Opposition Brief — Boeing Co. v. United States Ex Rel. Kelly

C2) F aprons ot, 8] 7

~— FILED

No. 93-817 | JAN 13 1994

ME @ERK

9n the Supreme Court of the Wnited States

OCTOBER TERM, 1993

THE BOEING COMPANY, PETITIONER,

UNITED STATES OF AMERICA, EX REL. KEVIN G. KELLY

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

JOINT BRIEF FOR THE RESPONDENT KEVIN G. KELLY AND AMICUS CURIAE

UNITED STATES SENATE IN OPPOSITION TO THE PETITION FOR CERTIORARI

MICHAEL DAVIDSON,

(Counsel of Record)

Senate Legal Counsel,

KEN U. BENJAMIN, JR.,

Deputy Senate Legal Counsel,

MORGAN J. FRANKEL,

Counsel for United States Senate

JANUARY 1994

Law Offices of Phillip E. Benson,

610 Newport Center Dr.,

Suite 1010,

Newport Beach, CA 92660.

(714) 644-4388

Counsel for Kevin G. Kelly

QUESTION PRESENTED

Whether the provisions of the False Claims Act that

authorize a private person to bring a civil action to re-

cover for the United States civil penalties and damages

for false claims against the United States and to receive

a portion of the recovery, subject to the Executive’s pow-

ers under the Act to protect its interests in the action,

comport with the separation of powers, the Appointments

Clause, the standing requirement of Article III, and the

Due Process Clause.

(I)

TABLE OF CONTENTS

SL SLID OTA TTR

i i sence umadibiuaeusas

a

Reasons Why the Writ Should be Denied ................0000000.0..

I. The Court Of Appeals’ Determination That The

False Claims Act Is Constitutional Is Fully Con-

sistent With This Court’s Precedents .............000.......

A. The False Claims Act Comports With the

Separation of Powers. ..............ccccscscccsssssereeeees

1. The Decision of the Court of Appeals

Is Correct Under Morrison v. Olson ...

2. THE CONGRESS’S OBJECTIVE OF

SUPPLEMENTING GOVERNMENT EF-

FORTS TO COMBAT FRAUD WITH PRI-

VATE ENFORCEMENT IS PERMISSIBLE

UNDER THE SEPARATION OF POWERS ..

B. The Qui Tam Provisions Do Not Implicate

the Appointments Clause ...................cccccc00e.

C. False Claims Act Qui Tam Relators Have Ar-

a aslacwsanndeabenns

D. Qui Tam Suits Under the False Claims Act

Do Not Violate the Due Process Clause ........

II. There Is No Conflict Among The Circuits ...................

III. There Are No Other Reasons Justifying This Court’s

Review Of The Decision Below .............0......ccccceeeeeees

sc csactbunseancapunninie

TABLE OF AUTHORITIES

Cases:

Allen v. Wright, 468 U.S. 737 (1984) oo.......eeecceecceceeeees

16

IV

Cases—Continued

American Construction Co. v. Jacksonville, T. & K.W.

Page

Ss ee EE CE gadetnnbdedcccdcvarnasnqitasnionninsotens 23

Buckley v. Valeo, 424 U.S. 1 (1976).............0.....04. 7, 14, 15

Estelle v. Gamble, 429 U.S. 97 (1976) ..........cccceccceeee eee 23

Flast v. Cohen, 392 U.S. 83 (1968) ................cceecceeeeeees 16, 17

Freytag v. Commissioner of Internal Revenue, 111

RE IEE cicccssihalasetsokonsnatntendincsabaccnasiadasiniiansies 15

Juliano v. Federal Asset Disposition Ass’n, 736 F

Supp. 348 (D.D.C. 1990), affd, 959 F.2d 1101 (D.C.

Ss ee OUD sett Gcnatcieicendc, Sraankduchsaiuitaaveniesesesedasindixaoes 25

Lujan v. Defenders of Wildlife, 112 S.Ct. 2130

CRIED puhocnlasicehidchatibusdiocsousincinhidbatiadnakabicinnns 5, 6, 16, 17, 21

Marshall v. Jerrico, Inc., 446 U.S. 238 (1980) ............ 19

Marvin v. Trout, 199 U.S. 212 (1905) «0... ee 8, 18

Mistretta v. United States, 488 U.S. 361 (1989) .......... 9, 12

Morrison v. Olson, 487 U.S. 654 (1988).................. 9,10, 14

Newman v. Piggie Park Enterprises, 390 U.S. 400

BRENIG CP PENS cteR ONT AE LECT TEE 20

Nixon v. Administrator of General Services, 433 U.S.

Se EU crenata Gres bbihcceeda elisa dad hincancencaiacebieeaenaceion 12

Priebe & Sons v. United States, 332 U.S. 407 (1947) . 17

Seattle Master Builders v. Pacific Northwest Electric

Power and Conservation Planning Council, 786

F.2d 1359 (9th Cir. 1986), cert. denied, 479 U.S.

I IE sk sis tireaesitte cas canedineoasigduasiaidasencintadencensbincasd 15

Spann v. Colonial Village, Inc., 899 F.2d 24 (D.C.

Cir.), cert. denied, 498 U.S. 980 (1990)..........000.000.. 20, 26

Tigner v. Texas, 310 U.S. 141 (1940) ....... ee. 26

United States ex rel. Burch v. Piqua Engineering,

Inc., 803 F. Supp. 115 (S.D. Ohio 1992).................. 22, 22

United States ex rel. Givler v. Smith, 775 F. Supp.

Fe Ne a icant taciendb tater Nacreinasasidaanaditacon dines 22, 23

United States ex rel. Kreindler & Kreindler v. United

Technologies Corporation, 985 F.2d 1148 (2d Cir.),

cert. denied, 113 S.Ct. 2962 (1993)..........0000.. 8, 16, 21, 22

United States ex rel. Madden v. General Dynamics

Corporation, 4 F.3d 827 (9th Cir. 1993) ................... 21

United States ex rel. Marcus v. Hess, 317 U.S. 537

IEEE = acaneuiecaeniidicecsucen ince deuce taney noma cena

V

Cases—Continued

United States ex rel. McGough v. Covington Tech- page

nologies, 967 F.2d 1391 (9th Cir. 1992) ...........00000... 25

United States ex rel. Milam v. University of Texas

M.D. Anderson Cancer Center, 961 F.2d 46 (4th

CTP BU sizasiisssoeitiesailescas sd beateeedpetaaeisaimaaban ad Mesias 16, 21

United States ex rel. Newsham v. Lockheed Missiles

and Space Co., 722 F. Supp. 607 (N.D. Cal. 1989) .. 22

United States ex rel. Robinson v. Northrop Corpora-

tion, 824 F. Supp. 830 (N.D. Ill. 1993)....... ee. 22, 23

United States ex rel. Stillwell v. Hughes Helicopters,

714 F. Supp. 1084 (C.D. Cal. 1989) oo. 22

United States ex rel. Taxpayers Against Fraud and

Chester L. Walsh v. General Electric Company, ap-

peals docketed, Nos. 92-4283 & 93-3015 (6th Cir.

Dec. 11, 1992 and Jan. 6, 1993) ...................0...c0c00000. 22

United States ex rel. Truong v. Northrop Corpora-

tion, 728 F. Supp. 615 (C.D. Cal. 1989)... 18, 22

United States ex rel. Weinberger v. Equifax, Inc., 557

F.2d 456 (5th Cir. 1977), cert. denied, 434 U.S.

