By Michael A. Sullivan, Esq.
© 2006 Finch McCranie LLP
1. Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 125 S.Ct. 2444 (2005): claims for retaliation under False Claims Act (FCA) are not governed by six-year statute of limitations in the FCA, but by most closely analogous state statute of limitations.
2. Cook County, Ill. v. United States ex rel. Chandler, 538 U.S. 119 (2003): Supreme Court held that municipal corporations may be defendants in qui tam actions under the False Claims Act, in action in which former research project director brought qui tam action under False Claims Act against county that operated hospital where research on treatment of drug-dependent pregnant women was conducted.
3. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000): Supreme Court rejected defendant’s argument that private citizen had no “standing” to seek damages under False Claims Act qui tam provisions, in case alleging that defendant had submitted false claims to the Environmental Protection Agency in connection with federal grant programs the EPA administered, and that defendant agency “had overstated the amount of time spent by its employees on the federally funded projects, thereby inducing the Government to disburse more grant money than petitioner was entitled to receive.” Unfortunately for this plaintiff, the Supreme Court also ruled that a state was not a "person" for purposes of imposing qui tam liability. This decision has noteworthy discussion of qui tam “relator” actions, as the following quotations show:
Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means "who pursues this action on our Lord the King's behalf as well as his own." The phrase dates from at least the time of Blackstone. See 3 W. Blackstone, Commentaries 160.
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. at 769.
In rejecting the defendant’s argument that this private citizen lacked standing to seek damages in a qui tam case, the Supreme Court discussed the long history of qui tam cases in the English and American legal traditions:
We are confirmed in this conclusion by the long tradition of qui tam actions in England and the American Colonies. That history is particularly relevant to the constitutional standing inquiry since, as we have said elsewhere, Article III's restriction of the judicial power to "Cases" and "Controversies" is properly understood to mean "cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process." Steel Co., supra, at 102, 118 S.Ct. 1003; see also Coleman v. Miller, 307 U.S. 433, 460, 59 S.Ct. 972, 83 L.Ed. 1385 (1939) (opinion of Frankfurter, J.) (the Constitution established that "[j]udicial power could come into play only in matters that were the traditional concern of the courts at Westminster and only if they arose in ways that to the expert feel of lawyers constituted 'Cases' or 'Controversies' ").
Qui tam actions appear to have originated around the end of the 13th century, when private individuals who had suffered injury began bringing actions in the royal courts on both their own and the Crown's behalf. See, e.g., Prior of Lewes v. De Holt (1300), reprinted in 48 Selden Society 198 (1931). Suit in this dual capacity was a device for getting their private claims into the respected royal courts, which generally entertained only matters involving the Crown's interests. See Milsom, Trespass from Henry III to Edward III, Part III: More Special Writs and Conclusions, 74 L.Q. Rev. 561, 585 (1958). Starting in the 14th century, as the royal courts began to extend jurisdiction to suits involving wholly private wrongs, the common-law qui tam action gradually fell into disuse, although it seems to have remained technically available for several centuries. See 2 W. Hawkins, Pleas of the Crown 369 (8th ed. 1824).
At about the same time, however, Parliament began enacting statutes that explicitly provided for qui tam suits. These were of two types: those that allowed injured parties to sue in vindication of their own interests (as well as the Crown's), see, e.g., Statute Providing a Remedy for Him Who Is Wrongfully Pursued in the Court of Admiralty, 2 Hen. IV, ch. 11 (1400), and-- more relevant here--those that allowed informers to obtain a portion of the penalty as a bounty for their information, even if they had not suffered an injury themselves, see, e.g., Statute Prohibiting the Sale of Wares After the Close of Fair, 5 Edw. III, ch. 5 (1331); see generally Common Informers Act, 14 & 15 Geo. VI, ch. 39, sched. (1951) (listing informer statutes). Most, though not all, of the informer statutes expressly gave the informer a cause of action, typically by bill, plaint, information, or action of debt. See, e.g., Bill for Leases of Hospitals, Colleges, and Other Corporations, 33 Hen. VIII, ch. 27 (1541); Act to Avoid Horse-Stealing, 31 Eliz. I, ch. 12, § 2 (1589); Act to Prevent the Over-Charge of the People by Stewards of Court-Leets and Court-Barons, 2 Jac. I, ch. 5 (1604).
