Petition for Writ of Certiorari — Mistick PBT v. Housing Authority of Pittsburgh

Supreme Court, vu.

Cd) FILED

99 9E9p«EC_ 8 30909

OFFICE OF THE CLERK

No.

IN THE SUPREME COURT OF THE UNITED STATES

October 1999 Term

MISTICK PBT,

Petitioner,

vs.

HOUSING AUTHORITY OF THE CITY OF

PITTSBURGH, et al.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PETITION FOR WRIT OF CERTIORARI

JOHN E. BEARD, III (Counsel of Record)

PETER N. FLOCOS

KIRKPATRICK & LOCKHART LLP

HENRY W. OLIVER BUILDING

535 SMITHFIELD STREET

PITTSBURGH, PA 15222-2312

(412) 355-6500

Counsel for Petitioner

DECEMBER 8, 1999

A2 2D

i

QUESTIONS PRESENTED

Whether the phrase “based upon” as used in 1986

Amendments to the False Claims Act, 31 U.S.C.

§ 3730(e)(4), should be given its plain meaning of

“derived from,” in accordance with the decisions of

certain United States Courts of Appeals, or instead

should be interpreted to mean “supported by” or

“substantially similar to,” as decided by certain other

United States Courts of Appeals?

Whether a U.S. Government response to a Freedom

of Information Act (“FOIA”) request constitutes an

“administrative report” or an “administrative

investigation” as those terms are used in

§ 3730(e)(4)(A), therefore barring gui tam actions

“based upon” information obtained through the

FOIA?

Whether a person is disqualified from being an

“original source” under § 3730(e)(4)(B) when that

person’s qui fam suit is “based upon” fraudulent

transactions that were publicly disclosed as a result

of that person’s efforts?

ii

LIST OF PARTIES

Mistick PBT (“Mistick”), the Petitioner, brought

this case against Respondents as a private relator plaintiff

under the False Claims Act, see 31 US.C. 3730(b)(1), in

the United States District Court for the Western District of

Pennsylvania (the “District Court”). Mistick was the

general contractor for two housing projects owned by

Respondent Housing Authority of the City of Pittsburgh

(“HACP”). Respondents Miller and Washington were

officers of HACP. Respondents L. D. Astorino &

Associates, Ltd. (formerly known as L. D. Astorino

Architects, Inc.), Astorino Branch Environmental, Inc.,

Astorino Branch Engineers, Louis D. Astorino, Dennis L.

Astorino, Patrick I. Branch and Bernard J. Quinn (referred

to herein together as “Astorino”) were the architects for the

two housing projects.

Mistick also was the appellant in the United States

Court of Appeals for the Third Circuit. Respondents were

defendants in the District Court and appellees in the Third

Circuit.

STATEMENT UNDER SUP. CT. R. 29.6

Mistick is a Pennsylvania business trust and is not a

“corporation” under Pennsylvania state law. In any event,

Mistick has no parent or subsidiary company (“subsidiary”

being defined as ownership by Mistick of greater than

50%).

\ iv

TABLE OF CONTENTS

oti: Setsaa c.g A TT ee ee F i

itunes ii

Statement Under Sup. Ct. R. 29.6 oo. iii

IAM iin a iv

Sie OCR AMON |... vii

J sea clatira bara cans OE TT ee AE REST Y l

Basis for uciediction peibi ere osdbadoveankeatehdgucéessbeemGeeieiide.. I

Statutory Provisions Involved .......0...0...0.cccccc0- I

sisi estonia, BE En ae 2

A. Statutory Background... ceccccccccssccoeecseecscc..... 2

D: FORDE i 3

C. Proceedings Below and Basis for Jurisdiction in the

« snciite sean Te ETC Ran aaah 5

D. The Third Circuit Opinion...............00000000.....0... 6

Reasons for Granting the Petition .............................. 8

I. This Case Presents Important Questions of

Federal Law That Should Be Settled by This

CE sass issmssctnin cana Rey Ea a Se 10

Vv

Il. The “Based Upon” Language of § 3730(e)4)(A)

IV.

Should Be Interpreted in Accordance With Its

PMNS ONIN icc Sc 16

A. The Panel Majority’s Interpretation of the

Phrase “Based Upon” Conflicts With

Decisions of Other United States Courts of

he enact tte Te ea i Oe ae 16

B. The Panel Majority’s Decision Conflicts

With Decisions of This Court..................... 18

I. Interpretive Decisions of This Court,

Including Decisions Addressing the

False Claims Act and “Poorly

RAGE I 18

2. Decisions of This Court Addressing

the Phrase “Based Upon” in Other

Federal Law Contexts.....0.0000.0.0.0.............. 20

Wichita ee 21

A Government Response to A FOIA Request

Does Not Constitute An “Administrative

Report” or “Administrative Investigation”

Under the Plain Language or Intent of

Eek oe ag OE ERS, OEIC ae 24

The Third Circuit Opinion Eviscerates the

“Original Source” Provision of the Act and

Defeats the Congressional Intent Behind

§ 3730(e)(4), in Further Conflict With Other

COUNTS OF ANON in 27

vi

Conclusion 29

alates shh: etal Dahl hte Scnhde fue lad aL LY TT Te ETO eT re

Vil

TABLE OF CITED AUTHORITIES

CASES

Connecticut Nat’l Bank v. Germain,

OF eee ee es eg 20

Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc..,

Pe Are Ne CR 24

Darby v. Cisneros,

cat eB | | Reem AOD ei Bee er a 19

Escondido Mut. Water Co. v. La Jolla Band

of Mission Indians,

bogus oeche Bcomwial, thee) LON MAT BETO 21

FDIC v. Meyer,

eee ST 19

FEA v. Algonquin SNG, Inc.,

ee ne 1]

H.J. Inc. v. Northwestern Bell Tel Co.,

nti ete ok an: RR RE rete 19

Hughes Aircraft Co. v. United States ex rel Schumer,

ee ah PP C00 ee 8, 13, 14

Lexecon Inc. v. Milberg Weiss Bershad H lynes & Lerach,

we ee PI 19

North Haven Bd. of Educ. v. Bell,

Es PAN 1]

Vili

Office of Workers’ Compensation Programs v. Rasmussen,

GOO ME, BP LAT EP Eiki cise ee 19

Rubin v. United States,

UW 0 NE icici 19

Saudi Arabia v. Nelson,

PT Ae, Pe ivccrihic gk a ee 21

United States v. Bank of Farmington,

166 F.3d 853 (7" Cir. 1999)... 17, 23

United States v. Bornstein, 423 U.S. 303 (1976) ............. 1]

United States ex rel. Biddle v. Board of Trustees,

161 F.3d 533 (9 Cir. 1998), cert. denied,

RU wD. OK. Pr Ne sinc 16

United States ex rel. Doe v. John Doe Corp.,

Fad FB BH COO, UO oovccoscicvsccccsekcsicoscecicc, 16

United States ex rel. Findley v. FPC-Boron Employees’

