United States ex rel. Michaels v. Agape Senior Community, Inc.

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 0:12-cv-03466-JFA. [1000023126]. [15-2145, 15-2147]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-2145

UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY
WHITESIDES,
Plaintiffs – Appellants,
v.
AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE,
INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE
MANAGEMENT SERVICE, INC.; AGAPE COMMUNITY HOSPICE, INC.;
AGAPE NURSING AND REHABILITATION CENTER, INC., d/b/a Agape
Rehabilitation of Rock Hill, a/k/a Agape Senior Post Acute
Care Center-Rock Hill, a/k/a Ebenezer Senior Services, LLC;
AGAPE SENIOR FOUNDATION, INC.; AGAPE COMMUNITY HOSPICE OF
ANDERSON, INC.; AGAPE HOSPICE OF THE PIEDMONT, INC.; AGAPE
COMMUNITY HOSPICE OF THE GRAND STRAND, INC.; AGAPE
COMMUNITY HOSPICE OF THE PEE DEE, INC.; AGAPE COMMUNITY
HOSPICE OF THE UPSTATE, INC.; AGAPE HOSPICE HOUSE OF HORRY
COUNTY, INC.; AGAPE HOSPICE HOUSE OF LAURENS, LLC; AGAPE
HOSPICE HOUSE OF THE LOW COUNTRY, INC.; AGAPE HOSPICE HOUSE
OF THE PIEDMONT, INC.; AGAPE REHABILITATION OF CONWAY,
INC.;
AGAPE
SENIOR
SERVICES
FOUNDATION,
INC.;
AGAPE
THERAPY, INC.; AGAPE HOSPICE; HOSPICE PIEDMONT; HOSPICE
ROCK HILL; CAROLINAS COMMUNITY HOSPICE, INC.,
Defendants – Appellees,
v.
UNITED STATES OF AMERICA,
Party-in-Interest – Appellee.
--------------------------------

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SAVASENIORCARE
ADMINISTRATIVE
SERVICES,
LLC;
AMERICAN
HEALTH CARE ASSOCIATION; AMERICAN HOSPITAL ASSOCIATION;
CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES,
Amici Supporting Defendants – Appellees.

No. 15-2147

UNITED STATES OF AMERICA ex rel. BRIANNA MICHAELS AND AMY
WHITESIDES,
Plaintiffs,
v.
AGAPE SENIOR COMMUNITY, INC.; AGAPE SENIOR PRIMARY CARE,
INC.; AGAPE SENIOR SERVICES, INC.; AGAPE SENIOR, LLC; AGAPE
COMMUNITY HOSPICE, INC.; AGAPE NURSING AND REHABILITATION
CENTER, INC., d/b/a Agape Rehabilitation of Rock Hill,
a/k/a Agape Senior Post Acute Care Center-Rock Hill, a/k/a
Ebenezer Senior Services, LLC; AGAPE MANAGEMENT SERVICE,
INC.; AGAPE COMMUNITY HOSPICE OF ANDERSON, INC.; AGAPE
HOSPICE OF THE PIEDMONT, INC.; AGAPE SENIOR FOUNDATION,
INC.; AGAPE COMMUNITY HOSPICE OF THE PEE DEE, INC.; AGAPE
COMMUNITY HOSPICE OF THE UPSTATE, INC.; AGAPE COMMUNITY
HOSPICE OF THE GRAND STRAND, INC.; AGAPE HOSPICE HOUSE OF
LAURENS, LLC; AGAPE HOSPICE HOUSE OF THE LOW COUNTRY, INC.;
AGAPE
HOSPICE
HOUSE
OF
HORRY
COUNTY,
INC.;
AGAPE
REHABILITATION OF CONWAY, INC.; AGAPE SENIOR SERVICES
FOUNDATION, INC.; AGAPE HOSPICE HOUSE OF THE PIEDMONT,
INC.; AGAPE HOSPICE; HOSPICE PIEDMONT; AGAPE THERAPY, INC.;
CAROLINAS COMMUNITY HOSPICE, INC.; HOSPICE ROCK HILL,
Defendants – Appellants,
v.
UNITED STATES OF AMERICA,
Party-in-Interest – Appellee.
--------------------------------

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SAVASENIORCARE
ADMINISTRATIVE
SERVICES,
LLC;
AMERICAN
HEALTH CARE ASSOCIATION; AMERICAN HOSPITAL ASSOCIATION;
CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES,
Amici Supporting Defendants – Appellants.

Appeals from the United States District Court for the District
of South Carolina, at Rock Hill.
Joseph F. Anderson, Jr.,
Senior District Judge. (0:12-cv-03466-JFA)

Argued:

October 26, 2016

Decided:

February 14, 2017

Before KING, KEENAN, and DIAZ, Circuit Judges.

Affirmed in part and dismissed in part by published opinion.
Judge King wrote the opinion, in which Judge Keenan and Judge
Diaz joined.

