United States ex rel. Wilson v. Graham Cnty. Soil & Water Conservation Dist.

• Decision Date: 01 October 2013
• Docket Number: Civil Case No. 2:01–cv–00019–MR.
• Citation: 976 F.Supp.2d 755
• Court: U.S. District Court — Western District of North Carolina
• Parties: UNITED STATES of America, ex rel. Karen T. WILSON, Plaintiff, v. GRAHAM COUNTY SOIL & WATER CONSERVATION DISTRICT, et al., Defendants.

976 F.Supp.2d 755

UNITED STATES of America, ex rel. Karen T. WILSON, Plaintiff,

v.GRAHAM COUNTY SOIL & WATER CONSERVATION DISTRICT, et al., Defendants.

Civil Case No. 2:01–cv–00019–MR.

United States District Court,

W.D. North Carolina,

Bryson City Division.

Oct. 1, 2013.

Mark Tucker Hurt, Abingdon, VA, Brian S. McCoy, Robert Bement Ingalls, Jr., McCoy Law Firm, LLC, Rock Hill, SC, for Plaintiff.

James P. Longest, Jr., N.C. Department of Justice, Jennie Wilhelm Hauser, Raleigh, NC, Sueanna Peeler Sumpter, Martin T. McCracken, NC Dept. of Justice, Asheville, NC, Sean F. Perrin, Womble, Carlyle, Sandridge & Rice, Charlotte, NC, Zeyland G. McKinney, Jr., McKinney & Tallant, P.A., Robbinsville, NC, for Defendants.

Richard Greene, Topton, NC, pro se.

William Timpson, Marble, NC, pro se.

MEMORANDUM OF DECISION AND ORDER

MARTIN REIDINGER, District Judge.

THIS MATTER is before the Court on the parties' supplemental pleadings filed pursuant to the instruction of this Court after the remand from the United States Court of Appeals for the Fourth Circuit, United States ex rel. Wilson v. Graham County Soil & Water Conservation District, et al., 399 Fed.Appx. 774 (4th Cir.2010).

PROCEDURAL HISTORY

The United States Supreme Court summarized the procedural history of this case as follows:

In 1995 the United States Department of Agriculture (USDA) entered into contracts with two counties in North Carolina authorizing them to perform, or to hire others to perform, cleanup and repair work in areas that had suffered extensive flooding. The Federal Government agreed to shoulder 75 percent of the contract costs. Respondent Karen T. Wilson was at that time an employee of the Graham County Soil and Conservation District, a special-purpose government body that had been delegated partial responsibility for coordinating and performing the remediation effort. Suspecting possible fraud in connection with this effort, Wilson voiced her concerns to local officials in the summer of 1995. She also sent a letter to, and had a meeting with, agents of the USDA.

Graham County officials began an investigation. An accounting firm hired by the county performed an audit and, in 1996, issued a report (Audit Report) that identified several potential irregularities in the county's administration of the contracts. Shortly thereafter, the North Carolina Department of Environment, Health, and Natural Resources issued a report (DEHNR Report) identifying similar problems. The USDA's Office of Inspector General eventually issued a third report that contained additional findings.

In 2001 Wilson filed this action, alleging that petitioners, the Graham County and Cherokee County Soil and Water Conservation Districts and a number of local and federal officials, violated the False Claims Act (FCA) by knowingly submitting false claims for payment pursuant to the 1995 contracts. She further alleged that petitioners retaliated against her for aiding the federal investigation of those false claims. Following this Court's review of the statute of limitations applicable to Wilson's retaliation claim, Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005), the Court of Appeals ordered that that claim be dismissed as time barred. 424 F.3d 437 (C.A.4 2005). On remand, the District Court subsequently dismissed Wilson's qui tam action for lack of jurisdiction. The court found that Wilson had failed to refute that her action was based upon allegations publicly disclosed in the Audit Report and the DEHNR Report.¹Those reports, the District Court determined, constituted “administrative ... report[s], ... audit[s], or investigation[s]” within the meaning of the FCA's public disclosure bar, 31 U.S.C. § 3730(e)(4)(A).

The Court of Appeals reversed the judgment of the District Court because the reports had been generated by state and local entities. “[O]nly federal administrative reports, audits or investigations,” the Fourth Circuit concluded, “qualify as public disclosures under the FCA.” 528 F.3d 292, 301 (2008) (emphasis added). The Circuits having divided over this issue, [the Supreme Court] granted certiorari to resolve the conflict. 557 U.S. 918, 125 S.Ct. 823, 160 L.Ed.2d 609 [129 S.Ct. 2824, 174 L.Ed.2d 551] (2009).

