« FPDS-NG stands for the Federal Procurement Data System-Not Germane | Main | Revolving Doors Spin Democratic »

Jan 24, 2007

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c68bf53ef00d83433740a53ef

Listed below are links to weblogs that reference Whistleblower Wins Oil Royalty Lawsuit: $7.5 Million Underpaid by Kerr-McGee:

» Colorado - $7.5 Million Whistleblower Verdict from What Is Your Case Worth?
The Project on Government Oversite Blog reported from this New York Times story that Kerr-McGee (now a unit of Anadarko Petroleum) underpaid $7.5 Million in royalties according to a jury verdit.  The action filed by auditor Bobby Maxwell alle... [Read More]

Comments

G.Florence Scott

Is this what it looks like it is? An attempt to disable the Qui-Tam whistleblower process? -GFS
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Special interests can make for strange bedfellows. What do The Boeing Company and Rockwell International have to do with The American Hospital Association? Is it possible that they joined forces to try to disable the Qui Tam provisions in U.S. law allowing whistleblowers to proceed with complaints and discoveries? I could see them tryingto do this through the back door, under the radar, by attaching themselves to and hiding behind a group such as the American Hospital Association. With all of the allegations against at least one of the defense contractors listed, and the numerous investigations ongoing as we speak, perhaps they are trying to cut the legs off their detractors as a preemptive strike before the investigations are complete? Let me know what your take is on this.

GFS
http://whistleblowersupporter.typepad.com

--------------------------------------------------
From The American Hospital Association, 9-8-09
Our Vision is of a society of healthy communities where
all individuals reach their highest potential for health


Home Advocacy Legal Amicus Brief

Amicus Brief
NOS. 99-1351, 99-1352, 99-1353

--------------------------------------------------

IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

--------------------------------------------------


UNITED STATES OF AMERICA ex rel. JAMES S. STONE,
Plaintiffs/Appellees,
v.
ROCKWELL INTERNATIONAL CORP. AND
BOEING NORTH AMERICAN, INC.
Defendants/Appellants.

--------------------------------------------------

On Appeal from the United States District Court for the
District of Colorado
The Hon. Richard P. Matsch, District Judge
Case No. 89-M-1154

--------------------------------------------------

BRIEF OF THE AMERICAN HOSPITAL ASSOCIATION AND NATIONAL DEFENSE INDUSTRIAL ASSOCIATION AS AMICI CURIAE IN SUPPORT OF APPELLANTS AND IN SUPPORT OF REVERSAL OF THE DISTRICT COURT'S DECISION

--------------------------------------------------

Of Counsel:

Maureen D. Mudron
Washington Counsel
American Hospital Association
325 Seventh Street, N.W.
Washington, D.C. 20004
(202) 626-2301 Counsel of Record
Herbert L. Fenster

On The Brief
C. Stanley Dees
Mark R. Troy
McKenna & Cuneo, L.L.P.
370 Seventeenth Street, Suite 4800
Denver, Colorado 80202
(303) 634-4000

Counsel For Amici Curiae
American Hospital Association And
National Defense Industrial Association

--------------------------------------------------

CORPORATE DISCLOSURE STATEMENT

Pursuant to 10th Circuit Rule 26.1, counsel for amici curiae American Hospital Association, Electronic Industries Alliance, and National Defense Industrial Association hereby states that none of the amici have a parent company. Furthermore, each of the amici are trade associations, and therefore have no stockholders.

--------------------------------------------------------------------------------

CERTIFICATE OF COMPLIANCE WITH FRAP 32(A)(7)

In compliance with Federal Rule of Appellate Procedure 32(a)(7), counsel for amici curiae American Hospital Association and National Defense Industrial Association hereby certifies that this brief contains __________ words, as calculated by the word processing system used to prepare the brief.

Herbert L. Fenster

--------------------------------------------------------------------------------

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES *

SUMMARY OF ARGUMENT *

ARGUMENT *

I. THE FCA’S QUI TAM PROVISIONS VIOLATE PRINCIPLES OF SEPARATION OF POWERS *

A. Relators Act In The Capacity Of Officers Of The United States But Are Not Properly Appointed Under The Appointments Clause *

B. The Qui Tam Provisions Deny The Executive Meaningful Control Over The Initiation, Prosecution and Termination Phases Of The Litigation, And Thereby Exceed The Outer Boundary Of Executive Encroachment As Defined In Morrison v. Olson *

C. The Impermissible Delegation To Relators Of The Executive’s Appointment And Execution Power Has Produced Cases That Are Meritless And Adverse To The Government’s Interests *

II. QUI TAM RELATORS LACK THE INDIVIDUATED INJURY IN FACT REQUIRED BY ARTICLE III *

A. Even A Plaintiff Acting As A Private Attorney General Must Have An Individuated Injury In Fact *

B. A Relator’s Potential Bounty Does Not Satisfy The Requirements For Standing *

CONCLUSION *


TABLE OF AUTHORITIES

Page(s)

IN THE UNITED STATES COURT OF APPEALS

FOR THE tenth CIRCUIT

United states of america ex rel. JAMES S. STONE,

Plaintiffs/Appellees,

v.

ROCKWELL INTERNATIONAL CORP. AND BOEING NORTH AMERICAN, INC., et al.,


Defendants/Appellants.
Nos. 99-1351, 99-1352,
99-1353

CERTIFICATE OF INTEREST OF THE AMICI CURIAE

The undersigned counsel of record certifies the following:

The American Hospital Association ("AHA") is the primary national membership organization for hospitals and health care institutions in this country. The AHA’s mission is to promote high quality health care and health services through leadership and assistance to hospitals in meeting the health care needs of their communities. AHA’s approximately 5,000 members deliver to millions of Americans health care services which are funded in whole or in part by the federal government.

The National Defense Industrial Association ("NDIA") is a national organization consisting of nearly 900 corporations and 26,000 individual members dedicated to maintaining a close working relationship between American industry and the government in pursuit of national security. NDIA’s members provide a wide variety of goods and services to the government and include some of the nation’s largest defense contractors.

Amici have a compelling interest in the resolution of the fundamental issue presented in this case – whether the qui tam provisions of the amended False Claims Act ("FCA"), which allow private non-appointed individuals with no individuated injury to litigate on behalf of the United States, are constitutional.

Counsel for Plaintiffs/Appellees United States of America and James S. Stone, and Defendants/Appellants Rockwell International Corp. and Boeing North American, Inc. have consented to the filing of this brief.

These representations are made in order that the judges of this court may evaluate possible disqualification or recusal.

Herbert L. Fenster


SUMMARY OF ARGUMENT

The challenge to the constitutionality of the qui tam provisions of the 1986 Amendments to the False Claims Act ("FCA") implicates a cascading set of constitutional issues which have made their way, in at least two other cases, to the Supreme Court. The constitutional dilemma begins with the lack of standing of those who would bring such actions, purportedly on behalf of the government; proceeds to their self-appointment to Executive Branch authority; continues through their nexus with that Branch, implicates a myriad of issues relating to the inability of the Executive Branch to control their conduct and comes - ultimately - to rest on the Judiciary which is cast in the role of supervising a cacophony of diverse interests emanating from a supposedly unitary Executive.

No matter what the justification for such a diversion of Executive Branch authority, the public interest has not been served by renegade prosecutors. We outline the following constitutional law concepts, all of which sit under the umbrella of separation of powers and therefore cannot be isolated from each other:

Standing – Relators cannot be cloaked with the interests, i.e., the injury, of the government. To hold otherwise would be to invite persons entirely outside the government to share the Article II powers and duties.

Appointments Clause – Concededly, there has been no appointment, notwithstanding that such appointment is the first line of control over the execution function of the Article II branch.

Execution ("Take Care" Clause) – The Constitution precludes ceding the execution function in someone not only totally outside the Article II branch but also not in any manner subject to its control.

Separation of Powers Doctrine – Were the Court to allow relators to push aside the lack of individuated injury, the lack of appointment, the lack of control by the Executive branch, there would remain the overriding consideration that the Court had thereby permitted virtually every separation violation conceivable on the part of the Article I and Article II branches acting in seeming concert. We define these as the "sins" of: (a) arrogation of power by Congress in taking an execution power out of the hands of the Executive branch and vesting it in someone more certain to act in the expressly stated interests of Congress; (b) delegation by Congress of a power of execution to someone entirely outside the government, and (c) cession or consent by the Executive branch to the compromise and dilution of its own execution powers. The qui tam provisions are a textbook on violations of the separation of powers.