ARGUED: Mario A. Pacella, STROM LAW FIRM, Columbia, South
Carolina, for Appellants. William Walter Wilkins, NEXSEN PRUET,
LLC, Greenville, South Carolina, for Appellees.
Charles W.
Scarborough, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee United States of America.
ON BRIEF: T.
Christopher Tuck, Catherine H. McElveen, Mt. Pleasant, South
Carolina,
Daniel
Haltiwanger,
Terry
E.
Richardson,
Jr.,
RICHARDSON, PATRICK, WESTBROOK & BRICKMAN, LLC, Barnwell, South
Carolina; Christy M. DeLuca, CHRISTY DELUCA, LLC, Mt. Pleasant,
South Carolina; Jessica H. Lerer, STROM LAW FIRM, Columbia,
South Carolina, for Appellants. Deborah B. Barbier, DEBORAH B.
BARBIER ATTORNEY AT LAW, Columbia, South Carolina; Kirsten E.
Small, Mark C. Moore, William C. Lewis, NEXSEN PRUET, LLC,
Greenville,
South
Carolina,
for
Appellees
Agape
Senior
Community, Inc., et al.
Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Michael S. Raab, Civil Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; William
N. Nettles, United States Attorney, Elizabeth C. Warren,
Assistant United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Columbia, South Carolina, for Appellee United States
of America.
James F. Segroves, Kelly A. Carroll, David J.
Vernon, HOOPER, LUNDY & BOOKMAN, PC, Washington, D.C., for
Amicus SavaSeniorCare Administrative Services, LLC.
Melinda
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Reid Hatton, Maureen Mudron, AMERICAN HOSPITAL ASSOCIATION,
Washington, D.C.; Lisa Gilden, THE CATHOLIC HEALTH ASSOCIATION
OF THE UNITED STATES, Washington, D.C.; Jessica L. Ellsworth,
Washington, D.C., Thomas P. Schmidt, HOGAN LOVELLS US LLP, New
York, New York, for Amici American Hospital Association and
Catholic Health Association of the United States.
Colin E.
Wrabley, M. Patrick Yingling, REED SMITH, LLP, Pittsburgh,
Pennsylvania, for Amicus American Health Care Association.

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KING, Circuit Judge:
In this qui tam action under the False Claims Act (the
“FCA”), defendant Agape Senior Community, Inc., and the twentythree other
entities

defendants

that

Carolina. 1

operate

(collectively,
elder

care

“Agape”)

facilities

are

affiliated

throughout

South

The relators, Brianna Michaels and Amy Whitesides,

are former Agape employees who allege that Agape fraudulently
billed

Medicare

services

to

and

thousands

other
of

federal
patients

health
—

care

services

programs
that

were

for
not

actually provided, or that were provided to patients who were
not

eligible

for

them.

The

United

States

Government

was

entitled, but declined, to intervene.
To establish liability and damages, the relators sought to
rely on statistical sampling.

The district court determined,

however, that using statistical sampling to prove their case
1

In addition to Agape Senior Community, Inc., the
defendants are Agape Senior Primary Care, Inc.; Agape Senior
Services, Inc.; Agape Senior, LLC; Agape Management Service,
Inc.;
Agape
Community
Hospice,
Inc.;
Agape
Nursing
and
Rehabilitation Center, Inc.; Agape Senior Foundation, Inc.;
Agape Community Hospice of Anderson, Inc.; Agape Hospice of the
Piedmont, Inc.; Agape Community Hospice of the Grand Strand,
Inc.; Agape Community Hospice of the Pee Dee, Inc.; Agape
Community Hospice of the Upstate, Inc.; Agape Hospice House of
Horry County, Inc.; Agape Hospice House of Laurens, LLC; Agape
Hospice House of the Low Country, Inc.; Agape Hospice House of
the Piedmont, Inc.; Agape Rehabilitation of Conway, Inc.; Agape
Senior Services Foundation, Inc.; Agape Therapy, Inc.; Agape
Hospice; Hospice Piedmont; Hospice Rock Hill; and Carolinas
Community Hospice, Inc.

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would

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be

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improper

(the

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“statistical

sampling

ruling”).

Additionally, the court rejected a proposed settlement between
the

relators

and

Agape,

because

United States objected to it.

the

Attorney

General

of

the

In so doing, the court concluded

that the Government — despite not having intervened in an FCA
qui tam action — possesses an unreviewable veto authority over
the

action’s

proposed

settlement

(the

“unreviewable

veto

ruling”).
The district court certified both its statistical sampling
and unreviewable veto rulings for these interlocutory appeals
under 28 U.S.C. § 1292(b).

We thereafter granted the petitions

for permission to appeal submitted to this Court by the relators
(seeking an appeal from both rulings) and by Agape (requesting
an appeal from the unreviewable veto ruling only).

