving the storage and disposal of radioactive waste, the report noted that the Los Alamos and Lawrence Livermore Laboratories had assessed $1 million and $420,000 respectively from the waste fund for their discretionary R & D projects in 1989. Id. The report suggested that it was not the first to discover the practice:

Officials from DOE's Office of Civilian Radioactive Waste Management are aware of the laboratories' practice of assessing monies spent at the laboratories for their discretionary R & D activities. An official in [that office] told us that the Office recognizes that assessing monies from the waste fund for discretionary R & D may be a violation of the [NWPA] and referred the issue to the DOE [Inspector General (IG) ] about 2 years ago. According to this official, the IG in turn referred the issue to the DOE General Counsel, who has not yet determined whether the practice is permissible.

Id. at 41. Thus, the report indicates that the DOE knew some of its laboratories were "taxing" nuclear waste funds for use in discretionary research and did not condemn the practice.

A congressional hearing in March 1991 further probed the laboratories' practice. The Environment, Energy and Natural Resources Subcommittee on Government Operations held a hearing to examine the DOE's practice of "allowing the contractors that operate its major multiprogram laboratories to withhold funds from authorized research programs and research contracts, and to use such funds for other laboratory activities at the discretion of the contractor." Review of the Department of Energy's Discretionary Laboratory Research Funds: Hearing Before the Environment, Energy, and Natural Resources Subcomm. of the House Comm. On Government Operations, 102d Cong., 1st Sess. 1 (1991) (opening statement of Rep. Mike Synar). In his testimony before the subcommittee, Victor S. Rezendes, the GAO Director of Energy Issues, listed two instances where the "taxing" of certain funds violated appropriations restrictions. Id. at 129. He testified that

[o]ne was the Nuclear Waste Policy Act. Basically, that prohibits any tapping into that fund for other than the objectives of establishing a nuclear waste disposal repository and related activities.

And what we found is that that was being charged the same overhead rates as, basically, any other DOE program. And in 1989, for example, that amounted to roughly about $1.5 million.

Id. Although the hearings did not specify specifically that Sandia was "taxing" nuclear waste funds, they did shed further light on the national laboratories' practice.

At the time of the GAO report and the congressional hearing, Mr. Fine was employed by the DOE's Office of Inspector General, where his duties included auditing Sandia. Following his retirement in July 1991, he continued to investigate the activities of Sandia and other government contractors. He claims that these post-retirement investigations, including his receipt of an anonymous phone call and his independent confirmation of it, formed the basis of the present complaint.

On April 6, 1992, Mr. Fine filed this qui tam action alleging that Sandia improperly assessed a 2.5% "tax" against nuclear waste funds during fiscal years 1991 and 1992 and used the diverted funds in generic, discretionary R & D activities. Because the NWPA specifically earmarks the funds for research on the storage and disposal of radioactive waste, he asserts that Sandia knowingly presented a false claim to the government when it certified that it had spent the funds in accordance with the applicable rules and regulations.

Mr. Fine filed this action pursuant to 31 U.S.C. Sec. 3730, the qui tam provision of the False Claims Act (FCA). This statute authorizes private individuals, acting on behalf of the government, to bring civil actions against those who defraud the government. To encourage the exposure of fraudulent activities, the FCA allows a successful qui tam plaintiff to receive up to 30% of the final recovery. However, to ensure that individuals cannot use the qui tam provisions to benefit from frauds already exposed through other means, the FCA contains explicit jurisdictional requirements. The statute bars suits which are

based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or [GAO] report, hearing, audit, or investigation, or from the news media, unless ... the person bringing the action is an original source of the information.

Id. Sec. 3730(e)(4)(A). The FCA defines "original source" as "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 [a qui tam action] which is based on the information." Id. Sec. 3730(e)(4)(B).

Applying these requirements, the district court concluded that it did not have jurisdiction over Mr. Fine's complaint. The court held that the general allegations regarding the laboratories' "taxing" of nuclear waste funds contained in the 1990 GAO report and the 1991 congressional hearing were sufficient to constitute "public disclosures" of the practice. ² Although the court held that Mr. Fine's former employment with the DOE Inspector General did not preclude him from filing a qui tam action, ³ it determined that he was not an "original source" because "as a government auditor he did not have 'direct and independent knowledge' of the publicly disclosed information." Aplt.App. at 175. The court therefore dismissed the complaint.

II.

Mr. Fine's sole contention on appeal is that neither the 1990 GAO report nor the 1991 congressional hearing constitutes a "public disclosure" for purposes of the jurisdictional bar. See Aplt.Br. at 3. We review de novo the district court's conclusion that it did not have subject matter jurisdiction. United States ex rel. Precision Co. v. Koch Industries, 971 F.2d 548, 551 (10th Cir.1992).

Although Mr. Fine concedes that the GAO report and the congressional hearing are the types of disclosures which invoke the jurisdictional bar, he contends that those disclosures did not contain the allegations or transactions upon which his complaint is based. He argues that those disclosures "merely described the national laboratories' practice of 'taxing' Nuclear Waste Funds for discretionary [R & D] projects," Br. of Aplt. at 11, whereas his complaint alleges that Sandia in particular "taxed" nuclear waste funds in fiscal years 1991 and 1992. Because these disclosures detailed the mechanics of the practice, revealed that at least two of Sandia's eight sister laboratories were engaged in it, and indicated the DOE's acquiescence, we conclude that they sufficiently alerted the government to the likelihood that Sandia would also "tax" nuclear waste funds in the future.

The FCA's jurisdictional scheme seeks "the golden mean between adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own." United States ex rel. Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 649 (D.C.Cir.1994). We analyze Mr. Fine's claim in the context of Congress' "twin goals of rejecting suits which the government is capable of pursuing itself, while promoting those which the government is not equipped to bring on its own." Id. at 651; see United States ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1514 (8th Cir.1994) (qui tam...