US DEPT. OF HUD EX REL. GIVLER v. Smith

• Decision Date: 19 September 1991
• Docket Number: Civ.A. No. 89-0647.
• Citation: 775 F. Supp. 172
• Parties: UNITED STATES of America, Acting as the DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ex rel. LaWanda GIVLER v. Gary SMITH, Buckl-Jankowski, Inc., and Gordon Bennett, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

775 F. Supp. 172

UNITED STATES of America, Acting as the DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ex rel. LaWanda GIVLER v. Gary SMITH, Buckl-Jankowski, Inc., and Gordon Bennett, Inc.

Civ.A. No. 89-0647.

United States District Court, E.D. Pennsylvania.

September 19, 1991.

COPYRIGHT MATERIAL OMITTED

Nicholas Noel, III, Richard P. Kovacs, Teel, Stettz, Shimer & Di Giacomo, Ltd., Easton, Pa., Michael F. Hertz and Lori K. Miller, U.S. Dept. of Justice, Washington, D.C., David F. McComb, U.S. Atty's. Office, Philadelphia, Pa., for plaintiff.

J. Stephen Kreglow, La Brum and Doak, Bethlehem, Pa., Thomas J. Hanlon, Andrew S. Quinn, Dunmore, Pa., Daniel B. Huyett, Stevens & Lee, Reading, Pa., and Steven E. Angstreich, Levy, Angstreich, Finney, Mann & Burkett, P.C., Philadelphia, Pa., for defendants.

OPINION

CAHN, District Judge.

In this qui tam¹ action, the plaintiff is suing on behalf of the United States of America ("the Government" or "the United States"), pursuant to the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA" or "the Act"), to recover statutory penalties for fraud committed against the United States. Defendant Buckl and Jankowski ("Buckl" or "the defendant")² has moved to dismiss the complaint on the basis that the qui tam sections of the Act are unconstitutional.³ In the alternative, the defendant asserts that the complaint should be dismissed because the plaintiff has failed to plead fraud with particularity. For the reasons which follow, I shall deny the defendant's motion.

BACKGROUND

The FCA imposes liability for civil penalties and damages on persons who submit false claims to the United States. 31 U.S.C. § 3729. The plaintiff, LaWanda Givler, sues pursuant to § 3730(b)(1) of the Act, which provides that private parties "may bring a civil action for a violation of section 3720 for the person and for the United States Government."

Givler alleges that the defendants colluded to inflate contractual bids for repairs and improvements to the Delaware Terrace Housing Project. The defendants submitted their bids to the Easton Housing Authority ("the Authority"), which in turn used the quotes to formulate an application to the Department of Housing and Urban Development. The Authority received $469,000.00 in federal funds in response to its application. Givler asserts that the inflated bids constituted false claims for purposes of the FCA. Because the United States declined to prosecute the suit, see 31 U.S.C. § 3730(b)(4)(B), Givler proceeds on her own, as authorized by § 3730(c)(3) of the FCA.

DISCUSSION

Buckl bases its motion to dismiss on its contention that the plaintiff has not stated a valid claim because the FCA is unconstitutional. For the purposes of this motion, Buckl does not contest the factual allegations in the Complaint. Rather, the defendant seeks the resolution of the purely legal question of the constitutionality of the FCA.

Buckl asserts that the Act violates the Constitution for three reasons. First, according to the defendant, qui tam actions violate the constitutional doctrine of separation of powers. Second, the defendant maintains that the FCA violates the Appointments Clause of the Constitution. Third, Buckl asserts that the statutory creation of qui tam plaintiffs does not comport with Article III standing requirements.

Under Fed.R.Civ.P. 12(b)(6), "the applicable standard of review requires the court to accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the nonmoving party." Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989). The question before the court is not whether the plaintiff will ultimately prevail; rather, it is whether the plaintiff could prove any set of facts in support of his claim that would entitle the plaintiff to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984).

The defendant is challenging the constitutionality of a duly enacted law, and federal statutes being reviewed for constitutional infirmities are presumptively valid. See Fullilove v. Klutznick, 448 U.S. 448, 472, 100 S.Ct. 2758, 2771-72, 65 L.Ed.2d 902 (1980) (one of the first principles of constitutional adjudication is the basic presumption of constitutional validity of duly enacted laws). Thus, when this court "is asked to invalidate a statutory provision that has been approved by both Houses of the Congress and signed by the President, particularly an Act of Congress that confronts a deeply vexing national problem, it should do so only for the most compelling constitutional reasons." Mistretta v. United States, 488 U.S. 361, 384, 109 S.Ct. 647, 660-61, 102 L.Ed.2d 714 (1989) (quoting Bowsher v. Synar, 478 U.S. 714, 736, 106 S.Ct. 3181, 3193, 92 L.Ed.2d 583 (1986)).

