v.
Univ. & Cmty. Coll. Sys.
[*1058] Lane Simonian, Reno, in Proper Person.
Mary Phelps Dugan, Associate General Counsel, Reno, for Respondent.
Before ROSE, C.J., DOUGLAS and PARRAGUIRRE, JJ.
OPINION
PER CURIAM.
In this proper person appeal, we determine whether the district court properly granted summary judgment to the University and Community College System of Nevada (UCCSN) because, as a state entity, UCCSN is not subject to liability under Nevada's False Claims Act (FCA).[1] We also consider whether sanctions may be imposed on a complainant for having filed an FCA action based on allegations that, in the context of an administrative retaliation proceeding, were previously found meritless.
We agree with the district court that UCCSN is a state entity and therefore not subject to FCA liability. Accordingly, we affirm the district court's summary judgment. We further conclude, however, that the district court's award of attorney fees as a sanction for having asserted a meritless claim is unsupportable under the circumstances. Thus, we reverse the portion of the order awarding UCCSN attorney fees.
FACTS
Appellant Lane Simonian was a part-time instructor for Truckee Meadows Community College for several years. As a result of concerns that surfaced during his employment, Simonian instituted proceedings against respondent UCCSN on four notable occasions.
First, in 1999, Simonian filed a district court petition for extraordinary relief, challenging UCCSN's alleged refusal to pay part-time instructors the entire salary amounts for which legislative appropriations had been made. Within a few months of petitioning the court and before any response had been filed, however, Simonian voluntarily dismissed the petition.
Second, that same year, Simonian requested a hearing with the Nevada Department of Personnel under NRS 281.641, which governs reprisals and retaliatory actions taken against state officer or employee whistleblowers.[2] In his request, Simonian asserted that he had sent letters to certain individuals and agencies, alleging that UCCSN had misappropriated state funds by submitting incorrect part-time instructor salaries in budget requests to the Legislature. Consequently, Simonian claimed, the community college retaliated against him by refusing to renew his teaching contract. After reviewing the matter, a hearing officer found that Simonian had not proven his retaliation claim, in part because Simonian had not demonstrated success on the merits of his underlying misappropriation allegations, and without so doing, he could not succeed on a claim for retaliation.
Third, the following year, Simonian filed a second NRS 281.641 request, this time alleging that he had been retaliated against when he was dismissed as a part-time lecturer earlier that year. Simonian claimed that the dismissal resulted from his public complaints [*1059] about "the false reporting of average new full-time instructors' salaries." The request was dismissed as untimely.
Finally, in 2001, Simonian instituted a false claims action against UCCSN. As a basis for relief, Simonian asserted that between 1987 and 2001, UCCSN had "presented to the Nevada State Legislature claims for $16 million in unpaid salaries for part-time instructors." He requested that UCCSN be assessed treble damages, a civil penalty payable to the State, and $5,000 for his expenses, plus costs. The Attorney General, although statutorily permitted to intervene in the action, declined to do so.
The district court granted UCCSN's ensuing motion to dismiss, treating it as a motion for summary judgment, and UCCSN's request for attorney fees as sanctions under NRCP 11 and NRS 357.180(2). Specifically, the district court determined that Simonian had failed to state an FCA claim because a legislative budget request does not fall within the FCA's definition of "claim" and because UCCSN is not a "person" for purposes of FCA liability. In addition, the district court summarily determined that Simonian's claim was barred by the doctrine of collateral estoppel. Finally, the district court noted that Simonian had previously brought actions against UCCSN on the issue of part-time UCCSN instructor salaries and awarded UCCSN $2,452.50 in attorney fees, as sanctions against Simonian for presenting "a claim ... not well-grounded in fact or in existing law." Simonian appeals from the district court's order.