As explained

below, we affirm the unreviewable veto ruling and dismiss as
improvidently granted the relators’ appeal as to the statistical
sampling ruling.

I.
A.
The FCA, codified at 31 U.S.C. §§ 3729-3733, authorizes a
private individual (i.e., a relator) to initiate and pursue an
action in the name of the United States Government (a qui tam
action) to seek civil remedies for fraud against the Government.
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See 31 U.S.C. § 3730(b)(1).

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Pursuant to § 3730(b)(1), the qui

tam “action may be dismissed only if the court and the Attorney
General give written consent to the dismissal and their reasons
for consenting.”
At

the

outset

of

the

qui

tam

action,

the

relator’s

complaint must be served on the Government, filed in camera, and
kept under seal for at least sixty days, with no service of
process on the defendant until the court so orders.
U.S.C.

§ 3730(b)(2).

During

the

sixty-day

period

See 31
after

it

receives the complaint, the Government may elect to intervene in
the qui tam action.
the

sixty-day

Id.

period

Specifically, before the expiration of
—

or

any

extension

thereof

under

§ 3730(b)(3) — the Government must either (A) “proceed with the
action”

by

assuming

primary

responsibility

for

the

action’s

prosecution, or (B) “notify the court that it declines to take
over the action” from the relator, who will then “have the right
to

conduct

the

action.”

Id.

§ 3730(b)(4)(A)-(B).

If

the

Government declines to intervene during the initial sixty-day
(or

extended)

period,

the

court

may

nevertheless

permit

its

intervention “at a later date upon a showing of good cause.”
Id. § 3730(c)(3).
Once

the

Government

intervenes,

the

relator

retains

the

right to continue as a party to the action, subject to certain
limitations.

See

31

U.S.C.

§ 3730(c)(1).
7

For

example,

the

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Government is authorized to settle the action over the relator’s
objection, but only “if the court determines, after a hearing,
that the proposed settlement is fair, adequate, and reasonable
under all the circumstances.”
When

the

qui

tam

Id. § 3730(c)(2)(B).

action

is

successful,

the

relator

entitled to share with the Government in the award.
U.S.C.

§ 3730(d)(1)-(4).

The

amount

of

the

See 31

relator’s

share

depends on whether the Government intervened in the action.
the

Government

did

not

intervene,

“the

person

is

bringing

If
the

action or settling the claim shall receive an amount which the
court decides is reasonable for collecting the civil penalty and
damages.”

Id. § 3730(d)(2) (specifying that such “amount shall

be not less than 25 percent and not more than 30 percent of the
proceeds of the action or settlement”).
B.
Here, the relators served their initial Complaint on the
Government and, on December 7, 2012, filed it under seal in the
District of South Carolina.

The district court extended the

Government’s deadline for its intervention decision to March 5,
2013.

By its notice of that date, the Government declined to

intervene

but

provision

of

Agape

solicit

called

attention

§ 3730(b)(1),
the

Attorney

to

the

requesting
General’s

consent-for-dismissal

that

the

written

relators

consent

asking the court to rule on any proposed dismissal.
8

and

before

Two days

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later, on March 7, 2013, the court unsealed the Complaint and
directed the relators to serve it on Agape.
The relators filed their operative Second Amended Complaint
on March 6, 2014, and discovery ensued. 2
and

Agape

dispute

the

exact

numbers,

Although the relators
they

agree

that

Agape

admitted more than 10,000 patients to its facilities in South
Carolina and submitted more than 50,000 claims to federal health
care programs during the relevant time period.

The relators

sought to use statistical sampling to prove their case in order
to avoid the cost of reviewing each patient’s chart to identify
which claims were fraudulent — a task that the relators said
would take their experts four to nine hours per patient, at a
rate

of

million.

$400

per

hour,

potentially

totalling

more

than

$36

For its part, Agape opposed the use of any evidentiary

form of statistical sampling.

Thus, the district court received

briefing and conducted a hearing on the issue.

By Order of

March 16, 2015, the court made its statistical sampling ruling
“that

based

on

the

would be improper.”

facts

of

this

case,

statistical

sampling

See United States ex rel. Michaels v. Agape

2

Like the initial Complaint, the Second Amended Complaint
alleges claims under not only the FCA, but also the AntiKickback Statute, 42 U.S.C. § 1320a-7b, and the Health Care
Fraud Statute, 18 U.S.C. § 1347.

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Senior Cmty., Inc., No. 0:12-cv-03466, at 2 (D.S.C. Mar. 16,
2015), ECF No. 255 (the “March 2015 Order”).
Meanwhile,

the

relators,

Agape,

and

the

Government

had

mediated unsuccessfully in November 2014, and the relators and
Agape had mediated again — without the Government’s knowledge —
in January 2015.
and

Agape

The proposed settlement between the relators

emerged

§ 3730(b)(1),

the

from

the

Attorney

second

General

mediation.
objected

to

Relying
the

on

proposed

settlement.

