U.S. ex rel. Siller v. Becton Dickinson & Co. By and Through Microbiology Systems Div.

• Decision Date: 18 April 1994
• Docket Number: 93-1459,Nos. 93-1275,s. 93-1275
• Citation: 21 F.3d 1339
• Parties: UNITED STATES of America, ex rel. David R. SILLER, Plaintiff-Appellant, and United States of America, Plaintiff, v. BECTON DICKINSON & COMPANY, By and Through its MICROBIOLOGY SYSTEMS DIVISION, Defendant-Appellee. UNITED STATES of America, Plaintiff-Appellant, and United States of America, ex rel. David R. Siller, Plaintiff, v. BECTON DICKINSON & COMPANY, By and Through its MICROBIOLOGY SYSTEMS DIVISION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1339

21 F.3d 1339

62 USLW 2667

UNITED STATES of America, ex rel. David R. SILLER, Plaintiff-Appellant, and United States of America, Plaintiff, v. BECTON DICKINSON & COMPANY, By and Through its MICROBIOLOGY

SYSTEMS DIVISION, Defendant-Appellee.

UNITED STATES of America, Plaintiff-Appellant, and United States of America, ex rel. David R. Siller, Plaintiff, v. BECTON DICKINSON & COMPANY, By and Through its MICROBIOLOGY

SYSTEMS DIVISION, Defendant-Appellee.

Nos. 93-1275, 93-1459.

United States Court of Appeals Fourth Circuit.

Argued Feb. 9, 1994.

Decided April 18, 1994.

ARGUED: Michael C. Theis, Civil Division, United States Department of Justice, Washington, DC, for Appellant United States; Robert L. Vogel, Washington, DC, for Appellant Siller. G. Stewart Webb, Jr., Venable, Baetjer & Howard, Baltimore, MD, for Appellee. ON BRIEF: Stuart E. Schiffer, Acting Assistant Attorney General, Richard D. Bennett, United States Attorney, Douglas N. Letter, Appellate Staff, Michael F. Hertz, Polly A. Dammann, Civil Division, United States Department of Justice, Washington, DC, for Appellant United States; James Henley Morgan, Fort Worth, TX, for Appellant Siller. James A. Dunbar, Venable, Baetjer & Howard, Baltimore, MD, J. Mitchell Brown, George W. Stiffler, Gwyn Ann Taylor, Bastianelli, Brown & Touhey, Chartered, Washington, DC, for Appellee.

Before LUTTIG, Circuit Judge, CHAPMAN, Senior Circuit Judge, and WILSON, United States District Judge for the Western District of Virginia, Sitting by Designation.

Reversed in part, vacated in part, and remanded by published opinion. Judge LUTTIG wrote the opinion, in which Senior Judge CHAPMAN and Judge WILSON joined.

OPINION

LUTTIG, Circuit Judge:

We interpret in this appeal several provisions of the qui tam section of the False Claims Act, 31 U.S.C. Sec. 3729 et seq.

Appellant David Siller, the brother and employee of a former distributor of Becton Dickinson & Company products, brought a civil qui tam action under 31 U.S.C. Sec. 3730 against Becton Dickinson & Company, alleging that the company had a practice of overcharging the government. The government ultimately elected to intervene in and proceed with the case pursuant to 31 U.S.C. Sec. 3730(b)(2)-(b)(4). On Becton Dickinson & Company's motion, the district court dismissed the government as a party plaintiff, holding that the government's failure to comply with section 3730(b)(4)'s timely intervention requirement barred the government from proceeding. The district court also dismissed Siller's action under section 3730(e)(4), holding that it was "based upon" publicly disclosed allegations. The government and Siller appeal the district court's order dismissing their complaints. For the reasons that follow, we vacate the district court's dismissal order and remand for further proceedings with the government and Siller reinstated as plaintiffs. 813 F.Supp. 410 (1993).

I.

From January 1986 until the filing of this lawsuit in January 1991, David Siller was employed at various times, and in various capacities by Scientific Supply, Inc. (SSI), a San Antonio, Texas, distributor of health care products whose president was Siller's brother, Ruben Siller. SSI was an authorized distributor of medical device products manufactured by Becton Dickinson & Company (BD) until BD canceled its distributorship agreement in 1987.

In 1989, SSI filed suit against BD in Texas state court, asserting various causes of action arising from BD's allegedly wrongful termination of its distributorship agreement. The thrust of SSI's complaint was that BD canceled SSI's distributorship because it feared that SSI, which was seeking to sell BD products to the federal government at prices below those quoted by BD itself, would disclose that BD was overcharging the government. See J.A. at 91-99. ¹ BD ultimately settled with SSI in September 1989. As part of the settlement agreement, Ruben Siller agreed to keep the existence and terms of the settlement confidential. David Siller, however, Ruben's brother and employee, was not similarly bound by the settlement agreement.

