U.S. ex rel. Ramseyer v. Century Healthcare Corp.

Decision Date24 July 1996
Docket NumberNo. 94-6299,94-6299
Citation90 F.3d 1514
Parties11 IER Cases 1746, Medicare & Medicaid Guide P 44,534 UNITED STATES ex rel. Susan RAMSEYER, Plaintiff-Appellant, v. CENTURY HEALTHCARE CORPORATION; Century Healthcare Development Corporation, Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Submitted on the Briefs: *

Drew Campo and Joseph C. Schubert, Oklahoma City, Oklahoma, for Plaintiff-Appellant.

Michael E. Joseph and Drew D. Webb of McAfee & Taft, Oklahoma City, Oklahoma, for Defendants-Appellees.

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

EBEL, Circuit Judge.

Plaintiff Susan Ramseyer brought this action on behalf of the United States under the qui tam provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3730(b)-(f), to recover a portion of the civil penalties and damages sought from the defendants. Plaintiff also asserted a claim for retaliatory discharge under the FCA's anti-retaliation provision, 31 U.S.C. § 3730(h). The district court dismissed the complaint pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, relying on the "public disclosure" jurisdictional bar of the FCA. 31 U.S.C. § 3730(e)(4). This provision bars qui tam suits that are based upon allegations of fraud already publicly disclosed, unless the person bringing the action qualifies as an "original source" of the information. Because we conclude plaintiff's suit was not based upon publicly disclosed information, we reverse the district court's dismissal of plaintiff's qui tam claim. However, because plaintiff has alleged no causal connection between her discharge and any conduct in furtherance of her qui tam claim, we affirm the dismissal of plaintiff's retaliation claim.


Plaintiff alleged that from October 1991 to May 1992, she was employed as a consultant to, and then as the clinical director of, a mental health facility operated by the defendants. In those capacities, it was her responsibility to monitor compliance with applicable Medicaid requirements. Plaintiff further alleged that during her employment she became aware of widespread noncompliance with minimum program components for day treatment services at defendants' facility. Although plaintiff regularly communicated the instances of noncompliance to her superiors, the defendants continued to submit noncomplying claims to the government that ultimately were paid by Medicaid.

In the meantime, and completely independent of plaintiff's efforts, a routine audit and inspection conducted by the Oklahoma Department of Human Services ("DHS") revealed deficiencies in the defendants' day treatment program similar to those discovered by plaintiff. As a result of this audit, Roy Hughes, a DHS Programs Supervisor, prepared a report (the "Hughes Report") detailing essentially the same compliance problems that plaintiff had raised. Only three copies of the Hughes Report were made: one copy was given to the DHS programs administrator, a second copy was provided to the defendants, and the third remained in the DHS files. No copies of the Hughes Report were released to the general public, nor was this report available to the public except upon a written request for the specific record and approval from the DHS legal department.

Defendants terminated plaintiff's employment in May 1992. Six months later, plaintiff filed the present lawsuit alleging that the defendants' Medicaid billing practices gave rise to false claims redressable under the FCA. Plaintiff also alleged that her discharge had been in retaliation for her repeated protests over defendants' noncompliance with the applicable Medicaid requirements.


Plaintiff's suit relies upon the qui tam provisions of the FCA, 31 U.S.C. § 3730(b)-(f), which authorize private individuals, acting on behalf of the United States, to bring a civil action against those who defraud the government. In order to encourage individuals with knowledge of fraudulent activity against the government to come forward, the FCA provides a successful qui tam litigant with a cash bounty of up to 30% of the final recovery. Id. § 3730(d). However, because Congress sought to achieve " '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. Fine v. Sandia Corp., 70 F.3d 568, 571 (10th Cir.1995) (quoting United States ex rel. Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 649 (D.C.Cir.1994)), the FCA also erects a jurisdictional bar for suits based upon allegations of fraud that have already been made public. In this regard, the FCA provides that

[n]o court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

31 U.S.C. § 3730(e)(4)(A) (emphasis added). Applying this statutory provision, the district court concluded that, because plaintiff's lawsuit was based upon publicly disclosed information--specifically, the allegations contained in Hughes Report--it lacked subject matter jurisdiction to entertain the action. 1