The Government has not, however, sought permission

pursuant

to

§ 3730(c)(3)

to

standing

by

its

decision

initial

intervene

in

under

this

action,

thus

§ 3730(b)(2)-(4)

to

decline intervention.
In

objecting

to

the

General

protested

in

part

proposed
that

settlement,

the

settlement

the

Attorney

amount

was

appreciably less than $25 million, the Government’s estimate of
total damages based on its own use of statistical sampling.

The

various bases for the Attorney General’s objection were stated
and discussed during a series of status conferences conducted by
the district court in an effort to determine if this action
could be settled. 3

3

To protect the confidentiality of the settlement
negotiations, the district court sealed transcripts and other
documents in which details of the proposed settlement were
revealed.
We thus do not specify herein the amount of the
(Continued)
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Agape eventually filed a motion to enforce the proposed
settlement

over

the

Attorney

General’s

objection,

Government filed a response opposing that motion.

and

the

By Order of

June 25, 2015, the district court rendered its unreviewable veto
ruling and thereby sustained the Attorney General’s objection to
the proposed settlement.

See United States ex rel. Michaels v.

Agape Senior Cmty., Inc., No. 0:12-cv-03466 (D.S.C. June 25,
2015), ECF No. 296 (the “June 2015 Order”).

The June 2015 Order

also expounded on the statistical sampling ruling that had been
made in the March 2015 Order.

Additionally, the June 2015 Order

certified sua sponte both the unreviewable veto and statistical
sampling rulings for these interlocutory appeals under 28 U.S.C.
§ 1292(b).
The district court prefaced its analysis in the June 2015
Order with a description of the “unique dilemma” that it faced:
The Government, claiming an unreviewable veto right
over the tentative settlement in this case, objects to
a settlement in a case to which it is not a party,
using as a basis of its objection some form of
statistical sampling that this Court has rejected for
use at the trial of the case.
See

June

2015

Order

6.

In

rendering

its

unreviewable

veto

ruling, the district court rejected the argument supporting the

proposed settlement or the Attorney General’s other grounds for
objection.

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proposed settlement that the relators and Agape jointly advanced
in reliance on the Ninth Circuit’s decision in United States ex
rel.

Killingsworth

1994).

Their

v.

Northrop

argument

was

Corp.,

that,

25

F.3d

because

the

715

(9th

Cir.

Government

had

declined to intervene herein, the Attorney General’s objection
to the proposed settlement was subject to the district court’s
reasonableness review.

The district court instead agreed with

the Government — as well as the Fifth Circuit in Searcy v.
Philips Electronics North America Corp., 117 F.3d 154 (5th Cir.
1997),

and

the

Sixth

Circuit

in

United

States

v.

Health

Possibilities, P.S.C., 207 F.3d 335 (6th Cir. 2000) — that the
Attorney General possesses an absolute veto power over voluntary
settlements in FCA qui tam actions.

In so ruling, the district

court explained that it was adhering to the plain language of 31
U.S.C.

§ 3730(b)(1),

Attorney
review

General’s

the

which

“provides

authority,

Attorney

and

General’s

no

no

limitation

right

objection

for

of

[a

on

court]

the
to

reasonableness.”

See June 2015 Order 6-7.
Nevertheless, the district court noted that, if it “did
have

the

General

authority
for

compelling

to

review

reasonableness

case

could

be

an

in
made

objection

a

case

here

position is not, in fact, reasonable.”

of

that

by

the

this
the

Attorney

nature,

a

Government’s

See June 2015 Order 10.

Such a compelling case would include that the relators “could be
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looking at an expenditure of between $16.2 million and $36.5
million

in

pretrial

preparation

alone

Government values at $25 million.”
court

observed,

although

“the

for

a

Id. at 11.

Government

case

that

the

Moreover, as the

has

admitted

that

statistical sampling of the entire universe of claims played a
major part in its calculation of the value of this case,” it
resisted

(with

the

court’s

reluctant

approval)

discovery

requests seeking specific details about its calculation.

Id. at

12.
Turning

to

its

earlier

statistical

sampling

ruling,

the

district court spelled out its rationale for concluding that it
would be improper to use statistical sampling evidence to prove
the

relators’

case.

In

sum,

the

court

explained

that

statistical sampling can be appropriate “where the evidence has
dissipated, thus rendering direct proof of damages impossible.”
See June 2015 Order 13-14 (citing example of FCA qui tam action
where

defendant

household
bumping

allegedly

belongings

weight

of

of

defrauded

military

shipments

Government

personnel

that

had

since

by
been

in

moving

artificially
completed).

Here, however, “nothing has been destroyed or dissipated . . . .