SIE IUD sishicesnaittladeustcnseee eee ee ee 21

United States v. Bornstein, 423 U.S. 303 (1976) ......... 12

United States v. Halper, 490 U.S. 435 (1989) ............. 19

Young v. United States ex rel. Vuitton et Fils S.A.,

GAS Wa Pee LIE wnieddincli Saale ee 19

Constitution and Federal Statutes:

U.S. Constitution:

MEE. scisctsbnns cheiapiacltiand eae 5...14, 15

UR TU ditinidlatliiaitstinenitiodnensoiael ne. 5, 15, 16

PS Sitios eee 5, 18

REE. TET ctitiriicie tc See ee 18

Act of March 2, 1863, ch. 67, 12 Stat. 696 ...........0...... 2

Pub. L. No. 100-700, §9, 102 Stat. 4631, 4638

(1988), codified at 31 U.S.C. §3730(d)(3) .o.ccccccccccee. 26

Be USB. BMD cniscndosicnenccastecisccsiaccecsubeetneuesenc 1

BUR RIND waikitvocceveseceoteencantiausctt ees 1

Be ee ID oo scsi iiss scnusnenanceiniasbeacecbeers 9

ae RS ID eacevvactsccsssodsacashcstburiccanechuncmamtasons 11

Se A IID sihiceissncesithccocnnsstansiesecnddnrtccectace 9, 15

ee MIE fienasinssstcnvacsinsansedscndiicnminestilc 9, 11

Oe PAR. Ie CH i hctsnnkico nipnasieistacestuniabcaiaialious 9

VI

Constitution and Federal Statutes—Continued

BB US Bee CD dceniccntibiclsnciarstxtestnneeicanee 2

False Claims Act, 31 U.S.C. §§3729, et seg. (1988

and Supp. IV 1992)

SPT TIIIEIID . usihicciacicshantecndsdedeseiuasesiéaahoasibeeyaneaenacinnelas 2

SATII’ sconcsuscdcnesachensbossanssansceiesiodsnbanaeaaanenian 2, 10

§3730(bX1) ............ salbnentnlylinaidieédiieddiasieacktnd tie maaaaaaanea 2, 10

UII scitisinciinsisdascshonaceuneheminiisthinainalanaaceian: saan 3

IED Stcenistocisecscincsincabeencimaesinaissaianaenanae 3

SAP UITIIEIED ccincciccdecocsenehensetesbenensaieaceneecneeaneaaniaes 3

De PEIIIEIED csiinesssecsnsneconnasedeckessunsesspeansenaasiaaenaan 3

NII TA vac sc:caissckcadeseusscichanknnebinesucsouepiacenmeuiadia 3, 6, 10

DIED iiiiscthacccacsshincdsucancudunnesaesdeceniasastaeanel 4,6, 10

TIED “\csichussadcdesdsconsececantdaeucmiciieiucconaniacaad 4, 10

SRI Dianna sinc scnbestecsansadsnnueudegigubmminmelmmen 3, 10, 11

AP EIIIIITIIED . <dccscccunisbnseeobencnecstusuedinninasunelsadiuaaiaian 4°

SAP IIIIIE .shondcienn<éacsustnbbipoaninsessaasekuuiisasiadieiaaaunaniiaal 3

DIT cecocenktetsbntins dnsciternniembclacsiaasaubaianaecenninl: 3, 6, 10

§ 3730(c)(5) ........ aeuisiibibiidoadahueniseebleeannasisiedaiataaian iam aman 6

TUPI snidlastnssanicatecaciconsneantbarsuandadianaeliamanaaanaien 4

§ 3730(dX1) .............. sidanenatesesaubddsassennidcialiaeaeneanaiae 4

OF SPIED <ciliiciccccacnesstuckenceessaesnabaddadcteceaaaenaan ane 4

PITTED chicnintsnacedsedaseceinidenmstsuuieascaiasaaaiacaaaatl 26

PTET sitnccinteassttansbadecosetananeiabecueeoliasasaaenae 4, 24

SIE anscndlcccdsssducumandseosensapia sevsieabiassanacconmena 15

i SP UIIIIEE -Secaniennniocnsaniasanicuinbentiigaiecelueedetnaaaddaacaaiaas 5

Congressional Materials:

H.R. Rep. No. 49, 37th Cong., 3d Sess. (1863) ............ 12

S. Rep. No. 345, 99th Cong., 2d Sess., reprinted in

Be Cas CI cnictictccctnesiecntenncsnncenentioden 13, 14, 25

S. Res. 343, 103d Comg. (1902) ..........cccccccosccssscccesscsseees 1

Cong. Globe, 37th Cong., 3d Sess. (1863) .................... 12

138 Cong. Rec. S$13877 (daily ed. Sept. 17, 1992) ....... 1

False Claims Reform Act: Hearing on S. 1562 Before

the Subcomm. on Administrative Practice and Pro-

cedure of the Senate Comm. on the Judiciary, 99th

Ceamagt.g Baad Beam. Ci icsincteccsissouseinticeacintatiinthepaiacsns 13, 14

False Claims Act Implementation: Hearing Before the

Subcomm. on Administrative Law and Govern-

mental Relations of the House Comm. on the Judi-

clary, 101st Cong., 2d Sess. (1990)................0... 10, 25, 26

vu

Congressional Materials—Continued

False Claims Act Technical Amendments of 1992:

Hearing Before the Subcomm. on Administrative

Law and Governmental Relations of the House

Comm. on the Judiciary, 102d Cong., 2d Sess.

CREED; scnliuintsuisueshinabthartaiiitkecnecetc ti ee 26

S. 841: The False Claims Amendments Act of 1993:

Hearing Before the Subcomm. on Courts and Ad-

ministrative Practice of the Senate Comm. on the

Judiciary, 103d Cong., 1st Sess. (1993)............. 25-26, 27

Miscellaneous:

William J. Brennan, Jr., Some Thoughts on the Su-

preme Court’s Workload, 66 Judicature 230 (1983) 24

4 William S. Holdsworth, A History of English Law

NS I inchs Aina oe 8

1 Fred Albert Shannon, The Organization and Ad-

ministration of the Union Army, 1861-1865 (1965) 12

Evan Caminker, The Constitutionality of Qui Tam

Actions, 99 Yale L.J. 341 (1989) o.oo. ccccccccccccceecceeee. 8

13 Op. Off. Legal Counsel 249 (1989) ..0.0000 00. 27

Letter of Acting Assistant Attorney General Stuart

E. Schiffer to the Clerk of the United States Court

of Appeals for the Ninth Circuit, filed in United

States ex rel. Madden v. General Dynamics Corp.,

No. 92-56042 (Mar. 31, 1993) .oo..oooccccccccccccecceseeeeee. 27

$n the Supreme Court of the Wnited States

OCTOBER TERM, 1993

No. 93-817

THE BOEING COMPANY, PETITIONER,

VU.

UNITED STATES OF AMERICA, EX REL. KEVIN G. KELLY

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

JOINT BRIEF FOR THE RESPONDENT KEVIN G. KELLY AND AMICUS CURIAE

UNITED STATES SENATE IN OPPOSITION TO THE PETITION FOR CERTIORARI

Respondent, Kevin G. Kelly, the qui tam plaintiff-ap-

pellee below, and the United States Senate, as amicus cu-

riae, submit this joint brief in opposition to the petition

of The Boeing Company for a writ of certiorari. The inter-

est of the Senate in this case is grounded in the convic-

tion that the enlisting of private individuals through qui

tam actions, as a supplement to public enforcement, is a

vital and constitutional component of the effort to combat

fraud against the federal government. 1

1The United States Senate participated as amicus curiae in the

court of appeals, and appears here also in that capacity pursuant to

2 U.S.C. §288e(a), which provides that the Senate may direct its Legal

Counsel to appear as amicus curiae in its name “in any court of the

United States * * * in which the powers and responsibilities of Con-

gress under the Constitution of the United States are placed in issue.”

Permissmen to appear is “of right” and may be denied only for untime-

liness. 2 U.S.C. §288l(a). See S. Res. 343, 102d Cong. (1992); 138

Cong. Rec. S13877 (daily ed. Sept. 17, 1992) (directing appearance in

this case). The Senate’s appearance is limited to the constitutional

issue in this case.

(1)

2

STATEMENT OF THE CASE

Pursuant to the False Claims Act, 31 U.S.C. §§ 3729, et

seq., (““FCA” or “the Act”), the respondent Kevin Kelly

filed a qui tam action on behalf of himself and the United

States against petitioner Boeing Company, alleging that

petitioner had committed fraud against the United States

by overcharging it for leasing costs for the buildings used

in the pétitioner’s work on military aircraft programs.

The petitioner moved to dismiss the complaint on a num-

ber of grounds, including that the qui tam provisions of

the False Claims Act violate the Constitution. The district

court denied the petitioner’s motion to dismiss on con-

stitutional grounds, Pet. App. at 74a—83a (unreported de-

cision), certified an interlocutory appeal, id. at 84a—87a,

and the court of appeals affirmed in an appeal under 28

U.S.C. § 1292(b). 2

A. The Statute

First enacted in 1863,3 the False Claims Act, codified

as amended at 31 U.S.C. §§3729, et seqg., provides that

any person who submits a fraudulent claim for payment

to the United States is liable to the government “for a

civil penalty * * * plus three times the amount of dam-

ages which the Government sustains.” Id. §3729(a). Al-

though the Act has been amended several times, most

comprehensively in 1986, since 1863 the Act has author-

ized both a civil action by the Attorney General,4 and a

qui tam action “by any person, as well for himself as for

the United States.”5

2Although the petitioner has reproduced in its appendix both the

original and amended opinions of the court of appeals, the amended

opinion, which fully substituted for the original opinion, is the opinion

of the Ninth Circuit in this case. That opinion, to be reported at 9 F.3d

743, is reproduced at Pet. App. at la—34a.