For obvious reasons, the informer statutes were highly subject to abuse, see M. Davies, The Enforcement of English Apprenticeship 58-61 (1956)-- particularly those relating to obsolete offenses, see generally 3 E. Coke, Institutes of the Laws of England 191 (4th ed. 1797) (informer prosecutions under obsolete statutes had been used to "vex and entangle the subject"). Thus, many of the old enactments were repealed, see Act for Continuing and Reviving of Divers Statutes and Repeal of Divers Others, 21 Jac. I, ch. 28, § 11 1623), and statutes were passed deterring and penalizing vexatious informers, limiting the locations in which informer suits could be brought, and subjecting such suits to relatively short statutes of limitation, see Act to Redress Disorders in Common Informers, 18 Eliz. I, ch. 5 (1576); Act Concerning Informers, 31 Eliz. I, ch. 5 (1589); see generally Davies, supra, at 63-76. Nevertheless, laws allowing qui tam suits by informers continued to exist in England until 1951, when all of the remaining ones were repealed. See Note, The History and Development of Qui Tam, 1972 Wash. U.L.Q. 81, 88, and n. 44 (citing Common Informers Act, 14 & 15 Geo. VI, ch. 39 (1951)).
Qui tam actions appear to have been as prevalent in America as in England, at least in the period immediately before and after the framing of the Constitution. Although there is no evidence that the Colonies allowed common-law qui tam actions (which, as we have noted, were dying out in England by that time), they did pass several informer statutes expressly authorizing qui tam suits. See, e.g., Act for the Restraining and Punishing of Privateers and Pirates, 1st Assembly, 4th Sess. (N.Y. 1692), reprinted in 1 Colonial Laws of New York 279, 281 (1894) (allowing informers to sue for, and receive share of, fine imposed upon officers who neglect their duty to pursue privateers and pirates). Moreover, immediately after the framing, the First Congress enacted a considerable number of informer statutes. [FN5] Like their English counterparts, some of them provided both a bounty and an express cause of action; [FN6] others provided a bounty only.
FN5. In addition, the First Congress passed one statute allowing injured parties to sue for damages on both their own and the United States' behalf. See Act of May 31, 1790, ch. 15, § 2, 1 Stat. 124-125 (allowing author or proprietor to sue for and receive half of penalty for violation of copyright); cf. Act of Mar. 1, 1790, ch. 2, § 6, 1 Stat. 103 (allowing census taker to sue for and receive half of penalty for failure to cooperate in census); Act of July 5, 1790, ch. 25, § 1, 1 Stat. 129 (extending same to Rhode Island).
FN6. See Act of Mar. 1, 1790, ch. 2, § 3, 1 Stat. 102 (allowing informer to sue for, and receive half of fine for, failure to file census return); Act of July 5, 1790, ch. 25, § 1, 1 Stat. 129 (extending same to Rhode Island); Act of July 20, 1790, ch. 29, §§ 1, 4, 1 Stat. 131, 133 (allowing private individual to sue for, and receive half of fine for, carriage of seamen without contract or illegal harboring of runaway seamen); Act of July 22, 1790, ch. 33, § 3, 1 Stat. 137-138 (allowing private individual to sue for, and receive half of goods forfeited for, unlicensed trading with Indian tribes); Act of Mar. 3, 1791, ch. 15, § 44, 1 Stat. 209 (allowing person who discovers violation of spirits duties, or officer who seizes contraband spirits, to sue for and receive half of penalty and forfeiture, along with costs, in action of debt); cf. Act of Apr. 30, 1790, ch. 9, §§ 16, 17, 1 Stat. 116 (allowing informer to conduct prosecution, and receive half of fine, for criminal larceny or receipt of stolen goods).
FN7. See Act of July 31, 1789, ch. 5, § 29, 1 Stat. 44-45 (giving informer full penalty paid by customs official for failing to post fee schedule); Act of Aug. 4, 1790, ch. 35, § 55, 1 Stat. 173 (same); Act of July 31, 1789, ch. 5, § 38, 1 Stat. 48 (giving informer quarter of penalties, fines, and forfeitures authorized under a customs law); Act of Sept. 1, 1789, ch. 11, § 21, 1 Stat. 60 (same under a maritime law); Act of Aug. 4, 1790, ch. 35, § 69, 1 Stat. 177 (same under another customs law); Act of Sept. 2, 1789, ch. 12, § 8, 1 Stat. 67 (providing informer half of penalty upon conviction for violation of conflict-of-interest and bribery provisions in Act establishing Treasury Department); Act of Mar. 3, 1791, ch. 8, § 1, 1 Stat. 215 (extending same to additional Treasury employees); Act of Feb. 25, 1791, ch. 10, §§ 8, 9, 1 Stat. 195-196 (providing informer half or fifth of fines resulting from improper trading or lending by agents of Bank of United States); cf. Act of Aug. 4, 1790, ch. 35, § 4, 1 Stat. 153 (apportioning half of penalty for failing to deposit ship manifest to official who should have received manifest, and half to collector in port of destination).