DISCUSSION
This court reviews orders granting summary judgment de novo.[3] Summary judgment is appropriate when, after an examination of the record viewed in a light most favorable to the nonmoving party, no genuine issues of material fact remain and the moving party is entitled to judgment as a matter of law.[4]
As, legally, state entities are not subject to FCA liability and no material factual disputes exist as to UCCSN's state entity status, we conclude that the district court properly granted summary judgment on that basis. Consequently, we do not reach Simonian's arguments regarding the district court's alternative bases for summary judgment, that an entity's budget request does not constitute a "claim" for FCA purposes and that the action was barred under the collateral estoppel doctrine.
State entities are not "persons" subject to FCA liability
Nevada's FCA permits the Attorney General, or a private "qui tam" plaintiff acting on his own behalf and on that of the State, to maintain an action for treble damages against "a person" who, among other things, presents a false claim for payment or approval, uses a false record or statement to obtain payment or approval of a false claim, or is the beneficiary of and fails to disclose after discovery of, an inadvertent submission of a false claim.[5] The FCA defines "claim" as "a request or demand for money, property or services made to ... [a]n officer, employee or agent of this state ... or ... [a] contractor, grantee or other recipient of money from the State ... if any part of the money ... was provided by the State."[6]
Although the FCA does not likewise define the term "person," a long-standing principle of statutory construction instructs that "`person' does not include the sovereign."[7] While we have previously only [*1060] had occasion to apply this principle in the context of statutory civil rights law, it applies equally to any statute.[8] Thus, unless a statute expressly indicates otherwise, we will presume that the statute does not confer "person" status on a state entity.[9] Here, the FCA contains no express language specifying that the term "person" includes state entities, and therefore we presume that the Legislature did not intend to subject the State to FCA liability.
While we acknowledge that this presumption is "not a `hard and fast rule of exclusion,'"[10] we conclude that the FCA's policy to recover state funds further supports the presumption's use here. It would simply make no sense to interpret the FCA to allow the Attorney General or a private plaintiff, acting on the State's behalf, to sue a state entity to recover state funds; a successful action would not actually "recover" funds for the State, but would rather merely require the State to reallocate resources between state entities while expending funds for litigation costs and amounts awarded to a private plaintiff under the FCA.[11]
Moreover, this court has recognized that Nevada's FCA is modeled after the federal FCA,[12] which the United States Supreme Court has interpreted as excluding states and state entities, but not local governments, from the definition of "person."[13] Although the Supreme Court's reasoning is not entirely relevant in the context of Nevada's FCA,[14] it does define language in the act upon which Nevada's FCA is expressly modeled, and thus we may look to it for guidance.[15]
Part of the Supreme Court's reasoning observes that the original federal FCA contained no express provision to overcome the presumption that states are not "persons" for purposes of qui tam liability, even though a separate federal FCA provision granting the Attorney General permission to instigate civil investigations with "any person" specifically defined "person" in that context to include states.[16] Because Congress had expressly defined "person" to include states in the investigative context, but not elsewhere in the FCA, the Supreme Court reasoned that the absence of a similar definition with respect to the liability provision revealed that the liability provision was not intended to include [*1061] states.[17] Further, that Court noted that, despite subsequently making various changes to the liability provision, Congress never expanded the meaning of "person" to include states.[18]
Correspondingly, because in drafting Nevada's FCA the Nevada Legislature looked to the federal FCA, the Legislature necessarily examined the federal act's definitions. Having thus considered the federal FCA's definition of "person" that expressly included state entities in the investigative context, the Legislature nevertheless chose not to similarly define "person" in the Nevada FCA's liability provision. Consequently, we see no reason to depart from the presumption that state entities are not "persons" under Nevada's FCA; therefore, state entities are not subject to FCA liability.[19]
UCCSN is a state entity