This Court has not yet considered the constitutionality of the qui tam provisions of the 1986 FCA Amendments. A panel of the Fifth Circuit recently held that the qui tam provisions violate the "Take Care" Clause and the separation of powers doctrine. Riley v. St. Lukes Episcopal Hospital, 196 F.3d 514, 531, reh’g en banc granted, 196 F.3d 561 (5th Cir. 1999). The Supreme Court has pending before it the question of qui tam relator "standing" in Vermont Agency of Natural Resources v. United States ex rel. Stevens, No. 98-1828, though it may not reach that question. To date, three other circuits have upheld the constitutionality of the 1986 Amendments to the FCA’s qui tam provisions, but their decisions are remarkably diverse, inconsistent and untenable when considered against constitutional law principles.

While all of these case involved qui tam actions in which the government never intervened, the same issues are equally relevant here where the government, after initially declining, intervened in part of the case. Indeed, the particular events which have transpired in this action highlight the constitutional flaws in the FCA’s statutory scheme. As discussed herein, the government’s control even over the claims on which it intervened is severely limited under 31 U.S.C. § 3730(c)(3), the provision under which the court allowed intervention. Additionally, the issues pursued solely by Stone present the same constitutional and practical problems as in any qui tam case declined by the government; i.e., meritless claims pursued by an uninjured party and unsupported by the government in whose name they are brought, causing undue burden on the defendant, the court, the government and ultimately the taxpayers.

ARGUMENT

I. THE FCA'S QUI TAM PROVISIONS VIOLATE PRINCIPLES OF SEPARATION OF POWERS

The FCA’s qui tam provisions constitute an impermissible attempt by Congress to arrogate the authority of the Executive branch by passing legislation that delegates to private non-appointed and uninjured individuals the Executive’s power to initiate, conduct and meaningfully control litigation on behalf of the United States. Apart from the Executive’s willingness to cede its power, the Constitution reserves this power exclusively to the Executive branch and its appointees by the Appointments Clause (Article II, § 2, cl. 2), and the Take Care Clause (Article II, § 3). As the Supreme Court noted in Printz v. United States, 521 U.S. 898, 923 (1997), these two clauses form the basis of the separation of powers doctrine.

Arrogation by Congress of the Executive’s authority was rejected in Buckley v. Valeo, 424 U.S. 1, 122 (1976), in which the Court observed that separation of powers is a "safeguard against the encroachment or aggrandizement of one branch at the expense of the other." In Buckley, the Court held that only the Executive, not Congress, was empowered to appoint members of the Federal Election Commission. Id. at 143. See also, Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252, 276 (1991) (because management of a federally owned airport is an Executive power, Congress was not empowered to create a congressional board of review with veto authority over managerial decisions); Bowsher v. Synar, 478 U.S. 714, 726 (1986) ("To permit the execution of the laws to be vested in an officer [the Comptroller General] answerable only to Congress would, in practical terms, reserve in Congress control over the execution of laws").

Recently, the Supreme Court confirmed that our branches of government do not have the constitutional authority even to consent to cede their authority:

To say the political branches have a somewhat free hand to reallocate their own authority would seem to require acceptance of two premises: first, that the public good demands it, and second, that liberty is not at risk. The former premise is inadmissible. The Constitution’s structure requires a stability which transcends the convenience of the moment. The latter premise, too, is flawed. Liberty is always at stake when one or more of the branches seek to transgress the separation of powers.

Clinton v. New York, 118 S. Ct. 2091, 2108-09 (1998) (Kennedy, J. concurring) (citations omitted). Accordingly, the current Administration’s official acquiescence to the FCA’s infringement of its authority cannot overcome the strictures of the separation of powers. See also INS v. Chadha, 462 U.S. 919, 942 n.13 (1983) ("The assent of the Executive to a bill which contains a provision contrary to the Constitution does not shield it from judicial review").

Notwithstanding that Congress perceived a need to delegate the Executive’s prosecutorial function – a perception which we maintain herein has proved to be sorely misguided – the Supreme Court has made it quite clear that the Constitution rests the prosecutorial function solely with the Executive who is obligated to "take care that the Laws be faithfully executed . . . ." Article II, § 3. See Buckley v. Valeo, 424 U.S. at 138; United States v. Nixon, 418 U.S. 683, 693 (1974) ("the Executive Branch has exclusive authority and absolute discretion to decide whether to prosecute a case"). Central to our tricameral form of government and, in particular, to the carrying out the Executive’s prosecutorial function is the Appointments Clause, which specifies that the President "[s]hall nominate, and . . . appoint . . . officers of the United States . . . ." Article II, § 2, cl. 2. It is only by control of appointments that the Executive can assure the fealty which the Constitution intends. The Take Care Clause and the Appointments Clause, operating together, enable the separation of the powers of lawmaking and execution.

As the Supreme Court noted in Mistretta v. United States, 488 U.S. 361, 374 n.7 (1989), decisions which have permitted the delegation of authority outside the branch to which the authority is assigned have done so on the narrowest of grounds. See, e.g., United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954) (Attorney General’s own regulation delegating his discretionary powers to the Board of Immigration Appeals was permitted because he could reassert his power by amending the regulation); United States v. Nixon, 418 U.S. at 696 (Attorney General retained power to revoke regulation authorizing special prosecutor to obtain discovery and to oppose the Executive’s invocation of Executive privilege); Mistretta, 488 U.S. at 371-79 (1989) (Congress’ delegation of power to an independent Sentencing Commission to promulgate sentencing guidelines was not an excessive delegation of legislative discretion because of the specific guidelines and constraints imposed by Congress on the Commission); but see Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) (improper delegation where Congress, under the depression era National Industrial Recovery Act, delegated certain law-making authority to the Executive branch but without articulating specific standards or "an intelligible principle" for the exercise of discretion by the Executive). See also Morrison v. Olson, discussed in more detail below. Here, of course, Congress delegated the Executive’s prosecutorial discretion to relators with no standards governing the conduct of the relators and no effective control by the Executive.

The FCA commits all three separation of powers sins by turning over prosecutorial controls to qui tam relators with no fealty to the Executive and no duty or interest in assuring faithful execution of the law. A qui tam relator is a government prosecutor who is not subject to Executive appointment or discharge control, and not subject to either the political or the prudential considerations that are encompassed by the notion of prosecutorial discretion. As the Supreme Court has recognized, relators are "motivated primarily by prospects of monetary reward rather than the public good," and therefore the "relator’s interests and the government’s do not necessarily coincide." Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 949 (1997). This conflicting interest between relators, who claim to represent the government, and the government, which is often in an adversarial position with respect to the relator, is perhaps the most apparent flaw that has emerged from Congress’ tampering with the constitutional framework.

A. Relators Act In The Capacity Of Officers Of The United States But Are Not Properly Appointed Under The Appointments Clause

Any individual "exercising significant authority pursuant to the laws of the United States is an ‘Officer of the United States,’ and must, therefore, be appointed in the manner prescribed by [the Appointments Clause]." Buckley v. Valeo, 424 U.S. at 126. See also Edmond v. United States, 520 U.S. 651, 662 (1997) ("The exercise of ‘significant authority pursuant to the laws of the United States’ marks . . . the line between officer and non-officer"). Only a properly appointed officer may conduct litigation on behalf of the United States. Buckley, 424 U.S. at 138. The qui tam provisions permit relators to appoint themselves as prosecutors for the United States – the same significant prosecutorial power which Buckley held was precluded.

The Supreme Court addressed this concept more recently in Printz v. United States, 521 U.S. 898 (1997), where it held that Congress could not properly delegate to state officials the authority to enforce the Brady Act’s rules concerning gun purchasers’ background checks.

The insistence of the Framers upon unity in the Federal Executive – to insure both vigor and accountability – is well known. That unity would be shattered, and the power of the President would be subject to reduction, if Congress could act as effectively without the President as with him, by simply requiring state officers to execute its laws.

Id. at 922 (citations omitted). If the Constitution does not permit such delegation to state officials, it is quite a stretch to suggest that it would permit such delegation to qui tam relators.