3 Act of March 2, 1863, ch. 67, 12 Stat. 696.

4Act of March 2, 1863, ch. 67, §5, 12 Stat. 698, codified as amended

at 31 U.S.C. §3730(a).

5Id. at §4, 12 Stat. 698, codified as amended at 31 U.S.C.

§ 3730(b)(1).

3

The Act’s system of dual public and private enforce-

ment originally made no provision for the government’s

participation in qui tam actions, but in 1986 the Congress

provided that the government may elect to take over a

qui tam action. 31 U.S.C. §3730(b)(2), (c)(3). To facilitate

the government’s decision, a relator must file the com-

plaint under seal and serve it on the government, to-

gether with a written disclosure of all material evidence

and information in the _ relator’s possession. Id.

§ 3730(b)(2).

The Act provides the government with 60 days, or

longer upon a showing of good cause, to investigate a qui

tam relator’s allegations and to determine whether to in-

tervene. Id. §3730(b)(2),(3). If the government elects to

intervene “the action shall be conducted by the Govern-

ment.” Id. §3730(b)(4)(A). If the government declines to

take over the case, “the person bringing the action shall

have the right to conduct the action.” Id. §3730(b)(4)(B).

The court “may nevertheless permit the Government to

intervene at a later date upon a showing of good cause.”

Id. §3730(c)(3). To aid the government in this determina-

tion, the Act provides that the government may require

the relator to serve it with copies of all pleadings and

deposition transcripts. Id. The government is empowered

to protect its interests in cases in which it does not par-

ticipate by obtaining from the court a stay of a qui tam

plaintiffs discovery, upon a showing that the discovery

“would interfere with the Government’s investigation or

prosecution of a criminal or civil matter arising out of the

same facts.” Id. §3730(c)(4).

If the government takes over a qui tam action, “it shall

have primary responsibility for prosecuting the action,

and shall not be bound by an act of the person bringing

the action.” Id. §3730(c)(1). Although the relator may con-

tinue as a party, the government may request that the

court limit the participation of the relator if it “would

interfere with or unduly delay the Government’s prosecu-

tion of the case, or would be repetitious, irrelevant, or for

purposes of harassment.” Jd. §3730(c)(2)(C). The govern-

4

ment may seek dismissal of the action, notwithstanding

the objections of the relator, provided the relator has an

opportunity for a hearing, id. §3730(c)(2)(A), or settle

with the defendant if the court determines after a hearing

“that the proposed settlement is fair, adequate, and rea-

sonable under all the circumstances.” Jd. §3730(c)(2)(B).

The defendant, for cases in which the government

elects to participate, may obtain judicial protection by re-

questing that the relator’s participation be limited if it

“would cause the defendant undue burden or unnecessary

expense.” Jd. §3730(c)(2)(D). In cases brought by qui tam

relators in which the government does not intervene, a

prevailing defendant may obtain an award of reasonable

attorneys’ fees and expenses upon a finding by the court

“that the claim of the person bringing the action was

clearly frivolous, clearly vexatious, or brought primarily

for purposes of harassment.” Jd. §3730(d)(4).

Successful private litigants are entitled to a percentage

of the government’s recovery. Id. §3730(d). In actions in

which the government intervenes, relators are entitled to

between 15% and 25% “depending upon the extent to

which the person substantially contributed to the pros-

ecution of the action,” or a lesser amount if a court finds

the action was primarily based on information available

to the government. Jd. §3730(d)(1). In actions the govern-

ment does not take over, the reward for the qui tam

plaintiff is “an emount which the court decides is reason-

able for collecting the civil penalty and damages,” of not

less than 25% nor more than 30% of the recovery for the

government. Jd. §3730(d)(2). The Act also provides for the

award of reasonable expenses and attorneys’ fees to suc-

cessful qui tam plaintiffs. Jd.

B. The Proceedings Below

In November 1989, the respondent filed a qui tam com-

plaint alleging that petitioner defrauded the United

States in violation of the Act by charging it for unreason-

able and unallowable leasing costs for facilities used by

the petitioner in its work on military programs, including

ee

5

the B-2 Bomber and Advanced Technical Fighter. Pet.

App. at 2a. In accordance with the Act, respondent filed

his complaint under seal and served it on the govern-

ment. Id. at 2a. After investigating the allegations in the

complaint, the government exercised its option under the

Act to decline intervention. Jd. The district court then un-

sealed the complaint, and the respondent served on the

petitioner an amended complaint. Jd. at 2a—3a.

The petitioner moved to dismiss the complaint on the

grounds that the qui tam provisions of the False Claims

Act violate (1) the separation of powers doctrine; (2) the

Appointments Clause; (3) Article III standing doctrine;

and (4) the Due Process Clause of the Fifth Amendment. 6

The district court rejected each of these arguments, not-

ing that other lower courts that had confronted similar

challenges to the Act had unanimously upheld its con-

stitutionality. Id. at 79a, 80a, 81a.

The court of appeals affirmed. Jd. at 34a. In a unani-

mous decision, the Ninth Circuit held that the qui tam

provisions of the False Claims Act “do not exceed the lim-

itations of Article III of the Constitution, nor do they vio-

late the constitutional principle of separation of powers,

the Appointments Clause of Article II, or the Due Process

Clause of the Fifth Amendment.” Jd. at 2a. First, the

court found that qui tam relators have Article III stand-

ing under Lujan v. Defenders of Wildlife, 112 S.Ct. 2130

(1992). Pet. App. at 7a—8a. It held that the False Claims

Act “effectively assigns the government’s claims to qui

tam plaintiffs such as Kelly, who then may sue based

upon an injury to the federal treasury. * * * Because the

government clearly is capable of establishing injury-in-

fact, causation, and redressability, qui tam plaintiffs sat-

isfy these Article III requirements as well.” Pet. App. at

8a. Also, qui tam suits involve allegations of fraud, which

6 Pet. App. at 76a. The petitioner also moved to dismiss the respond-

ent’s state law claim for wrongful discharge on the ground that the

False Claims Act’s prohibition against retaliation, 31 U.S.C. § 3730(h),

preempts state claims for wrongful discharge. The district court agreed

and dismissed the state law claim. Pet. App. at 82a—83a.

75-465 - 94 - 2

6

are readily capable of judicial resolution. Jd. at 28a n.19.

By deciding qui tam actions courts “are not intruding into

areas committed to the other branches of government.”

Id. at 11a. ;

With regard to the separation of powers, the court of

appeals held that under this Court’s decision upholding

the independent counsel provisions of the Ethics in Gov-

ernment Act of 1978, the proper test is whether the qui

tam provisions “accord the Executive Branch ‘sufficient

cortrol’ over the conduct of relators to ‘ensure that the

President is able to perform his constitutionally assigned

duties.’” Id. at 14a (quoting Morrison v. Olson, 487 U.S.

654, 696 (1988)). Carefully examining the provisions of

the False Claims Act, the court concluded that the Act

leaves the Executive Branch “sufficient means of control-

ling or supervising relators to satisfy separation of powers

concerns.” Pet. App. at 23a.

Comparing the controls that the qui tam provisions af-

ford the Executive Branch with the limited controls pro-

vided under the independent counsel law, the court found

that “the Executive Branch exercises at least an equiva-

lent amount of control over qui tam relators as it does

over independent counsels.” Jd. It noted that, unlike the

Attorney General’s limited relationship to proceedings

brought by an independent counsel, the government may

intervene in a qui tam action and assume primary re-

sponsibility for prosecuting it, 31 U.S.C. §3730(c)(1); it

may move to dismiss a case which it believes lacks

merit;7 whether or not it intervenes it may seek a judicial

stay of the relator’s discovery, 31 U.S.C. §3730(c)(4); and

it is free to seek available alternative remedies through,

for example, administrative proceedings. 8

7Id. §3730(cX2)A). While a relator must be provided notice and an

opportunity for a hearing, the court observed that this would not likely

prove burdensome in practice, Pet. App. at 20a n.11, and that the

analogous power of the Executive to remove an independent counsel

was qualified by the requirement of good cause. Id. at 24a.

8 Id. §3730(c\(5); see Pet. App. at 20a. The court also rejected the pe-

titioner’s contention that the Act violates the separation of powers by

|

7

The court also held that the qui tam provisions of the

False Claims Act do not violate the Appointments Clause.