The patients’ medical charts are all intact and available for
review by either party.”
Finally,
statistical

Id. at 14.

in

certifying

sampling

rulings

its

for
13

unreviewable

these

veto

interlocutory

and

appeals,

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the district court observed that the relators and Agape “face a
trial of monumental proportions, involving a staggering outlay
of expenses by the [relators] and a significant drain of [court]
resources.”

See June 2015 Order 18.

The court deemed it to “be

much more judicially efficient to have a ruling on both of the
questions before, rather than after, such a monumental trial.”
Id.

Echoing the requirements of 28 U.S.C. § 1292(b), the court

also stated that each ruling involves “a controlling question of
law as to which there is substantial ground for difference of
opinion,

and

that

an

immediate

appeal

. . .

may

materially

advance the ultimate termination of this litigation.”
19.

Id. at

Because we granted the relators’ and Agape’s subsequent

petitions

for

permission

to

appeal,

we

possess

jurisdiction

pursuant to § 1292(b). 4

II.
A.
We
ruling.

first

assess

the

district

court’s

unreviewable

veto

Because the interpretation of 31 U.S.C. § 3730 presents

4

Briefs were separately filed in these appeals by the
relators (challenging both the unreviewable veto and statistical
sampling rulings), Agape (challenging the unreviewable veto
ruling and defending the statistical sampling ruling), and the
government (defending the unreviewable veto ruling without
addressing the statistical sampling ruling).
Each participated
in oral argument of these appeals.

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a pure question of law, our review is de novo.

See United

States ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 804
F.3d 646, 654 (4th Cir. 2015).

Our focus, of course, is on

§ 3730(b)(1), which provides in full:
A person may bring a civil action for a violation of
[the FCA] for the person and for the United States
Government.
The action shall be brought in the name
of the Government.
The action may be dismissed only
if the court and the Attorney General give written
consent to the dismissal and their reasons for
consenting.
31 U.S.C. § 3730(b)(1) (emphasis added).
1.
The
General’s

question
power

presented
under

—

the

§ 3730(b)(1)

extent
to

of

veto

the
the

Attorney
voluntary

settlement of an FCA qui tam action in which the Government
declined to intervene — is not one that we have heretofore
squarely

confronted. 5

Thus,

it

is

helpful

to

begin

with

a

discussion of the three courts of appeals decisions debated in
the

district

court:

United

States

5

ex

rel.

Killingsworth

v.

We observed in a 1992 decision that, “[e]ven where the
government allows the qui tam relator to pursue the action, the
case may not be settled or voluntarily dismissed without the
government’s consent.” See United States ex rel. Milam v. Univ.
of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.
1992).
There, however, we were not called on to decide the
extent of the Attorney General’s veto power. Rather, the issue
before us was “whether the inapplicability of the Eleventh
Amendment to suits brought by the United States extends to
actions brought on the United States’ behalf by qui tam
relators.” Id. at 47 (ruling “that it does”).

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Northrop Corp., 25 F.3d 715 (9th Cir. 1994); Searcy v. Philips
Electronics North America Corp., 117 F.3d 154 (5th Cir. 1997);
and United States v. Health Possibilities, P.S.C., 207 F.3d 335
(6th Cir. 2000).
In the Killingsworth decision, the Ninth Circuit determined
that § 3730(b)(1)’s consent-for-dismissal provision is limited
by § 3730(b)(2)-(4), which delineates the initial sixty-day (or
extended)

period

intervene,

as

during

well

as

which

by

the

Government

§ 3730(c)(3),

which

may

elect

authorizes

to
the

court to permit later intervention upon a showing of good cause.
See 25 F.3d at 722.

The Killingsworth court ruled that “the

consent provision contained in § 3730(b)(1) applies only during
the initial sixty-day (or extended) period.”

Id.

Thereafter,

the Government’s settlement-related authority depends on whether
it has intervened, i.e., whether the Government or the relator
is

empowered

to

control

the

litigation.

Id.

When

the

Government has not intervened, Killingsworth merely permits the
Attorney

General

to

object

with

“good

cause”

to

a

proposed

settlement and obtain a hearing on whether the settlement is
“fair and reasonable.”

Id. at 723-25 (cobbling standard from

§ 3730(c)(2)(B), § 3730(c)(3), and other aspects of § 3730).
The

Ninth

Circuit

resolved

in

Killingsworth

that

the

Government’s position — “that without intervention [the Attorney
General]

possesses

an

absolute
16

right

to

reject

a

proposed

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settlement at any time and for any reason” — cannot comport with
the plain language of § 3730(b)(4)(B), which affords the relator
“the

right

to

conduct

declined to intervene.

the

action”

once

the

See 25 F.3d at 722.

Government

has

According to the

court, that is because “[t]he right to conduct a qui tam action
obviously includes the right to negotiate a settlement in that
action.”

Id.

