U.S. ex rel. State of Wis. (Dept. of Health and Social Services) v. Dean

• Decision Date: 07 March 1984
• Docket Number: No. 83-1815,83-1815
• Citation: 729 F.2d 1100
• Parties: Medicare&Medicaid Gu 33,663 UNITED STATES of America ex rel. the STATE OF WISCONSIN (DEPARTMENT of HEALTH and SOCIAL SERVICES) and Wisconsin Department of Justice, Plaintiffs-Appellees, v. Alice R. DEAN, M.D., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1100

729 F.2d 1100

Medicare&Medicaid Gu 33,663

UNITED STATES of America ex rel. the STATE OF WISCONSIN (DEPARTMENT of HEALTH and SOCIAL SERVICES) and Wisconsin Department of Justice Plaintiffs-Appellees, v. Alice R. DEAN, M.D., Defendant-Appellant.

No. 83-1815.

United States Court of Appeals Seventh Circuit.

Argued Dec. 1, 1983.

Decided March 5, 1984.

As Corrected March 7, 1984.

Janice A. Rhodes, Shellow, Shellow & Glynn, Milwaukee, Wis., for defendant-appellant.

Peter Cannon, Milwaukee, Wis., for plaintiffs-appellees.

Before PELL, BAUER, Circuit Judges, and MAROVITZ, Senior District Judge. ^*

BAUER, Circuit Judge.

The United States District Court for the Eastern District of Wisconsin found jurisdiction for this qui tam ¹ action under the federal False Claims Act, 31 U.S.C. Secs. 231-233 (1976), despite its finding that the suit was "based upon evidence or information in possession of the United States ... at the time [the] suit was brought." 31 U.S.C. Sec. 232(C). The district court's order finding jurisdiction was certified to this court as an interlocutory appeal, pursuant to 28 U.S.C. Sec. 1292(b) (1976). We reverse.

I

Defendant Alice R. Dean is a medical doctor who at one time practiced psychiatry in the Milwaukee area. In 1980 the defendant was found guilty in state court of making fraudulent claims for Medicaid reimbursements in connection with her medical practice. State v. Dean, Case No. J-4775 (Cir.Ct., Milw. Cty.1979). The court sentenced the defendant to probation and ordered her to pay $13,285 in restitution to the State of Wisconsin. As a consequence of her conviction, the State permanently revoked the defendant's license to practice medicine in Wisconsin.

On September 9, 1980, the State of Wisconsin's Departments of Justice and Health and Social Services (the State) filed suit in federal district court against the defendant under the False Claims Act, 31 U.S.C. Secs. 231-233 (1976). The False Claims Act gives parties other than the federal government both a private right of action against persons who submit false claims to the federal government and a portion of any recovery. The complaint here alleged that the defendant submitted approximately 912 fraudulent claims for reimbursement for psychiatric services between March 1974 and February 1976. The State demands relief of $2,000 per false claim (the statutory forfeiture amount), $47,343.76 damages on behalf of the United States, $15,808.12 compensatory damages on a pendent claim, $150,000 punitive damages, and costs.

To exercise a private right of action, the qui tam plaintiff must provide the United States Attorney General with a copy of the complaint and "a disclosure in writing of substantially all evidence and information in his possession material to the effective prosecution of such suit." 31 U.S.C. Sec. 232(C). The United States then has sixty days upon notification of the qui tam action "within which to enter appearance in such suit." Id. The plaintiff may maintain the action even though the government declines to join unless "it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought." Id.

The United States declined to join this action. ² After considering all of the arguments and evidence, the district court held that "the information upon which the instant case is based was sufficiently in the possession of the United States to enable the federal government to adequately investigate the case and make a decision whether to prosecute." Nonetheless, the district court interpreted the legislative history of section 232(C) and denied the defendant's motion to dismiss for lack of subject matter jurisdiction. The district court certified this interlocutory appeal on the ground that its decision to find subject matter jurisdiction "involves a controlling question of law ... and that an immediate appeal ... may materially advance the ultimate termination of the litigation." 28 U.S.C. Sec. 1292(b). We accepted jurisdiction and now reverse.