Graham County Soil and Water Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280, 130 S.Ct. 1396, 1400–01, 176 L.Ed.2d 225 (2010). In resolving that conflict, the Supreme Court held that the reference to “administrative” reports, audits, and investigations in § 3730(e)(4)(A) encompasses disclosures made in state and local sources as well as federal sources. Id. at 1398. Finding the Fourth Circuit's interpretation erroneous, the Supreme Court reversed and remanded to the Fourth Circuit “for further proceedings consistent with” its opinion. Id.

On remand, the Fourth Circuit acknowledged the Supreme Court's ruling “that the public-disclosure bar is not limited to federal reports and audits, but also applies to reports, audits, and the like conducted or issued by state and local governments.” Wilson, 399 Fed.Appx. at 775.

The Supreme Court's opinion, of course, establishes the scope of the public-disclosure bar. The Court's opinion, however, does not affect our previously expressed view that a remand to the district court is required before we can consider the substance of Wilson's claims. As is relevant to this case, the public-disclosure bar strips courts of jurisdiction over FCA actions that are “based upon the public disclosure of allegations or transactions in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation.” As noted in our prior opinion, the district court did not make the necessary factual findings to establish that Wilson's claims were “based upon” any of the reports at issue in this case. The district court likewise failed to make the requisite findings to establish that the reports at issue were in fact publicly disclosed. Given the jurisdictional nature of the public-disclosure bar, these subsidiary issues must be resolved before we can proceed to consider the merits of the Wilson's FCA claims.

Id. at 775–76.

The Fourth Circuit thus instructed this Court ² to make the necessary factual determinations as to (1) whether the relevant federal, state or local governmental audits, reports, hearings or investigations were publicly disclosed; (2) whether Wilson's claims were based on those public disclosures; and (3) if both of these requirements have been met, reconsider whether Wilson qualifies as an original source for any claim. Id. The Court of Appeals also directed that “the district court shall permitthe parties to submit additional evidence as may be necessary for the court to make the factual determinations upon which the jurisdictional questions turn.” Id. at 776.

Upon the most recent remand by the Court of Appeals, this Court conducted a status conference at which all parties appeared. At that conference, the parties advised the Court that there was no dispute as to the facts underlying the question of subject matter jurisdiction. [Doc. 338 at 1]. They further stipulated that in the event the Court determined there to be any such conflict in the evidence that this Court should make any necessary findings of facts based on the evidence in the record without any further hearing. [ Id. at 2]. The Court therefore entered an amended pretrial order which established deadlines by which the parties were allowed to submit any additional evidence pertinent to the question of jurisdiction. [ Id. at 2–4]. The parties having done so, [Docs. 342–1 through 342–9, 345–1 through 345–4, 347–1 through 347–5, 351–1 through 351–6], this matter is ripe for determination.

THE THIRD AMENDED COMPLAINT

The only remaining claims are ones asserted pursuant to the False Claims Act based on the allegations set forth in Section A of the Third Amended Complaint filed July 31, 2006.³ [Doc. 184]. The Relator, Wilson, was a part-time secretary for the Graham County Soil and Water Conservation District (Graham County District) beginning in 1993.⁴ [ Id. at 5]. As recounted by the Supreme Court, after extensive flooding caused substantial damage in Graham, Cherokee, and Clay Counties in far western North Carolina in February 1995, the federal government developed a program known as EWP–216, which was established by a grant pursuant to the Emergency Watershed Protection Program (EWP). [ Id.]. In her Complaint ⁵ Wilson alleges the following as having violated the FCA. Defendant Keith Orr (Orr) was employed as an inspector for the Graham County District. Orr presented claims for payment for work he asserted he had done in Graham and Cherokee Counties. These claims, however, are alleged to be improper because Orr had a conflict of interest due to his employment with the District and because the contracts for the work had been placed with Orr without any bids having been sought or received. Wilson also alleged that Orr “had not performed some or any of the work for which he filed claims for payment and for which he was paid.” [Doc. 184 at 6 ¶ 31.e.]. It is alleged that the other Graham County Defendants ⁶ are liable for such improper claims and payments because they facilitatedand covered up such wrongful acts. [ Id. at 5–6].

Wilson alleged a second category of wrongful claims by Defendants Orr, Richard Greene and William Timpson. Greene and Timpson were employees of the USDA who were responsible for inspecting work on EWP–216 repairs. Wilsom alleges that these three Defendants took the logs that were cut in relation to the EWP–216 clean up and sold them for their personal profit, even though those logs had become the property of the USDA as a result of the clean up efforts.⁷ [ Id. at 6–7].

In a third category, Wilson alleges that Orr, Greene and Timpson, along with Defendant Billy Brown “conspired to make similar false claims under the EWP–2...