USA. v. The District of Columbia

• Decision Date: 21 December 1999
• Docket Number: No. 98-7180,98-7180
• Citation: 198 F.3d 913
• Parties: (D.C. Cir. 1999) United States of America ex rel. Earl S. Settlemire, Appellant v. The District of Columbia, Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 913

198 F.3d 913 (D.C. Cir. 1999)

United States of America ex rel. Earl S. Settlemire, Appellant v. The District of Columbia, Appellee

No. 98-7180

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 8, 1999

Decided December 21, 1999

[Copyrighted Material Omitted] Appeal from the United States District Court for the District of Columbia(No. 96cv00568)

Joyce E. Mayers argued the cause and was on the briefs for appellant. Pamela J. Bethel entered an appearance.

Donna M. Murasky, Assistant Corporation Counsel, argued the cause for appellee. With her on the briefs were John M. Ferren, Corporation Counsel at the time the main brief was filed, Jo Anne Robinson and Robert R. Rigsby, Interim

Corporation Counsel at the time supplemental briefs were filed, and Charles L. Reischel, Deputy Corporation Counsel.

Douglas N. Letter, Attorney, U.S. Department of Justice, argued the cause for the United States as amicus curiae. With him on the brief were David W. Ogden, Acting Assistant Attorney General, Michael F. Hertz and David M. Gossett, Attorneys, and Wilma A. Lewis, U.S. Attorney.

Before: Edwards, Chief Judge, Sentelle and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge:

Appellant-relator Earl S. Settlemire brought this qui tam action against the District of Columbia, alleging that the District spent funds appropriated by the United States for purposes other than those intended by Congress, thereby violating the False Claims Act ("FCA" or "Act"), 31 U.S.C. §§ 3729-3733 (1994). The district court dismissed the action for lack of subject matter jurisdiction. We agree with the district court that Settlemire's allegations fall within the Act's jurisdictional bar against actions based on publicly disclosed information. See 31 U.S.C. 3730(e)(4)(A).Because we further hold that Settlemire has not satisfied the original source exception to the jurisdictional bar, we affirm the district court's dismissal of this action.

I. Background

Under the FCA, a private party may bring suit for fraud committed against the United States. The ability to bring such actions is limited by the "public disclosure" provision of the Act, which divests courts of jurisdiction over claims "based upon the public disclosure of allegations or transactions" in specified types of public proceedings, "unless ... the person bringing the action is an original source of the information." 31 U.S.C. 3730(e)(4)(A). An original source is a plaintiff with "direct and independent knowledge" of the relevant facts who has revealed his knowledge to the Government before public disclosure and before filing suit. 31 U.S.C. 3730(e)(4)(B); see United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 690 (D.C. Cir.), cert. denied, 118 S. Ct. 172 (1997). This creates a two-step process in which a court decides whether the action is based on publicly disclosed information, and if so, whether the plaintiff may still proceed because he is an original source of that information.

Settlemire brought suit under the FCA alleging the following facts. In 1989, the government of the District of Columbia requested federal financial assistance in order to increase the officer strength of the Metropolitan Police Department ("MPD"). Congress subsequently enacted the District of Columbia Police Authorization and Expansion Act of 1989, Pub. L. No. 101-223, 2, 103 Stat. 1901, 1901-02 ("Expansion Act") (codified at D.C. Code Ann. 47-3406(c) (1997 repl.)), which authorized the appropriation of funds for fiscal years 1990 through 1994 for "salaries and expenses (including benefits) of 700 additional officers and members of the Metropolitan Police Department of the District of Columbia." Id. 2(c)(1). Under the statute, these funds were to be available only to pay for "officers and members of the [MPD] in excess of 4,355 officers and members (and supplies, equipment, and protective vests for reserve officers of the [MPD])." Id. 2(c)(2).

Congress first appropriated funds under the Expansion Act for fiscal year 1990, in the amount of $17,630,000. See District of Columbia Appropriations Act, 1990, Pub. L. No. 101-168, 103 Stat. 1267, 1267-71 (1989). The Conference Report accompanying this act recognized that it would be impossible for the District to hire and train enough new police officers above the 4,355 threshold to use all of the appropriated funds. See H.R. Conf. Rep. No. 101-270, at 5-6 (1989).Thus the report stated that the "first priority" of Expansion Act funds was for the hiring of additional officers, but provided that if the funds were not so expended, they "may be used to purchase goods and services in the non-personal object classes including support and other materials as well as capital items." Id.