§ 3730(d)(2),
intervened,
claim

For

which

“the

shall

that

proposition,

provides

person

receive

that

if

the

the

court

Government

on

the

action

or

amount

which

the

court

has

not

settling

bringing

an

relied

the

decides

reasonable for collecting the civil penalty and damages.”

is
The

Killingsworth decision emphasized the “or settling the claim”
language

of

§ 3730(d)(2),

propounding

that

it

“confirms

the

relator’s right to settle the action if the government declines
to intervene.”
The

See 25 F.3d at 722-23.

Ninth

Circuit’s

interpretation

in

Killingsworth

of

§ 3730 was subsequently rejected by the Fifth Circuit in its
Searcy

decision

and

Possibilities decision.

the

Sixth

Circuit

in

its

Health

Unlike the Ninth Circuit, those latter

two courts recognized “an absolute veto power over voluntary
settlements in qui tam [FCA] suits,” see Searcy, 117 F.3d at
158, under which a relator “may not seek a voluntary dismissal
of any action . . . without the Attorney General’s consent,” see
Health Possibilities, 207 F.3d at 336.
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As the Fifth Circuit explained in Searcy, the language of
§ 3730(b)(1)’s

consent-for-dismissal

provision

“is

as

unambiguous as one can expect,” and there is “nothing in § 3730
to negate [that language’s] plain import.”
In

particular,

the

§ 3730 utilized
the

relator

Searcy

in

“the

court

confronted

Killingsworth:
right

to

See 117 F.3d at 159.
those

aspects

§ 3730(b)(4)(B)

conduct

the

action”

of

(according
when

the

Government declines to intervene), and § 3730(d)(2) (providing a
reasonable amount to “the person bringing the action or settling
the claim”).

More specifically, Searcy refuted Killingsworth’s

pronouncements that the § 3730(b)(4)(B) “right to conduct a qui
tam

action

obviously

includes

the

right

to

negotiate

a

settlement in that action,” and that § 3730(d)(2) “confirms the
relator’s right to settle the action if the government declines
to

intervene.”

Searcy

court

See

Killingsworth,

expounded

that

“[a]

25

F.3d

relator

at

has

722-23.

The

‘conducted’

an

action if he devises strategy, executes discovery, and argues
the

case

in

court,

even

settlement efforts.”
the

court

observed

if

the

government

frustrates

See Searcy, 117 F.3d at 160.
that

“the

government’s

power

his

Moreover,
to

block

settlements does not mean that the relator will never be the
person settling the claim.”
The

Searcy

court

Id.

further

recognized

“that

relators

can

manipulate settlements in ways that unfairly enrich them and
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reduce

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benefits

to

the

Pg: 19 of 27

government,”

including

away claims on behalf of the United States.”
160.

Section

3730(b)(1)’s

“by

bargaining

See 117 F.3d at

consent-for-dismissal

provision,

however, “allows the government to resist [such] tactics and
protect its ability to prosecute matters in the future.”

Id.

Along those same lines, the Sixth Circuit observed in Health
Possibilities that “the power to veto a privately negotiated
settlement

of

public

claims

is

a

critical

aspect

of

the

government’s ability to protect the public interest in qui tam
litigation.
interests

of

The FCA is not designed to serve the parochial
relators,

but

to

vindicate

avoiding fraud against public monies.”

civic

interests

in

See 207 F.3d at 340.

The Health Possibilities court underscored that “[t]he location
of the consent provision [in § 3730(b)(1)] immediately after the
command

that

the

action

be

brought

in

the

government’s

name

suggests that it is an important component of the government’s
ability to regulate qui tam actions.”

Id. at 342.

Notably, the Fifth, Sixth, and Ninth Circuits considered
the legislative history of the FCA.
Circuit

discerned

a

congressional

On the one hand, the Ninth
“intent

to

place

full

responsibility for [FCA] litigation on private parties, absent
early intervention by the government or later intervention for
good

cause”

—

an

intent

that

the

court

deemed

to

be

“fundamentally inconsistent with the asserted ‘absolute’ right
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of the government to block a settlement and force a private
party to continue litigation.”

See Killingsworth, 25 F.3d at

722.
On the other hand, the Fifth and Sixth Circuits perceived
Congress’s

intent

to

grant

the

Attorney

General

full

veto

authority that has existed since the original FCA statute was
enacted in 1863 during the Civil War.

See Health Possibilities,

207 F.3d at 342-43; Searcy, 117 F.3d at 159.
saw

it,

that

intent

has

endured

even

As those courts

through

subsequent

amendments to the FCA providing more incentives to relators and
creating and expanding the Government’s power to intervene.

Id.

