United States ex rel. Welch v. My Left Foot Children's Therapy, LLC

United States ex rel. Welch v. My Left Foot Children's Therapy, LLC

Opinion

 [*793]  FISHER, Circuit Judge:

Originally enacted in 1863,] the False Claims Act (FCA) establishes a scheme that permits either the Attorney General, 31 U.S.C. § 3730(a), or a private party, § 3730(b), to maintain a civil action against "any person" who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment" to an employee of the United States government. § 3729(a). When brought by a private party, an "enforcement action under the FCA is called a qui tam action, with the private party referred to as the relator." United States ex rel. Eisenstein v. City of New York, 556 U.S. 928, 932, 129 S. Ct. 2230, 173 L. Ed. 2d 1255 (2009) (internal quotation marks omitted). And when a relator initiates a FCA action, [**3]  the United States has 60 days to review the complaint and decide whether it will intervene in the case. § 3730(b)(2), (4).

 [*794]  ] When the government intervenes, it assumes "the primary responsibility for prosecuting the action, and shall not be bound by an act of the [relator]." § 3730(c)(1). When it does not intervene, it is not a "party" to a FCA action for the purposes of certain procedural rules. See Eisenstein, 556 U.S. at 931. Nonetheless, the United States maintains some minimal involvement in all FCA actions. For example, in every FCA case, it remains "a 'real party in interest,'" id. at 930, and retains specific statutory rights including rights to "intervene at a later date upon a showing of good cause," § 3730(c)(3), request service of pleadings and deposition transcripts, § 3730(c)(3), and veto a relator's decision to voluntarily dismiss the action, § 3730(b)(1).

In this case, Mary Kaye Welch alleges that her former employer violated the federal FCA and Nevada FCA by presenting fraudulent Medicaid claims. The United States and Nevada declined to intervene in the case and her employer moved to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. Holding that Welch had entered into a valid arbitration agreement that covers this FCA case, the District Court nonetheless declined [**4]  to enforce that arbitration agreement. In its view, because FCA claims belong to the government and neither the United States nor Nevada agreed to arbitrate their claims, sending this dispute to arbitration would improperly bind them to an agreement they never signed. Though the question of the enforceability of a relator's agreement to arbitrate FCA claims is interesting, our holding rests on a rather unremarkable textual analysis. Since we conclude that the plain text of Welch's arbitration agreement does not encompass this FCA case, this lawsuit is not arbitrable, and we will affirm the District Court's denial of the Defendants' motion to compel arbitration on that alternate ground.

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