DOJ may argue here, as it did in Riley, that relators are not officers of the United States, and therefore do not fall within the purview of the Appointments Clause. If this were true, it would seem that 28 U.S.C. §§ 515 and 543 are unnecessary. This is circular reasoning because if they are not appointed they cannot prosecute. No case holds that non-officers may conduct litigation on behalf of the United States because Buckley requires that litigation on behalf of the United States "may be discharged only by persons who are ‘Officers of the United States.’" 424 U.S. at 140. Notwithstanding the array of statutes which give private rights of action to persons termed "private attorneys general," in all of those cases, there must be an individuated injury (as required by Article III), that is being requited. The rights of the United States that are addressed are ancillary to those private rights. See, e.g., National Helium Corp. v. Morton, 455 F.2d 650, 654-55 (10th Cir. 1971) (where plaintiffs relied upon environmental statutes to enjoin the Secretary of Interior from terminating their contract, the court held that plaintiffs’ "asserted representation of the public interest . . . is admittedly less important than their private financial stake – which in final analysis justifies their seeking judicial review"). Accordingly, unlike qui tam relators, litigants pursuing redress of their own injuries are not acting as government officers and therefore need not be appointed.

B. The Qui Tam Provisions Deny The Executive Meaningful Control Over The Initiation, Prosecution and Termination Phases Of The Litigation, And Thereby Exceed The Outer Boundary Of Executive Encroachment As Defined In Morrison v. Olson

As the majority in Riley correctly observed, Morrison v. Olson "express[es] the outer boundary of executive encroachment." 196 F.3d at 525, n.32. The Morrison Court identified the criteria for determining whether the statute in that case (the independent counsel law), encroached on the Executive’s constitutionally assigned duty to "take care" that the laws be faithfully executed; i.e., whether the statute sufficiently enabled Executive appointment and control. Morrison, 487 U.S. at 696. In Morrison, the Executive had the power to appoint. While a judicial body actually appointed Ms. Morrison, the Attorney General (who recommended appointees) could block any appointment by the simple expedient of not ever requesting one. In that regard, the Attorney General prescribed the scope of the appointee’s charter; Morrison was not free to address any subject she pleased. Further, the Attorney General retained the power to remove the appointee for good cause – perhaps the ultimate indicia of control. And finally, the Special Counsel was required to adhere to the policies of DOJ.

The qui tam provisions afford none of these controls. Relators are self-appointed with no input whatsoever from the Executive branch. This is unlike other citizen-suit statutes that require the plaintiff to notify the government of the matter before filing suit and provide the Executive branch with a right of first refusal to bring the action itself. See, e.g., National Resources Defense Council, Inc. v. Outboard Marine Corp., 692 F. Supp. 801, 816-17 (N.D. Ill. 1988) (discussing Executive authority under the citizen-suit procedures of the Clean Water Act).

Recently, three Supreme Court justices raised a concern over the constitutional propriety of citizen suit enforcement of public laws like the Clean Water Act which afford the Executive more control over the litigation than does the False Claims Act. In Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 120 S. Ct. 693 (2000), Justice Kennedy, in his concurrence, expressed concern that the delegation of law enforcement authority to citizens may run afoul of separation of powers principles.

Difficult and fundamental questions are raised when we ask whether exactions of public fines by private litigants, and the delegation of Executive power which might be inferable from the authorization, are permissible in view of the responsibilities committed to the Executive by Article II of the Constitution of the United States.

120 S. Ct. at 713. Justice Scalia’s dissent in Laidlaw (joined in by Justice Thomas), agreed with that concern and went even further in suggesting that private enforcement of the Clean Water Act, in particular the right of a citizen to initiate an enforcement suit, encroaches on the Executive’s authority.

Elected officials are entirely deprived of their discretion to decide that a given violation should not be the object of suit at all, or that the enforcement decision should be postponed.

120 S. Ct. at 719. Justice Scalia found little solace in the statute’s provision permitting the government to intervene, stating that such power "is meager substitute for the power to decide whether prosecution will occur." Id. at n.2.

Under the FCA’s qui tam provisions, the Executive branch usually does not even learn of the existence of a qui tam suit until after it has been filed. Then it must utilize its resources to investigate the relator’s allegations prior to notifying the court whether it will intervene. The statute affords the Executive branch sixty days to conduct its investigation and make its election, a period which can be extended by the court only "for good cause shown." 31 U.S.C. § 3730(b)(3). While such extensions are frequently granted, the timing and the scope of the Executive branch’s investigation is clearly beyond its control. See, e.g., United States ex rel. Costa v. Baker & Taylor, 955 F. Supp. 1188, 1191 (N.D. Cal. 1997) (court rejected DOJ’s claims that it needed more time to make its decision and that commencement of the civil litigation might interfere with DOJ’s ongoing criminal investigation and DOJ’s efforts to obtain a global settlement).

If the government intervenes at the outset of the action, as it can as a matter of right under 31 U.S.C. § 3730(b)(4)(A), the FCA purports to afford DOJ "primary control" over the litigation (§ 3730(c)(1)), but even then, DOJ may not freely dismiss or settle the action. Rather, the DOJ must notify the relator and file a motion to be heard by the court (§ 3730(c)(2)(A),(B)). Unlike the independent counsel in Morrison, the Attorney General has absolutely no authority or power to remove a relator. 31 U.S.C. § 3730(c)(1) (3).

Once the Executive branch declines, as it did at the outset of the instant case, it has lost the ability to dismiss the action, even if the action is meritless or would compromise the policy or judgment of the Executive. Section 3730(c)(3) provides:

If the Government elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the Government so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts (at the Government’s expense). When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the Government to intervene at a later date upon a showing of good cause. [Emphasis added.]

Under this provision, the government cannot intervene as a matter of right and can never attain "primary responsibility." Rather, the relator has and retains the "right to conduct the action." This right never changes under the language of § 3730(c)(3), because that provision expressly keeps in place the "status and rights" of the relator. Accordingly, once the government has declined, it does not have the right to intervene in the case and move for dismissal. Such a move would certainly be inconsistent with the "status and rights" provision of § 3730(c)(3). In that regard, the FCA represents a greater encroachment on the Executive’s authority than the law at issue in Morrison which provided for the Attorney General to remove the independent counsel for good cause. 487 U.S. at 692.

In the instant case, once the government declined its initial opportunity to intervene, it lost forever the opportunity to have "primary responsibility" to conduct the action under § 3730(c)(1). When the government sought to intervene in this action, it did not have an automatic right to do so; rather it had to file a motion attempting to show "good cause." The effect of seeking to intervene under § 3730(c)(3), rather than under § 3730(b)(4)(A) was to limit the government’s control of the case.

In considering that motion, the court was extremely mindful of the effect such intervention would have on the relator’s rights. United States ex rel. Stone v. Rockwell International Corp., 950 F. Supp. 1046, 1049 (D. Colo. 1996) (holding that § 3730(c)(3) was intended to protect the financial interests of a relator who expended substantial resources to advance the case), aff’d, 124 F.3d 1194 (10th Cir. 1997). In particular, the court expressed concern that if the government, having initially decided not to intervene, later saw that the relator had developed a fruitful case, the government might seek to intervene for the purpose reducing the relator’s recovery from 30% (the maximum in non-intervention cases) to 15-20% (the range recoverable by the relator when the government intervenes). Id. See 31 U.S.C. § 3730(d)(1),(2). The court further suggested that in order to show "good cause," the government would have to meet an even higher burden of showing that it acquired new evidence, gained independently of the relator. Id. Ultimately, the court permitted the government’s intervention, largely because Stone was "fully supportive of the government’s motion to intervene." Id. Clearly, the government’s ability to intervene in this case brought purportedly on its behalf was limited by the statute and by the court which put the government at the mercy of the relator. Such lack of control strays far from the standards articulated in Morrison.

What is remarkable in the instant case is the fact that upon intervention, the government was entirely impotent to dismiss – or otherwise affect – allegations in the relators complaint that the government had found meritless. The relator simply proceeded with those claims on his own, but still in the government’s name.

Some courts interpret the qui tam provisions to deny the government the unilateral authority to settle a qui tam suit. In at least one published decision, a relator successfully blocked a proposed settlement between DOJ and the defendant. See Gravitt v. General Elec. Co., 680 F. Supp. 1162 (S.D. Ohio 1988). As a practical matter, in the instant case, Stone’s status in the case interferes with the government’s ability to settle. As Appellants point out (at p. 18), this litigation went on for several years only to result in: (a) nearly all of Stone’s own allegations being dropped; (b) a jury verdict in favor of Appellants on the government’s breach of contract claim and as to seven of the ten claims for payment that plaintiffs alleged violated the FCA, and (c) a jury verdict finding Appellants liable for single damages of $1,390,775 instead of $164,000,000 which the plaintiffs asked the jury to award. Appellants’ Opening Brief at 3-4. Notwithstanding Stone’s overall lack of success in the case, under the FCA (at 31 U.S.C. § 3730(d)(1)), any settlement would require the Appellants to pay Stone’s reasonable attorneys’ fees, which, given the lengthy history of the case, would no doubt be claimed in an amount far exceeding the amount of single damages awarded by the jury, making settlement virtually unachievable.