Club, 105 F.3d 675 (D.C. Cir.), cert. denied,

RUS D, GE 176 Cli ii ae uk 16

United States ex rel. Jones v. Horizon Healthcare Corp.,

160 F.3d 326 (6" Cir. 1998)... occcccccccccccee 17

United States ex rel. LeBlanc v. Raytheon Co.,

874 F. Supp. 35 (D. Mass.),

aff'd 62 F.3d 1411 (1" Cir, 1995),

cert. denied, 516 U.S. 1140 (1996) ooo... ccccccce. 17

ix

United States ex rel. Le Blanc v. Raytheon Co.,

No, 95-1263, 1995 WL 471105 (1" Cir.

| Sapte naan arate aa ag a 17

United States ex rel. Marcus vy. Hess,

Dir Ge Oe CAR 11, 14, 18, 19

United States ex rel. Mistick PBT v. Housing Auth. of

Pittsburgh,

186 F.3d 376 (3d Cir. 1999). passim

United States ex rel. Newsham y. Lockheed Missiles &

Space Co.,

190 F.3d 963 (9" Cir, 1999). 8, 28

United States ex rel. Precision Co. v. Koch Indus., Inc.,

971 F.2d 548 (10" Cir, 1992),

cert. denied, 507 U.S, 951 8) Saeeevaapbatte 16, 22

United Siates ex rel. Siller v. Becton Dickinson & Co.,

21 F.3d 1339 (4" Cir.), cert denied.

Dao WB. PERI) oi 17, 22

United States ex rel. Springfield Terminal Ry. Co. v.

Quinn,

14 F.3d 645 (D.C. Cir. 1994)... 23, 28

United States ex rel. Stinson, L ons, Gerlin & Bustamante

v. Prudential Ins. Co.,

944 F.2d 1149 (3d Cir. 1991)... 6, 23, 28

United States ex rel. Wisconsin y. Dean,

729 FAQS 1 Ce. 1984)... 13

x

United States v. James,

BFS I FOF CUO ici cise ae gk 19, 21

United States v. Locke,

GFE TED: WRC iscaviicligi ee a at 19

United States v. McNinch,

RR Reel ee ee ener Cea 11

United States v. Neifert-White Co..

sit Sys ik | Re ea ere nese e Arie Sar 18

United States v. Wade,

SO ST RN ih ee es 7 20

Vermont Agency of Natural Resources v. United States ex

rel. Stevens, No. 98-1828, cert. granted, 119 S. Ct. 2391

(UR 20, TPR otha acc moe 10

STATUTES

Ff i, STOPES i eae ee ee 21

A EAS. © SRR IED vcck aioe basta namie l

oS B.S P90 t CON oi iki ie RE 5

St UGS, SR Stee Oe COO i passim

SU ALB RS POP RS oii eke eee 8. 2

Sh UEC. G STIRRING OOD iciicss socket kisi a 5

StUSC. 4S AG 2,5

UBC. CIT 2

31 U.S.C. § 3730(e)(4) PMR cacti SP He

31 U.S.C. § 3730(e)(4)(A) Oop. Mea aaa eesti a

31 U.S.C. § 3730(e)(4)(B) ( Lap. Speer meta amraicae 2,5

COURT RULES

ao es rai 9,10

OE eit hs 9

LEGISLATIVE MATERIALS

False Claims Act Amendments of 1986,

S. Rep. No. 99-345 (1986), reprinted in 1986

15 Tk oe Sh Ge a ee 12, 13, 14, 15

Letter From Senator Charles E. Grassley and

Congressman Howard L. Berman to

Janet Reno, Attorney General,

145 Cong. Rec. E1540-0] (July 14,

seasfst UK) NP ER Oi 11, 13, 26, 27, 28

145 Cong. Rec. E2069-01 (Oct. 7, 1999)

(Statement of Rep. Lazio) oo... ccccccccccceeseeeecc 12

145 Cong. Rec. H12090-01 (Nov. 16. 1999)

(Statement of Rep. Sessions) 0.000.000.0000... ccccccccocco 12

xi

Black’s Law Dictionary (6th ed. 1990)... 25, 26

| Bouvier’s Law Dictionary (1984)... 26

| Melville B. Nimmer & David Nimmer,

Nimmer on Copyright §3.01 (1997)... ican 21

Robert Salcido, Screening Out UnWorthy Whistleblower

Actions: An Historical Analysis of the Public Disclosure

Jurisdictional Bar to Qui Tam Actions Under the False

Claims Act,

24 Pub. Cont. L.J. 237 (1995)... 12, 13

William L. Stringer, 7he 1986 False Claims Act

Amendments: An Assessment of Economic Impact

CPE 2) Se OA es tinea he eae ete oe 12

The American Heritage Dictionary

CN OE FI iii 25

The Compact Oxford English Dictionary

GR PPR iii te a, 25, 26

Gary W. Thompson, A Critical Analysis of Restrictive

Interpretations Under the False Claims Act's Public

Disclosure Bar: Reopening the Qui Tam Door,

27 Pub. Cont. L.J. 669 (1998)... 12, 13, 23

Webster’s New Collegiate Dictionary (1981)............. 25, 26

OPINIONS BELOW

The Third Circuit opinion in United States ex rel

Mistick PBT v. Housing Authority of the C ‘ity of Pittsburgh,

No. 97-3248 (Appendix A at 1a), is reported at 186 F.3d

376 (3d Cir. 1999). The order of the Third Circuit denying

Mistick’s Petitions for Rehearing and Rehearing En Banc

(Appendix E at 92a) is not reported. The opinion of the

District Court (Appendix C at 66a) is not reported.

BASIS FOR JURISDICTION

The judgment sought to be reviewed was entered on

July 30, 1999. Mistick’s Petitions for Rehearing and for

Rehearing En Banc were denied on September 9, 1999, and

this Petition for Writ of Certiorari was filed within 90 days

thereafter. This Court has jurisdiction under 28 U.S.C.

§ 1254(1) (1994). The constitutionality of a statute is not at

issue.

STATUTORY PROVISIONS INVOLVED

This Petition involves 31 U.S.C. § 3730(e)(4),

which states in full:

(A) No court shall have jurisdiction over an

action under this section based upon the

public disclosure of allegations or

transactions in a criminal, civil, or

administrative hearing, in a congressional,

administrative, or United States [General]

Accounting Office report, hearing, audit, or

investigation, or from the news media,

unless the action is brought by the Attorney

2

General or the person bringing the action is

an original source of the information.

(B) For purposes of this paragraph,

“original source” means an individual who

has direct and independent knowledge of the

information on which the allegations are

based and has voluntarily provided the

information to the United States before filing

an action under this section which is based

on the information.

STATEMENT OF THE CASE

A. Statutory Background

This case arises under the False Claims Act (the

“Act”), 31 U.S.C.. §§ 3729 et seq. (1994), which makes

unlawful the making of false statements to the United States

Government (“United States” or “Government”), in order

to obtain payment for a claim. A private person (known as

the “relator”) may bring a civil action for violation of the

Act on behalf of itself and the United States (referred to as

a “qui tam” action), and retain a portion of any damages

recovered. See id. § 3730(b)(1), (d).'