Observing that the proper test under this Court’s decision

in Buckley v. Valeo, 424 U.S. 1, 126 (1976)(per curiam),

is whether relators exercise “significant authority” under

the laws of the United States, the court stated that “we

find it impossible to characterize the authority exercised

by relators as so ‘significant’ that it must only be exer-

cised by officers appointed in the manner which Article

II, §2, cl. 2 prescribes.” Pet. App. at 29a. The court noted

in addition that relators are also distinguished from offi-

cers because they receive no government resources or sal-

ary, and have no tenure. Jd. at 30a & n.21

Finally, the court rejected petitioner’s assertion that

under the Due Process Clause financially interested liti-

gants may not prosecute civil claims on behalf of the

United States. Concluding that the petitioner’s claim was

unsupported by this Court’s precedents, the court ob-

served that suits by qui tam relators, who “pursue their

claims essentially as private plaintiffs, except that the

government may displace a relator as the party with pri-

mary authority for prosecuting an action,” do “not impli-

cate due process concerns.” Jd. at 73a.

REASONS WHY THE WRIT SHOULD BE DENIED

The petition should be denied because the court of ap-

peals correctly applied this Court’s precedents in uphold-

ing the constitutionality of the False Claims Act, it is the

second court of appeals to uphold the Act’s constitutional-

permitting the judicial branch to determine whether the government

may intervene in cases it initially declines and providing the judiciary

a role in dismissals. Pet. App. at 25a-27a. The court determined that

“[t]he government’s ability to intervene at the outset of an action is

unfettered; we have seen no indication that it is difficult for the gov-

ernment to show good cause to intervene late; and, in view of analo-

gous authority, judicial oversight of the government’s dismissal power

is unremarkable.” Jd. at 27a.

8

ity 9 and there is no conflict with the decision of any other

circuit, and there is no other reason why review by this

Court is merited.

I.

THE COURT OF APPEALS’ DETERMINATION

THAT THE FALSE CLAIMS ACT IS CONSTITU-

TIONAL IS FULLY CONSISTENT WITH THIS

COURT’S PRECEDENTS

This Court is no stranger to the False Claims Act, or

to qui tam actions, which “have been in existence for hun-

dreds of years in England, and in this country ever since

the foundation of our Government.” Marvin v. Trout, 199

U.S. 212, 225 (1905). 1° Fifty years ago, in denying an ef-

fort by the government to limit the scope of qui tam ac-

tions under the False Claims Act, this Court stated with

great clarity that “Congress has the power to choose this

method to protect the government from burdens fraudu-

lently imposed upon it.” United States ex rel. Marcus v.

Hess, 317 U.S. 537, 542 (1943). To the government’s as-

sertion in that case that control of false claims litigation

should “be left to the Attorney General; that divided con-

trol is against the public interest,” id. at 547, this Court

responded that “[t]he government presses upon us strong

arguments of policy against the statutory plan, but the

entire force of these considerations is directed solely at

what the government thinks Congress should have done

rather than at what it did.” 11 At this late date in the his-

9 United States ex rel. Kreindler & Kreindler v. United Technologies

Corporation, 985 F.2d 1148 (2d Cir.), cert. denied, 113 S.Ct. 2962

(1993) (holding that qui tam relators have standing).

10Qui tam actions, which had been an established part of English

legal tradition, see 4 William S. Holdsworth, A History of English Law

356 (2d ed. 1937), were “routinely authorized by the First and subse-

quent early Congresses.” Evan Caminker, The Constitutionality of Qui

Tam Actions, 99 Yale L.J. 341, 342 & n.3 (1989) (listing qui tam stat-

utes of the early Congresses).

11Jd, at 546-47. Although the petitioner asserts that this Court “has

noted the anomalous position of the qui tam lawsuit,” Pet. Br. at 5,

the Court has never expressed constitutional doubt about the Act.

TF

9

tory of qui tam legislation, petitioner seeks to transform

those rejected policy arguments into constitutional claims,

and that effort should be equally unavailing.

A. The False Claims Act Comports With the Separa-

tion of Powers

1. THE DECISION OF THE COURT OF APPEALS Is CORRECT

UNDER Morrison v. OLSON

The court of appeals correctly concluded that the False

Claims Act does not violate the separation of powers doc-

trine by unduly interfering with the role of the Executive

Branch. Recognizing that Morrison v. Olson, 487 U.S. 654

(1988), is the “authority most analogous to this case” be-

cause it addressed “the degree to which Congress may as-

sign prosecutorial powers to persons not under the direct

control of the Executive Branch,” Pet. App. at 15a, the

court properly determined that the False Claims Act is at

least as protective of the Executive’s prerogatives as the

independent counsel law upheld in Morrison.

“Taken as a whole,” the court of appeals concluded, the

False Claims Act gives the Executive Branch “a degree of

control over qui tam relators that is not distinguishable

from the degree of control * * * the Executive Branch

exercises over independent counsels.” Pet. App. at 27a.

Under the independent counsel law at issue in Morrison,

the Attorney General was required to seek the appoint-

ment of an independent counsel in specified cir-

cumstances, had no authority to supervise or control the

counsel, lost all investigative and prosecutorial power

within the counsel’s area of jurisdiction, could not remove

the counsel in the absence of “good cause” (which was

subject to judicial review), and could terminate a coun-

sel’s investigation only on the ground that the investiga-

tion was completed or substantially completed. 28 U.S.C.

§§ 592, 594, 596-97 (1988),

Moreover, “constitutional principles of separated powers are not vio-

lated. . . by mere anomaly or innovation.” Mistretta v. United States,

488 U.S. 361, 385 (1989).

10

In contrast, under the False Claims Act the Executive

retains full authority to investigate and prosecute viola-

tions, 31 U.S.C. §3730(a), and retains significant control

over actions initiated by private persons. It may assume

“primary responsibility for prosecuting the action” (either

at the outset or later for good cause), id. §3730(c)(1), it

may seek to dismiss or settle the suit, id.

§ 3730(c)(2)(A),(B), and qui tam relators may not volun- )

tarily dismiss a case without the Executive’s consent. Id.

§ 3730(b)(1). The Executive may seek to limit the relator’s

role where “unrestricted participation * * * would inter-

fere with or unduly delay the Government’s prosecution

of the case.” Id. §3730(c)(2)(C). Whether or not it takes

over the case, the Executive may seek to block “discovery

by the person initiating the action [that] would interfere

with the Government’s investigation or prosecution of a

criminal or civil matter arising out of the same facts.” Jd.

§ 3730(c)(4).

The petitioner has made, and on the record in this case

can make, no showing of interferences with the Execu-

tive’s law enforcement powers. Indeed, the only evidence

is to the contrary. The government was permitted to in-

vestigate this case for three years before deciding not to

intervene, evidently satisfying the district court that it

had good cause to extend the investigation beyond 60

days. The government’s election neither to participate in

this case, nor to seek its dismissal or settlement, is con-

sistent with its willingness in other cases “to allow the re-

lator to go forward and attempt to make his case” !2

The petitioner’s contention that the Act fails adequately

to preserve Executive control because it lacks some spe-

cific features of the independent counsel statute, Pet. Br.

at 18-19, ignores this Court’s instruction in Morrison

that a statute must be evaluated as “a whole,” 487 U.S

at 685, 693, and overstates the significance of the dif-

12False Claims Act Implementation: Hearing Before the Subcomm.

on Administrative Law and Governmental Relations of the House

Comm. on the Judiciary, 101st Cong., 2d Sess. 26 (1990) [hereinafter

“1990 Hearing”) (statement of Ass’t Att’y Gen. Stuart Gerson).

11

ferences between the statutes. While the government can-

not control the initiation of a qui tam suit, once an action

has begun “the government has greater authority to limit

the conduct of the prosecutor and ultimately end the liti-

gation in a qui tam action than it does in an independent

counsel’s action.” 13

Under the False Claims Act the government “‘may dis-

miss’ a qui tam action ‘notwithstanding the objections’ of

the relator, as long as the relator has received notice and

an opportunity for a hearing.” Pet. App. at 22a n.14. In

contrast, under the independent counsel law, the Execu-

tive has no authority to terminate a particular investiga-

tion it believes lacks merit, although it may move to ter-

minate the office where an investigation is completed or

substantially completed. 28 U.S.C. §596(b)(2). The Execu-

tive’s ability to remove an independent counsel is re-

stricted to “good cause” and subject to judicial review. Id.

§ 596(a). Moreover, while “removal” of a qui tam litigant

by dismissal of the complaint ends the litigation, removal

of a particular independent counsel does not, as a re-

moved independent counsel would simply be replaced. Id.

§ 593(e).

2. THE CONGRESS’S OBJECTIVE OF SUPPLEMENTING GOV-

ERNMENT EFFORTS TO COMBAT FRAUD WITH PRIVATE

ENFORCEMENT IS PERMISSIBLE UNDER THE SEPARATION

OF POWERS

Petitioner argues that Congress had an “impermissible

motive” for strengthening qui tam enforcement in 1986,

namely that Congress did “not fully approve” of the man-

ner of Executive enforcement. Pet. Br. at 18. Despite the

130-year history of the False Claims Act, petitioner con-

ce

13 Pet. App. at 22a (emphasis in original). The petitioner’s observa-

tion that the relator cannot be “removed” if the government takes over

the case, Pet. Br. at 19, ignores that the government can prevent any

participation by the relator by filing suit first and can seek to limit

the participation of the relator to the extent it “would interfere with

or unduly delay the Government’s prosecution of the case, or would be

repetitious, irrelevant, or for purposes of harassment.” 31 U.S.C.

