Cedars-Sinai Medical Center v. Shalala

Decision Date10 September 1997
Docket NumberCEDARS-SINAI,Nos. 96-55358,96-55892,s. 96-55358
Citation125 F.3d 765
Parties, Medicare & Medicaid Guide P 45,621, 97 Cal. Daily Op. Serv. 7269, 97 Daily Journal D.A.R. 11,753 MEDICAL CENTER; University of California San Francisco Medical Center; University of California Los Angeles Medical Center; University of California San Diego Medical Center; Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital Medical Center; Galen of Arizona, Inc., D/B/A Healthwest Regional Medical Center; Holy Cross Hospital; Johns Hopkins Hospital; et al., Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary, Defendant, v. QUI TAM RELATOR, Defendant-Appellant.MEDICAL CENTER; University of California San Francisco Medical Center; University of California Los Angeles Medical Center; University of California San Diego Medical Center; Adventist Health System/Sunbelt, Inc., dba Florida Hospital Medical Center; Allegheny General Hospital; Galen Of Arizona, Inc., dba Healthwest Regional Medical Center; Holy Cross Hospital; Johns Hopkins Hospital; Loma Linda University Medical Center Hospital; Medlantic Healthcare Group, Inc., a not-for-profit corporation dba Washington Hospital Center; Miami Beach Healthcare Group, Ltd., dba Miami Heart Institute; Monte-Fiore Medical Center; Mount Sinai Hospital; Society Of The New York Hospital; Northwestern Memorial Hospital; Presbyterian University Hospital; St. Francis Hospital; Saint Joseph'S Hospital of Atlanta, Inc.; St. Luke's Medical Center; St. Thomas Hospital; Sinai Samaritan Medical Center; West Florida Regional Medical Center, Inc., dba West Florida Regional Medical Center; University of Maryland Medical System Corporation; Yale-New Haven Hospital, Inc.; Regents of the University of California, a constitutional corporation under Article 9, Section 9 of the California Constitution, by and on behalf of the University of California San Francisco Medical Center, the University of California Los Angeles Medical Center, the University of California San Diego Medical Center, Plaintiffs-Appellees, and Scripps Health Systems,
CourtU.S. Court of Appeals — Ninth Circuit

Christine N. Kohl, Assistant United States Attorney, Department of Justice, Washington, DC, for the defendant-appellant.

Donald R. Warren, Monaghan & Warren, San Diego, CA, for the defendant-appellant.

Harry R. Silver, Carol M. McCarthy and Leonard C. Homer, Ober, Kaler, Grimes & Shriver, Baltimore, MD, for the plaintiffs-appellees.

Appeals from the United States District Court for the Central District of California. John G. Davies, District Judge, Presiding. D.C. No. CV-95-02902-JGD.

Before BROWNING and SCHROEDER, Circuit Judges, and RESTANI, U.S. Court of International Trade Judge. *

SCHROEDER, Circuit Judge.

The Secretary of Health and Human Services appeals the district court's summary judgment in favor of Cedars-Sinai Medical Center and twenty-four other hospitals ("the Hospitals") in the Hospitals' declaratory judgment action challenging a 1986 Health Care Financing Administration ("HCFA") policy. The challenged policy provides that Medicare will not cover investigational medical devices that have not been approved for marketing by the Food and Drug Administration. The Hospitals claim, and the district court held, that the policy is invalid because it was not issued in accordance with the rulemaking requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553.

A qui tam relator ("the Relator"), who is the plaintiff in a False Claims Act (31 U.S.C. § 3729) case in the federal district court in Seattle, appeals the district court's denial of his motion to intervene and dismiss this action. In the qui tam action, which is under seal, the Relator alleges that 130 hospitals knowingly submitted false claims for payment to Medicare and Medicaid seeking reimbursement for non-FDA-approved medical devices, which are barred from Medicare coverage under the 1986 HCFA policy. The Relator argues that this declaratory action is an attempt by the Hospitals to forum-shop, and that the validity of the 1986 amendment should be litigated in the Seattle qui tam action, which was filed first.

We have jurisdiction under 28 U.S.C. § 1291. We affirm the district court's denial of the Relator's motion to intervene and to dismiss. We remand the case to the district court for the limited purpose of considering whether the Hospitals' claim is barred by the six-year statute of limitations codified at 28 U.S.C. § 2401(a).