Those courts thus concluded:
For more than 130 years, Congress has instructed
courts to let the government stand on the sidelines
and veto a voluntary settlement.
It would take a
serious conflict within the structure of the [FCA] or
a profound gap in the reasonableness of the [consentfor-dismissal] provision for us to be able to justify
ignoring this language. We can find neither.
Health Possibilities, 207 F.3d at 344 (quoting Searcy, 117 F.3d
at 160).
district

Here, in rendering its unreviewable veto ruling, the
court

similarly

interpreted

§ 3730(b)(1)

and

its

consent-for-dismissal provision.
2.
We agree with the district court, and with the Fifth and
Sixth Circuits, that the Attorney General possesses an absolute
veto power over voluntary settlements in FCA qui tam actions.
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In reaching that conclusion, we rely on the plain language of 31
U.S.C. § 3730(b)(1), “read[ing] the words in their context and
with a view to their place in the overall statutory scheme.”
See King v. Burwell, 135 S. Ct. 2480, 2489 (2015) (internal
quotation marks omitted).

Simply put, nothing else in § 3730

leads us to doubt that Congress meant exactly what it said in
§ 3730(b)(1) — that a qui tam action “may be dismissed only if
the court and the Attorney General give written consent to the
dismissal and their reasons for consenting.”
On

appeal,

neither

the

relators

nor

Agape

advocate

the

Ninth Circuit’s theory that the consent-for-dismissal provision
“applies only during the initial sixty-day (or extended) period”
in which the Government must decide whether to intervene in a
qui tam action.

See Killingsworth, 25 F.3d at 722.

like

Circuit,

the

Ninth

Government
settlement.
flows

from

cannot

however,

unreasonably

Agape

withhold

contends
its

Somewhat
that

consent

the

to

a

According to Agape, the reasonableness requirement
§ 3730(b)(1)

itself.

See

Br.

of

Agape

20

(“[A]

correct reading of § 3730(b)(1) recognizes that the Government’s
consent

to

withheld.”).
from

other

a

qui

tam

settlement

cannot

be

unreasonably

For its part, the Ninth Circuit cobbled a standard
aspects

of

§ 3730,

including

§ 3730(c)(2)(B)

and

§ 3730(c)(3), limiting the Attorney General to an objection for
“good cause” and a hearing on whether the proposed settlement is
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“fair and reasonable.”

Pg: 22 of 27

See Killingsworth, 25 F.3d at 723-25.

Both Agape and the Ninth Circuit have reasoned that an unlimited
veto power cannot coexist with § 3730(b)(4)(B) insofar as it
confers on the relator “the right to conduct the action” when
the

Government

declines

to

intervene,

or

with

§ 3730(d)(2)

insofar as it provides for a share of the award to “the person
bringing the action or settling the claim.”
Of course, as the Fifth Circuit deftly explained, the right
to conduct the action does not necessarily include the right to
settle

the

claim,

although,

absent

the

Attorney

objection, the relator may yet settle the claim.
117

F.3d

at

160.

That

is,

§ 3730(b)(4)(B)

and

General’s

See Searcy,
§ 3730(d)(2)

cannot reasonably be understood to create an unfettered right to
settle on the part of the relator.
Furthermore,

§ 3730(b)(1)

and

its

consent-for-dismissal

provision is not temporally qualified or explicitly limited in
any

other

manner.

Unlike

other

provisions

of

§ 3730,

§ 3730(b)(1) does not overtly require the Government to satisfy
any standard or make any showing reviewable by the court.

A

prime example is § 3730(c)(2)(B), under which the Government may
settle a qui tam action over the relator’s objection, but only
“if the court determines, after a hearing, that the proposed
settlement

is

circumstances.”

fair,

adequate,

and

reasonable

under

all

the

Congress could have readily included similar
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language in § 3730(b)(1); that it decided against doing so is
enlightening.

See Barnhart v. Sigmon Coal Co., 534 U.S. 438,

452 (2002) (“[W]hen Congress includes particular language in one
section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally
and

purposely

in

the

disparate

inclusion

or

exclusion.”

(internal quotation marks omitted)).
Finally,
Attorney

we

would

General’s

be

remiss

absolute

not

veto

to

recognize

authority

consistent with the statutory scheme of the FCA.

that

is

the

entirely

Even where the

Government declines to intervene, “the United States is the real
party in interest in any [FCA] suit.”

See United States ex rel.

Milam v. Univ. of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46,
50 (4th Cir. 1992).

Meanwhile, “[a]s a class of plaintiffs, qui

tam relators are different in kind than the Government.

They

are motivated primarily by prospects of monetary reward rather
than the public good.”

See Hughes Aircraft Co. v. United States

ex rel. Schumer, 520 U.S. 939, 949 (1997).