In the absence of a right to control the initiation of a qui tam action, to dismiss or settle the action as it sees fit, or to control the conduct of the litigation by a relator, and in the absence of any right whatsoever to remove a relator, the Executive branch does not have the control required by Morrison. In the absence of such control, the amended qui tam provisions do not survive constitutional scrutiny.

C. The Impermissible Delegation To Relators Of The Executive’s Appointment And Execution Power Has Produced Cases That Are Meritless And Adverse To The Government’s Interests

As a practical matter, the past thirteen years of qui tam litigation have been detrimental not only to government contractors which have been forced to confront an onslaught of frivolous actions, but also to the government, which is frequently at odds with relators purporting to act on its behalf. The onslaught of litigation also has been detrimental to the courts, which must devote resources to resolving matters brought by uninjured plaintiffs, and to the taxpayers who ultimately bear the cost of nearly all of this litigation.

The fruits of the constitutional havoc wreaked by Congress are most evident in the anomalous situation where a relator brings a case "on behalf of the United States" even though the government views the case as meritless or even directly adverse to government’s interests. For example, in Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939 (1997), the relator filed suit based on allegations of cost mischarging that were contained in a government audit report. Id. at 942-44. But during the course of the litigation, the government ultimately reversed its initial findings and concluded that the defendant did not mischarge costs but actually saved the government money. Id. at 943, n. 1. The relator proceeded unsuccessfully with the case, in a futile attempt to dispute the government’s findings. See also, United States ex rel. Lindenthal v. General Dynamics Corp., 61 F.3d 1402, 1411-12 (9th Cir. 1995), cert. denied, 517 U.S. 1104 (1996) (relator’s contention about the quality of drawings defendant sold to the government was undercut by the testimony of a dozen government officials that the drawings were compliant with the contract and did not give rise to any false claims); United States ex rel. Butler v. Hughes Helicopters, Inc., 71 F.3d 321, 326 (9th Cir. 1995) (allegations of defective product and failure to perform product testing were disproved by evidence that the government’s "knowledge of and accession at every turn to the subsystems’ testing modifications as well as to the subsystems’ limitations . . . ").

Indeed, meritless qui tam litigation has become an unmanageable problem. In 1992, then Assistant Attorney General Stuart Gerson observed:

[b]ecause so many meritless qui tams [sic] are filed, at least one large Inspector General’s office has warned us that it may have to decline to investigate certain qui tam suits. Quite apart from our time and our investigators’ time, these suits also waste defendants’ and the courts’ resources.

Gerson Statement, Addendum A at p. 20. According to statistics recently released by DOJ, over 3,000 qui tam cases have been filed since the FCA was amended in 1986, resulting in the government’s recovery of over $2.9 billion. But only a very small fraction of that recovery (approximately $200 million) was from cases pursued by relators after DOJ had declined to intervene. DOJ declined to intervene in 78% of the cases filed, and 94% of those cases resulted in the matter ultimately being dismissed with no recovery. These statistics demonstrate that placing prosecutorial discretion in the hands of private litigants does not serve the public. The same conclusion can be derived from Stone’s years of pursuing numerous claims which the government did not join and which he ultimately abandoned. See Appellants’ Opening Brief at 13-14.

What Mr. Gerson did not mention is the cost borne by the taxpayers stemming from unsuccessful qui tam litigation. First, because the action alleges false claims against the government, government witnesses and documents are alleged to be relevant, and DOJ attorneys and agency personnel must participate in lengthy motions practice and burdensome third-party discovery, as exemplified by the foregoing cases. In the instant case, although the government declined to intervene in one of the FCA counts, the district court ordered a separate trial on that count which will, no doubt, impose a substantial burden on the government notwithstanding its declination. Second, the substantial legal fees incurred by government contractors in successfully defending a qui tam action declined by the government are passed on to the government. See 48 C.F.R. §§ 31.205-47. One scholarly study noted that "DOD ultimately expends significantly greater sums on reimbursing the contractor for defense costs than the Treasury receives in [Civil] FCA recoveries" in cases declined by DOJ. William E. Kovacic, The Civil False Claims Act As A Deterrent To Participation In Government Procurement Markets, 6 Sup. Ct. Econ. Rev. 201, 226 (1998).

In sum, because the qui tam provisions empower relators who lack fealty to the Executive, they leave open the possibility for uneven application of the law. They cause the broader legal, political and practical considerations of litigation on behalf of the government to go completely ignored. They bring before the judiciary meritless actions that the Executive previously has investigated and decided not to pursue, and they frustrate DOJ’s goal of efficient and effective prosecution.


II. QUI TAM RELATORS LACK THE INDIVIDUATED INJURY IN FACT REQUIRED BY ARTICLE III

The principle is well established that a plaintiff must have suffered an "injury in fact" which is "concrete and particularized" as to the "invasion of a legally-protected interest." Lujan v. Defenders of Wildlife, 504 U.S. 555, 558-61 (1992). The Court defined "particularized" as injury which "must affect the plaintiff in a personal and individual way;" id. at 561, n.1, in their words an "individuated injury." The Supreme Court recently reaffirmed this principle in Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 120 S. Ct. 693, 704-05 (2000) (standing of environmental group to bring citizen suit under Clean Water Act was premised upon sworn statements of group members attesting to their particular injury in fact stemming from their use of the affected area).

The Second, Sixth and Ninth Circuits have upheld standing on the theory that Congress, through the enactment of the FCA, provided for the "assignment" of the government’s claim to the relator. See supra, n.1. The Ninth Circuit also found in Kelly that the relator’s stake in the outcome (the monetary bounty) is sufficient to ensure that the case is presented in an adversarial context. 9 F.3d at 749. These theories do not rise to the equivalent of, or substitute for, the required individuated injury by a plaintiff asserting his/her own legal rights and interests.

A. Even A Plaintiff Acting As A Private Attorney General Must Have An Individuated Injury In Fact

Notwithstanding the array of federal statutes permitting "citizen-suits" to redress harm which may be suffered by a community and its members, the Supreme Court, as it did in Laidlaw, has upheld the standing of so-called "private attorneys general" only where the plaintiff was able to allege that he, in particular, suffered some form of injury. The Supreme Court often has said that while Congress may, by legislation, expand standing to one who otherwise would be barred, Congress cannot eliminate the injury in fact requirement gleaned from Article III. Raines v. Byrd, 521 U.S. 811, 820 n.3 (1997) ("Congress cannot erase Article III’s standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing"); Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 17 (1981) ("private attorneys general" differ from other plaintiffs not because they need not show injury but because their "injuries are ‘noneconomic’ and probably noncompensable").

Congress has expanded citizen standing in statutes dealing with civil rights, consumer interests and environmental interests. Notwithstanding that the alleged injuries affected a large group of people, in each instance in which citizen standing was upheld, the court noted that the plaintiff had alleged some individuated interest as distinguished from the polity as a whole. See, e.g., Laidlaw, 120 S. Ct. at 704; United States v. SCRAP, 412 U.S. 669 (1973); but see also Natural Resources Defense Council, Inc. v. EPA, 507 F.2d 905, 908 (9th Cir. 1974) (despite Congress’ grant of standing to "any citizen" to enforce the Clean Air Act, plaintiff organization could not show individuated injury in fact to itself or to its members). As we discussed above, a statute authorizing private attorneys general who lack an individuated injury gives rise to violations of Article II principles as well.

The theory that the qui tam provisions, in effect, assign the government’s "claims" to relators can be rejected without delving into the question of what constitutes a valid assignment. It can be rejected simply because it is not the "injury" which Congress assigned. Therefore, the assignment theory cannot satisfy Lujan‘s holding that an individuated injury is part of the "irreducible constitutional minimum of standing." Lujan, 504 U.S. at 560; see also Riley, 196 F.3d at 540 (concurrence).