§ 3730(c)(2C).

12

tends that it finds “no valid reason for diminishing the

President’s constitutional authority.” Jd. However, this

Court has repeatedly stressed that “[oJnly where the po-

tential for disruption is present must we then determine

whether that impact is justified by an overriding need to

promote objectives within the constitutional authority of

Congress.” Nixon v. Administrator of General Services,

433 U.S. 425, 443 (1977). '4 While the Act’s careful accom-

modation of the interests of the Executive makes this in-

quiry unnecessary, the Act’s long history reflects

Congress’s ample justification for employing the qui tam

mechanism for redressing fraud against the government.

The Act was first enacted as part of a comprehensive

legislative effort to “stop[ ] the massive frauds per-

petrated by large contractors during the Civil War.” Unit-

ed States v. Bornstein, 423 U.S. 303, 309 (1976). A con-

gressional committee formed to investigate “the gross

waste and squandering of the public funds,” H.R. Rep.

No. 49, 37th Cong., 3d Sess. 5 (1863), “discovered an as-

tounding amount of illegal and fraudulent activities... .

Through haste, carelessness, or criminal collusion, the

state and federal officers accepted almost every offer and

paid almost any price for the commodities, regardless of

character, quality, or quantity. . . .”!5 As the sponsor of

the Act explained, the purpose of the qui tam provisions

was to remedy this by “hold[ing] out to a confederate a

strong temptation to betray his coconspirator, and bring

him to justice... . I have based the [provisions] upon the

old-fashioned idea of holding out a temptation, and ‘set-

ting a rogue to catch a rogue,’ which is the safest and

most expeditious way I have ever discovered of bringing

rogues to justice.” Cong. Globe, 37th Cong., 3d Sess. 955-

56 (1863) (remarks of Sen. Howard).

14See also Mistretta v. United States, 488 U.S. at 383 n.13 (quoting

Nixon, 433 U.S. at 443).

15] Fred Albert Shannon, The Organization and Administration of

the Union Army, 1861-1865, at 58, 55-56 (1965) (quoting Tomes, For-

tunes of War, 29 Harper’s Monthly Mag. 228 (1864)).

BEST AVAILA

alin

13

When Cougress revisited the Act in 1986, it recognized

that the False Claims Act had failed to stem a rising tide

of fraud in government programs and procurements. !6

Exploring the reasons for this, the Senate Committee on

the Judiciary learned that “‘most fraud goes unde-

tected,’”!7 because “[djetecting fraud is usually very dif-

ficult without the cooperation of individuals who are ei-

ther close observers or otherwise involved in the fraudu-

lent activity.” S. Rep. No. 99-345, at 4, 1986 U.S.C.C.A.N.

5269. The committee also found that individuals with in-

formation were unlikely to come forward because they

tended to believe nothing would change even if they took

the risk of reporting illegal activity, and because they

feared reprisal. !8

In addition to these problems, the committee found that

“perhaps the most serious problem plaguing effective en-

forcement is a lack of resources on the pari of Federal en-

forcement agencies,” which requires them “to make

‘screening’ decisions.” S. Rep. No. 99-345, at 7, 1986

U.S.C.C.A.N. 5272. “Allegations that perhaps could de-

velop into very significant cases are often left

unaddressed at the outset due to a judgment that devot-

ing scarce resources to a questionable case may not be ef-

ficient. And with current budgetary constraints, it is un-

likely that the Government’s corps of individuals assigned

to anti-fraud enforcement will substantially increase.” Jd.

16S. Rep. No. 345, 99th Cong., 2d Sess. 2-3 (1986), reprinted in 1986

U.S.C.C.A.N. 5266, 5267-68 (stating that based on Department of Jus-

tice estimates that fraud may be “draining 1 to 10 percent of the en-

tire Federal budget,” with a “spending level in 1985 of nearly $1 tril-

lion, fraud against the Government could be costing taxpayers any-

where from $10 to $100 billion annually”).

'7Id. at 2, 1986 U.S.C.C.A.N. 5267 (quoting GAO Report to Con-

gress, Fraud in Government Programs: How Extensive is it? How Can

it be Controlled? (1981) and omitting footnote).

18]d. at 4, 5, 1986 U.S.C.C.A.N. 5269, 5270; False Claims Reform

Act: Hearing on S. 1562 Before the Subcomm. on Administrative Prac-

tice and Procedure of the Senate Comm. on the Judiciary, 99th Cong.,

lst Sess. 82-83 (1985) [hereinafter “1985 Hearing”] (testimony of Rob-

ert Wityczak); id. at 51 (testimony of John Gravitt).

14

The committee concluded that “[iJn the face of sophisti-

cated and widespread fraud,. . . only a coordinated effort

of both the Government and the citizenry will decrease

this wave of defrauding public funds,” id. at 2, 1986

U.S.C.C.A.N. 5267, and that the False Claims Act, “root-

ed in the realization that we cannot guard against Gov-

ernment fraud without the aid of private citizen inform-

ers,” had the potential to be a powerful tool in deterring

fraud. '!9 Thus, far from reflecting simple distrust of the

Executive, as the petitioner contends, Pet. Br. at 18, the

Act is a carefully considered response to the problems of

detecting and remedying fraud against the government.

B. The Qui Tam Provisions Do Not Implicate the Ap-

pointments Clause

The court of appeals also correctly applied Buckley v.

Valeo, 427 U.S. at 126, 140, to hold that qui tam relators

need not be officers of the United States appointed in ac-

cordance with the Appointments Clause because they do

not exercise “significant authority” and “primary respon-

sibility” for conducting litigation. Pet. App. at 30a. Qui

tam relators litigate false claims cases in the same man-

ner as any other private litigant, and are subject to con-

trol by the government, which may either intervene or re-

quest that a court limit the relator’s activities.

Petitioner concedes that the limited role of qui tam re-

lators in a single case distinguishes them from the federal

election commissioners in Buckley, but asserts that these

factors do not distinguish relators from the independent

counsel, who was held to be an officer of the United

States in Morrison v. Olson. Pet. Br. at 16. However, as

the court of appeals demonstrated, qui tam relators are

distinguished from the independent counsel in several re-

spects that make apparent why qui tam relators need not

be appointed.

Although an independent counsel has primary respon-

sibility for the conduct of a particular criminal case, with-

out any possibility of Executive participation, a qui tam

191985 Hearing, supra n.18, at 2.

eek

15

relator is subject to control by the government at any

point the government intervenes. In addition, even when

the government declines to intervene, it may seek limits

on the relator’s discovery. Moreover, qui tam relators, un-

like the independent counsel, cannot be said to fill an of-

fice of the United States. 2° In contrast to the independent

counsel, a relator does not hold a position in which he or

she can be replaced, receives no salary, and is provided

no resources by the government. Indeed, the Act specifi-

cally provides that “[t]he Government is not liable for ex-

penses which a person incurs in bringing an action under

this section.” 2!

Finally, as the court below recognized, Pet. App. at 31a,

the central point of Buckley, that Congress may not arro-

gate power to itself by appointing officers who perform

executive functions, as it had with the federal election

commissioners, is not implicated here.22 No concerns

about congressional aggrandizement are presented by the

False Claims Act, as Congress has not retained for itself

any control over the conduct of qui tam litigation.

20See Buckley, 424 at 125-26 (“We think that the term ‘Officers of

the United States’ as used in Art. II, [is] defined to include ‘all persons

who can be said to hold an office under the government.’”) (Citation

omitted).

2131 U.S.C. §3730(f). Compare 28 U.S.C. §594(b) (providing for com-

pensation of independent counsel); id. §594(c) (authorizing independ-

ent counsel to appoint and fix the compensation of staff); id. §594(d)(1)

(authorizing independent counsel to use resources and personnel of the

Department of Justice).

22424 US. at 143. See also Seattle Master Builders v. Pacific North-

west Electric Power and Conservation Planning Council, 786 F.2d

1359, 1364-65 (9th Cir. 1986), cert. denied, 479 U.S. 1059 (1987). Nor,

as the court of appeals correctly observed, Pet. App. at 28a, does this

case present the question, addressed by this Court in Freytag v. Com-

missioner of Internal Revenue, 111 S.Ct. 2631, 2645 (1991), of whether

the power to appoint has been diffused by placing it in the hands of

appointers not enumerated in the Appointments Clause.

