U.S. ex rel. Costner v. U.S.

• Decision Date: 28 January 2003
• Docket Number: No. 01-3764.,01-3764.
• Parties: UNITED STATES of America ex rel. Pat COSTNER; Sharon Golgan; Carolyn Lance; Debra Litchfield; Becky Summers; Kenny Brown; Edward Campbell; Don Daniel; Jeffrey Foot; David Hermanson; Arkansas Peace Center; Vietnam Veterans of America, Arkansas State Council, Inc., Plaintiffs/Appellants, v. UNITED STATES of America, Movant, URS Consultants, Inc.; Morrison Knudsen Corporation; MRK Incineration, Inc.; Vertac Site Contractors, Defendants/Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

317 F.3d 883

UNITED STATES of America ex rel. Pat COSTNER; Sharon Golgan; Carolyn Lance; Debra Litchfield; Becky Summers; Kenny Brown; Edward Campbell; Don Daniel; Jeffrey Foot; David Hermanson; Arkansas Peace Center; Vietnam Veterans of America, Arkansas State Council, Inc., Plaintiffs/Appellants, v. UNITED STATES of America, Movant, URS Consultants, Inc.; Morrison Knudsen Corporation; MRK Incineration, Inc.; Vertac Site Contractors, Defendants/Appellees.

No. 01-3764.

United States Court of Appeals, Eighth Circuit.

Submitted: November 4, 2002.

Filed: January 28, 2003.

Mick G. Harrison, argued, KY Environmental Foundation, Berea, KY, for appellant.

Charles R. Nestrud, argued, Little Rock, AR, for appellee Vertac.

Mary E. Bosco, argued, Washington, DC, for appellee URS.

Before WOLLMAN, FAGG, and LOKEN, Circuit Judges.

WOLLMAN, Circuit Judge.

This is a qui tam action brought on behalf of the United States by the plaintiffs as relators pursuant to the False Claims Act (FCA), 31 U.S.C. §§ 3729-3733. The complaint alleges that URS Consultants, Inc. (URS), Morrison Knudsen Corporation (MK), MRK Incineration, Inc. (MRK), and Vertac Site Contractors (VSC) conspired to submit false claims for payment under a government contract for the treatment and disposal of hazardous waste at the Vertac Chemical Plant site in Jacksonville, Arkansas. The plaintiffs appeal the district court's¹ judgment in favor of the defendants. We affirm.

I.

The plaintiffs filed this False Claims Act suit in 1995. The suit arises out of the defendants' contract with the Environmental Protection Agency to clean up a contaminated industrial site known as the Vertac site. We set out the history of the site and this litigation in a prior appeal:

From 1948 to 1987, the Vertac site was home to various chemical, herbicide, and pesticide production facilities. Throughout the years, chemical waste from such activity was deposited in landfills and stored in drums or barrels above ground with little or no attention to human health or environmental consequences. As a result, the site became extremely contaminated with dioxin and other highly toxic chemicals. The United States Environmental Protection Agency (EPA) has placed the site on the Superfund National Priorities List.

. . .

Substantial cleanup began in 1987, following Vertac Chemical's abandonment of the site. After learning that approximately 28,000 corroding and leaking drums of toxic waste had been left on the premises, the EPA initiated an emergency removal action pursuant to section 9604 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § § 9601-9675 (1995 & Supp.1998). The state then negotiated a contract for on-site incineration of the waste with MRK Incineration, Inc., which subsequently assigned the contract to Vertac Site Contractors, a joint venture composed of MRK and MK Environmental Services, a division of Morrison Knudsen Corp.

. . .

Pursuant to the agreement, the state imposed various conditions regarding the operation of the incinerator constructed by the contractors, but certified that the contractors had demonstrated the ability to satisfy state and federal regulations. In 1991, the district court approved and entered an additional consent decree. The EPA remained involved in the cleanup by monitoring air quality, handling and transporting the drums of waste to be incinerated by the contractors, and disposing of incinerator ash.

In 1992, after it became clear that the trust fund would not be sufficient to complete the cleanup, the EPA assumed primary responsibility for the site and approved a federal removal action using federal funds. When the trust fund was depleted, the state terminated its contract with Vertac Site Contractors. Soon after, the EPA assigned general oversight authority of the site to URS Consultants, Inc. URS then entered into a contract with Vertac Site Contractors to continue incineration activities. In 1995, the EPA transported the remaining drums of toxic waste to a site in Kansas for incineration.