We note at the outset that our review of the district court's dismissal under the FCA jurisdictional bar is plenary. When a court's subject matter jurisdiction is dependent upon the same statute that provides the substantive claim in the case, the jurisdictional question is necessarily intertwined with the merits. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.1995) (citing Wheeler v. Hurdman, 825 F.2d 257, 259 (10th Cir.), cert. denied, 484 U.S. 986, 108 S.Ct. 503, 98 L.Ed.2d 501 (1987)). In a qui tam suit brought under the FCA, the jurisdictional issue of "public disclosure" clearly arises out of the same statute that creates the cause of action. See United States ex rel. Fine v. Advanced Sciences, Inc., 879 F.Supp. 1092, 1094 (D.N.M.1995). Thus, a challenge under the FCA jurisdictional bar is necessarily intertwined with the merits. Under our precedent, such "intertwined" jurisdictional questions should be resolved either under Federal Rule of Civil Procedure 12(b)(6), or, after proper conversion into a motion for summary judgment, under Rule 56. Holt, 46 F.3d at 1003; Redmon ex rel. Redmon v. United States, 934 F.2d 1151, 1155 (10th Cir.1991).

In the present case, defendants' motion to dismiss did not simply attack the facial validity of the complaint; rather, it raised a factual challenge to the existence of subject matter jurisdiction. That is, defendants argued that plaintiff's allegations of fraud were based upon publicly disclosed information and in support of this factual claim tendered to the district court evidence outside the pleadings. The district court treated defendants' motion as a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1). However, because the jurisdictional question was intertwined with the merits, and because the court relied on affidavits and other evidentiary material submitted by the parties, defendants' motion to dismiss should have been treated as one for summary judgment under Rule 56(c). Northington v. Jackson, 973 F.2d 1518, 1521 (10th Cir.1992). Accordingly, we exercise our plenary power and consider the defendants' motion as a motion for summary judgment. See Redmon, 934 F.2d at 1155.

We review the grant or denial of summary judgment de novo, applying the same legal standard used by the district court pursuant to Fed.R.Civ.P. 56(c). Universal Money Ctrs., Inc. v. AT & T, 22 F.3d 1527, 1529 (10th Cir.), cert. denied, 513 U.S. 1052, 115 S.Ct. 655, 130 L.Ed.2d 558 (1994); Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). The determination of subject matter jurisdiction is reviewed de novo. United States ex rel. Precision Co. v. Koch Industries, 971 F.2d 548, 551 (10th Cir.1992), cert. denied, 507 U.S. 951, 113 S.Ct. 1364, 122 L.Ed.2d 742 (1993).


The district court held that because the Hughes Report was available to the general public upon a written request, the "allegations or transactions" therein were "public[ly] disclos[ed]" within the meaning of 31 U.S.C. § 3730(e)(4)(A). On appeal, plaintiff contends that the mere existence of a report that is only "theoretically" or potentially available to the public cannot constitute public disclosure. In plaintiff's view, the public disclosure bar does not come into play here because DHS took no affirmative steps to make the "allegations or transactions" in the Hughes Report publicly known. 2

Since 1986, when Congress amended the FCA to add the public disclosure bar, the Tenth Circuit has not had the occasion to address directly what constitutes "public disclosure" for purposes of section 3730(e)(4)(A). See United States ex rel. Fine v. MK-Ferguson Co., 861 F.Supp. 1544, 1550 (D.N.M.1994) (noting that "[t]he Tenth Circuit is basically silent as to the extent to which given information must have been disclosed so a[s] to bar qui tam actions"). Moreover, our sister circuits are divided on the question whether theoretical or potential accessibility--as opposed to actual disclosure--of allegations or transactions is sufficient to bar a qui tam suit that is based upon such information. Compare United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1158 (3d Cir.1991) (information exchanged between private parties through discovery but not filed with the court is "potentially accessible to the public" and thus is publicly disclosed) with United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512,...

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