16

C. False Claims Act Qui Tam Relators Have Article

III Standing

The court of appeals also correctly held that qui tam re-

lators have Article III standing. A relator under the False

Claims Act “effectively stands in the shoes of the govern-

ment” and asserts on behalf of the United States a con-

crete claim for monetary damage from fraud, in return for

which the relator receives a share of the recovery.23 The

petitioner concedes that “[n]o one doubts that the United

States has standing to sue for violations of the False

Claims Act.” Pet. Br. at 13. The relator is, as this Court

has recognized, give: “a concrete private interest in the

outcome of a suit against a private party for the govern-

ment’s benefit, by providing a cash bounty for the victori-

ous plaintiff.” Lujan v. Defenders of Wildlife, 112 S.Ct. at

2143 (distinguishing qui tam suits from suits in which an

individual has no concrete private interest).

That the recognition of standing for qui tam relators is

consistent with this Court’s standing doctrine is evident

when the policies-underlying standing are considered in

the context of the False Claims Act. This Court has ob-

served that the “single basic idea” upon which the law of

Article III rests is separation of powers. Allen v. Wright,

468 U.S. 737, 752 (1984). The requirement of standing

serves to limit federal courts to their appropriate role in

two ways: first, by requiring that courts consider only

questions “presented in an adversary context and in a

form historically viewed as capable of resolution through

the judicial process;” and, second, by assuring that courts

“not intrude into areas committed to the other branches

of government.” Flast v. Cohen, 392 U.S. 83, 95 (1968).

Qui tam actions under the False Claims Act respect

those dual limitations. First, “[t]hey involve allegations of

fraud—an area of law that is neither novel nor extraor-

23Pet. App. at 8a. See also United States ex rel. Kreindler &

Kreindler v. United Technologies Corporation, 985 F.2d at 1153-55; ac-

cord United States ex rel. Milam v. University of Texas M.D. Anderson

Cancer Center, 961 F.2d 46, 49 (4th Cir. 1992) (stating that in a qui

tam action standing depends upon the injury to the government).

17

dinarily complex.” Pet. App. at lla. By seeking the impo-

sition of penalties for fraud against the federal treasury,

qui tam relators do not ask a court to resolve “‘ill-defined

controversies over constitutional issues,’ or a case which

is of a ‘hypothetical or abstract character.’” Flast v.

Cohen, 392 U.S. at 100 (citations omitted).

Second, qui tam actions under the False Claims Act do

not involve the judiciary in political confrontations with

the representative branches. “Instead, they are merely ac-

commodating a congressional policy decision that relators

may sue on behalf of the government for violations of the

[False Claims Act].” Pet. App. at lla. See also Priebe &

Sons v. United States, 332 U.S. 407, 417, 418 (1947)

(Frankfurter, J., dissenting) (In “qui tam actions * * *

society makes individuals the representatives of the pub-

lic for the purpose of enforcing a policy explicitly formu-

lated by legislation.”).

The petitioner addresses alternative standing theories

it labels “workplace injury” and “legislated standing” that

were no part of the decision below. See Pet. Br. at 11-13.

Moreover, with respect to “workplace injury” standing, or

standing based on the injury a relator suffers from work-

ing for an employer engaged in fraud, that theory has

been sketched for the most part only as an alternative

basis for standing by four district courts, two of which

were in the Ninth Circuit and are now controlled by the

decision below. That a few district courts have rendered

decisions that have included an argument in support of

the result reached by the court below, provides scant rea-

son for review by this Court.

With respect to “legislated standing,” which the peti-

tioner defines as standing based on Congress’s providing

a qui tam relator with a statutory share of any recovery,

no court has held that the existence of a bounty alone is

a basis for standing. Rather, several courts have noted

that a statutory bounty provides the relator a concrete

stake in the controversy, which is consistent with this

Court’s opinion in Lujan v. Defenders of Wildlife, 112

S.Ct. at 2143. Those courts have also recognized that

18

such a stake, while necessary, is not sufficient for stand-

ing. Court’s that have focused on the relator’s monetary

stake have recognized that an injury must also exist and

have identified the monetary injury to the government

from fraud as the relevant injury. 24

The petitioner argues that a qui tam plaintiff cannot

sue based on an injury to the government because no

statutory language suggests that Congress was attempt-

ing to assign a claim to relators. Pet. Br. at 14. However,

as the court of appeals held in rejecting that contention,

no terms of art are required to assign a claim. Pet. App.

at 9a. The Act expressly gives the relator a right to bring

suit on the government’s behalf and “the entire purpose

of the [False Claims Act] qui tam provisions is to employ

the help of individuals to uncover fraud against the gov-

ernment.” 25

D. Qui Tam Suits Under the False Claims Act Do

Not Violate the Due Process Clause

Finally, the assertion that the False Claims Act vio-

lates the Due Process Clause of the Fifth Amendment

was properly rejected by the court of appeals. In Marvin

v. Trout, 199 U.S. 212 (1905), this Court rejected a claim

that a state qui tam action violated the Due Process

Clause of the Fourteenth Amendment by providing a for-

feiture “for the private benefit of a third person . . . who

suffered no personal loss.” Jd. at 218. The Court stated

that “[w]le are aware of no provision in the Federal Con-

it ha Ioais dinar > ar ate

24 See, e.g., United States ex rel. Truong v. Northrop Corporation, 728

F. Supp. 615, 618-19 & n.7 (C.D. Cal. 1989) (stating that Article III j

concerns are met because of the “very clear demonstration of injury to

the government and. . . relator’s personal stake in the litigation”).

25Jd. at 9a—10a. The petitioner’s assertion that upholding standing

would create a “loophole allowing Congress to create standing without

regard to the limitations imposed by Article III,” Pet. Br. at 14, was

answered by the court of appeals, which stated that “pure speculation

about the policy choices Congress might attempt to make does not

weigh into our constitutional analysis. Furthermore, it is unlikely that ‘

in other areas of civil law enforcement a similarly concrete, identifi-

able injury to the U.S. treasury as exists in the [False Claims Act] con-

text would exist as a basis for standing.” Pet. App. at 28a n.19.

aceite

19

stitution which prevents this kind of legislation.” Jd. at

225. Likewise, no provision of the Constitution is violated

by providing a litigant a financial interest in a civil action

to vindicate the public interest in redressing fraud

against the United States.

The authority relied upon by the petitioner for its due

process claim, which addresses the requirements for

criminal prosecutions and for public officials, neither of

which are at issue here, was appropriately rejected by the

court below as inapposite. Pet. App. at 32a. In Young v.

United States ex rel. Vuitton et Fils S.A., 481 U.S. 787

(1987), which held that a district court, appointing a pri-

vate attorney to represent the United States in a criminal

contempt prosecution, must select an attorney who is dis-

interested in the outcome of the prosecution, this Court

explicitly grounded its holding on its supervisory powers

over inferior courts and not on the Due Process Clause. 26

Moreover, as the court below observed, Pet. App. at 34a,

Young was a criminal case where the concern about disin-

terested prosecutors is justified because the public pros-

ecutor has at his command “a terrible array of coercive

methods to obtain information,” which, when misused,

“would unfairly harass citizens, give unfair advantage to

[the prosecutor’s persomal interests], and impair public

willingness to accept the legitimate use of those pow-

ers.”27 These attributes of public power are unavailable

to litigants who have omly the litigation tools available to

any private litigant in amy civil litigation. 28

26 Young, 481 U.S. at 809 & n.21.

27 Young, 481 U.S. at 811 (quoting C. Wolfram, Modern Legal Ethics

460 (1986)). This Court has recently affirmed that “proceedings and

penalties under the civil Falsie Claims Act are indeed civil in nature”

for the purpose of defining diefendants’ entitlement to general proce-

dural safeguards. United Staites v. Halper, 490 U.S. 435, 442 (1989).

28 Qui tam relators also clearly do not have the responsibilities of a

neutral judge, and thus are not subject to the “rigid require-

ments * * *, designed for officials performing judicial or quasi-judicial

functions, [which] are not appilicable to those acting in a prosecutorial

Continued

20

In Marshall v. Jerrico, Inc., also cited by the petitioner,

this Court found no due process violation caused by a

public official assessing penalties for violations of federal

labor laws where his office received a portion of the pro-

ceeds. See Pet. App. at 32a. With respect to due process,

qui tam relators are in an even stronger position than

such a public official as “[i]t is not at all clear that qui

tam relators are bound to fulfill the same type of public

duty as government prosecutors * * *. [T]he fact that re-

lators sue in the name of the United States does not

mean that they wield governmental powers * * *.” Jd. at

33a. A qui tam relator litigates just like any other private

litigant except that the government receives the bulk of

the recovery and may elect to assume responsibility for

the case.