Based on growing concerns regarding the frequency

and amount of contractor fraud against the United States,

Congress, through 1986 amendments to the False Claims

; Under the Act, the Government is initially given the option of

intervening in and conducting an action brought by the relator, but if

the Government declines to intervene, then the relator has the right to

conduct the action itself. See 31 U.S.C. § 3730(b)(4) (1994).

ee

3

Act, substantially liberalized a jurisdictional bar applicable

to qui tam litigants. The amended bar, which is at issue in

; this Petition, applies only when the relator’s action is “based

upon” a public disclosure of fraud in specified hearings,

reports or investigations or in the news media generally.

, See 31 U.S.C. § 3730(e)(4) (1994) (set forth in full above

under “Statutory Provisions Involved”).

B. Factual Background

Petitioner Mistick, the relator here, was the general

contractor for renovation work, including lead-based paint

abatement work, performed at two public housing projects

of Respondent HACP, known as the “Bedford” and

“Addison” projects. See United States ex rel. Mistick PBT

v. Housing Auth. of Pittsburgh, 186 F.3d 376, 379 (3d Cir.

1999) (Appendix A, at la, 4a). Both construction projects

were administered by HACP, and were financed, in part, by

the United States Department of Housing and Urban

Development (“HUD”). See id. (Appendix A, at 4a).

Respondent Astorino was the architectural firm that

developed for HACP the specifications for the renovation

work, including lead-based paint abatement work. See id.

(Appendix A, at 4a).

In its complaint under the Act, Mistick alleges that

Respondents made false statements to HUD in 1990 and

1992, in order to obtain HUD funding for certain cost

increases at the Bedford and Addison projects. See id.

(Appendix A, at 4a). The cost increases and related false

Statements involved a change of the product originally

specified for the lead-based paint abatement work at the

Bedford and Addison projects. See id. at 379-381

(Appendix A, at 4a-10a).

4

Respondents’ false statements were contained in

certain letters from Respondents to HUD, and were made,

at least in part, in response to written inquiries by HUD as

to the basis for the specifications change. See id. at 380-

381 (Appendix A, at 6a-10a). Those letters were

discovered by Mistick in or about October 1993, pursuant

to a Freedom of Information Act (“FOIA”) request made by

David M. Priselac, Esq., counsel for Mistick (the “Priselac

FOIA Request”). See id. at 381 (Appendix A, at 10a).

Mistick knew Respondents’ statements to HUD to be false

based on the knowledge Mistick had acquired while

performing its contracting duties ai the Bedford and

Addison projects. See id. at 379 (Appendix A, at 4a-6a).

Mistick’s knowledge of the trie state of facts had

formed the basis for a July 1991 Pennsylvania state court

contract action brought by Mistick against HACP (the

“Mistick State Action”). In the Mistick State Action,

Mistick sought to recover the damage; it suffered resulting

from the delay and disruption caused by the lead abatement

specifications change. See id. at 381 (Appendix A, at 8a-

9a). Copies of certain of Respondents’ letters to HUD,

which were originally produced by HUD independently of

the Mistick State Action, were also later produced by

Respondents in discovery in the Mistick State Action. The

Mistick State Action also uncovered additional

documentary and testimonial evidence regarding the

knowing falseness of Respondents’ statements to HUD.

Indeed, as a matter of logic, virtually no person

other than Mistick would have understood the context in

which the statements were made, known that the statements

5

were false, or even looked for the statements in the first

2

place.

C. Proceedings Below and Basis for Jurisdiction in

the District Court

Mistick filed its initial qui tam complaint under the

Act in the District Court against Respondents on

November 20, 1995, under seal as required by the Act. See

31 U.S.C. § 3730(b)(2) (1994)? As also required by the

Act, Mistick provided written disclosure of substantially all

material evidence and information to the United States. See

id. The basis for federal jurisdiction in the District Court

was that Mistick’s claims arose under the laws of the United

States, namely the Act, see 28 U.S.C. § 1331 (1994), and

that Mistick had satisfied the foregoing information

disclosure provisions of the Act.

On July 9, 1996, the District Court granted the

United States’ motion of election to decline intervention in

this case, and ordered the complaint unsealed and served on

Respondents. See 31 U.S.C. § 3730(b)(2), (b)(4) (1994).

After service of the complaint, Respondents moved to

. See Mistick, 186 F.3d at 399 (Becker, C.J., dissenting) (“[i}t

is clear, however, that the present relator, Mistick, is nothing like the

opportunistic and parasitic relator.... Rather, Mistick plausibly

alleges (but has not had the opportunity to prove) that it learned of

defendants’ fraud well before it was ‘publicly disclosed’ in state-court

litigation. . . .”) (Appendix A, at 52a-53a).

. Prior to filing its complaint, Mistick met with the

Government and voluntarily provided the information on which the

allegations in this action are based. See 31 U.S.C. § 3730(e)(4)(B)

(1994).

dismiss, which motion was granted by the District Court on

March 26, 1997, solely on the basis of § 3730(e)(4).

Mistick filed its Notice of Appeal in the Third

Circuit on April 23, 1997. By opinion dated July 30, 1999,

a divided Third Circuit panel, over the dissent of Chief

Judge Becker, affirmed the judgment of the District Court.

See Mistick, 186 F.3d at 378-389 (Appendix A, at 1a-29a);

id. at 389-403 (Becker, C.J., dissenting) (Appendix A, at

30a-62a). On August 13, 1999, Mistick filed Petitions for

Rehearing and for Rehearing En Banc, which were denied

by order dated September 9, 1999.

D. The Third Circuit Opinion

The Third Circuit panel divided in its decision

essentially along the lines of division that exist among the

United States Courts of Appeals. Under the panel majority

view, the Mistick Action was “barred” because the action

was “supported by” or “substantially similar to” publicly

disclosed information and “the relator’s independent

knowledge of the information is irrelevant”. See id. at 385-

388. Under Chief Judge Becker’s view, the action was not

barred because, among other reasons, it was not “derived

from” publicly disclosed information. /d. at 395.

According to the Third Circuit panel majority, both

the misrepresented facts (X) and the true facts (Y) were

disclosed in discovery in the Mistick State Action, and

accordingly both sets of facts had been “publicly disclosed”

in a “civil hearing” within the meaning of § 3730(e)(4)(A)

under Third Circuit precedent. See Mistick, 186 F.3d at

385 (citing United States ex rel. Stinson, Lyons, Gerlin &

Bustamante v. Prudential Ins. Co., 944 F.2d 1149, 1160

(3d Cir. 1991)) (Appendix A, at 19a).

However, the panel majority recognized that Mistick

knew both the true and misrepresented facts independently,

well before republication of the same in the Mistick State

Action. Mistick’s original and independent knowledge was

gained, as to the true set of facts, primarily as a result of

Mistick’s performance of its general contracting work on

the Bedford and Addison projects. Mistick acquired its

knowledge of the false set of facts from HUD’s response to

the Priselac FOIA Request. See id. at 379, 381, 383, 385

(Appendix A, at 5a, 6a, 9a, 10a, 13a, 19a). Accordingly,

the panel majority addressed the issue of whether Mistick’s

qui tam action, in fact, was “based upon” the public

disclosures within the meaning of § 3730(e)(4)(A). See id

at 385 (Appendix A, at 20a).