Costner v. URS Consultants, Inc., 153 F.3d 667, 671-72 (8th Cir.1998) (citations omitted) (Costner I).

The EPA assumed responsibility for the project on June 8, 1993. The EPA executed an agreement with URS, giving URS general oversight authority over the incinerator and authorizing it to contract with VSC to continue VSC's incineration operations. From the start of the cleanup, the EPA had a Remedial Project Manager, a team of engineers, a risk assessment specialist, and other scientists assigned to the site. URS and VSC produced daily, weekly, and monthly reports concerning site operations, as well as air monitoring reports, quality assurance reports, and other regulatory compliance reports. In response to allegations made by the plaintiffs and others during the course of operations, the EPA conducted investigations into intentional tampering and regulatory violations. The investigators suggested improvements, improvements were made, and the EPA continued to make payments under the contract.

The plaintiffs allege that before and during the course of the contract the defendants concealed operational problems and numerous regulatory violations from the EPA. They contend that in light of this concealment the defendants' requests for payment constituted false claims under the FCA. After extended discovery, the district court granted summary judgment to the defendants on all claims except those that alleged tampering with monitoring devices. The district court then dismissed certain of the tampering claims, finding they had been pled with insufficient particularity. After trial on the remaining two tampering claims, the district court entered judgment in favor of the defendants on all claims.

II.

We review the district court's grant of summary judgment de novo, applying the same standards as the district court and viewing the evidence in a light favorable to the nonmoving party. Hammond v. Northland Counseling Ctr., Inc., 218 F.3d 886, 891 (8th Cir.2000). Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Once the party moving for summary judgment has demonstrated that the record contains no genuine issue on a material fact, the burden is on the nonmoving party to present affirmative evidence raising a genuine issue as to that fact. Hammond, 218 F.3d at 891 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

A. Materiality

The False Claims Act imposes liability on "[a]ny person who knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a). In addition, several courts have required that the falsehood in the claim must be material to the payment decision. The district court dismissed all but two of the plaintiffs' claims for failure to present affirmative evidence raising a genuine issue of material fact regarding the materiality of the defendants' alleged misstatements and omissions. The existence of and appropriate standard for a materiality element is a matter of some disagreement in the courts. See, e.g., United States, ex rel. Cantekin v. Univ. of Pittsburgh, 192 F.3d 402, 415-16 (3d Cir.1999) (declining to decide whether such an element exists because the claims at issue would easily qualify); United States v. Southland Mgmt. Corp., 288 F.3d 665, 674-78 (5th Cir.) (questioning existence of materiality element, but finding that false certification of compliance with condition required for payment satisfied even strict outcome materiality standard), reh'g en banc granted, 307 F.3d 352 (5th Cir.2002); Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir.1999) (applying materiality requirement that depends on "whether the false statement has a natural tendency to influence agency action").

Although we have not heretofore directly considered whether a materiality element is implicit in the Act, we have stated that the Act provides recovery from one "who makes a material misrepresentation to avoid paying some obligation owed to the government." United States v. Q Int'l Courier, Inc., 131 F.3d 770, 772 (8th Cir. 1997). Moreover, our decision in Rabushka ex rel. United States v. Crane Co. suggests that outcome materiality is the proper standard. 122 F.3d 559, 563 (8th Cir. 1997) ("If Rabushka cannot show that the PBGC would have terminated CF & I's pension plan [if it had known of the misrepresentations and nondisclosures], then there is no false claim because ... liabilities would have occurred regardless of Crane's actions."). In our prior decision in this case we implied a materiality standard stricter than mere relevancy: "only those actions by the claimant which have the purpose and effect of causing the United States to pay out money it is not obligated to pay ... are properly considered `claims' within the meaning of the FCA." Costner I, 153 F.3d at 677. We need not decide the precise contours of the materiality requirement, however, because we hold that the plaintiffs have failed to produce evidence raising a genuine issue of material fact as to whether the allegedly withheld information was even relevant to the EPA's payment decision.

In rejecting most of the plaintiffs' claims, the district court found that although the EPA undisputably was informed of the operational problems from at least three sources, it nonetheless continued to approve monthly payments. The record contains extensive documentation revealing the inspections conducted by the EPA, the reports sent to the EPA by the defendant contractors and on-site EPA personnel, and the information obtained by the EPA through the plaintiffs' previous lawsuits and other complaints. The EPA did not consider the operational difficulties encountered...