UCCSN is comprised of the system of universities, colleges, administrative services, research facilities, and departments within the public service division, and it is administered by the Board of Regents[20]the group of persons constitutionally authorized to control and manage the state university system.[21] At least to the extent that other funds are inadequate, the Legislature must "provide for [the] support and maintenance" of the system.[22] To obtain maintenance and support from the state, UCCSN must apply for "direct legislative appropriation from the general fund, upon the presentation of budgets in the manner required by law."[23] The Board of Regents must biennially present a four-year plan to the Legislature,[24] and the Governor must be supplied with minutes of the Board's meetings.[25] The Board members function as trustees over the system's funds[26] but are subject to specific rules governing university securities.[27]
Based on the decisional law of this state and other jurisdictions, UCCSN is a state entity. In Northern Nevada Association of [*1062] Injured Workers v. SIIS,[28] this court concluded that the former State Industrial Insurance System was a state agency because it (1) was "subject to the approval and control of the Governor, the legislature, and other agencies of the government"; (2) was "treated as the State or a state agency throughout the Nevada Revised Statutes"; and (3) possessed certain sovereign powers.[29] Similarly, UCCSN is: (1) subject to the approval and control of the state government;[30] (2) at least in some limited fashion, treated as a state entity within the Nevada Revised Statutes;[31] and (3) through its Board, in possession of some sovereign powers.[32]
Moreover, although we have not previously examined UCCSN's state entity status, federal district courts in Nevada have concluded that UCCSN, UNR, and the Board of Regents are "state instrumentalities" for Eleventh Amendment purposes.[33] Other courts have also concluded that state universities are part of the state government under the Eleventh Amendment.[34] Because the analysis for determining an entity's status for Eleventh Amendment purposes is similar to the distinctions made for FCA purposes i.e., state entities are entitled to immunity while local governments are notdeterminations made for Eleventh Amendment purposes are germane to determinations in FCA cases.[35] Thus, these determinations strongly support the view that UCCSN has state entity status for FCA liability purposes.
For the foregoing reasons, we conclude that UCCSN is a state entity. Since state entities are not "persons" subject to FCA liability, the district court properly determined that UCCSN was entitled to judgment as a matter of law on Simonian's FCA claim.
[*1063] Sanctions
In addition to granting summary judgment, however, the district court also determined that Simonian's "claim [was] not well-grounded in fact or in existing law." Consequently, the court sanctioned Simonian, awarding $2,452.50 in attorney fees to UCCSN under NRCP 11(c) and NRS 357.180(2), which allow a party to be awarded attorney fees for defending an action brought on baseless grounds or for improper purposes. In so doing, the court noted that Simonian had instituted four proceedings against UCCSN regarding its part-time instructors' salaries, none of which was successfully prosecuted. The court made no other findings.
Both NRCP 11 and NRS 357.180 sanctions are reviewed under an abuse of discretion standard.[36] In 2002, NRCP 11 sanctions, including attorney fees, could be imposed on a litigant for filing a pleading that was not "well-grounded in fact and ... warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law."[37] Under NRS 357.180(2), the court may award a prevailing defendant reasonable expenses and attorney fees "if it finds that the action was clearly frivolous or vexatious or brought solely for harassment." Although the district court concluded that Simonian's claim was "not well-grounded in fact or in existing law," it used none of the above NRS 357.180(2) descriptions. Apparently, however, the court determined that Simonian's false claims action was "clearly frivolous," since a frivolous action has been defined as one that is "baseless," and "baseless" means that "the pleading is [not] well grounded in fact [or is not] warranted by existing law or a good faith argument for the extension, modification or reversal of existing law."[38]
As noted above, the FCA does not expressly state that a plaintiff may not sue the State or may not bring claims based on legislative budget requests. And no prior Nevada decisional law so interpreted the FCA. Thus, it cannot be said that Simonian's false claims action was clearly frivolous.
According to UCCSN, the false claims action was not well-grounded in fact or law because Simonian had repeatedly asserted the same claim, under different names, and those proceedings were "either dismissed or... lost on the merits." UCCSN asserts that the district court could have reasonably concluded that Simonian's intent in reasserting this matter, pursuant to an obviously nonapplicable statute, was to harass UCCSN.
