Second Circuit Judges recently traded strong language in opinions accompanying the denial of a petition for en banc review in Tanvir v. Tanzin.

In Tanvir, Plaintiffs alleged that, in retaliation for their refusal to serve as informants, federal officials improperly placed or retained plaintiffs’ names on the “No Fly List” in violation of the First Amendment and the Religious Freedom Restoration Act (RFRA). Plaintiffs asserted that they rebuffed these efforts based in part on their sincerely-held religious beliefs.

SDNY District Judge Abrams held that RFRA does not permit the recovery of money damages against federal officers sued as individuals, but a Second Circuit panel reversed, holding that RFRA permits individual capacity suits for money damages. In strong opinions accompanying the denial of a petition for en banc review, Judges Jacobs and Cabranes asserted that the panel decision was wrong, akin to the creation of a new Bivens remedy, and dangerous.

The Panel Decision

The appeal was argued before Judges Katzmann, Pooler and Lynch, and Judge Pooler wrote the decision for the Court. RFRA provides that the Government shall not substantially burden a person’s exercise of religion unless it can demonstrate the application of the burden is in furtherance of a compelling government interest and is the least restrictive means of furthering that interest. In addition, RFRA provides a private right of action to assert the RFRA violation “as a claim or defense in a judicial proceeding and obtain appropriate relief against a government.”

Judge Pooler first determined that because the RFRA definition of “government” includes federal officials, RFRA authorizes individual capacity suits against government officials. Next, Judge Pooler found that “appropriate relief” against such individuals includes money damages. The Court acknowledged that the phrase was not defined in the statute. The Court resorted to canons of statutory interpretation and relied on Supreme Court precedent holding that that the availability of all appropriate remedies is presumed unless Congress expressly indicates otherwise.  The panel concluded that RFRA authorizes the recovery of money damages against federal officers sued in their individual capacities.

Judges Katzmann and Pooler Concur in Denial of En Banc Review

Defendants filed a petition for en banc review, which was denied because it lacked majority support. Judges Katzmann and Pooler filed an opinion concurring in the denial, and rejected the arguments from the dissenting Judges that the panel opinion improperly engaged in finding a new Bivens-like private right of action against individuals for money damages. They argued that RFRA contains an express private right of action with an express provision for “appropriate relief.” They drew the distinction that the panel decision did not imply a right of action, but instead interpreted the statute to provide a damages remedy. They viewed this as a “time-honored exercise of the judiciary’s power to grant relief where Congress has legislated liability,” and stated that they wrote separately “merely to expose the dissents’ Bivens accusations as a red herring.”

Judge Jacobs’s Dissent

Judge Jacobs would have granted en banc review to reverse “the panel’s erroneous creation of a right to money damages under RFRA.” Judge Jacobs pointed to Second Circuit and Supreme Court precedent under the Religious Land Use and Institutionalized Persons Act (RLUIPA), holding that the phrase “appropriate relief against a government” does not support a private right of action against individual state officials for money damages, and that RLUIPA does not authorize private suits for money damages against the states. Judge Jacobs also stated that if a statute imposed personal money damages liability against individual federal officers, “one would expect that to be done explicitly, rather than by indirection, hint, or negative pregnant.”

The language of Judge Jacobs’s dissent raised the alarm that the panel decision was wrong and dangerous.

  • “The panel’s expansive conclusion can be viewed without alarm only by people (judges and law clerks) who enjoy absolute immunity from such suits.”
  • “The panel has done what the Supreme Court has forbidden: it has created a new Bivens cause of action. The Supreme Court did not shut the Bivens door so that we could climb in a window.”
  • “The safest course for a government employee in doubt would be to avoid doing one’s job, which is not a choice in need of encouragement.”
  • “The panel opinion is quite wrong and actually dangerous.”

Judge Cabranes’s Dissent

Judge Cabranes, noting that Judge Jacobs had done the “heavy lifting” in his opinion, emphasized his view that the panel decision “represents a transparent attempt to evade, if not defy, the precedents of the Supreme Court.” He referenced two Supreme Court decisions that had reversed Second Circuit extensions of the Bivens remedy, Ashcroft v. Iqbal and Ziglar v. Abasi. Judge Cabranes rejected, also in strong language, what he saw as the panel decision’s presumption that “Congress legislated a Bivens-like remedy—sub silentio—in RFRA.”

  • “It appears our Court is still incapable of learning this lesson.”
  • “This rationalization is as flawed as it is transparent.”
  • “When asked why he persisted in issuing decisions that the Supreme Court would predictably overturn, a prominent judge of another circuit once explained, ‘[t]hey can’t catch ‘em all.’ Such an attitude is not, and must not become, the approach of our Circuit.”

A Petition For Certiorari?