The law is replete with examples of private civil liti-

gants who have a financial stake in litigation in which

they assert both their private interests and, as private at-

torneys general, the public’s interest in “a policy that

Congress considered of the highest priority.” Newman v.

Piggie Park Enterprises, 390 U.S. 400, 402 (1968) (per cu-

riam); Spann v. Colonial Village, Inc., 899 F.2d 24, 30-

31 (D.C. Cir.) (“Enforcement by private attorneys general

has become a feature of many modern legislative pro-

grams * * * Indeed, such individuals and groups may

assert the public interest even when their own interests

do not precisely coincide.”), cert. denied, 498 U.S. 980

(1990)). Just as in those cases in which litigants may

function as private attorneys general, there is no conflict

here between public and private interests, for “the only

private interest at stake in a qui tam action is the inter-

est which Congress has created in a reward for successful

prosecution; thus the public’s interest in successfully en-

forcing the [False Claims Act] and the relator’s private in-

terest are intertwined rather than conflicting.” Pet. App.

at 33a.

or plaintiff-like capacity.” See Marshall v. Jerrico, Inc., 446 U.S. 238,

248 (1980).

21

IT.

THERE IS NO CONFLICT AMONG THE CIRCUITS

The unanimity of the federal appellate and district

courts in upholding the constitutionality of the qui tam

provisions of the False Claims Act is further reason why

review by this Court is not warranted. The Ninth Circuit

is the second court of appeals expressly to address and re-

ject a constitutional challenge, implicating both separa-

tion of powers and standing, to the qui tam provisions of

the False Claims Act.29 The Second Circuit, in United

States ex rel. Kreindler & Kreindler v. United Tech-

nologies Corporation, 985 F.2d 1148, held that the grant

of standing to qui tam relators comports with Article III.

Id. at 1153-55. The court found that the injury require-

ment is satisfied because the government has suffered an

injury, id., at 1154, and a qui tam relator “stands in the

shoes of the government, which is the real party in inter-

est.”30 Relying in part on this Court’s decision in Lujan

v. Defenders of Wildlife, 112 S.Ct. at 2143, the Second

Circuit concluded that the relator is provided with a con-

crete stake in the controversy by the “cash bounty” of-

fered to the victorious relator. 985 F.2d at 1155.

The Second Circuit’s evaluation of the separation of

powers concerns underlying standing doctrine is also con-

29In the Ninth Circuit, the panel which decided the case that is the

subject of the present petition, relied upon its ruling below to reject

a nearly identical constitutional challenge by another contractor. Unit-

ed States ex rel. Madden v. General Dynamics Corporation, 4 F.3d 827,

830 (9th Cir. 1993) (referring to the decision below for explanation of

its reasons). The petitioner indicated in its brief, Pet. Br. at 3 n.1, that

it understood that a petition for a writ of certiorari would be filed in

that case, which was decided on September 14, 1993, but the time for

filing a petition has run and no petition has been filed.

The Fifth Circuit has also held that a False Claims Act qui tam re-

lator had standing, United States ex rel. Weinberger v. Equifax, Inc.,

557 F.2d 456, 460 (5th Cir. 1977), cert. denied, 434 U.S. 1035 (1978),

but there is some ambiguity whether the court predicated its decision

on statutory or constitutional grounds.

30Id. at 1154; accord United States ex rel. Milam v. University of

Texas M.D. Anderson Cancer Center, 961 F.2d at 49.

22

sistent with the Ninth Circuit’s determination that the

qui tam provisions comport with the separation of pow-

ers. The Second Circuit concluded, as did the court below,

that the “qui tam provisions do not usurp the executive

branch’s litigating function because the statute gives the

executive branch substantial control over the litigation.”

Id.

There is only one other circuit in which a challenge to

the Act’s constitutionality is oven pending, the Sixth Cir-

cuit, in an appeal that has been briefed and is awaiting

argument. 3! There, kowever, the constitutional challenge

is being made by a contractor in an appeal from an award

of attorneys’ fees to a qui tam relator in a case which the

government took over and settled, and, as the petitioner

recognizes, the constitutional issues it raises “are largely

mooted” in such a case. Pet. Br. at 13.

Since the 1986 amendments to the False Claims Act,

constitutional challenges similar to the petitioner’s have

been presented in a number of district courts in addition

to those which resulted in these several appellate cases.

In each case the district court upheld the constitutionality

of the Act. Of the six reported district court decisions, 32

only three are outside of the Ninth Circuit.

The petitioner does not dispute the unanimity of the

lower court precedent, but rather asserts that lower

courts have “disagreed on a number of the specific is-

sues.” Pet. Br. at 5 & n.4. Any variations in the reasoning

of the district court decisions cited by the petitioner do

not warrant review by this Court for several reasons.

31 See United States ex rel. Taxpayers Against Fraud and Chester L.

Walsh v. General Electric Company, appeals docketed, Nos. 92-4283 &

93-3015 (6th Cir. Dec. 11, 1992 and Jan. 6, 1993).

32United States ex rel. Robinson v. Northrop Corporation, 824 F.

Supp. 830 (N.D. Ill. 1993); United States ex rel. Burch v. Piqua Engi-

neering, Inc., 803 F. Supp. 115 (S.D. Ohio 1992); United States ex rel.

Givler v. Smith, 775 F. Supp. 172 (E.D. Pa. 1991); United States ex rel.

Truong v. Northrop Corporation, 728 F. Supp. 615 (C.D. Cal. 1989);

United States ex rel. Newsham v. Lockheed Missiles and Space Co.,

722 F. Supp. 607 (N.D. Cal. 1989); United States ex rel. Stillwell v.

Hughes Helicopters, 714 F. Supp. 1084 (C.D. Cal. 1989).

23

First, the majority of decisions the petitioner cites were

rendered by district courts in the Ninth Circuit. The deci-

sion below now governs all proceedings in the Ninth Cir-

cuit involving the issues raised by the petitioner.

Second, with respect to the few district court decisions

rendered by district courts in other circuits,33 any per-

mutations in their analyses may be addressed through

the ordinary process of appellate review. Differences in

the reasoning of district courts, which have without ex-

ception affirmed the constitutionality of the Act, do not

warrant the investment of this Court’s resources. More-

over, these district court decisions preceded the decision

below. The Ninth Circuit has now dealt comprehensively

with these issues, and together with the decision of the

Second Circuit, its decision will now provide additional

guidance for district courts.

III.

THERE ARE NO OTHER REASONS JUSTIFYING

THIS COURT’S REVIEW OF THE DECISION

BELOW

There are no other reasons justifying this Court’s re-

view of the interlocutory decision below, which only clears

the way for further proceedings in the district court. In-

deed, there are affirmative reasons for denying review of

the constitutionality of a statute whose most recent

amendments continue to be the subject of interpretive de-

velopment in the lower courts. Certainly, none of the pol-

icy arguments presented by the petitioner justify review,

and those policy arguments, which are the province of

Congress, continue to be evaluated by that body.

This case presents no special circumstances warranting

departure from this Court’s “normal practice of denying

33 United States ex rel. Robinson v. Northrop Corporation, 824 F.

Supp. 830; United States ex rel. Burch v. Piqua Engineering, Inc., 803

F. Supp. 115; United States ex rel. Givler v. Smith, 775 F. Supp. 172.

A fourth case cited did not involve the False Claims Act. See Pet. Br.

at 5 n.4 (citing United States ex rel. Yellowtail v. Little Horn State

Bank, 828 F. Supp. 780 (D. Mont. 1992)).

24

interlocutory review.”34 The record below reflects little

activity in this case other than the litigation of petition-

er’s constitutional claims, which has halted further pro-

ceedings. The Ninth Circuit has now ruled on the peti-

tioner’s claims in a manner consistent with the decisions

of other courts and there may never be a need for this

Court to rule on these issues in this case because, as the

petitioner observes, “the vast majority of qui tam suits in

which the Government elects not to intervene typically

never get to trial, thus mooting the constitutional issues.”

Pet. Br. at 29. Rather than demonstrating, as petitioner

suggests, that the issues are capable of evading review,

the dismissal of nonmeritorious cases and the settlement

of other cases in favor of the government’s interests is a

product of the ordinary process of litigation. At best, peti-

tioner’s claim is that some litigation under the Act will be

frivolous, but that may be said of any law, and the Act

provides a specific remedy for such cases. 35

Moreover, there is every reason to believe that the con-

trols over qui tam litigation that the Act affords the Exec-

utive Branch, many of which have not yet been put to use

in the lower courts, are fully adequate to address peti-

tioner’s concerns about potential infringement of Execu-

tive prerogatives. The court of appeals emphasized, con-

34 Estelle v. Gamble, 429 U.S. 97, 114 (1976) (Stevens, J., dissenting);

American Construction Co. v. Jacksonville, T. & K.W. Ry., 148 US.