Instead of freeing

relators to maximize their own rewards at the public’s expense,
Congress

has

unqualified

granted

right

to

the

Attorney

General

the

veto

proposed

settlements

broad
of

qui

and
tam

actions.
Accordingly, we reject Agape’s interpretation of § 3730 and
conclude today that, under the plain language of § 3730(b)(1),
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the

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Attorney

voluntary

Filed: 02/14/2017

General

settlements

possesses
in

FCA

Pg: 24 of 27

an

qui

absolute

tam

veto

actions.

power
The

over

district

court having concluded the same, we affirm its unreviewable veto
ruling. 6
B.
Turning

to

the

district

court’s

statistical

sampling

ruling, we find it prudent to re-examine whether that aspect of
the

relator’s

appeal

is

appropriate

under 28 U.S.C. § 1292(b).

for

interlocutory

review

Pursuant thereto, the order being

reviewed must involve “a controlling question of law as to which
there is substantial ground for difference of opinion,” and an
immediate appeal from that order must promise to “materially
advance the ultimate termination of the litigation.”

We have

cautioned “that § 1292(b) should be used sparingly and thus that
its

requirements

must

be

strictly

construed.”

See

Myles

v.

Laffitte, 881 F.2d 125, 127 (4th Cir. 1989).

6

Notably, the relators have taken a different tack from
Agape on appeal, conceding that “[i]t may be the case that the
Government has the authority under [§ 3730(b)(1)] to reject a
relator and defendant’s settlement in a typical [FCA] matter in
which the Government has declined to intervene.”
See Br. of
Relators 18-19.
The relators argue instead that, because the
Government engaged in a so-called “de facto intervention” in
this action, the Attorney General’s objection to the proposed
settlement
must
be
reviewed
by
the
district
court
for
reasonableness.
Id. at 19.
Unfortunately for the relators,
their novel theory finds no support in the FCA.

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Strictly construing § 1292(b), we recognize that it may be
proper to conduct an interlocutory review of an order presenting
“a pure question of law,” i.e., “an abstract legal issue that
the

court

Mamani

of

v.

appeals

Berzain,

can
825

decide
F.3d

quickly

1304,

(internal quotation marks omitted).

and

1312

cleanly.”

(11th

Cir.

See
2016)

In other words, § 1292(b)

review may be appropriate where “the court of appeals can rule
on a pure, controlling question of law without having to delve
beyond

the

facts.”

surface

of

record

in

order

to

determine

the

See McFarlin v. Conseco Servs., LLC, 381 F.3d 1251,

1259 (11th Cir. 2004).
issue

the

raised

in

the

Such a pure question of law includes the
relators’

and

Agape’s

appeals

from

the

district court’s unreviewable veto ruling.
By contrast, § 1292(b) review is not appropriate where, for
example, the question presented “turns on whether there is a
genuine issue of fact or whether the district court properly
applied settled law to the facts or evidence of a particular
case.”

See

McFarlin,

381

F.3d

at

1259;

see

also

Harriscom

Svenska AB v. Harris Corp., 947 F.2d 627, 631 (2d Cir. 1991)
(“Where, as here, the controlling issues are questions of fact,
or, more precisely, questions as to whether genuine issues of
material fact remain to be tried, the federal scheme does not
provide for an immediate appeal . . . .”).

Significantly, there

is “a distinction between a question of law, which will satisfy
25

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§ 1292(b), and a question of fact or matter for the discretion
of the trial court.”

See McFarlin, 381 F.3d at 1258 (internal

quotation marks omitted).
In

its

statistical

sampling

ruling,

the

district

court

determined that the use of statistical sampling evidence can
sometimes be permissible, but is not appropriate here based on
the particular facts and evidence in this case.

Moreover, in

their opening appellate brief, the relators clarify that “[t]he
true question for the District Court is not whether statistical
sampling and extrapolation, in and of itself, is appropriate.”
See Br. of Relators 11 (emphasis added).

Rather, the relators

insist that the issue is whether their proposed “statistical
sampling is conducted in a scientifically proven and accepted
manner pursuant to the Supreme Court’s ruling in [Daubert v.
Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)].”

Id.

Thus, the relators’ appeal raises the question of whether the
district court may, in its discretion, allow the relators to use
statistical sampling to prove their case.
Household,

Inc.,

429

F.3d

469,

475

(4th

See Bryte v. Am.
Cir.

2005)

(“[T]he

district court has broad latitude in ruling on the admissibility
of evidence, including expert opinion, and we will not overturn
Daubert

evidentiary

rulings

with

respect

reliability absent an abuse of discretion.”).

26

to

relevance

and

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In these circumstances, we are satisfied that, as to the
statistical
present

a

sampling
pure

ruling,

question

the

of

relators’

law

interlocutory review under § 1292(b).

that

is

appeal
subject

does

not

to

our

Accordingly, although we

understand and appreciate the district court’s desire to obtain
review of its statistical sampling ruling prior to undertaking
complex trial proceedings, we are constrained to dismiss that
aspect of the relators’ appeal as improvidently granted.

III.
Pursuant to the foregoing, we affirm the district court’s
unreviewable veto ruling and dismiss as improvidently granted
the

relators’

appeal

as

to

the

court’s

statistical

sampling

ruling.
AFFIRMED IN PART
AND DISMISSED IN PART

27