David Siller filed the instant qui tam suit against BD in January 1991. According to Siller, he originally learned that BD overcharged the government through his employment with SSI, not as a result of SSI's suit against BD. In fact, Siller asserts, he obtained this knowledge before the SLS and SSI complaints were filed and had not read those complaints until BD filed its motion to dismiss in January 1993. Siller contends that he learned about the False Claims Act (FCA) and its qui tam provisions in the spring of 1990, after his brother's company's suit against BD was settled, and that he subsequently conducted his own investigation which uncovered evidence revealing how BD overcharged the government and attempted to conceal those overcharges. Siller then retained counsel and, on December 27, 1990, as required by section 3730(b)(2), voluntarily disclosed the evidence he had garnered regarding BD's overcharging practices to the Office of Inspector General for the Department of Veterans' Affairs, the agency BD allegedly overcharged. Siller filed his lawsuit against BD on January 4, 1991. Pursuant to the FCA's requirements, see id., Siller's complaint remained under seal until the government decided whether to proceed with the case.

The government's decision was 21 months in coming. Between Siller's filing of the lawsuit and the government's ultimate decision to intervene, the government moved for, and received, eight extensions of time in which to consider whether to intervene. See 31 U.S.C. Sec. 3730(b)(3). On two occasions, the government failed to comply even with the court's extended deadline.

The government first missed its March 4, 1992, deadline. Although the Assistant United States Attorney (AUSA) investigating the matter claims to have "made sure" the government's motion for an extension of time was placed in the district court's night filing box on March 4, 1992, Supp.J.A. at 36-37, the motion apparently was never processed by the clerk's office, and there is no record of the motion ever having been filed. When, three weeks later, the court notified the government that it had not received any papers before the March 4 deadline, the AUSA filed a motion for a nunc pro tunc extension of time, which Judge Legg granted on March 27, 1992.

The government subsequently failed to meet its August 3, 1992, deadline for electing whether to intervene, not filing its motion for another extension of time until August 5, 1992. Judge Legg again granted the government's motion, allowing the government until October 5, 1992, to make its decision. On October 5, the government filed a notice of election to intervene and notice of appearance, and the complaint was unsealed.

BD moved on January 19, 1993, to dismiss the case. On February 10, Judge Smalkin, to whom the case had been re-assigned, granted BD's motion. Judge Smalkin dismissed the government as a party plaintiff, holding that each of the government's two previous failures to meet its deadlines violated the FCA's mandatory timely intervention requirement, see 31 U.S.C. Sec. 3730(b)(4), divesting the court of its jurisdiction over the government's complaint. Judge Smalkin also held that Siller's action was barred under section 3730(e)(4) because it was "based upon" the prior public disclosure of allegations that BD overcharged the government which appeared in SSI's 1989 lawsuit against BD. Judge Smalkin thereafter denied the government's motion to alter or amend its judgment, and ordered the action dismissed.

II.

We first address the government's claim that the district court erred in dismissing it as a party plaintiff. Whether the government's failure to comply with section 3730(b)(4)'s timeliness requirement jurisdictionally bars the government from proceeding with the case is a question of first impression in this, or any other, federal circuit. ² Section 3730 of the False Claims Act provides that private persons may bring civil qui tam actions for alleged violations of the FCA. 31 U.S.C. Sec. 3730(b). Under this provision, a qui tam plaintiff is instructed to serve on the government his complaint and written disclosure of material evidence. 31 U.S.C. Sec. 3730(b)(2). The government then has 60 days, during which time the relator's complaint is filed in camera and remains under seal, within which to elect whether to intervene and proceed with the case, id., although the government may, for good cause shown, move the court for extensions of time, 31 U.S.C. Sec. 3730(b)(3). Section 3730(b)(4) further requires that

[b]efore the expiration of the 60-day period or any extensions obtained under [section 3730(b)(3) ], the Government shall--

(A) proceed with the action, in which case the action shall be conducted by the Government; or

(B) notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.

31 U.S.C. Sec. 3730(b)(4).

The district court found that the government failed to prove that it had actually filed papers with the clerk's office on or before its March 4, 1992, and August 3, 1992, deadlines. Construing section 3730(b)(4) as a mandatory jurisdictional timeliness requirement, it held that each of the government's two failures to comply with that section divested the court of jurisdiction over the government's complaint, and ordered the United States dismissed.

The government, evidently conceding that it failed to meet its March 4, 1992, and August 3, 1992, deadlines, contends that section 3730(b)(4) is not a jurisdictional requirement, and therefore that its failure to comply with that section's timely intervention directive did not bar Judge Legg from excusing the government's untimeliness and allowing it to proceed. Under an established line of authority implicitly approved by the Supreme Court in Brock v. Pierce County, 476 U.S....