United States ex rel Bain v. Georgia Gulf Corp.

Georgia Gulf Corp. was obligated to obey the law, including the Clean Air Act, and if it did not, it could be subjected to"statutory fines and penalties.But the mere contingent potential that such fines or penalties might be (but had not been) sought and imposed does not constitute "an obligation to pay or transmit money or property to the Government" within the meaning of 31 U.S.C.

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Click here for the full text of this decision FACTS:Ronald Bain began working for Georgia Gulf Corp. in Louisiana in 1982. Georgia Gulf produces polyvinyl chloride (PVC), a known carcinogen. In 1994 or 1995, Bain was transferred to the PVC unit, where he was to monitor and measure the release of vinyl chloride in what were called “open lid loss logs.” These logs were submitted to the Environmental Protection Agency (EPA) and the Louisiana Department of Environmental Quality (LDEQ) to see that the release came within certain proscribed limits. Bain says that when he began working in the PVC unit, he discovered that Georgia Gulf’s standard operating procedures was to vent vinyl chloride into the atmosphere without monitoring or measuring it. Bain said false entries were thus made on the open lid loss logs. Bain eventually filed a reverse false claims suit under the False Claims Act. He claims that if Georgia Gulf had submitted accurate figures to the EPA and the LDEQ, it would have had to pay fines; its failure to submit accurate records deprived the government of a payment to which it was due. The government did not intervene in Bain’s qui tam suit. Georgia Gulf moved to dismiss the claim, but the district court gave Bain an extension to amend his complaint. His new complaint again alleged the reverse false claim allegation, and also added a new claim that Georgia Gulf received Emission Reduction Credits (ERC) from Louisiana because of its false reports. The district court refused to dismiss the case, finding that assuming the truth of the allegations, Georgia Gulf’s conduct regarding the payment to the federal government would fall within the reverse False Claims Act because “the making of false or fraudulent records prepared by the defendant would allow Georgia Gulf to”avoid’ an”obligation to pay’ what the Government would have received had Georgia Gulf submitted accurate records.” The district court did not address the ERC claim because it was added after Georgia Gulf’s April motion to dismiss. After the district court denied Georgia Gulf’s motion to reconsider, and after staying the entry of judgment pending the resolution of a similar case going on at the appellate level, the district court eventually granted Georgia Gulf’s motion for leave to take an interlocutory appeal of the first order. The federal government filed an amicus brief in the case. HOLDING:Reversed and remanded. Bain’s argument that he has a reverse false claims case is based on his assumption that the permit LDEQ issues to Georgia Gulf � under the implementation plan it developed with the EPA to demonstrate how the state would meet national air pollution standards under the Clean Air Act � is a contract. The fines that Georgia Gulf may be avoiding by filing false reports, Bain describes as “obligations. Georgia Gulf argues that the FCA 3729(a)(7) should be read so that potential fines or penalties cannot form the basis of an FCA reverse claim. Bain argues that potential fines and penalties should be considered �obligations� for the purposes of 3729(a)(7). Meanwhile, the government takes the position that the statute does not require that there always be a specific fixed legal obligation at the time the alleged false record or statement was made. “It is clear to us that, as the government argues, the reverse false claims act does not extend to the potential or contingent obligations to pay the government fines or penalties which have not been levied or assessed (and as to which no formal proceedings to do so have been instituted) and which do not arise out of an economic relationship between the government and the defendant (such as a lease or a contract or the like) under which the government provides some benefit to the defendant wholly or partially in exchange for an agreed or expected payment or transfer of property by (or on behalf of) the defendant to (or for the economic benefit of) the government. Nothing in the complaint or amended complaint even suggests that Georgia Gulf had any sort of contractual or other economic relationship with the government, or indeed any relationship at all other than having a permit authorizing certain PVC emissions. Any such relationship was obviously purely regulatory, and not one in which any economic or financial transfer or payment by Georgia Gulf to the government was contemplated.” Turning to Bain’s argument that the false reports earned Georgia Gulf ERC that it was not entitled to, the court agrees that this claim was not before the district court, and so should be considered by that court on remand. OPINION:Garwood, Circuit Judge.; Garwood, Higginbotham and Smith, JJ.

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