A similar sequence of events occurred for fiscal year 1991.Congress again appropriated funds, and the Conference Report contained the same language. See District of Columbia Appropriations Act of 1991, Pub. L. No. 101-518, 104 Stat. 2224, 2224-29 (1990); H.R. Conf. Rep. No. 101-958, at 10-11 (1990).¹

On May 7, 1990, the District claimed that the police department had reached a staffing level of 4,355 and began to access the Expansion Act funds. A number of Congressional hearings occurred in 1990 and 1991 which included discussions about the use of Expansion Act funds.

First, a subcommittee of the Senate Committee on Appropriations held hearings on May 24, 1990. See Hearings Before the Senate Subcomm. of the Comm. on Appropriations, District of Columbia Appropriations for Fiscal Year 1991, 101st Cong. (1990). Mayor Marion S. Barry, Jr. testified as to what was happening to the Expansion Act monies. In his submitted statement he declared: "Now that we are able to access the $17 million we will be using some of those funds for overtime as well as to continue the hiring of the 700 police officers." Id. at 50. During his oral testimony, he explained why the MPD's overtime spending was over budget:

Why did we spend it? Because we wanted to demonstrate our commitment. We knew we were going to access the $17 million. We knew it did not require are programming. Only that, as I understand it, we had toreach a police officer level of 4,355 before we could access the $17 million for the police department

.....

Congress gave us $17.6 million. When you take [the District's other funds] and add it to the $17.6 million that would give us enough overtime money to finish the rest of this year.

Id. at 68-69.

Isaac Fullwood, Jr., Chief of Police, testified to similar effect:

We were spending that money as if we already had access to it.

We knew that once we reached a police officer strength of 4,355 that we would have direct access to the funds. It was our understanding that no reprogramming would be required. The money was virtually unencumbered in the way that the Congress intended us to use it, as long as it was used specifically for law enforcement purposes.

Id. at 71.

On May 22, 1991, a House subcommittee held budget hearings regarding District appropriations for the 1992 fiscal year. See Hearings Before a Subcomm. of the Comm. on Appropriations: Subcomm. on District of Columbia Appropriations, Fiscal Year 1992, 102d Cong. (1991). Chairman Julian Dixon questioned District representatives about the use of Expansion Act funds:

When the Mayor sent up her [budget] reductions of $216million, a major part of that was a reduction of some$12.5 million in the police department.

From my way of looking at it, it was a reduction of money that you had already received. Is that correct? In other words, you got $17.6 million in fiscal year 1991to hire additional police officers. You have that money in your pocket, and when the Mayor sent up the budget, she said I am going to cut $12.5 million in the police department. My response would be that you already have that money so you are not cutting anything--you are just keeping our money but you are not spending it for the purpose it was intended.

Id. at 1160.

While Expansion Act funds were being appropriated by Congress, appellant headed the budget branch of the MPD's Office of Finance and Resource Management. He claims that he had access to reports that detail how the District spent Expansion Act funds on items other than for additional officers beyond the 4,355 threshold. He filed the instant action in the district court on March 22, 1996 under seal, as required by the FCA. See 31 U.S.C. 3730(b). After the U.S. Department of Justice notified the district court that it did not wish to intervene, the seal was released, and the complaint served on the District.

After discovery, both parties filed motions for summary judgment. The District additionally moved for dismissal for lack of subject matter jurisdiction based upon the jurisdictional limitation of the FCA which bars suits based upon publicly disclosed transactions. See 31 U.S.C. 3730(e)(4).The district court concluded that Settlemire's claims were precluded by the jurisdictional bar, and that Settlemire did not fall under the "original source" exception. Because of these conclusions, the district court dismissed for lack of subject matter jurisdiction. Settlemire has appealed the dismissal.

Prior to oral argument, we requested additional briefing on the relevance of United States ex rel. Long v. SCS Business & Technical Inst., 173 F.3d 870 (D.C. Cir.) (holding that a state is not a "person" subject to suit under the FCA), supplemented by, 173 F.3d 890 (D.C. Cir.), petition for cert. filed, 68 U.S.L.W. 3116 (U.S. Aug. 2, 1999) (No. 99-213). The United States submitted an amicus brief and participated in oral argument on that matter. As explained below, we do not reach the issue.

II.

Since its original enactment in 1863, the FCA has allowed any private party to bring suit, on behalf of the United States government, based on that party's knowledge of fraud committed...