Wake Forest Law Review

By Kelsey Hyde

Today, in the civil case of United States ex rel. Michaels v. Agape Senior Community, Inc., the Fourth Circuit published an opinion affirming the district court’s decision on the Attorney General’s unreviewable veto power under 31 U.S.C. § 3730, and dismissing the appeal of an evidentiary issue. In affirming the lower court’s ruling, the Court found the U.S. District Court for the District of South Carolina properly interpreted the relevant statute and persuasive case law on the issue of the Government’s right to veto a settlement for qui tam action cases in which they elected not to take part. In dismissing the appeal of the district court’s decision to disallow statistical sampling as hard evidence, the Court strictly construed 28 U.S.C. § 1292(b) and declined to review the present issue for it did not concern a pure question of law.

Procedural Matters in Determining the Parties

This action arose from the allegations of Brianna Michaels and Amy Whitesides regarding the dealings of their former employer, defendant Agape Senior Community, Inc. and twenty-three affiliated elder care facilities throughout South Carolina (collectively, “Agape”). The two former employees alleged that Agape had fraudulently billed Medicare and other health care programs run by the Federal Government for thousands of patients who were ineligible or did not actually receive the charged services.

Michaels and Whitesides proceeded with this matter under the False Claims Act (FCA), which authorizes private individuals (referred to as “relators”) to pursue legal actions on behalf of the United States in order to receive civil remedies for fraud committed against the Government, called a “qui tam action”. See 31 U.S.C. §§ 3729-3733. This type of suit permits the Government to intervene within specified time periods, or decline to intervene and instead allow the relators to conduct the action. Id. at § 3730(b)(4)(A)-(B). In this case, the Government declined to intervene, but did alert the relators of a provision in § 3730(b) which provides the Attorney General ultimate, non-reviewable authority to object to proposed settlements and dismissals, a provision at the center of this appeal.

The Two District Court Rulings that Led to Interlocutory Appeal  

Discovery efforts revealed that Agape had filed over 50,000 claims for federal health care programs for a relevant time period in which they had also admitted 10,000 patients. Based on the unreasonable cost of reviewing all such documents and materials pertaining to these claims and individuals, estimated at over $36 million, the relators sought instead to use a statistical sampling of the evidence to prove their case of fraudulent federal health care billing. However, the District Court ruled this to be an improper evidentiary method (referred to as “the statistical sampling ruling”).

The parties then negotiated and reached a proposed settlement agreement, but the Attorney General objected to the settlement amount, pursuant to § 3730(b)(1), based on the Government’s own statistical sampling assessment and estimated damages. Agape sought to enforce the settlement over such objection, but the District court refused and found instead that the Attorney General possessed absolute veto power over such decisions under § 3730(b)(1). In this ruling, the court did note the peculiarity of the Government involving itself in a case in which it chose not to be a party, and by way of a method in which the court had found improper, but still upheld this veto power (referred to as “the unreviewable veto ruling”).

Challenges & Standards of Review on Appeal

On appeal, the Fourth Circuit addressed the district court’s two rulings, the statistical sampling ruling and the unreviewable veto ruling. Namely, these matters raised two issues: (1) the extent of the Attorney General’s power under § 3730(b)(1) to veto an FCA qui tam action settlement in which the Government chose not to intervene; and (2) the authority of the Court of Appeals to review the district court’s decision regarding the evidentiary use of statistical sampling in this case. The Court’s review of these matters was de novo. The appeal of these issues occurred before the actual trial to better serve judicial efficiency, based on the court’s opinion that both involved important and controlling questions whose result could lead to the ultimate termination and judgment of litigation. As such, the Fourth Circuit granted appeal and heard these issues pursuant to 28 U.S.C. § 1292(b).

Fourth Circuit Adopts Finding of Attorney General’s “Absolute Veto Power” Over Such Settlements

            In reviewing the district court’s interpretation of Section 3730(b)(1), the Court began by assessing two different interpretations of this very statute put forth by different circuit courts. First, the Ninth Circuit’s decision in United States ex rel. Killingsworth v. Northrop, 25 F.3d 715 (9th Cir. 1994) held that the Attorney General’s consent-for-dismissal provision for FCA qui tam suits is not absolute, but instead can be limited and subject to a reasonableness review if the government chooses not to intervene. Conversely, the Fifth and Sixth Circuits both determined that the Attorney General has absolute veto power over such settlements, regardless of the Government’s choice to intervene, and therefore relators may not seek voluntary dismissals without the consent of the Attorney General. See Searcy v. Philips Electronics North America Corp., 117 F.3d 154 (5th Cir. 1997); United States v. Health Possibilities, P.S.C., 207 F.3d 335 (6th Cir. 2000).