Notwithstanding that the injury itself is not subject to this fictionalized assignment, Congress, as we discussed above, lacks the authority, under the separation of powers doctrine, to assign to the citizenry the Executive’s prosecutorial right. In that regard, even if the courts could tailor a brand new theory of standing for qui tam relators which overcomes the lack of an individuated injury, the statutory scheme would still run afoul of the other constitutional principles at issue here. As the concurring opinion in Riley correctly stated: "Congress cannot assign something that it does not ‘own.’" Riley, 196 F.3d at 540 (concurrence); accord Bowsher v. Synar, 478 U.S. 714, 726 (1986).

B. A Relator’s Potential Bounty Does Not Satisfy The Requirements For Standing

A bounty plainly is not an injury. Nor can it take the place of an injury under the Supreme Court’s articulation of the standing doctrine. Putting aside the counterintuitive characterization of the potential receipt of a bounty as an "injury," a relator’s claim to the statutory bounty does not satisfy the injury in fact requirement because relators can demonstrate no "invasion" of a "legally protected interest." See Lujan, 112 S. Ct. at 2136. If Congress could confer standing on a citizen simply by creating an economic interest in the outcome, Congress would also, in essence, be empowered to establish a prosecutorial system entirely outside of the Executive branch—yet another aspect of standing which merges with the overwhelming Article II issues.

Moreover, the statutory bounty created by the FCA does not constitute a "legally protected interest" because a relator cannot, with any degree of certainty, claim an entitlement to such an award. In this respect, it is significant that, even if a relator wins the action, his recovery may be limited or even precluded entirely by the court. 31 U.S.C. § 3730(d)(3). In essence, a relator’s claim amounts to no more than an indeterminable contingent interest. Such a speculative interest does not constitute "a legally protected interest," as contemplated by Article III. Accord United States ex rel. Truong v. Northrop Corp., 728 F. Supp. 615, 619 n.5 (C.D. Cal. 1989).

Even if the bounty did constitute a "legally protected interest," which it does not, there has been no "invasion" of that interest by the challenged conduct of an alleged false claim being submitted to the government. A relator cannot establish an invasion of a legally protected interest simply by filing suit and claiming a stake in the outcome. "[T]he essence of standing ‘is not a question of motivation but of possession of the requisite . . . interest that is, or is threatened to be, injured by the . . . conduct’" of the defendant. Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 225-226 (1974) (citations omitted). A relator who files suit and anticipates a bounty is no different than any other "person bringing a suit at law [who] has the hope of receiving money." United States ex rel. Burch v. Piqua Eng’g, Inc., 803 F. Supp. 115, 118 (S.D. Ohio 1992). In this respect, merely possessing an interest in the outcome of litigation is insufficient; there must be an invasion of a legally protected interest – a condition lacking here.

All that Stone has ever alleged is the right to recover the government’s damages, fines, and penalties. He has never had injuries of his own stemming from the alleged submission of false claims to the government. Therefore, he lacks standing to litigate this case.

CONCLUSION

Qui tam relators seek to enforce a law made to requite an injury to the United States and not to themselves. This fact distinguishes the qui tam provisions from all other citizen suit provisions and from all private attorney general actions. But at its heart, the issue is really one of separation of powers. Overlapping the issue of standing is the question of whether Congress can "confer" standing, and overlapping that issue is whether Congress can delegate out of the Executive branch the constitutional power to enforce the law. The Supreme Court has made it clear that the Constitution prohibits this kind of delegation. The chaos we have experienced in the prosecution of the qui tam actions during the past thirteen years demonstrates the sound basis for applying these constitutional principles to overturn this law.

Respectfully submitted,

Herbert L. Fenster
C. Stanley Dees

Mark R. Troy

McKenna & Cuneo, L.L.P.
370 Seventeenth Street, Suite 4800
Denver, Colorado 80202
(303) 634-4000

Counsel for Amici Curiae
American Hospital Association and National Defense Industrial Association

Of Counsel:

Maureen D. Mudron
Washington Counsel
American Hospital Association
325 Seventh Street, N.W.
Washington, D.C. 20004
(202) 626-2301

CERTIFICATE OF SERVICE

I hereby certify that on February 14, 2000, true and correct copies of the foregoing BRIEF Of the American Hospital Association and National Defense Industrial Association As Amici Curiae In Support Of Appellants and in support of reversal of the district court’s decision were sent via Federal express addressed to the following:

Marie T. Vullo, Esq. Douglas M. Letter, Esq.

Bruce Birenboim, Esq. Peter R. Maier, Esq.

Paul, Weiss, Rifkind, Wharton & Garrison Civil Division, Appellate Staff

1285 Avenue of the Americas United States Department of Justice

New York, NY 10019 601 D Street, N.W.

Washington, DC 20530-001

and deposited in the U.S. Mail, postage prepaid, addressed to:

Hartley David Alley, Esq. Michael A. Williams, Esq.

4251 Kipling Street, #130 Christopher J. Koenigs, Esq.

Wheat Ridge, CO 80033 Michael B. Carroll, Esq.

Williams, Youle & Koenigs, P.C

I am

Bruno

On March 30, 2007, Judge Figa threw out the suit on technical jurisdiction grounds.. A couple of weeks before, in Early March 2007, Judge Figa in Denver was told he had an aggressive brain tumor, an agressive cancer, and was in the hospital.So, despite the fraud of Kerr McGee, the suit was tossed becasue the 1986 False Claism Act is flawed to provide technical defenses to large corporations to remove jurisdiction..
In short the flawed 1986 sucks in whistlwblowers, then ruins them,,,
Is that disgrace going to be soon corrected by Congress, or will it allow more fraud to go unrectified.
SAD.
Bobby Maxwell brought the suit in 2004, and the case was in court for 3 years.
Strange, the Jude gets cancer, tosses it, and Kerr McGee must be lauhgint its ass off, at how CONGRESS PROVIDED IT SPECAL TECHNICAL JURISDICTION DEFENSES. a REAL LINCLON LAW HAD NO JURISDICTIONAL BARS. THE 1986 FCA IS A FAKE RUSE-- NOT A REAL 1986 FCA.

Maria G

In 1939 as per certified final judgement.Sunoco had come around signing leases for all my ancestors and murdered parents now. Not to mention a murdered great grandfather who was forced to sign over his property at gun point, as he walked away, was shot on his back. Yes, all for Oil. I have written letters to Sunoco, they referred me to Kerr-Mcgee. I have written letters to the White House. Knowingly what really happened to the early settlers of America. The French and Spanish, Certainly the local Indian population at that time. Most eradicated all for oil. Here in the United States of America. Read futher in my Book Legacy Lost Heritage Found. While over 700 filed have been pulled down families that supposedly are already receiving Royalties. All is kept hushed up. The Rinches may be still alive. Please Help me stand up for my rights as a Human being and certainly as a ORPHAN WHO HAS LOST AN ENTIRE FAMILY. write to Kerr-Mcgee, write to Sunoco, the Media anything to help me reach Justice for my gg grandfather Andre for my parents. Thank you for taking the time to read. It America, an in someway somehow we are losing it. Just pay attention.

Veronica

Why would some want, or not care if MMS accounts are ripped off ? What is in it for them ?
Why do some promote a unitary executive that thumbs its nose at laws on accountability governing USA federal accounts. Well, really the answer to that is most evident. Not only that, there is a distinct correlation.
Take Barbara Cubin(R , Wyo, House REP), who took Dick Cheney's seat in Congress. It is the PAC money kick back syndrome.(or holding USA assets hostage, a la a ROVE Texas plan)
She supports by way of policies and other ways companies who cheat on MMS accounts---big oil companies-- and they kick back loads of PAC money. In fact, the records demonstrate that she gets large amounts of big OIL PAC money. Her Hearings attacking POGO even underscore this
phenomma. She never sued an oil company in her life, despite all her hot air, for pomp and show.
Same with the Senator from Texas Kaye Bailey Hutchinson. MMS Director Johnnie Burton came out of that climate, and got her appointment from the Senior Member of the Wyoming Congressional Delegation, Senator Craig Thomas.(R, Wyo). Of course, you may have figured out, he too gets big loads of big oil PAC money. They seem to be against full market pricing to who: the land owner(USA).
Anadardko is only a leasee, not the land owner. It is too bad they don't really genuinely respect property rights for the land owner, when it is the USA, but then PAC money does have its insidious impacts on some, now doesn't it ?
As billions ended up missing from MMS accounts, Burton looked for cover. Of course, some many have seen that
those providing pathetic excuses for Burton, where the big oil PAC receipents.

