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United States v. Dean

decided: March 5, 1984.

UNITED STATES OF AMERICA EX REL. THE STATE OF WISCONSIN (DEPARTMENT OF HEALTH AND SOCIAL SERVICES) AND WISCONSIN DEPARTMENT OF JUSTICE, PLAINTIFFS-APPELLEES
v.
ALICE R. DEAN, M.D., DEFENDANT-APPELLANT



Appeal from the United States District Court for the Eastern District of Wisconsin No. 80 C 0831 -- Robert W. Warren, Judge.

Pell, Bauer, Circuit Judges, and Marovitz, Senior District Judge.*fn*

Author: Bauer

BAUER, Circuit Judge.

The United States District Court for the Eastern District of Wisconsin found jurisdiction for this qui tam*fn1 action under the federal False Claims Act, 31 U.S.C. §§ 231-233 (1976), despite its finding that the suit was "based upon evidence or information in possession of the United States . . . at the time [the] suit was brought." 31 U.S.C. § 232(C). The district court's order finding jurisdiction was certified to this court as an interlocutory appeal, pursuant to 28 U.S.C. § 1292(b) (1976). We reverse.

I

Defendant Alice R. Dean is a medical doctor who at one time practiced psychiatry in the Milwaukee area. In 1980 the defendant was found guilty in state court of making fraudulent claims for Medicaid reimbursements in connection with her medical practice. State v. Dean, Case No. J-4775 (Cir. Ct., Milw. Cty. 1979). The court sentenced the defendant to probation and ordered her to pay $13,285 in restitution to the State of Wisconsin. As a consequence of her conviction, the State permanently revoked the defendant's license to practice medicine in Wisconsin.

On September 9, 1980, the State of Wisconsin's Departments of Justice and Health and Social Services (the State) filed suit in federal district court against the defendant under the False Claims Act, 31 U.S.C. §§ 231-233 (1976). The False Claims Act gives parties other than the federal government both a private right of action against persons who submit false claims to the federal government and a portion of any recovery. The complaint here alleged that the defendant submitted approximately 912 fraudulent claims for reimbursement for psychiatric services between March 1974 and February 1976. The State demands relief of $2,000 per false claim (the statutory forfeiture amount), $47,343.76 damages on behalf of the United States, $15,808.12 compensatory damages on a pendent claim, $150,000 punitive damages, and costs.

To exercise a private right of action, the qui tam plaintiff must provide the United States Attorney General with a copy of the complaint and "a disclosure in writing of substantially all evidence and information in his possession material to the effective prosecution of such suit." 31 U.S.C. § 232(C). The United States then has sixty days upon notification of the qui tam action "within which to enter appearance in such suit." Id. The plaintiff may maintain the action even though the government declines to join unless "it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought." Id.

The United States declined to join this action.*fn2 After considering all of the arguments and evidence, the district court held that "the information upon which the instant case is based was sufficiently in the possession of the United States to enable the federal government to adequately investigate the case and make a decision whether to prosecute." Nonetheless, the district court interpreted the legislative history of section 232(C) and denied the defendant's motion to dismiss for lack of subject matter jurisdiction. The district court certified this interlocutory appeal on the ground that its decision to find subject matter jurisdiction "involves a controlling question of law . . . and that an immediate appeal . . . may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). We accepted jurisdiction and now reverse.

II

The district court properly recognized that the jurisdiction bar of section 232(C) applies whenever the government has knowledge of the "essential information upon which the suit is predicated" before the suit is filed, even when the plaintiff is the source of that knowledge. United States ex rel. Weinberger v. Florida, 615 F.2d 1370, 1371 (5th Cir. 1980). Although the courts consistently have interpreted the unambiguous language of section 232(C) to admit no exception when the government possesses such "essential information,"*fn3 the district court examined the legislative history of the False Claims Act and determined that the State of Wisconsin could maintain a qui tam action when the State was the source of the "essential information" and when the State was required to provide such information to the federal government as part of its participation in the Medicare reimbursement program. A contrary result, the district court reasoned, "would frustrate the purpose of Congress in protecting the United States against false claims."

A

We are not persuaded by the State's contention that the district court improperly determined that the State's complaint was "based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time" the complaint was filed. 31 U.S.C. § 232(C). The evidence which the government possesses need not be a "mirror image of that in the hands of the qui tam plaintiff." The evidence and information need only be "sufficient to enable [the government] adequately to investigate the case and to make a decision whether to prosecute." Pettis ex rel. United States v. Morrison-Knudsen Co., 577 F.2d 668, 674 (9th Cir. 1978). In the district court, the defendant showed that the government possessed such "sufficient information." First, the Wisconsin Medicaid Fraud Control Unit provided the United States Department of Health and Human Services with many reports about the allegedly fraudulent Medicaid claims during the State's investigation and prosecution of the appellant on state criminal grounds. Many of those reports were required from the State under 42 C.F.R. § 455.17 (1980). Second, the state criminal proceedings were reported extensively in two Milwaukee newspapers. Finally, the ...


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