The Fourth Circuit chose to adopt the interpretation of the Fifth and Sixth Circuits, holding that the Attorney General does indeed have absolute, unreviewable power to consent or object to voluntary settlements in FCA qui tam suits. It reached this conclusion based on the plain language of the statute and the determination that the consent-for-dismissal provision is unambiguous. Additionally, the court found that the statute’s legislative history reveals a clear Congressional intent to grant such unreviewable authority to the Attorney General, and that Congress did in fact act purposefully by choosing not to articulate limitations on this authority. Moreover, the court reasoned that this interpretation is wholly consistent with the FCA, a statutory scheme that still construes the United States Government as the real party of interest, regardless of their choice to intervene.

District Court’s Evidentiary Ruling Did Not Present Question of Law Subject for Review on Interlocutory Appeal

            In examining the district court’s statistical sampling ruling, the Circuit relied on other Fourth Circuit precedent concerning interlocutory review to determine that this issue was not eligible for this specific type of appeal. Namely, the court observed that such review is to be used sparingly under strictly construed requirements, and must involve a controlling question of law. See Myles v. Laffitte, 881 F.2d 125, 127 (4th Cir. 1989). Moreover, the court emphasized that review under Section 1292(b) is not proper when the question turns on genuine issues of fact where the district court applies settled law to the facts and evidence of a particular case. Based on such standards, the Court found that the district court’s ruling to disallow statistical sampling did not concern a question of law regarding its admissibility in general, but instead solely concerned its admissibility with respect to the particular facts and evidence in this case. Thus, the issue did not raise a pure question of law subject to interlocutory review.

Fourth Circuit Affirmed in Part, and Dismissed in Part

Accordingly, the Fourth Circuit affirmed the district court’s unreviewable veto ruling, and dismissed the relators’ appeal of the statistical sampling ruling.

By Blake Stafford

On March 31, 2016, the Fourth Circuit issued its published opinion in Yates v. Terry, a civil case concerning a police officer’s qualified immunity defense against a claim of excessive force.  After being tased three times during a nonviolent traffic stop, Brian Yates (“Yates”) filed an action against the arresting officer, Christopher Terry (“Terry”), asserting, inter alia, excessive force in violation of 42 U.S.C. § 1983.  Terry filed a motion for summary judgment on the basis of qualified immunity, which was denied by the district court.  The Fourth Circuit affirmed the denial of summary judgment.

Facts & Procedural History

Yates, a first sergeant and Iraq War veteran, was driving on a highway in North Charleston, South Carolina with his mother and brother following in a separate vehicle behind him.  Yates drove past two police cruisers, and one of the cruisers, driven by Terry, pulled out and began to follow him, activating his lights to indicate that Yates should pull over.  When Yates realized that Terry was behind him, he pulled over at a gas station.  At the gas station, Terry requested to see Yates’s driver’s license.  Yates responded that he did not have his driver’s license but that he did have military identification.  Terry then opened Yates’s car door, forced him out of the car, and ordered him to place his hands on the car.  Yates complied.  Terry informed Yates that he was under arrest; however, when Yates questioned him about the basis for the arrest, Terry failed to provide any explanation.  By this time, Yates’s mother and brother had arrived at the gas station.

With Yates’s hands on top of the car and Terry behind him, Yates turned his head to the left, at which point Terry deployed his taser in “probe mode,” whereby two probes are fired from the taser, attached by thin electrical wires, into the skin of the subject, delivering a five-second cycle of electricity as a means to override the subject’s central nervous system.  Yates fell to the ground.  While he was still on the ground and having made no attempt to get up, Terry tased him a second time.  Following the second application of the taser, Yates told his brother to call his commanding officer.  When Yates reached for his cell phone, which was clipped to his waist, Terry tased Yates a third time.  Following these events, other officers arrived on the scene, and Yates was arrested and charged with an excessive noise violation, no license in possession, and disorderly conduct.  All of these charges were nol prossed.