The panel majority concluded that the phrase “based

upon” should be interpreted to mean “supported by” or

“substantially similar to,” so that “the relator’s independent

knowledge of the information is irrelevant.” See id. at 385-

388 (citations omitted) (Appendix A, at 20a-27a). In this

connection, the panel majority expressly decided to

disregard what it admitted was the plain meaning of the

phrase “based upon,” namely, “actually derived from.” See

id. (Appendix A, at 20a-27a). As noted by the panel

majority, the interpretation of the term “based upon” as

used in Section 3730(e)(4)(A) is the subject of split

decisions within the federal circuits. See id. (Appendix A,

at 20a-27a).

The panel majority also held that HUD’s response to

the Priselac FOIA Request, through which Mistick initially

discovered Respondents’ fraudulent letters to HUD, itself

constituted a “public disclosure” in an “administrative

report” or in an “administrative investigation,” as those

terms are used by § 3730(e)(4)(A). See id. at 383-385

(Appendix A, at 13a-18a). The import of this holding is to

bar within the Third Circuit qui tam actions based upon

information acquired through the FOIA. This dramatic

expansion of the bar to private litigants has not been

addressed by any other United States Court of Appeal.‘

Lastly, the panel majority determined that Mistick

could not be an “original source” under § 3730(e)(4)(B), on

the grounds that Mistick gained its knowledge of the

misrepresented facts through a § 3730(e)(4)(A) public

disclosure, i.e., HUD’s response to the Priselac FOIA

Request. See id. at 388-389 (Appendix A, at 27a-28a). At

least one other federal circuit has held that a party that

causes a public disclosure is not precluded from being an

original source. See United States ex rel. Newsham vy.

Lockheed Missiles & Space Co., 190 F.3d 963, 970 (9th

Cir. 1999).

REASONS FOR GRANTING THE PETITION

This case presents three important questions of

federal law. Settlement of the questions presented is of vital

importance to effectuate Congressional intent to combat

fraud against the United States and to ensure that fraud

against the United States is policed equally and effectively

regardless of the jurisdiction in which the fraud occurs. For

4

In Hughes Aircraft Co. v. United States ex rel. Schumer. 520

U.S. 939, 945 (1997), this Court did not reach the narrower question,

answered affirmatively by the vacated underlying Ninth Circuit

decision, of whether a response to a FOIA request constitutes a

“public” disclosure.

ag OM a tr cca

9

these reasons, review on a writ of certiorari is appropriate.

See Sup. Ct. R. 10(a) and 10(c).

By interpreting the phrase “based upon” in

§ 3730(e)(4)(A) to mean “substantially similar to,” or

“supported by,” rather than according to its admitted plain

meaning cf “derived from,” the panel majority interprets

§ 3730(e)(4)(A) as a bar to meritorious qui tam suits

generated from the relator’s original and independent

knowledge. As stated by the Third Circuit, “the relator’s

independent knowledge of the information is irrelevant.”

Mistick, 186 F.3d at 385-388 (Appendix A, at 21a). The

panel majority’s interpretation of the “based upon” language

conflicts with decisions of other United States Courts of

Appeals addressing that language, making review on

certiorari appropriate under Sup. Ct. R. 10(a), and with

relevant decisions of this Court mandating that the qui tam

language be given its plain and ordinary meaning, making

review on certiorari appropriate under Sup. Ct. R. 10(c).

Second, the panel majority’s holding that HUD’s

response to the Priselac FOIA Request was an

“administrative report” or “administrative investigation”

within the meaning of § 3730(e)(4)(A) similarly disregards

the plain meaning of the statutory language. Indeed, the

FOIA is not identified in or implied by the statute as a type

of public disclosure to which the bar applies. The types of

public disclosures identified are those in which the

Government or news media are presumed to understand

that a fraud has been perpetrated. Moreover, the panel

majority’s holding effectively prevents qui tam plaintiffs

from using the FOIA, which is one of the most effective

» means of discovering or verifying a fraud that is being

perpetrated on the Government. Review on certiorari is

appropriate under Sup. Ct. R. 10(c).

10

Third, the panel majority effectively negates the

“original source” provision of § 3730(e)(4)(B), under which

a qui fam plaintiff may maintain its suit regardless of the

applicability of § 3730(e)(4)(A). The panel majority creates .

an ambiguity where none exists in the statute, and holds

circularly that where there has been a “public disclosure” of

fraud under paragraph (A), then the relator cannot be an

Original source under paragraph (B), even though the

relator itself caused the supposed public disclosure of the

fraud in the first place. This interpretation stands in conflict

with that of at least one other Court of Appeals, making

review appropriate under Sup. Ct. R. 10(a).°

I. This Case Presents Important Questions of

Federal Law That Should Be Settled by This

Court

The split in decision among the Federal Circuit

Courts is a basis alone to grant this Petition for Certiorari.

Review by this Court is also merited because Congress has

long viewed the qui tam provisions of the Act, including

liberalization of the private relator bar in 1986, as vitally

important to rooting out fraud against the United States.

Any unduly broad interpretation of the private relator bar

benefits dishonest contractors. Accordingly, it is vital that

this Court address the operative language in § 3730(e)(4) at

issue in this case.

5

Petitioner understands that recently, in Vermont Agency of

Natural Resources v. United States ex rel. Stevens, No. 98-1828, cert.

granted, 119 S. Ct. 2391 (Jun. 24, 1999), this Court requested briefing

and heard argument on the issue of whether a private person has

standing to maintain a qui tam action.

Indeed, in a recent letter to the Attorney General of

the United States, Senator Charles E. Grassley and

Congressman Howard L. Berman, the principal sponsors of

the 1986 amendments to the Act, sharply criticize the type

of broad interpretation of § 3730(e)(4) rendered by the

Third Circuit panei majority in this case, as defeating both

the language and intent of Congress in drafting that

provision and thereby damaging the United States’ anti-

fraud efforts. See generally Letter From Senator Charles E.

Grassley and Congressman Howard L. Berman to Janet

Reno, Attorney General, 145 Cong. Rec. E1540-01,

E1546-01 (July 14, 1999) (the “Grassley/Berman Letter”)

(Appendix F, at 94a, 98a).°

The scale of fraud against the United States more

than justifies Congress’ concerns. As of 1986, estimates of

the amount of fraud committed against the United States

ranged from hundreds of millions to more than $50 billion

per year, with the Justice Department estimating that as

much as ten percent of the federal budget was being drained

: This Court has considered the views of legislative sponsors in

addressing interpretive issues under the Act. See United States v.

Bornstein, 423 U.S. 303, 309 & n.5 (1976); United States v. McNinch,

356 U.S. at 595, 599 & n.9 (1958); United States ex rel. Marcus v.

Hess, 317 U.S. 537, 546 & n.10 (1943). Indeed, this Court has

explained more generally that statements from legislative sponsors are

to be accorded “substantial weight” in interpreting a statute, and has

also indicated that even subsequent legislative history is to be

considered valid in determining the “scope and purpose of” a statute.

See FEA v. Algonquin SNG, Inc., 426 U.S. 548, 564 (1976); see also

North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 526-27, 535 (1982).