Monica

Given the Cheney's financial interest in Anadarko, which owns Kerr McGee, you might wonder why some strings are pulled: Carefully Observe;
Lynne V. Cheney, wife of US Vice-President Dick Cheney, was a board member of Lockheed Martin for the period 1994-2001, picking up a handy US$120,000 per year for the privilege. (Mrs Cheney other lucrative directorship's include AXP Mutual {an American Express subsidiary}, the Union Pacific Resources Group, & the Reader's Digest Association. As a director of Union Pacific when it merged with Anadarko Petroleum, Lynne Cheney received Anadarko stock worth $250,000 to $500,000. Her husband's major source of vast wealth, Halliburton, had done business with Anadarko Petroleum since 1959.
The V. P strings on influence reach into the DOJ, The DOJ is controlled by the guy who worked for Enron's major law firm. the AG, Alberto.
ERGO: the latest activity out of Vincent and Elkin, which is the other major law firm in the Anadarko matter.
Before Fullbright and Jaworski ( services big OIL) told Kerr McGee to never pay MMS royalities on the matters in question, and MMS caved in, and does what BIG OIL"s Texas law firms push for. Is Lynn now saying in effect: let MMS eat YELLOW cake, her stance as she held a financial stake in Kerr McGee via the Anadarko mergers etc. Also, Cheney's son in law(Phil Perry) was high in the DOJ, and of course he got his other position(General Counsel) in Homeland Security because he knows the right people: Dick Cheney. No wonder MMS is so in bed with BIG OIL, when will Congress look into all the Cheney connections, and all the strings pulled, given the serious breakdowns in MMS accountability. Deficts don't matter to Cheney is what he said(see the Ex U S Treasury Secretary report on Cheney), & no wonder MMS seems to care less on having accountability on its accounts, when the Cheney personal financal interests reach deep into Anadarko.
As POGO may know. Barb Cubin took off where Cheney left off, as she took his Big Oil Seat in Congress, and she fills her political coffers with Anadarko PAC money, too

DEAN BERRY

Barrick Gold of Elko, NV, (the largest gold mine in the world) is absolutely the worst about hiring only rednecks to work in the mines. They are anything but an EOE employer. Can someone help penetrate their management's arrogance? http://redneckaffirmativeaction.blogspot.com. Thanks!

Miranda

<<>>>>>>>>>>>>>>>>>>QUI TAM ALERT:>>>>>><<<<<<<<>>>>>>>>>>
Now, in the qui tam action, U S. Ex rel Maxwell, after the jury found Kerr McGee was a major cheater of MMS(USA) accounts, engaging in bilking of millions, Alberto Gonzolaes, the Attorney General's old firm, based in Houston with D. C. offices, namely Vincent and Elkins(Enron's attorneys) has filed a 40 page brief that the court( U. S. District Court in Denver) had no jurisdiction. This is a move to seek to financial destory Mr Maxwell, and his law firm. This 40 page motion/ brief was filed on Feb. 9, 2007. --post jury verdict. Yet, the qui tam action had been filed in 2004, and massive expenses were underwritten by Maxwell (as a "human/ natural person") and his attorneys, not paid by the DOJ...... A COST is not a profit.. as MMS lies filled the PR airwaves..to smear Maxwell post jury verdict. Some twisted MMS taunting of real accountability. There are very few jury verdicts in qui tam actions; note POGO has not pointed to any others ones, since 1986, most significantly, and all despite major cheating of MMS accounts as it they were targeted by the likes of large OIL COMPANIES.
All a jurisdiction ruling does, if a court finds no jurisdiciton, is to block the power of a court to hear the merits, or to void out a jury ruling.
It is like a license to steal for a large corportation, and never be held accountable for its bilking operations. Even though a jury found cheating, how can Vincent and Elkins file such a motion-- Because Congress set up traps to bar jurisdiction to help large companies that cheat USA accounts. Large corporations(with some in Congress, then) slipped the jurisdictional bar traps into the 1986 FCA Act at the last moment(late 1986) to ruin the effect of that ACT. POGO should know, didn't POGO get a jurisdictional bar laid on it, in its oily suit, however it was not one that a jury had found large oil companies guilty. A real Lincoln law had no jurisdictional bar provisions. The 1986 FCA is a fake Lincoln law, it allows a license to steal, and that is unfolding--right before your, and America's eyes. A real Lincoln law had no jurisdictional bars, yet there is major misleading activity to hurt whistleblowers in America by the traps to ruin them ! How come that is not spoken of in the beltway, these days ? It is a tragedy unfolding, and some don't give a damn in D. C. because they like to ruin whistleblowers as if some beltway Sport by the clique of Enrons circles---others-- who has so bought off the Bush Administration, and play other beltway games. How can Senator Grassley allow a fake non-Lincoln law to go on to ruin citizens by the traps. How.. he is not a trial attorney(never stood up for one second for some ordinary citizen in a Federal Court), this brewing scandal may reveal deeper problems, indeed. The make" whole" provisions are illusory, and were a big dupe job, and now extortion to ruin whistleblowers is the name of the beltway games. Yet, mum seems to be the operative mode to keep this problem under cover. The 1986 FCA is no real Lincoln Law..it is a total fake to help large corporations get away with bilking USA accounts. How long has Grassley known that, and allowed 1,000 of USA citizens to be ruined ? Yes, that is now the question , spreading all over America. Most curiouslu Enrons major law firm, now is working to make the Grassley passed FCA a total joke, a farce, and it speaks volumes of how the corrupt power to cheat USA accounts has so taken hold in the beltway.

Bridget

Please---right now--- take note of the Offiicial Code of Ethics in Government Service:
It is, and has been around a long time before 1989 as follows :


CODE OF ETHICS FOR GOVERNMENT SERVICE

Any person in Government service should:

1. Put loyalty to the highest moral principals and to country above loyalty to Government persons, party, or department.

2. Uphold the Constitution, laws, and legal regulations of the United States and of all governments therein and never be a party to their evasion.

3. Give a full day's labor for a full day's pay; giving to the performance of his duties his earnest effort and best thought.

4. Seek to find and employ more efficient and economical ways of getting tasks accomplished.

5. Never discriminate unfairly by the dispensing of special favors or privileges to anyone, whether for remuneration or not; and never accept for himself or his family, favors or benefits under circumstances which might be construed by reasonable persons as influencing the performance of his governmental duties.

6. Make no private promises of any kind binding upon the duties of office, since a Government employee has no private word which can be binding on public duty.

7. Engage in no business with the Government, either directly or indirectly which is inconsistent with the conscientious performance of his governmental duties.

8. Never use any information coming to him confidentially in the performance of governmental duties as a means for making private profit.

9. Expose corruption wherever discovered.

10. Uphold these principles, ever conscious that public office is a public trust.

[Source: U.S. House of Represenatives>.

MMS high Management is urging the violations of the CODE of Ethics by urging favors to big oil, deterring the reporting of corruption in MMS shoddy mismanagement, demanding(in effect) loyality to companies who kick back PAC money.
Maxwell has not gotten any profit, as the DOJ lies have been used to smear him, to cover up MMS wrongdoing.
MMS is a rouge out of control place, and some who get big PAC $$$ like it that way as does the very political DOJ, run by an ex lawyer(outhouse FRIM) for Enron.

MarkE

MMS shows it will traffic in favors to assit Big oil rip off USA accounts.
Contrast Code of Conduc:. Do no favors for any, and put loyality to USA(its accounts). See CODE of Conduct for people like MMS Director., A USA OFFICIAL
MMS doesn't care about accountability. the latest Jan 2007 nutty MMS press relase shows that MMS is out of step with American values, accountability, and it is a rogue operation is a disgrace. POGO, & USA all citizens need to speak out to urge Congress to do more oversight. MMS has contemp for USA laws, and it is part of some rogue Unitary Executive power mad agenda. It is only interested in creating a PAC pool of $$$, as kick backs to some in Congress who protect the likes of MMS corruption. Shame on MMS, and shame on those who do not see what it is doing to America. '"Ferme Generale", put that in your French lingo Dictionary, Madam MMS Director Burton, from Dick Cheney's neck of the woods/Natrona, Cubin-ville.,
a la, the crusade to undermine accountability on USA accounts. Wake up America.