Yates filed, inter alia, a § 1983 excessive force claim against Terry in his individual capacity.  Terry filed a motion for summary judgment on the basis of qualified immunity.  The district court determined that Terry was not entitled to qualified immunity with respect to the first two taser applications as a matter of law, but found that the third taser application was “problematic” in that it would depend on more factual development, including the timing of events surrounding it.  However, the district court held that, as to all three uses of the taser, qualified immunity did not apply, and that defendant Terry was therefore not entitled to summary judgment.  Terry appealed the denial of summary judgment.

Interlocutory Appellate Jurisdiction

Before reaching the merits, the Fourth Circuit first had to determine whether it had jurisdiction over Terry’s interlocutory appeal.  Generally, a district court’s order denying summary judgment based on qualified immunity is immediately appealable under the collateral order doctrine.  However, when a district court denies a claim of qualified immunity based on the insufficiency of the facts, then that determination is not immediately appealable—the reviewing court’s jurisdiction only extends to issues of law.  In this case, the district court provided conflicting language in explaining its reasoning for holding that qualified immunity did not apply, first noting that there was a constitutional violation as to the first two taser deployments, then noting that factual development was required for the third.

In this case, the district court provided conflicting language in explaining its reasoning for holding that qualified immunity did not apply, first noting that there was a constitutional violation as to the first two taser deployments, then noting that factual development was required for the third.  However, in evaluating excessive force claims, the Fourth Circuit has a general rule cautioning courts against using a segmented view of the sequence of events where each distinct act of force becomes reasonable given what the officer knew at each point in the progression.  Instead, determining reasonableness of force should be done in full context, with an eye toward the proportionality of the force in light of the totality of the circumstances.  Thus, the Fourth Circuit determined that it had jurisdiction to review the district court’s denial of Terry’s motion for summary judgment.

Qualified Immunity

Turning to the merits, the Fourth Circuit affirmed the district court’s denial of Terry’s motion for summary judgment on the basis of qualified immunity.  Generally, qualified immunity shields government officials from liability for civil damages, provided that their conduct does not violate clearly established statutory or constitutional rights within the knowledge of a reasonable person.  To determine whether an officer is entitled to qualified immunity, the court must determine (1) whether the facts, taken in the light most favorable to the non-movant, establish that the officer violated a constitutional right; and (2) whether that right was clearly established.

Constitutional Violation: Excessive Force.  The Fourth Circuit first evaluated whether an established constitutional right was violated—in this case, the Fourth Amendment’s bar against the use of excessive force by police officers to effectuate a seizure.  To determine whether the force used was excessive, as opposed to objectively reasonable, courts evaluate the totality of the circumstances in light of three factors: (1) the severity of the crime at issue, (2) whether the suspect poses an immediate threat to the safety of the officers or others, and (3) whether he is actively resisting arrest or attempting to evade arrest by flight.

Here, the Fourth Circuit found that all three factors weighed heavily in Yates’s favor.  First, the Court found that the severity of the crime at issue strongly favored Yates.  It was undisputed that the alleged violations were nonviolent, minor traffic infractions; none amounted to more than a misdemeanor.  Second, the Court found that the evidence did not support any inference that Yates posed an immediate threat to the safety of Terry or others at any time during their encounter.  Yates, who was unarmed, complied with Terry’s initial order to place his hands on the car; however, he was subsequently tased by Terry once for turning his head and a second time for no apparent reason.  The Court noted that Yates was never a danger to Terry at any time during their encounter.  Third, the Court found that, based on the evidence, Yates never attempted to flee or resist Terry’s efforts to detain him—he never attempted to get up after he fell to the ground following the first taser application.  Thus, in light of the totality of the circumstances, the Court held that the level of force used by Terry against Yates was not objectively reasonable and constituted excessive force in violation of Yates’s Fourth Amendment rights.

Clearly Established Right.  Next, the Fourth Circuit determined that Yates’s violated constitutional rights were clearly established at the time of Terry’s conduct, such that a reasonable official would have understood that what he was doing violates that right.  The Court held that it was clearly established—and Terry was thus on fair notice—that a police officer was not entitled to use “unnecessary, gratuitous, or disproportionate force by repeatedly tasing a nonviolent misdemeanant who presented no threat to the safety of the officer or the public and who was compliant and not actively resisting arrest or fleeing.”

Disposition

The Fourth Circuit concluded that, based on the totality of the circumstances, Terry was not entitled to qualified immunity as a matter of law.  The Court affirmed the district court’s denial of Terry’s motion for summary judgment based on qualified immunity.