12

due to fraud.’ One 1996 study estimated that as much as

5% of the total federal budget is drained by fraud, and that

without the deterrent effect of the Act, approximately $656

billion would have been lost due to fraud over the 1987 to

1996 period.“ Recent General Accounting Office and other

studies indicate that waste, fraud and abuse consume over

$200 billion of taxpayer funds each year, and that Medicare

fraud alone amounts to approximately $20 billion annually.”

Although the Act originally contained no restriction

on private relator actions, Congress inserted a jurisdictional

bar into the statute in 1943, in response to perceived abuses

by “parasitic” relators who simply copied Government

indictments and added no information of their own.’ That

bar, later called the “government knowledge” bar, was

interpreted to prevent a qui fam action simply if information

about the fraud was possessed in a United States file,

5267-5268.

: William L. Stringer, The 1986 False Claims Act

Amendments: An Assessment of Economic Impact 6-10 (1996)

(Appendix G, at 119a-124a).

. See 145 Cong. Rec. H12090-01, at H12093 (Nov. 16, 1999)

(statement of Rep. Sessions); id. E2069-01, at E2069 (Oct. 7, 1999)

(statement of Rep. Lazio).

10

See Gary W. Thompson, A Critical Analysis of Restrictive

Interpretations Under the False Claims Act's Public Disclosure Bar:

Reopening the Qui Tam Door, 27 Pub. Cont. L.J. 669, 673-79 (1998)

(citing and discussing legislative history); Robert Salcido, Screening

Out Unworthy Whistleblower Actions: An Historical Analysis of the

Public Disclosure Jurisdictional Bar to Qui Tam Actions Under the

False Claims Act, 24 Pub. Cont. L.J. 237, 240-50 (1995) (same).

13

regardless of whether the relator knew of the information

independently or whether the United States understood the

significance of the information."

Indeed, in some cases, such as the Seventh Circuit’s

decision in Wisconsin v. Dean, the government knowledge

bar was held to apply even where the relator itself had

informed the United States of the fraud in the first place.'?

Not surprisingly, the government knowledge bar caused the

number of gui fam actions to drop off dramatically. '*

In 1986, Congress amended the Act to replace the

government knowledge bar with the present bar of

§ 3730(e)(4). It is manifestly clear that, in doing so,

Congress intended not merely to eradicate the government

knowledge bar, but also to generally invigorate the

Government’s anti-fraud efforts by increasing the number of

private actions. See Hughes Aircraft, 520 U.S. at 950

(1986 amendments “permit[] actions by an expanded

universe of plaintiffs”); S. Rep. No. 99-345, at 23-24

(1986), reprinted in 1986 U.S.C.C.AN. at 5288-5289

(intent of 1986 amendments “to encourage more private

enforcement suits”): id at 24, reprinted in 1986

U.S.C.C.A.N. at 5289 (“much of the purpose of the gui tam

" See Salcido, supra note 10, at 248-250 & nn.47-56 (citing

and discussing cases); see also Grassley/Berman Letter, 145 Cong.

Rec. at E1546 (Appendix F, at 100a).

. See Salcido, supra note 10, at 249-250 & nn.53-55

(discussing United States ex rel. Wisconsin y. Dean, 729 F.2d 1100

(7th Cir. 1984)); Grassley/Berman Letter, 145 Cong. Rec. at E1546

(same) (Appendix F, at 100a).

: See Thompson, supra note 10, at 675 n.40; Salcido, supra

note 10, at 258.

14

actions would be defeated unless the private individual is

able to advance the case to litigation”); see also id. at 12-

13, reprinted in 1986 US.C.C.AN. at 5277-5278

(discussing “unfortunate” interpretation of 1943 bar in

Wisconsin v. Dean)."*

Congress viewed increased availability of qui tam

actions as having two related purposes. First, Congress

intended to encourage those with information regarding

fraud against the United States to come forward with that

information. See, e.g., H.R. Rep. No. 99-660, at 23 (1986)

(“The purpose of the qui tam provisions of the False Claims

Act is to encourage private individuals who are aware of

fraud being perpetrated against the Government to bring

such information forward.”); S. Rep. No. 99-345, at 2

(1986), reprinted in 1986 U.S.C.C.A.N. at 5266-5267

(purpose of amendments to “encourage any individual

knowing of Government fraud to bring that information

forward,” and commenting that “only a coordinated effort

of both the Government and the citizenry will decrease this

wave of defrauding public funds”).

4

This Court has also recognized that, since the inception of the

Act in 1863, Congress has viewed the private relator right of action as

central to effectuating the Act's purposes of providing incentives for

persons to bring forward information regarding fraud, spurring

initiation of anti-fraud cases and adding the relator’s resources to the

United States’ anti-fraud effort. See Marcus, 317 U.S. at 545-547 &

nn.l0 & 12; see also Hughes Aircraft Co. v. United States ex rel.

Schumer, 520 U.S. 939, 949 (1997) (describing the private relator

action one of the oldest and “least expensive and most effective means

of preventing fraud”) (quoting Mfarcus, 317 U.S. at 541 n.5).

15

Second, Congress believed that more qui tam

actions would assist (and even prod) the United States in

acting against fraud. See id. at 8, reprinted in 1986

US.C.C.A.N. at 5273 (private relators can “make a

significant impact on bolstering the Government’s fraud

enforcement effort”); H.R. Rep. No. 99-660, at 18 (1986),

and S. Rep. No. 99-345, at 2-3 (1986), reprinted in 1986

US.CC.A.N. at 5267-5268 (“[MJost fraud goes

undetected” by Government auditors); S. Rep. No. 99-345,

at 4 (1986), reprinted in 1986 U.S.C.C.A.N. at 5269

(“most fraud referrals remain unprosecuted and ‘ost public

funds, therefore, remain uncollected”); id. at 26, reprinted

in 1986 U.S.C.C.A.N. at 5291 (Government may “neglect

evidence, cause unduly [sic] delay, or drop the false claims

case without legitimate reason”); id. at 7, reprinted in 1986

US.CC.A.N. at 5272 (lack of adequate Government

resources “perhaps the most serious problem plaguing

effective enforcement” and the reason why promising

information is “often left unaddressed”); id. at 26, reprinted

in 1986 US.C.C.A.N. at 5291 (“{T]he often heavy,

sporadic workload of Government attorneys may create a

situation where a qui tam plaintiff is better able to conduct

the litigation in a timely manner.”’).

Mistick is precisely the type of gui tam relator that

Congress wanted to encourage via the 1986 amendments.

Far from acting as a parasite, Mistick was the general

contractor of the construction projects that gave rise to the

false claims at issue here. Each essential element of

Respondents’ fraud was discovered through Mistick’s own

efforts. Indeed, as a result of its “insider” role, Mistick

itself caused the supposed “public disclosure” of

Respondents’ statements, originally through the Priselac

FOIA Request and later in discovery in the Mistick State

Action. Mistick then brought its information regarding the

16

fraud to the United States and initiated this action, precisely

as intended by Congress.