Marsha

Filing a law suit is a cost, not a profit. it takes a lot of costs to pursue those who rip off MMS accounts while MMS abbets more corruption in its programs. Maxwel---the USA citizen---l actually did soemthing rather than issue some Press releases. Yet, after the Jury verdict in Denver MMS issuee a incredibly stupid, tone deaft press release showing it is in bed with big oil, and seems not to care if it favors rip offs, as if devaluing USA accounts is par for the MMS mismanagement. The dopey MMS press release is as follows , which it put out on the WWW at taxpayers expense:


Statement in Response to Result of Kerr McGee Litigation

Statement:

“Kerr McGee has indicated they will likely appeal the verdict. The Minerals Management Service maintains its original position that Kerr McGee paid the royalties it owed to the U.S. government.”

January 24, 2007




Qs and As Concerning Mr. Bobby Maxwell and the Kerr McGee Lawsuit

Q1. Why didn’t MMS pursue Mr. Maxwell’s claim that Kerr McGee was underpaying royalties owed to the U.S. government?

A1. MMS, the Department of the Interior’s Office of the Inspector General, and the U.S. Department of Justice investigated and analyzed Mr. Maxwell’s claim. The United States declined to intervene in the qui tam lawsuit that Mr. Maxwell brought under the False Claims Act (U.S. ex rel . Maxwell v. Kerr-McGee Chemical Worldwide, LLC, No. 04-F-1224 (D. Colo.)).

MMS, the OIG and the DOJ have also investigated the other FCA claims and declined to intervene.

Q2. Mr. Maxwell says very explicitly that the overall auditing and compliance review effort has slowed markedly in the past five years, that his complaint about Kerr-McGee is simply a "symptom of the illness,'' which he describes as a "passivity'' and an "unwillingness to take risks'' on the part of MMS when the outcome is even slightly uncertain. Why is he wrong?

A2. MMS pursues a vigorous audit and compliance review program that generated an annual average of more than $125 million over the last 24 years. That’s a total of more than $3 billion dollars that flowed to the American public as a result of MMS’s audit and compliance efforts. Without MMS’s diligence, that money would have not been recovered.

In FY 2006, MMS reviewed and/or audited 72.5 percent of all Federal and Indian royalty payments within three years from the date of receipt of payment, using a system that targets the largest properties and payors. This represents a dramatic increase in the amount of revenue reviewed and/or audited within three years, up from 46 percent in FY 2003 and 10.5 percent in FY 2002. This work is in addition to legacy audit work completed beyond the 3-year cycle.

Q3. What is the best evidence that MMS is aggressively pursuing all the money that oil and gas drillers owe?

A3. In November, 2005, an independent certified public accounting firm issued a clean audit opinion of MMS’s audit program with no material weaknesses, and no reportable conditions. The results are clear and irrefutable, MMS is accomplishing its job on behalf of the American public. MMS routinely bills for interest. In fact, in FY 2006, MMS issued over 3,800 late payment interest bills for a net amount of $7 million.

What’s also clear is that our mission requires us to act in the best interests of the American public. As government employees, we are responsible for ensuring that oil and gas companies pay everything they owe to the U.S. Treasury.

From FY 2002-2006, our minerals revenue program accounted for, substantiated, and disbursed royalties totaling $44.6 billion. From 2002-2005, MMS and State and Tribal auditors completed 1,214 audits. That compares to 784 audits completed for the prior four year period.

Q4. If Mr. Maxwell recovers additional millions of dollars for the government, would the Interior Department still contend that he was wrong to bring his case?

A4. In the case of MMS audits, our procedures require that auditors who detect fraud must report it to the MMS’s Office of Enforcement who in turn must report it to the Department of Interior’s Office of Inspector General. Alternatively, the auditors can go directly to the OIG. Mr. Maxwell and the other auditors who filed qui tam lawsuits did not follow these required procedures.

Q5. Why is it troubling for federal auditors to file lawsuits as private citizens?

A5. The auditors seek to profit personally using information they are paid by the taxpayers to collect. Audits conducted by Federal agencies are governed by standards developed and published by the Government Accountability Office (GAO). These standards provide an overall framework for ensuring that auditors have the competence, integrity, objectivity, and independence in planning, conducting, and reporting on their work.

A False Claims Act claim filed by an MMS auditor against an oil or gas company that he or she is responsible for auditing results in a conflict of interest that causes both the auditor and MMS to be in violation of auditing standards set forth by the Government Accounting Office. That conflict of interest exists because the auditor stands to gain personally by receiving a percentage of the additional royalties collected from the company against which he files a false claim.

In addition, as stated above, the Department has a procedure in place to pursue allegations of fraud. Rather than follow that procedure, and have the OIG – pursue the fraud, the auditors chose the route which is more profitable to them than the taxpayers.

Q6. POGO, citing MMS budget documents, says the number of auditors has declined from 250 in 2001 to 185 in 2005? Is that correct?

A6. Since the end of FY 2001, MMS’s overall audit and compliance staff decreased from 420 Full Time Employees (FTE) to 369. The reduction of 65 full-time employees (FTE) cited in the FY 2007 Budget Justification applies to the Offshore and Federal Onshore compliance and audit staff members. However, of that 65 FTE, 14 were sent to the MMS Indian audit and compliance program. Of those remaining 51 FTE, 28 were reassigned to the RIK program, 21 were eliminated, and 2 were reassigned to Indian outreach.

Further, MMS is receiving an increasing percentage of revenues through its RIK program, thereby eliminating valuation issues that previously required substantial audit resources. During FY 2005, for example, MMS received about 32 percent of its revenues through RIK as compared to FY 2001 when MMS only received 15 percent.

Q7. What is the comparable number for 2006?

A7. The overall audit and compliance staff as of January 2006 was 363.

January 24, 2007



Background on Mr. Bobby Maxwell’s Case Against Kerr-McGee

Bobby L. Maxwell, an audit manager for the Minerals Management Service (MMS) in 2005, filed a False Claims Act (FCA) suit charging that Kerr-McGee violated federal royalty regulations by failing to market the oil produced from federal lands at the highest price for the benefit of the U.S. government and the company. Mr. Maxwell further claimed that MMS dissuaded him from pursuing any action against Kerr-McGee.

MMS procedures require that auditors who believe they have detected fraudulent actions must report it to the MMS’s Office of Enforcement who in turn must report it to the Department of Interior’s Office of Inspector General (OIG). Alternatively, the auditors can go directly to the OIG. Mr. Maxwell and the other auditors who filed qui tam lawsuits did not follow these required procedures.

A False Claims Act claim filed by an MMS auditor against an oil or gas company that he or she is responsible for auditing causes a conflict of interest because the auditor stands to gain personally by using information they are paid by the taxpayers to collect.

Upon review, MMS saw no regulatory basis for issuing an order on the issue raised by Mr. Maxwell. Once made aware of the suit, the Department of Justice independently reviewed Mr. Maxwell’s claim and declined to intervene.

January 24, 2007



Qui Tam Lawsuits

SUBJECT: Summary and Discussion of Qui Tam Cases

I. SUMMARY

This memorandum summarizes False Claims Act (FCA) qui tam cases where, unbeknownst to the Government, MMS auditors used confidential materials, including documents provided by federal lessees during the course of federal audits, to formulate numerous private claims under the FCA.

II. DISCUSSION

The FCA, 31 U.S.C. §§ 3729-3733, allows private citizens (“relators”) to bring actions to redress damage to the United States caused by violations of the FCA. Under these so-called “qui tam” actions, relators are awarded up to 30 percent of the recovery from the government's damages, as well as attorney fees and costs from the defendants. Such rewards are only available to relators who bring new information to the government not already in the public domain. District courts have no subject matter jurisdiction when a relator's action is based on a “publicly disclosed” investigation or audit unless the relator is the original source for that disclosure. 31 U.S.C. § 3730(e)(4).

Qui tam cases are filed under seal under 31 U.S.C. § 3730(b), so that the United States may investigate the relator’s claims and decide whether to intervene. The government may decline to intervene under 31 U.S.C. § 3730(b)(4) or intervene under 31 U.S.C. § 3730(c)(3). If the government does not intervene, the relator may continue to pursue the action without the government, but the government still shares in any recovery. If the government intervenes, pursues the action, and prevails, the relator still recovers a percentage of the damages. After the government makes its decision the court unseals the case. The government also may move to dismiss the relator’s action under 31 U.S.C. § 3730(c)(2)(A) whether it intervenes or not.