II

The district court properly recognized that the jurisdictional bar of section 232(C) applies whenever the government has knowledge of the "essential information upon which the suit is predicated" before the suit is filed, even when the plaintiff is the source of that knowledge. United States ex rel. Weinberger v. Florida, 615 F.2d 1370, 1371 (5th Cir.1980). Although the courts consistently have interpreted the unambiguous language of section 232(C) to admit no exception when the government possesses such "essential information," ³ the district court examined the legislative history of the False Claims Act and determined that the State of Wisconsin could maintain a qui tam action when the State was the source of "essential information" and when the State was required to provide such information to the federal government as part of its participation in the Medicare reimbursement program. A contrary result, the district court reasoned, "would frustrate the purpose of Congress in protecting the United States against false claims."

A

We are not persuaded by the State's contention that the district court improperly determined that the State's complaint was "based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time" the complaint was filed. 31 U.S.C. Sec. 232(C). The evidence which the government possesses need not be a "mirror image of that in the hands of the qui tam plaintiff." The evidence and information need only be "sufficient to enable [the government] adequately to investigate the case and to make a decision whether to prosecute." Pettis ex rel. United States v. Morrison-Knudsen Co., 577 F.2d 668, 674 (9th Cir.1978). In the district court, the defendant showed that the government possessed such "sufficient information." First, the Wisconsin Medicaid Fraud Control Unit provided the United States Department of Health and Human Services with many reports about the allegedly fraudulent Medicaid claims during the State's investigation and prosecution of the appellant on state criminal grounds. Many of those reports were required from the State under 42 C.F.R. Sec. 455.17 (1980). Second, the state criminal proceedings were reported extensively in two Milwaukee newspapers. Finally, the Milwaukee County Assistant District Attorney who prosecuted the appellant in the state criminal proceedings acted as a Special United States Attorney at the time of the prosecution. The district court thus properly determined that the government possessed adequate information as contemplated by section 232(C).

B

In order to establish an exception to overcome the plain language of the False Claims Act, we must find a "clearly expressed legislative intention" contrary to that language. Consumer Product Safety Comm'n v. GTE Sylvania, 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). The district court concluded that the legislative history of the Act was clear enough to overcome the statute's unambiguous language. Our own review of the legislative history leads us to the opposite conclusion.

Many courts have reviewed the legislative history of the False Claims Act since the jurisdictional bar at issue here was added in 1943. See, e.g., Safir v. Blackwell, 579 F.2d 742 (2d Cir.1978), cert. denied, 441 U.S. 943, 99 S.Ct. 2161, 60 L.Ed.2d 1045 (1979); Pettis, 577 F.2d 668; United States ex rel. Bayarski v. Brooks, 154 F.2d 344 (3d Cir.1946); United States v. Pittman, 151 F.2d 851 (5th Cir.1946); United States ex rel. Vance v. Westinghouse Electric Corp., 363 F.Supp. 1038 (W.D.Pa.1973); United States v. Aster, 176 F.Supp. 208 (E.D.Pa.1959), aff'd, 275 F.2d 281 (3d Cir.), cert. denied sub nom. Aloff v. Aster, 364 U.S. 894, 81 S.Ct. 223, 5 L.Ed.2d 188 (1960); United States v. Armour & Co., 146 F.Supp. 546 (D.D.C.1956). In each of these cases a party challenged the jurisdictional bar by seeking an exception to the plain language of the statute. The various courts all held that no exception exists.

For example, the Pettis court denied jurisdiction for a qui tam plaintiff despite the plaintiff's contention that section 232(C) was inapplicable "when an informer prior to bringing suit supplies the government with the information which under 31 U.S.C. Sec. 232(C) invokes the bar." 577 F.2d at 669. The court reviewed extensively the legislative history of the False Claims Act presented by the parties here in support of their respective interpretations of the jurisdictional bar of the Act.

Congress enacted the jurisdictional bar at issue here in reaction to United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943), in which the Supreme Court held that a qui tam action was not barred merely because the qui tam plaintiff may have obtained the information for his complaint from an indictment or other public record and thus may have contributed nothing to the discovery of the fraud upon the government. Although Congress's immediate concern in enacting the 1943 amendment was to do away with the "parasitical suits" allowed by Hess, the language and effect of the 1943 amendment in fact is much broader. The amendment itself was the result of a compromise between very different remedies proposed in each House of Congress.

The House of Representatives passed a bill to completely abolish qui tam suits. The Senate, on the other hand, sought to allow qui tam actions if they were based either upon information not in the possession of the United States or upon information in the possession of the United States of which the qui tam plaintiff was the source. The compromise amendment allowed qui tam actions that the United States did not join to continue if the information was not in the possession of the United States at the time the action was brought, thereby incorporating only...