II. The “Based Upon” Language of § 3730(e)(4)(A)

Should Be Interpreted in Accordance With Its

Plain Meaning

A. The Panel Majority’s Interpretation of the

Phrase “Based Upon” Conflicts _ With

Decisions of Other United States Courts of

Appeals

The Third Circuit panel majority held that the phrase

“based upon” in § 3730(e)(4)(A) should not be given its

plain meaning of “derived from,” but instead should be

interpreted to mean “supported by” or “substantially similar

to,” so that “the relator’s independent knowledge of the

information is irrelevant.” See Mistick, 186 F.3d at 385-

388 (citations omitted) (Appendix A, at 20a-27a). In

admittedly disregarding the plain language of the statute,

the panel majority adopted the position taken by the D.C.

and Ninth Circuits in interpreting the phrase “based upon”

in that provision. See id. at 385-388 (citing United States

ex rel. Biddle v. Board of Trustees, 161 F.3d 533 (9th Cir.

1998), cert. denied, 119 S. Ct. 1457 (1999), and United

States ex rel. Findley v. FPC-Boron Employees’ Club, 105

F.3d 675 (D.C. Cir.), cert. denied, 118 S. Ct. 172 (1997))

(Appendix A, at 21a-27a).'°

i The panel majority also cited United States ex rel. Precision

Co. v. Koch Indus., Inc., 971 F.2d 548 (10th Cir. 1992), cert. denied,

507 U.S. 951 (1993), and United States ex rel. Doe v. John Doe

Corp., 960 F.2d 318 (2d Cir. 1992). See Mistick, 186 F.3d at 386

(Appendix A, at 21a). However, as noted by the Fourth Circuit,

(Footnote continued next page . . .)

17

However, other United States Courts of Appeals

have either held or strongly indicated that the phrase “based

upon” in § 3730(e)(4)(A) should be interpreted according

to its plain meaning, i.e., as “actually derived from.” See

United States ex rel. Siller v. Becton Dickinson & tm. 21

F.3d 1339, 1348 (4th Cir.), cert. denied, 513 U.S. 928

(1994); see also United States v. Bank of Farmington, 166

F.3d 853, 863 (7th Cir. 1999) (“[t]he Fourth Circuit’s

interpretation of ‘based upon’ is the better on the grounds

both of plain meaning and public policy,” and is the

“preferred” reading); United States ex rel. LeBlanc v.

Raytheon Co., 874 F. Supp. 35, 40-41 (D. Mass.) (stating

among other things that “[iJn light of the plain meaning of

the words ‘based upon,’ this Court is inclined to agree with

the Fourth Circuit”), aff'd, 62 F.3d 1411 (Ist Cir. 1995),

cert. denied, 516 U.S. 1140 (1996).'° Additionally, in his

spirited dissent in the Mistick case, Chief Judge Becker of

the Third Circuit also urged that the “based upon” phrase be

interpreted according to its plain meaning, in accordance

Precision and Koch do not truly address whether “based upon” should

be interpreted to mean “derived from.” See United States ex rel. Siller

v. Becton Dickinson & Co., 21 F.3d 1339, 1348-1349 & n.8 (4th Cir.),

cert. denied, 513 U.S. 928 (1994). Conversely, although not cited by

the panel majority, the Sixth Circuit also has adopted the position that

“based upon” means “supported by” or substantially similar to. See

United States ex rel. Jones v. Horizon Healthcare C orp., 160 F.3d

326, 332 (6th Cir. 1998) (citations omitted).

“ In affirming the district court’s opinion in LeBlanc, the First

Circuit issued an unpublished opinion describing the district court’s

opinion as “well reasoned” and affirming the district court’s judgment

“for substantially the reasons elucidated in the opinion below.” See

United States ex rel. LeBlanc vy. Raytheon Co., No. 95-1263, 1995 WL

471105, at *1 (1st Cir. Aug. 9, 1995) (Selya, J.).

18

with the Fourth Circuit’s approach in Siller. See Mistick,

186 F.3d at 394-400 (Becker, C.J., dissenting) (Appendix

A, at 4la-S6a).

B. The Panel Majority’s Decision Conflicts

With Decisions of This Court

The Third Circuit panel majority expressly decided

to disregard what it admitted was the plain meaning of that

phrase, namely, “actually derived from.” See Mistick, 186

F.3d at 386-388 (Appendix A, at 21a-27a). In justification

of this approach, and reflecting the same concerns voiced by

the D.C. and Ninth Circuits, the panel majority stated that

(1) the statute “does not reflect careful drafting or a precise

use of language,” and (2) a plain meaning interpretation of

“based upon” would render the “original source” provision

of § 3730(e)(4)(B) superfluous. See id (Appendix A, at

2la-27a). However, the panel majority’s interpretive

analysis directly conflicts with decisions of this Court and is

plainly incorrect.

l. Interpretive Decisions of This Court,

Including Decisions Addressing the

False Claims Act and “Poorly

Drafted” Statutes

This Court has warned against unduly restrictive

interpretations of the qui fam provisions of the Act, in light

of the clear historical Congressional intent to employ such

actions as part of the United States’ anti-fraud efforts. See

Marcus, 317 U.S. at 540-542 & nn.4-5; cf. United States v.

Neifert-White Co., 390 U.S. 228, 232 (1968) (stating that

this Court, in “various contexts,” has “consistently refused”

a “restrictive reading” of the reach of both the criminal and

civil provisions of the False Claims Act) (citing Marcus). In

19

this context, this Court specifically has stated that fidelity

must be maintained to the language chosen by Congress to

describe the private relator right of action, regardless of the

court’s views of the desirability of such actions. See

Marcus, 317 U.S. at 546-47 n.9.

Indeed, this Court consistently has ruled that

unambiguous terms of any statute must be interpreted

according to the plain, ordinary and natural meaning of the

terms chosen by Congress. See, e. g., Lexecon Inc. v.

Milberg Weiss Bershad Hynes & Lerach, 523 US. 26, 37

(1998); FDIC v. Meyer, 510 US. 471, 476 (1994); Darby

v. Cisneros, 509 U.S. 137, 147 (1993); United States v.

James, 478 U.S. 597, 604 (1986); Rubin v. United States,

449 U.S. 424, 429-430 (1981).

In this connection, this Court has specifically

rejected the suggestion, made by the Third Circuit panel

majority, that supposedly poor or forgetful drafting of a

Statute gives a court the license to disregard the plain

meaning of the terms chosen by Congress and to revise the

statute. See H.J. Inc. v. Northwestern Beil Tel Co., 492

U.S. 229, 249 (1989) (commenting that “RICO may be a

poorly drafted statute; but rewriting it is a job for Congress,

if it is so inclined and not for this Court”); United States v.

Locke, 471 U.S. 84, 95 (1985) (“the fact that Congress

might have acted with greater clarity or foresight does not

give courts a carte blanch to redraft statutes in an effort to

achieve that which Congress is perceived to have failed to

do”); cf. Office of Workers’ Compensation Programs v.

Rasmussen, 440 U.S. 29, 45-47 (1979) (“Congress has put

down its pen, and we can neither rewrite Congress’ words

nor call it back ‘to cancel half a Line.’”).