January 24, 2007

Relevant Web Site:
MMS Main Website

Media Contact:

Marsha

Filing a law suit is a cost, not a profit. it takes a lot of costs to pursue those who rip off MMS accounts while MMS abbets more corruption in its programs. Maxwel---the USA citizen---l actually did soemthing rather than issue some Press releases. Yet, after the Jury verdict in Denver MMS issuee a incredibly stupid, tone deaft press release showing it is in bed with big oil, and seems not to care if it favors rip offs, as if devaluing USA accounts is par for the MMS mismanagement. The dopey MMS press release is as follows , which it put out on the WWW at taxpayers expense:


Statement in Response to Result of Kerr McGee Litigation

Statement:

“Kerr McGee has indicated they will likely appeal the verdict. The Minerals Management Service maintains its original position that Kerr McGee paid the royalties it owed to the U.S. government.”

January 24, 2007




Qs and As Concerning Mr. Bobby Maxwell and the Kerr McGee Lawsuit

Q1. Why didn’t MMS pursue Mr. Maxwell’s claim that Kerr McGee was underpaying royalties owed to the U.S. government?

A1. MMS, the Department of the Interior’s Office of the Inspector General, and the U.S. Department of Justice investigated and analyzed Mr. Maxwell’s claim. The United States declined to intervene in the qui tam lawsuit that Mr. Maxwell brought under the False Claims Act (U.S. ex rel . Maxwell v. Kerr-McGee Chemical Worldwide, LLC, No. 04-F-1224 (D. Colo.)).

MMS, the OIG and the DOJ have also investigated the other FCA claims and declined to intervene.

Q2. Mr. Maxwell says very explicitly that the overall auditing and compliance review effort has slowed markedly in the past five years, that his complaint about Kerr-McGee is simply a "symptom of the illness,'' which he describes as a "passivity'' and an "unwillingness to take risks'' on the part of MMS when the outcome is even slightly uncertain. Why is he wrong?

A2. MMS pursues a vigorous audit and compliance review program that generated an annual average of more than $125 million over the last 24 years. That’s a total of more than $3 billion dollars that flowed to the American public as a result of MMS’s audit and compliance efforts. Without MMS’s diligence, that money would have not been recovered.

In FY 2006, MMS reviewed and/or audited 72.5 percent of all Federal and Indian royalty payments within three years from the date of receipt of payment, using a system that targets the largest properties and payors. This represents a dramatic increase in the amount of revenue reviewed and/or audited within three years, up from 46 percent in FY 2003 and 10.5 percent in FY 2002. This work is in addition to legacy audit work completed beyond the 3-year cycle.

Q3. What is the best evidence that MMS is aggressively pursuing all the money that oil and gas drillers owe?

A3. In November, 2005, an independent certified public accounting firm issued a clean audit opinion of MMS’s audit program with no material weaknesses, and no reportable conditions. The results are clear and irrefutable, MMS is accomplishing its job on behalf of the American public. MMS routinely bills for interest. In fact, in FY 2006, MMS issued over 3,800 late payment interest bills for a net amount of $7 million.

What’s also clear is that our mission requires us to act in the best interests of the American public. As government employees, we are responsible for ensuring that oil and gas companies pay everything they owe to the U.S. Treasury.

From FY 2002-2006, our minerals revenue program accounted for, substantiated, and disbursed royalties totaling $44.6 billion. From 2002-2005, MMS and State and Tribal auditors completed 1,214 audits. That compares to 784 audits completed for the prior four year period.

Q4. If Mr. Maxwell recovers additional millions of dollars for the government, would the Interior Department still contend that he was wrong to bring his case?

A4. In the case of MMS audits, our procedures require that auditors who detect fraud must report it to the MMS’s Office of Enforcement who in turn must report it to the Department of Interior’s Office of Inspector General. Alternatively, the auditors can go directly to the OIG. Mr. Maxwell and the other auditors who filed qui tam lawsuits did not follow these required procedures.

Q5. Why is it troubling for federal auditors to file lawsuits as private citizens?

A5. The auditors seek to profit personally using information they are paid by the taxpayers to collect. Audits conducted by Federal agencies are governed by standards developed and published by the Government Accountability Office (GAO). These standards provide an overall framework for ensuring that auditors have the competence, integrity, objectivity, and independence in planning, conducting, and reporting on their work.

A False Claims Act claim filed by an MMS auditor against an oil or gas company that he or she is responsible for auditing results in a conflict of interest that causes both the auditor and MMS to be in violation of auditing standards set forth by the Government Accounting Office. That conflict of interest exists because the auditor stands to gain personally by receiving a percentage of the additional royalties collected from the company against which he files a false claim.

In addition, as stated above, the Department has a procedure in place to pursue allegations of fraud. Rather than follow that procedure, and have the OIG – pursue the fraud, the auditors chose the route which is more profitable to them than the taxpayers.

Q6. POGO, citing MMS budget documents, says the number of auditors has declined from 250 in 2001 to 185 in 2005? Is that correct?

A6. Since the end of FY 2001, MMS’s overall audit and compliance staff decreased from 420 Full Time Employees (FTE) to 369. The reduction of 65 full-time employees (FTE) cited in the FY 2007 Budget Justification applies to the Offshore and Federal Onshore compliance and audit staff members. However, of that 65 FTE, 14 were sent to the MMS Indian audit and compliance program. Of those remaining 51 FTE, 28 were reassigned to the RIK program, 21 were eliminated, and 2 were reassigned to Indian outreach.

Further, MMS is receiving an increasing percentage of revenues through its RIK program, thereby eliminating valuation issues that previously required substantial audit resources. During FY 2005, for example, MMS received about 32 percent of its revenues through RIK as compared to FY 2001 when MMS only received 15 percent.

Q7. What is the comparable number for 2006?

A7. The overall audit and compliance staff as of January 2006 was 363.

January 24, 2007



Background on Mr. Bobby Maxwell’s Case Against Kerr-McGee

Bobby L. Maxwell, an audit manager for the Minerals Management Service (MMS) in 2005, filed a False Claims Act (FCA) suit charging that Kerr-McGee violated federal royalty regulations by failing to market the oil produced from federal lands at the highest price for the benefit of the U.S. government and the company. Mr. Maxwell further claimed that MMS dissuaded him from pursuing any action against Kerr-McGee.

MMS procedures require that auditors who believe they have detected fraudulent actions must report it to the MMS’s Office of Enforcement who in turn must report it to the Department of Interior’s Office of Inspector General (OIG). Alternatively, the auditors can go directly to the OIG. Mr. Maxwell and the other auditors who filed qui tam lawsuits did not follow these required procedures.

A False Claims Act claim filed by an MMS auditor against an oil or gas company that he or she is responsible for auditing causes a conflict of interest because the auditor stands to gain personally by using information they are paid by the taxpayers to collect.

Upon review, MMS saw no regulatory basis for issuing an order on the issue raised by Mr. Maxwell. Once made aware of the suit, the Department of Justice independently reviewed Mr. Maxwell’s claim and declined to intervene.

January 24, 2007



Qui Tam Lawsuits

SUBJECT: Summary and Discussion of Qui Tam Cases

I. SUMMARY

This memorandum summarizes False Claims Act (FCA) qui tam cases where, unbeknownst to the Government, MMS auditors used confidential materials, including documents provided by federal lessees during the course of federal audits, to formulate numerous private claims under the FCA.

II. DISCUSSION

The FCA, 31 U.S.C. §§ 3729-3733, allows private citizens (“relators”) to bring actions to redress damage to the United States caused by violations of the FCA. Under these so-called “qui tam” actions, relators are awarded up to 30 percent of the recovery from the government's damages, as well as attorney fees and costs from the defendants. Such rewards are only available to relators who bring new information to the government not already in the public domain. District courts have no subject matter jurisdiction when a relator's action is based on a “publicly disclosed” investigation or audit unless the relator is the original source for that disclosure. 31 U.S.C. § 3730(e)(4).

Qui tam cases are filed under seal under 31 U.S.C. § 3730(b), so that the United States may investigate the relator’s claims and decide whether to intervene. The government may decline to intervene under 31 U.S.C. § 3730(b)(4) or intervene under 31 U.S.C. § 3730(c)(3). If the government does not intervene, the relator may continue to pursue the action without the government, but the government still shares in any recovery. If the government intervenes, pursues the action, and prevails, the relator still recovers a percentage of the damages. After the government makes its decision the court unseals the case. The government also may move to dismiss the relator’s action under 31 U.S.C. § 3730(c)(2)(A) whether it intervenes or not.

January 24, 2007

Relevant Web Site:
MMS Main Website

Media Contact:

The comments to this entry are closed.