The district court, however, made no findings of harassment. Moreover, Simonian's writ petition was voluntarily dismissed, apparently before UCCSN responded or the petition's merits were addressed. The second and third "claims" arose from allegations of retaliation by the community college, not of UCCSN misappropriation, the latter of which was also dismissed before its merits were reached. Thus, the merits of Simonian's salary concerns were addressed only in his 1999 administrative retaliation proceeding against the community college. As a result, unless the 1999 hearing officer's decision is sufficient to show that Simonian's FCA claim was not well-grounded in fact and law, there exists no basis for the district court's award of attorney fees.[39]
[*1064] The 1999 administrative decision
Because the hearing officer was not required to determine the merits of Simonian's misappropriation allegations in the 1999 retaliation proceeding, and because those allegations were not purported to have arisen under the FCA, the administrative decision on Simonian's retaliation hearing request may not be used to show that Simonian's FCA claim was unfounded in fact or law.
As previously mentioned, Simonian's 1999 retaliation claim was brought under a whistleblower protection statute, NRS 281.641. The declared public policy of NRS Chapter 281's disclosure provisions is to encourage state and local officers and employees "to disclose, to the extent not expressly prohibited by law, improper governmental action, and it is the intent of the Legislature to protect the rights of [the person] who makes such a disclosure."[40] Thus, NRS 281.641(1) allows a state officer or employee who believes that he or she has experienced retaliation for having disclosed information concerning improper governmental action to apply to a hearing officer for a determination of the retaliation allegations.[41] The hearing officer must determine whether "the action taken was a reprisal or retaliatory action, [and] may issue an order directing the proper person to desist and refrain from engaging in such action."[42]
Nowhere in NRS Chapter 281 does it specifically authorize hearing officers to independently determine whether the government has actually undertaken "improper governmental action" or to remedy such conduct. Instead, NRS 281.641(1) merely ensures that a state employee "who discloses information concerning improper governmental action" is protected against retaliatory action incurred as a result of disclosing that information. Since the statute does not state whether "proof" of improper governmental action is required, it is ambiguous as to that issue, and we must look to reason and public policy to determine what the Legislature intended.[43]
By enacting NRS 281.641, the Legislature aimed to encourage persons to come forward with information of employer wrongdoing by affording them protection against retaliatory action by their employer.[44] That purpose could be thwarted if a person is only protected if his or her allegations are proven correct. And because NRS 281.651 provides that a state officer or employee may not use the disclosure provisions to harass, explaining that those provisions "do not prohibit a [person] from initiating proper disciplinary procedures against [a state or local officer or employee] ... who discloses untruthful information concerning improper governmental action," the Legislature has separately addressed any improper conduct on the employee's part.
Thus, with respect to an NRS 281.641(1) reprisal/retaliation claim, the hearing officer must only determine whether a state employee has engaged in protected activity, i.e., has disclosed information concerning alleged conduct that might constitute "improper governmental action."[45] As a result, the hearing [*1065] officer's determination regarding whether Simonian's allegations proved correct was unauthorized.
Further, Simonian's FCA allegations pertain to false claims as defined under NRS Chapter 357, not to "improper governmental action," as defined at NRS 281.611(1). While the two categories might overlap, they do not always necessarily do so. Thus, any finding that UCCSN's conduct did not constitute "improper governmental action" does not support the conclusion that Simonian's false claims action was therefore necessarily premised on unfounded grounds. Accordingly, the district court improperly awarded UCCSN attorney fees as sanctions against Simonian under NRCP 11 and NRS 357.180.
CONCLUSION
Because an FCA plaintiff, who sues on behalf of the State, may not pursue a false claims action against the State, we affirm the portion of the district court's order granting summary judgment to UCCSN. As the district court never reached the merits of Simonian's action and the record contains insufficient information to support the district court's determination that Simonian's false claim action was not well-grounded in fact or law, however, we reverse the district court's award of attorney fees as sanctions against Simonian.
If any reprisal or retaliatory action is taken against a state officer or employee who discloses information concerning improper governmental action within 2 years after the information is disclosed, the state officer or employee may file a written appeal with a hearing officer of the Department of Personnel for a determination of whether the action taken was a reprisal or retaliatory action.