Call government employees whatever you want, but call them “persons” if they decide to file a qui tam action in a federal court. That’s the bottom line in a case of first impression decided by the 5th U.S. Circuit Court of Appeals.
According to the July 31 decision in Little, et al. v. Shell Exploration & Production Co., et al., the 5th Circuit had to answer this question: “Is a federal employee, even one whose job it is to investigate fraud, a ‘person’ under the False Claims Act such that he may maintain a qui tam action?”
The question arose in a qui tam case filed by two auditors at the Minerals Management Service (MMS), an agency within the Department of the Interior, who alleged that Shell deprived the U.S. government of royalty earnings on oil and gas leases. Shell denied the allegations, and the U.S. government declined to become involved in the case, so the MMS employees filed the qui tam action themselves.
The False Claims Act describes qui tam actions as suits brought “for the person and for the United States Government.” But the trial court dismissed the case on summary judgment, agreeing with Shell’s argument that government employees are not “persons” who are allowed to bring qui tam actions.
“The argument is that because the government can only act through individuals, a government employee cannot act ‘for the United States’; that person is the United States,” writes Judge Leslie Southwick, in a decision that reverses and remands the case to the trial court. “We are unconvinced. A person can have two legal identities, one official and one individual.”
And there are some good public policy reasons for letting government employees file qui tam actions, Southwick notes.
“The government has monetary and personnel constraints that do not enable it to pursue every lead or prosecute every wrongdoer. By nature, bureaucracies can be slow to act, and on occasion can fall victim to corruption or restrictive partisan agendas. There is potential for governmental relators to prompt more agency responsiveness even when suits are not filed. Additionally, the prospect of monetary awards might provide public servants with additional incentives to ferret out fraud.”
--- John Council