20

This Court has even gone so far as to state that the

canon of plain language interpretation is the “cardinal canon

before all others,” and to suggest that while superfluous

interpretations are “disfavored,” the doctrine of avoiding

superfluous interpretations may “not apply” so long as the

statutory language is clear and the result is not “repugnant.”

Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-254

(1992); see also id. (“courts must presume that a legislature

says in a statute what it means and means in a statute what

it says there,” and that “[i]Jt would be dangerous in the

extreme to infer . . . that a case for which the words of an

instrument expressly provide, shall be exempted from its

Operation’) (citations omitted).

2. Decisions of This Court Addressing

the Phrase “Based Upon” in Other

Federal Law Contexts

This Court has interpreted the phrase “based upon”

according to its plain and ordinary meaning in other federal

law contexts, and accordingly has favored the type of

“derived from” meaning rejected by the Third Circuit panel

majority. In describing the “independent source” exception

to the exclusionary rule under the Fourth Amendment, this

Court has stated that the United States, in order to have the

evidence in question admitted, must prove that the evidence

was “based upon” some source other than the illegal source.

See United States v. Wade, 388 U.S. 218, 240 (1967)

(citation omitted). Further elaborating, this Court made

clear in Wade that such a test is keyed to whether the

evidence had an “independent origin,” and whether the

evidence “has been come at by exploitation of [the] illegality

or instead by means sufficiently distinguishable to be purged

of the primary taint.” Jd. at 240 n31, 241 (citations

omitted).

21

Similarly, in Saudi Arabia v. Nelson, 507 U.S. 349

(1993), this Court addressed the issue of whether a lawsuit

was “based upon a commercial activity,” as referred to in

the Foreign Sovereign Immunities Act of 1976, and

therefore permitted to be maintained against a foreign

sovereign under that statute. This Court stated that

“guidance is hardly necessary” to determine the meaning of

that phrase, and looked to dictionary definitions to

determine that meaning in the context of the issue

presented. /d. at 355-359 (citations omitted).'”

x Creation of Ambiguities Where None

Exist

This Court has cautioned that courts are not to

create ambiguities, where none in fact exist, aS an excuse

for departing from the plain language of a statute. See

United States vy. James, 478 US. 597, 604-605 (1986)

(admonishing against using “ingenuity to create ambiguity”)

(citations omitted); Escondido Mut. Water Co. v. La Jolla

Band of Mission Indians, 466 U.S. 765, 781 (1984)

(admonishing against “effort to circumvent the plain

meaning of the statute by creating an ambiguity where none

exists”). In this case, however, the Third Circuit panel

majority has done just that. Contrary to the panel

oi Congress, too, has used the phrase “based upon” in other

Statutes as meaning “derived from.” The Copyright Act defines a

“derivative work” as a work that is “based upon one or more

preexisting works.” 17 U.S.C. § 101 (1994). Authoritative treatises

have characterized this definition as meaning that the derivative work

is “substantially copied from a prior work.” 1 Melville B. Nimmer &

David Nimmer, Nimmer on Copyright § 3.01, at 3-3 ( 1997).

22

majority’s claim, a plain language reading of “based upon”

in § 3730(3)(4)(A), to mean “derived from,” does nof

render the original source provision of § 3730(e)(4)(B)

superfluous.

As an initial matter, it may be more confusing than

helpful to view the “original source” provision of

§ 3730(e)(4)(B) as an “exception” that can be rendered

“superfluous” by an interpretation of § 3730(e)(4)(A).

Instead, the original source provision may be a mere safe

harbor, useful whenever a relator could more easily prove

itself an “original source” than disprove a causal link

between. the public disclosures and its gui tam action. See

Mistick, 186 F.3d at 400 (Becker, C.J, dissenting)

(Appendix A, at 54a-55a).

In any event, the “based upon” phrase in

§ 3730(e)(4)(A) may be interpreted according to its plain

meaning of “derived from” without rendering the original

source provision of § 3730(e)(4)(B) superfluous, even if the

latter provision is viewed as an exception to the former.

The interpretive logic employed by the Third Circuit panel

majority, as well as by the D.C. and Ninth Circuits,

overlocks the fact that the phrase “based upon” could

reasonably be interpreted to mean based “in part” upon."

See Mistick, 186 F.3d at 399 (Becker, C.J., dissenting)

(Appendix A, at 53a-54a); Precision, 971 F.2d at 552

(holding that “an FCA qui tam action even partly based

upon publicly disclosed allegations or transactions is

. As noted by the Fourth Circuit, the question of whether

“based upon” means “derived from” logically precedes and is distinct

from the question of whether an action based “in part” on a qualifying

public disclosure counts under the statute. See Siller, 21 F.3d at 1349.

23

nonetheless ‘based upon’ such allegations or transactions”):

see also Farmington, 166 F.3d at 863-864 (while reserving

question of based “in part” upon, nevertheless holding that a

claim “which both depends essentially upon publicly

disclosed information and is actually derived from such

information is ‘based upon’ a public disclosure”).

When it is realized that the phrase “based upon” in

§ 3730(e)(4)(A) could mean “actually derived in part from,”

the supposed superfluousness of § 3730(e)(4)(B)’s original

source provision vanishes. For example, suppose that

Mistick derived this action partly from its own knowledge

of both the true and false state of facts (X and Y), and

partly from a qualifying Statutory public disclosure of both

those essential elements. Or, suppose that a relator

independently knows of one essential element of a fraud (X

or Y), but learns the rest through a news article which

describes all the essential elements (X and Y). See

Thompson, supra note 10, at 701-703.

In both of these cases, the relator could still be

subjected to § 3730(e)(A) under a “derived from”

interpretation of “based upon,” but nevertheless qualify

under existing case law as a § 3730(e)(4)(B) “original

source.” See, e.g., United States ex rel Springfield

Terminal Ry. Co. v. Quinn, 14 F.3d 645, 657 (D.C. Cir.

1994) (relator is original source where it has direct and

independent knowledge of any essential element, X or Y);

United States ex rel. Stinson, Lyons, Gerlin & Bustamante

v. Prudential Ins. Co., 944 F.2d 1149, 1160 (3d Cir. 1991)

(relator is original source where it has direct and

independent knowledge of “substantive information about

the particular fraud”).

24 pain rs

Ill. A Government Response to A FOIA Request

Does Not Constitute An “Administrative

Report” or “Administrative Investigation”

Under the Plain Language or Intent of

§ 3730(e)(4)(A)

The panel majority also held that HUD’s response to

the Priselac FOIA Request, through which Mistick initially

discovered letters containing misrepresentations to HUD,

constituted a “public disclosure” in an “administrative

report’ or in an “administrative investigation,” as those

terms are used by § 3730(e)(4)(A). See Mistick, 186 F.3d

at 383-385 (Appendix A, at 13a-18a). Significantly,

however, the FOIA is nowhere mentioned or even implied

in § 3730(e)(4)(A) as a kind of disclosure to which the bar

applies, even though Congress could have easily added the

FOIA to the list of qualifying disclosures had it so desired.

Only by stretching the language of that provision wel!

beyond its ordinary meaning is the panel majority able to

conclude that a response to a FOIA request constitutes a

disclosure in an “administrative report” or “administrative

investigation” for purposes of § 3730(e)(4)(A).