I. The Qui Tam Relator's Motion to Intervene and to Dismiss
A. Intervention

The Relator seeks to intervene as a matter of right under Fed.R.Civ.P. 24(a)(2). The denial of a motion to intervene as a matter of right is reviewed de novo. See Waller v. Financial Corp. of Am., 828 F.2d 579, 582 (9th Cir.1987).

Under this court's established test, a party may intervene as a matter of right if it meets four criteria:

(1) The party's motion must be timely; (2) the party must assert an interest relating to the property or transaction which is the subject of the action; (3) the party must be so situated that without intervention the disposition of the action may as a practical matter impair or impede its ability to protect that interest; and (4) the party's interest must be inadequately represented by the other parties.

Waller, 828 F.2d at 582 (citation omitted); Sagebrush Rebellion, Inc. v. Watt, 713 F.2d 525, 527 (9th Cir.1983) (citations omitted).

As the district court correctly reasoned, the Relator's claim founders on the fourth prong. The only issue to be decided on the merits of this action is the validity of the 1986 HCFA policy, and on that issue the interest of the Relator is identical to that of the Secretary: that the validity of the policy be upheld. The Secretary is capable of adequately representing her interest in defending her own policy. The Relator has failed to show any interest distinct from that of the United States, that the United States will not adequately represent. See Hopwood v. Texas, 21 F.3d 603, 605-06 (5th Cir.1994). This is so especially because a qui tam plaintiff by definition asserts not his own interests, but only those of United States. See United States ex rel. Hyatt v. Northrop Corp., 91 F.3d 1211, 1215 (9th Cir.1996) ("[Q]ui tam plaintiffs are merely agents suing on behalf of the government, which is always the real party in interest."); United States ex rel. Milam v. University of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.1992) ("The relator has no personal stake in the damages sought-all of which, by definition, were suffered by the government.").

Arguing that he does have an interest distinct from the government's, the Relator cites our statement in United States ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir.1993), that a qui tam plaintiff's interest in his potential bounty and in the costs expended on litigation gives him a personal stake in the case. See id. at 749; see also United States ex rel. Robinson v. Northrop Corp., 824 F.Supp. 830, 834-35 (N.D.Ill.1993) (recognizing a plaintiff's interest in working for an honest business and being free from the dilemma of either participating in fraud or suffering reprisal). Kelly and Robinson, however, concerned not intervention, but Article III standing. In both cases the court recognized that the injury suffered in a False Claims Act case is injury to the federal treasury, and that qui tam plaintiffs, for purposes of the injury requirement of standing, have been authorized by Congress to sue based on the government's loss. See Kelly, 9 F.3d at 748; Robinson, 824 F.Supp. at 836. The recognition in Kelly and Robinson of qui tam plaintiffs' personal interests in the litigation was to support the proposition that qui tam plaintiffs have incentive to litigate their cases zealously and thereby present the issues sharply and in an adversary context, as Article III requires. See Kelly, 9 F.3d at 749; Robinson, 824 F.Supp. at 836. Those cases do not hold that qui tam plaintiffs have any interests so distinct from those of the government that they will support intervention.

Because the Relator does not assert any interest not adequately represented by the United States, the Relator had no right to intervene under Fed.R.Civ.P. 24(a). 1

B. Dismissal Under the "First to File" Rule

Although the district court denied the Relator's motion to intervene in the merits of the case, it went on also to consider and deny the Relator's motion to dismiss. The district court thus effectively granted intervention for the limited purpose of considering that motion. The district court correctly denied the motion.

The Relator argues the district court should have dismissed the Hospitals' declaratory action under the "first to file" rule. Under that rule, when cases involving the same parties and issues have been filed in two different districts, the second district court has discretion to transfer, stay, or dismiss the second case in the interest of efficiency and judicial economy. See Alltrade, Inc. v. Uniweld Products, 946 F.2d 622, 625, 628-29 (9th Cir.1991); Pacesetter Sys. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir.1982); see generally Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183-84, 72 S.Ct. 219, 221-22, 96 L.Ed. 200 (1952).

The district court correctly decided that the issues in this case and the Seattle qui tam case are different. The issue in this declaratory action is whether the HCFA's 1986 rule was validly promulgated. The issue in the Seattle qui tam case is whether any of the Hospitals knowingly submitted false claims for payment. Because these issues are distinct, the requirement of identity...

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