In July 2012, the Fifth Circuit, in a matter of first impression, held that a federal employee, even one whose job it is to investigate fraud, is a “person” within the meaning of the False Claims Act (FCA), such that he or she may serve as the relator and bring a qui tam action in the name of the United States.
In Little v Shell Exploration & Production Company, the Relators — two auditors for the Department of Interior, Minerals Management Service (MMS) — brought a qui tam action against a government contractor alleging the contractor violated the FCA by failing to pay certain royalties to the United States. It is undisputed that the Relators learned of the information supporting their allegations during the course of their duties and that they were required to furnish their findings to their supervisor. The contractor moved for summary judgment because (1) the federal employees who brought the suit were not “private persons” within the meaning of the FCA; and (2) because the court lacked jurisdiction under the public disclosure bar of the FCA. The trial court granted summary judgment in favor of the contractor, and the Relators appealed.
On appeal, the Fifth Circuit first needed to resolve whether, under these circumstances, the Relators were “private persons” within the meaning of the FCA, such that they had standing to bring a qui tam action. Finding that federal employees are “persons” within the meaning of the FCA, the Fifth Circuit rejected the contractor’s argument that the reference to “private persons” in the statutory heading was intended to exclude federal employees from the scope of the qui tam provisions. The court of appeals was equally unconvinced that federal employees are acting in the interests of the United States and therefore cannot constitute “persons” for purposes of the qui tam provisions, or that permitting federal employees to serve as qui tam relators violates conflicts of interest principles. To the contrary, the Fifth Circuit held that allowing governmental relators is not an absurd result, but may prompt more agency responsiveness and provide additional incentives to ferret out fraud.
The other issue on appeal was whether the court lacked jurisdiction based on the public disclosure bar to the FCA. On this issue, the Fifth Circuit remanded the case, finding that the trial court had previously applied an overly broad definition of public disclosure, and instructed the trial court to re-examine the evidence. Significantly, the Fifth Circuit further held that if a public disclosure has occurred, the suit must be dismissed under the public disclosure bar because the Relators could not be original sources of the allegations underlying their complaint. To be an original source, a relator must voluntarily provide the information to the government. Here, the relators were employed specifically to disclose fraud. Therefore, their disclosures were involuntary.
Little v. Shell Exploration & Production Co.,---F.3d---, 2012 WL 308077 (5th Cir. 2012).