372, 384 (1893) (stating that “this court should not issue a writ of cer-

tiorari to review a decree of the Circuit Court of Appeals on appeal

from an interlocutory order, unless it is necessary to prevent extraor-

dinary inconvenience and embarrassment in the conduct of the

cause”). As Justice Brennan has observed, “granting certiorari at an

interlocutory stage of a case when allowing the case to proceed to its

final disposition below might produce a resu't that makes it unneces-

sary to address an important and difficult constitutional question”

would not be “faithful to the Ashwander principle not to address con-

stitutional issues if there is a way properly to avoid doing so.” William

J. Brennan, Jr., Some Thoughts on the Supreme Court’s Workload, 66

Judicature 230, 231-32 (1983).

3531 U.S.C. §3730(d\(4) (providing that a court may award a pre-

vailing defendant reasonable fees and expenses if the action was frivo-

lous).

ib ete ttn ede te.»

25

sistent with the admonitions of this Court, that any ambi-

guities in the Att, in regard to the powers of the govern-

ment to protect its interests, should be construed in a

manner that preserves the constitutionality of the stat-

ute. Pet. App. at 18a n.8 (citing Morrison, 487 U.S. at

682; Commodity Futures Trading Comm’n v. Schor, 478

U.S. 833, 841 (1986)). Indeed, courts have construed the

Act to enable the government to protect its interests by

intervening solely in order to dismiss a defendant from a

qui tam action, 36 or solely to appeal the dismissal of a de-

fendant.37 The Department of Justice also has stated that

the courts have applied the statute to accommodate the

Executive’s interests. 38

The petitioner’s several policy arguments also fail to

provide a basis for review. Petitioner argues that review

by this Court is necessary because qui tam actions will be

expanded to redress fraud outside of defense procure-

ment, Pet. Br. at 25-27, and expresses particular concern

that the Act’s qui tam provisions will be used “in combat-

ting health care fraud against the Government.” Id. at 26

(quoting a sense of the Senate provision in an unenacted

bill). Whether the government is being defrauded in the

administration of defense programs or health care pro-

grams makes no difference in terms of the impact on the

United States Treasury and the government’s need for re-

dress. 39

36See Juliano v. Federal Asset Disposition Ass’n, 736 F. Supp. 348

(D.D.C. 1990), affd, 959 F.2d 1101 (D.C. Cir. 1992) (table).

37 United States ex rel. McGough v. Covington Technologies, 967 F.2d

1391 (9th Cir. 1992).

38 See 1990 Hearing, supra n.12, at 13 (testimony of Ass’t Att’y Gen.

Gerson) (“Where we have required judicial interpretations, we seem to

be able to get them.”).

39As the Senate Judiciary Committee stated in reporting the 1986

amendments, “Fraud permeates generally all Government programs

ranging from welfare and food stamps benefits, to multibillion dollar

defense procurements to crop subsidies and disaster relief programs.”

S. Rep. No. 99-345, at 2, 1986 U.S.C.C.A.N. 5267. The qui tam provi-

sions have already been used in nondefense fields such as health care

to recover substantial amounts for the government. See, e.g., Letter of

Continued

26

The petitioner also suggests that review is necessary to

permit Congress to explore alternatives and adopt a

“timely remedy,” such as increasing the number of gov-

ernment attorneys. Pet. Br. at 27. Whether fraud should

be redressed by hiring more government investigators

and attorneys, or by qui tam actions, is a policy judgment

for Congress.4° In any event, petitioner’s dislike of

Congress’s choice is not shared by either of the policy-

making branches of the government, which continue to

evaluate and seek to improve the implementation of the

Act. Since 1986, Congress has monitored the Act’s imple-

mentation,4! and to date the consensus view has been

that the qui tam provisions “have worked resoundingly

well, to the tune of $500 million and counting.”42 When

particular improvements have been warranted, Congress

has amended the Act, for example in 1988 by adding a

provision that would prevent a qui tam relator who per-

petrated a fraud from obtaining any recovery under the

Ass’t Att’y Gen. Frank W. Hunger to Howell Heflin, Chairman of the

Subcomm. on Courts and Administrative Practice of the Senate Comm.

on the Judiciary, reprinted in S. 841, The False Claims Amendments

Act of 1993: Hearing Before the Subcomm. on Courts and Administra-

tive Practice of the Senate Comm. on the Judiciary, 103d Cong., 1st

Sess. 2 (1993) (hereinafter “1993 Hearings”) (citing recovery of $100

million against National Health Laboratories for Medicare, Medicaid

and CHAMPUS fraud).

40 Tigner v. Texas, 310 U.S. 141, 148 (1940) (“Whether proscribed

conduct is to be deterred by qui tam action or triple damages or in-

junction, or by criminal prosecution, or merely by defense to actions

in contract, or by some, or all, of these remedies in combination, is a

matter within the legislature’s range of choice.”); see also Spann v. Co-

lonial Village, Inc., 899 F.2d at 30 (noting that Congress has relied on

the aid of private individuals to enforce laws because the resources of

public officials are limited).

+1 See, e.g., 1993 Hearings, supra n.39; False Claims Act Technical

Amendments of 1992: Hearing Before the Subcomm. on Administrative

Law and Governmental Relations of the House Comm. on the Judici-

ary, 102d Cong., 2d Sess. (1992); 1990 Hearings, supra n.12.

421993 Hearings, supra n.39, at 10 (statement of Rep. Howard Ber-

man).

-

27

statute, while guaranteeing the Department of Justice’s

ability to pursue the case. 43

The Department of Justice has likewise expressed to

the Congress its support for the qui tam regime.44 The

Department recently reported to the Congress that “the

False Claims Act has been a success which has substan-

tially benefitted the United States. . . . No one can look

at the ever increasing recoveries in qui tam cases and

come to any other conclusion.” 45 Even assuming the peti-

tioner is correct, that the bulk of rewards from qui tam

cases are from cases the government joins, that is en-

tirely consistent with the Act’s purpose of encouraging in-

dividuals with information to initiate actions, to permit

the government to identify the cases to take over, and to

let private individuals devote their own resources to the

remainder. If the government chooses to join the cases

brought by relators in which the recoveries are likely to

*3 Pub. L. No. 100-700, §9, 102 Stat. 4631, 4638 (1988), codified at

31 U.S.C. §3730(d\(3).

44 Petitioner cites an “opinion” by former Attorney General Barr

while serving as Assistant Attorney General for the Office of Legal

Counsel that the Act is unconstitutional. Pet. Br. at 4. Although the

document was published in a volume of Opinions of the Office of Legal

Counsel, 13 Op. Off. Legal Counsel 249 (1989), it is actually a memo-

randum to then Attorney General Thornburgh about an intramural

dispute between, on the one side, the Civil Division and Office of Legal

Counsel, and on the other side, the Solicitor General’s office, which

supported the facial constitutionality of the Act, which was the only

question decided by the court below. Jd. at 250; see also id. at 284. The

Department of Justice disavowed Mr. Barr’s view in a letter filed with

the court below, stating that it “was never adopted by the Attorney

General, and does not represent the position of the United States.”

Letter of Acting Assistant Attorney General Stuart E. Schiffer to the

Clerk of the United States Court of Appeals for the Ninth Circuit, filed

in United States ex rel. Madden v. General Dynamics Corp., No. 92-

56042 (Mar. 31, 1993).

45 Letter of Ass’t Att’y Gen. Frank W. Hunger to Howell Heflin,

Chairman of the Subcomm. on Courts and Administrative Practice of

the Senate Judiciary Committee, reprinted in 1993 Hearings, supra

n.39, at 1-2 (citing recoveries since 1986 of approximately $400 mil-

lion, or one third of the total recoveries under the Act, from approxi-

mately 80 qui tam lawsuits).

28

be the largest, then the Act is working, precisely as in-

tended, to enlist the aid of private individuals to help the

government “obtain information about fraud that it did

not independently have and recover sums it might not

have otherwise been able to identify.” Id.

CONCLUSION

For the foregoing reasons, the petition for a writ of cer-

tiorari should be denied.

Respectfully submitted,

PHILLIP E. BENSON,

LINDA MACLEAN,

Law Offices of Phillip E. Benson.

Counsel for Kevin G. Kelly.

MICHAEL DAVIDSON,

Senate Legal Counsel.

KEN U. BENJAMIN, Jr.,

Deputy Senate Legal Counsel.

MORGAN J. FRANKEL,

CLAIRE M. SYLVIA,

Assistant Senate Legal Counsel.

Counsel for United States Senate.

JANUARY 1994.