I. The False Claims Act

The FCA provides that any person who submits a fraudulent claim for payment to the government "is liable to the United States Government for a civil penalty plus 3 times the amount of damages which the Government sustains." 31 U.S.C. § 3729. The qui tam provisions of the Act allow private parties to initiate civil actions to enforce the law. 31 U.S.C. § 3730(b).⁴

Under the provisions of the Act, the qui tam plaintiff must file the complaint in camera. The complaint then remains under seal for sixty days. At the time it is filed, the complaint is served on the United States rather than the defendant. While the complaint remains under seal, the Government decides whether to proceed with the action. 31 U.S.C. § 3730(b)(4)(A). If the Government declines to proceed, the relator has the right to conduct the action. 31 U.S.C. § 3730(b)(4)(B). If the relator's lawsuit interferes with the Government's investigation or prosecution of another action arising out of the same facts, the Government may request a stay of discovery in the qui tam action. 31 U.S.C. § 3730(c)(4). Additionally, the United States retains the right to intervene for good cause shown, even if the Government initially declines to prosecute the action. 31 U.S.C. § 3730(c)(4).

Through the above-quoted provisions, the Act "assists the government by enlisting the aid of citizens in enforcing statutes." Marra v. Burgdorf Realtors, Inc., 726 F.Supp. 1000, 1012 (E.D.Pa.1989). The Act "is the government's primary litigative tool for the recovery of losses sustained as the result of fraud against the government." Avco Corp. v. United States Department of Justice, 884 F.2d 621, 622 (D.C.Cir.1989) (citing S.Rep. No. 345, 99th Cong., 2d Sess. 2 (1986), reprinted in 1986 U.S.Code Cong. & Admin.News 5266). Congress undoubtedly has the power to protect the United States from fraudulent practices. See United States ex rel. Marcus v. Hess, 317 U.S. 537, 550, 63 S.Ct. 379, 387, 87 L.Ed. 443 (1943). The question presented by the defendant's motion is whether protection through a statutory qui tam provision comports with the Constitution. I turn first to the separation of powers challenge.

II. Separation of Powers and Qui Tam Actions

A. The Framework for Separation of Powers Inquiry

In its most recent cases analyzing the constitutional issue of separation of powers, Morrison v. Olson, 487 U.S. 654, 108 S.Ct. 2597, 101 L.Ed.2d 569 (1988) and Mistretta, supra, the Court adopted a functionalist approach. See Harold J. Krent, Fragmenting the Unitary Executive: Congressional Delegations of Administrative Authority Outside the Federal Government, 85 Nw.U.L.Rev. 62, 95 (1990); Evan Caminker, The Constitutionality of Qui Tam Actions, 99 Yale L.J. 341, 358 n. 85 (1989); Paul Gewirtz, Realism in Separation of Powers Thinking, 30 Wm. & Mary L.Rev. 343, 351-54 & n. 39 (1989); see generally Suzanne Prieur Clair, Note, Separation of Powers: A New Look at the Functionalist Approach, 40 Case W.Res.L.Rev. 331, 331 (1990); Michael L. Yoder, Note, Separation of Power: No Longer Simply Hanging in the Balance, 79 Geo.L.J. 173, 179 (1990). The functionalist approaches of Morrison and Mistretta reflect a "flexible understanding of separation of powers." Mistretta, 488 U.S. at 381, 109 S.Ct. at 659; see generally Stephen L. Carter, Constitutional Improprieties, 57 U.Chi.L.Rev. 357, 402 (1990) (Morrison and Mistretta contain flexible vision of structural clauses of the Constitution).

Morrison and Mistretta concluded that "while our Constitution mandates that `each of the three general departments of government must remain entirely free from the control or coercive influence, direct or indirect, of either of the others, ... the Framers did not require — and indeed rejected — the notion that the three Branches must be entirely separate and distinct.'" Mistretta, 488 U.S. at 380, 109 S.Ct. at 658-59 (quoting Humphrey's Executor v. United States, 295 U.S. 602, 629, 55 S.Ct. 869, 874, 79 L.Ed. 1611 (1935)). Thus, the Court has adhered to the "pragmatic, flexible view of differentiated governmental power," Mistretta, 488 U.S. at 381, 109 S.Ct. at 659, espoused by Justice Jackson in Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 72 S.Ct. 863, 96 L.Ed. 1153 (1952):

While the Constitution diffuses power the better to secure liberty, it also contemplates that practice will integrate the dispersed powers into a workable government. It enjoins upon its branches separateness but interdependence, autonomy but reciprocity.

343 U.S. at 635, 72 S.Ct. at 877 (Jackson, J., concurring).

When confronted with a separation of powers challenge, courts must focus on whether the law in question fosters the "encroachment or aggrandizement of one branch at the expense of the other." Morrison, 487 U.S. at 693, 108 S.Ct. at 2620 (quoting Buckley v. Valeo, 424 U.S. 1, 122, 96 S.Ct. 612, 684, 46 L.Ed.2d 659 (1976)); see also United States ex rel. Truong v. Northrop Corp., 728 F.Supp. 615, 620 (C.D.Cal.1989) ("where functions of two coordinate branches are commingled without encroachment or aggrandizement, there is no constitutional...