We have suggested, in dictum, that "[s]tatutes providing for a reward to informers which do not specifically either authorize or forbid the informer to institute the action are construed to authorize him to sue." United States ex rel. Marcus v. Hess, 317 U.S. 537, 541 n.4, 63 S.Ct. 379, 87 L.Ed. 443 (1943).
We think this history well nigh conclusive with respect to the question before us here: whether qui tam actions were "cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process." Steel Co., 523 U.S., at 102, 118 S.Ct. 1003. When combined with the theoretical justification for relator standing discussed earlier, it leaves no room for doubt that a qui tam relator under the FCA has Article III standing.
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. at 774-778 (some footnotes omitted).
4. Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997): Supreme Court held that 1986 amendment to jurisdictional provision of False Claims Act permitting qui tam suits based on information already in government's possession under certain circumstances did not apply retroactively, in case brought by former manager at Hughes Aircraft Co. alleging that Hughes, a subcontractor, knowingly mischarged the contractor, Northrop (and ultimately the federal government) for certain radar development costs.
5. United States v. Halper, 490 U.S. 435 (1989): Supreme Court applied the double jeopardy provision of the U.S. Constitution and held that a defendant previously punished in a criminal prosecution has certain protections when civil sanctions under the False Claims Act are sought. (The Supreme Court later partially overruled its Halper decision in Hudson v. United States, 522 U.S. 93 (1997)).
6. United States v. Bornstein, 423 U.S. 303 (1976): under prior version of False Claims Act before 1986 amendments, Supreme Court held that subcontractor, which made shipments of falsely branded electron tubes to prime contractor that caused prime contractor to submit false claims to the United States for radio kits, was liable, under False Claims Act, for statutory forfeitures for each of separate shipments, and other damages.
7. United States. v. Neifert-White Co., 390 U.S. 228 (1968): Under prior version of False Claims Act, Supreme Court held that the Act includes “all fraudulent” attempts to cause the government to pay out sums of money, in case in which dealer, in selling grain storage bins to farmers, allegedly furnished false invoices which overstated purchase price of bins and which were used in support of applications to Commodity Credit Corporation for loans to farmers. The Supreme Court emphasized that the False Claims Act is broad:
The original False Claims Act was passed in 1863 as a result of investigations of the fraudulent use of government funds during the Civil War. Debates at the time suggest that the Act was intended to reach all types of fraud, without qualification, that might result in financial loss to the Government. In its present form the Act is broadly phrased to reach any person who makes or causes to be made 'any claim upon or against' the United States, or who makes a false 'bill, receipt, * * * claim, * * * affidavit or deposition' for the purpose of 'obtaining or aiding to obtain the payment or approval of' such a false claim. In the various contexts in which questions of the proper construction of the Act have been presented, the Court has consistently refused to accept a rigid, restrictive reading, even at the time when the statute imposed criminal sanctions as well as civil. See, e.g., United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.E d. 443 (1943).
United States. v. Neifert-White Co., 390 U.S. at 232.
8. Rainwater v. United States, 356 U.S. 590 (1958): Under previous version of False Claim Act, Supreme Court held that the Act applied to false applications for loans from government- owned corporation, the Commodity Credit Corporation. The Supreme Court also observed that “[i]t seems quite clear that the objective of Congress was broadly to protect the funds and property of the Government from fraudulent claims, regardless of the particular form, or function, of the government instrumentality upon which such claims were made.”
9. United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943): Supreme Court found that electrical contractors could be held liable for collusive bidding on P.W.A. projects even though contracts were made with local governmental units rather than with the United States government, but a substantial portion of their pay came from the United States. The Supreme Court also emphasized the value to the public of allowing private citizens to bring qui tam cases, such as in its discussion of the cases below:
The statute is a remedial one. It is intended to protect the treasury against the hungry and unscrupulous host that encompasses it on every side, and should be construed accordingly. It was passed upon the theory, based on experience as old as modern civilization, that one of the least expensive and most effective means of preventing frauds on the treasury is to make the perpetrators of them liable to actions by private persons acting, if you please, under the strong stimulus of personal ill will or the hope of gain. Prosecutions conducted by such means compare with the ordinary methods as the enterprising privateer does to the slow-going public vessel.
United States ex rel. Marcus v. Hess, 317 U.S. at 542 (quoting United States v. Griswold, 24 F. 361, 366 (D. Or. 1885)) (emphasis supplied).