Whether the strong language from the dissenting opinions will interest the Supreme Court remains to be seen. The government has requested a stay of the mandate so the Solicitor General, or possibly private counsel, can determine whether to file a petition for certiorari to the Supreme Court. In any event, this debate is likely to continue.

New York City will pay $5.3 million to the United States for fraudulently obtaining FEMA funds related to Superstorm Sandy in a False Claims Act settlement with the Southern District of New York. The City admitted improperly seeking reimbursement from FEMA for vehicles that were not damaged by Superstorm Sandy.

Superstorm Sandy swept through New York in October 2012 and left extraordinary damage in its wake. The New York City Department of Transportation (NYC DOT) sought reimbursement from the Federal Emergency Management Agency (FEMA) for 132 vehicles it certified had been directly damages by Sandy. Many of these vehicles, however, had been non-operational prior to the storm.

In February, the SDNY filed a civil complaint asserting False Claims Act and common law claims. In a settlement stipulation filed the same day, the City admitted to fraudulent conduct, including:

  • NYC DOT failed to sufficiently review whether the vehicles were operational or in use prior to Sandy, and whether the amounts in the request for reimbursement accurately represented losses incurred due to Sandy;
  • The City official signing the certification did not have personal knowledge and failed to direct a proper investigation before signing the certification;
  • Shortly after the certification, a NYC DOT employee sent an e-mail to the certifying official that certain vehicles were “junk for years;”
  • The City did not take steps to notify FEMA that it was not entitled to certain of the requested funds until after it became aware of the SDNY investigation.

The City agreed to a total settlement of $5.3 million, including a repayment of over $4 million and a de-obligation of over $1 million that FEMA had authorized but not yet paid.  The City agreed to cooperate with the investigation of individuals, and the release language of the settlement agreement specifically provided that “[f]or avoidance of doubt, this Stipulation does not release any current or former officer, director, employee, or agent of the City from liability of any kind.”

This settlement, and the possible continuing investigation, highlight the significant responsibilities held by those who certify information in requests for federal funds.

EDNY Judge Nina Gershon analyzed several False Claims Act issues in United States ex rel. Omni Healthcare Inc. v. McKesson Corp., ruling on first-to-file, Rule 9(b), and statute of limitations issues.

Relator Omni Healthcare alleged that defendants improperly used “overfill” in vials of injectable drugs. “Overfill” is the amount of a drug in excess of the amount indicated on the label, typically included so the provider can withdraw a full dose from the vial. Relator alleged that defendants wrongfully broke into the vials, harvested the overfill, and then sold syringes with the overfill to providers who then billed the government.

Identify of Defendants Drives First-To-File Ruling

The Court initially addressed whether relator’s second amended complaint should be dismissed under the first-to-file rule, based on an earlier-filed case that also addressed alleged fraudulent repackaging of overfill. The Court reviewed Second Circuit law holding that a later-filed action is related and therefore barred if it “incorporate[s] the same material elements of fraud as the earlier action.” The Court concluded that the Omni Healthcare allegations were only related as to the one defendant that was a defendant in the earlier action, and dismissed the complaint only as against that defendant. The Court held that “the first-to-file bar would not reach a subsequent qui tam action otherwise alleging the same material elements of fraud, but alleging those elements concerning different defendants.” A later complaint is related if the earlier complaint equips the Government to investigate the fraud, and the Court determined that to be “‘equipped’ to investigate a fraud, the government must know whom to investigate.”

2017 Chorches Decisions Defeats Rule 9(b) Challenge

Defendants next asserted that the complaint did not satisfy the particularity requirement for pleading fraud under Rule 9(b), because it lacked allegations about the content of the false claims, who submitted them, and when they were submitted. Judge Gershon denied this argument based on the 2017 Second Circuit decision in United States ex rel. Chorches v. Am. Med. Response, Inc., which was discussed in our New York Health Law Blog here. The Court held that “such information is not required where, as here, the relator’s allegations create a strong inference that specific false claims were submitted.”

Statute of Limitations Bars Claims Against Added Defendants

Omni Healthcare conceded that, to satisfy the False Claims Act six year statute of limitations, the new allegations in its second amended complaint would be timely only if they related back to its earlier-filed first amended complaint. The Court noted that the False Claims Act specifically allows a timely complaint to satisfy the statute of limitations even though the named defendants were deprived of notice while the complaint was sealed. New claims against defendants named by Omni Healthcare in the first amended complaint were therefore timely. The second amended complaint, however, had added five additional defendants, and the Court held that claims against these defendants were untimely. “The statute of limitations, like the first-to-file rule, encourages relators to come forward promptly with information to help the government uncover fraud … This purpose would be undermined if a relator were permitted to add additional defendants years later—and potentially after the government has declined to intervene.”

Judge Gershon’s rulings highlight the importance of naming all False Claims Act defendants as early as possible to avoid procedural dismissals.