Indeed, in addressing “public disclosure” language

contained in the Consumer Product Safety Act, this Court

specifically indicated that it would not view a FOIA request

as falling within a statutory reference to “disclosures in the

course of an administrative... proceeding.” See Consumer

Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102,

109 & n.5 (1980); id. (Congress could have listed a FOIA

request in the provision had it so intended).

The Third Circuit panel majority, however, gives the

term “report” the very broad meaning of “something that

gives information.” See Mistick, 186 F.3d at 383

ae

(Appendix A, at 15a). In fact, however, as a review of

dictionary definitions reveals, the true thrust of dictionary

definitions of “report” is an official or formal statement or

account of facts, usually detailed and formal. See Black’s

Law Dictionary 1300 (6th ed. 1990); The American

Heritage Dictionary 1049 (2d College ed. 1985); Webster’s

New Collegiate Dictionary 973-74 (1981).

Similarly, the panel majority also contends that an

“investigation” is comparable to the very broad term

“search.” See Mistick, 186 F.3d at 384 (Appendix A, at

17a). In fact, however, as a review of dictionary definitions

reveals, the true thrust of “investigation” or “investigate,”

as pertinent here, involves more than a mere search, instead

describing patient, detailed, systematic and careful inquiry,

observation or examination. See Black’s Law Dictionary

825 (6th ed. 1990); The Compact Oxford English

Dictionary 874 (2d ed. 1991); The American Heritage

Dictionary 675 (2d College ed. 1985); Webster’s New

Collegiate Dictionary 603 (198 1).

In this case, in response to the Priselac FOIA

Request, HUD’s only actions were that an employee of

HUD in HUD’s Pittsburgh Regional Office engaged in the

purely ministerial acts of (1) identifying HUD’s files on the

Bedford and Addison projects located in that office, and

(2) making those files available to Mistick for inspection

and copying. Copies of Respondents’ letters to HUD were

the only products of the FOIA request.

Accordingly, as noted by Chief Judge Becker in his

dissent, HUD’s activities involved no real “investigation,”

nor did they involve any analysis, statement or account by

HUD as would be required to come within the true sense of

the term “report.” See Mistick, 186 F.3d at 393-394

26

(Becker, C.J., dissenting) (Appendix A, at 40a); see also id.

(citing applicable FOIA provisions establishing that FOIA

requires only a “search,” not an “investigation,” and

involves the actual “records” themselves, not any “report”)

(Appendix A, at 40a). At most, HUD’s actions in this case

constituted a mere “collection” or “compilation” of

documents after a search.’”

Significantly, the panel majority’s interpretation of

HUD’s response to the Priselac FOIA Request, as resulting

in an administrative “report” or “investigation” for purposes

of § 3730(e)(4)(A), is tantamount to reinstating the

government knowledge bar Congress intended to eliminate

in the 1986 amendments to the Act. See Part I, supra.

Under that interpretation, § 3730(e)(4)(A) would be

triggered whenever any materials possessed by the United

States come into the possession of a relator through the

FOIA, regardless of whether the relator was acting

parasitically or whether the United States understood the

significance of the information it possessed. See also

Grassley/Berman Letter, 145 Cong. Rec. at E1546-1547

(criticizing broad judicial interpretations of the “public

disclosure” items enumerated in § 3730(e)(4)(A))

(Appendix F, at 98a-110a).

p In distinction to a “report,” a “collection” or “compilation” is

ordinarily thought of as a simple selection or arrangement of materials

authored or produced by some other party. See Black’s Law

Dictionary 263-64, 284 (6th ed. 1990); 1 Bouvier’s Law Dictionary

573 (1914); The Compact Oxford English Dictionary 286-87, 301 (2d

ed. 1991); Webster’s New Collegiate Dictionary 218, 228 (1981).

27

IV. The Third Circuit Opinion Eviscerates the

“Original Source” Provision of the Act and

Defeats the Congressional Intent Behind

§ 3730(e)(4), in Further Conflict With Other

Courts of Appeals

According to the panel majority, Mistick cannot

qualify as an original source under § 3730(e)(4)(B) because

it gained its knowledge of the misrepresented facts (X)

through a § 3730(e)(4)(A) public disclosure, i.e., the

response to the Priselac FOIA Request. See Mistick, 186

F.3d at 388-389 (Appendix A, at 27a-28a). Yet the panel

majority’s approach to the statute is entirely circular -- the

very same thing that is said to make § 3730(e)(4)(A)

initially applicable to Mistick is then also used to deny

Mistick the original source safe harbor or exception of

§ 3730(e)(4)(B).

The panel majority has rendered either paragraph

(A) or (B) of § 3730(e)(4) superfluous. The panel

majority’s broad, non-plain language interpretation of

“based upon” may prevent parasitic suits, but does so at the

expense of also barring the non-parasitic suits that

Congress specifically intended to encourage in 1986. See

Part I, supra. Congressional intent might be addressed

through a proper interpretation of the “original source”

provision.

- In their recent letter to the Attorney General, Senator Grassley

and Congressman Berman specifically emphasize that Congress

intended the 1986 amendments to encourage non-parasitic private

relator suits. See Grassley/Berman Letter, 145 Cong. Rec. at E1546-

1547 (Appendix F at 98a, 110a).

28

In other circuits that have adopted the panel’s broad

view of the term “based upon,” the Original source

provision nevertheless has been interpreted to effectuate

Congressional intent. See, e.g., Springfield, 14 F.3d at 657

(relator is original source where it has direct and

independent knowledge of any essential element, X or Y).

In fact, as pointed out by Chief Judge Becker in his Mistick

dissent, the panel majority’s treatment of the original source

provision is inconsistent in this regard with the Third

Circuit’s own precedent. See Mistick, 186 F.3d at 399

(Becker, C.J., dissenting) (discussing Stinson) (Appendix A,

at 53a); Stinson, 944 F.2d at 1160 (relator is Original source

so long as it has direct and independent knowledge of

“substantive information about the particular fraud”). The

Ninth Circuit specifically has held that a relator still qualifies

as an original source where the relator itself caused the

supposed “public disclosure” of the fraud. Lockheed

Missiles & Space Co., 190 F.3d at 970; see also

Grassley/Berman Letter, 145 Cong. Rec. at E1546-1547

(original source provision should be available to relators

combining their own experience with information obtained

from a FOIA request or other public documents).

By ignoring that Mistick itself brought Respondents’

false statements to light through the Priselac FOIA Request,

and that the United States did not know those statements to

be false until Mistick explained the circumstances, the panel

majority’s interpretation of the original source provision

effectively reinstates the pre-1986 government knowledge

bar, under which a relator could not maintain a suit even

though it was the relator that had disclosed the fraud to the

United States in the first place. See Part I, supra, Mistick,

123 F.3d at 400 (Becker, C.J., dissenting) (Appendix A, at

55a).

29

CONCLUSION

For all the foregoing reasons, this Court should

grant Mistick’s Petition for Writ of Certiorari

Respectfully submitted,

JOHN E. BEARD, III (Counsel of Record)

PETER N. FLOCOS

Counsel for Petitioner

DECEMBER 8, 1999