U.S. ex rel Cosens v. Yale-New Haven Hosp.

• Decision Date: 14 November 2002
• Docket Number: No. 3:02CV688(GLG).,3:02CV688(GLG).
• Citation: 233 F.Supp.2d 319
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED STATES of America, ex rel. Kevin COSENS, Plaintiff, v. YALE-NEW HAVEN HOSPITAL, Defendant.

Page 319

233 F.Supp.2d 319

UNITED STATES of America, ex rel. Kevin COSENS, Plaintiff, v. YALE-NEW HAVEN HOSPITAL, Defendant.

No. 3:02CV688(GLG).

United States District Court, D. Connecticut.

November 14, 2002.

Mary Alice Leonhardt, Hartford, CT, Phillip E. Benson, Anaheim, CA, William Keller McInerney, Jr., Seattle, WA, Donald R. Warren, Warren Benson Law Group, San Diego, CA, John B. Hughes, Richard M. Molot, U.S. Attorney's Office, New Haven, CT, Brian C. Kipnis, David R Jennings, U.S. Attorney's Office, Seattle, WA, David T. Cohen, Department of Justice Commercial Litigation Branch, Washington, DC, for Plaintiff.

Jonathan D. Elliot, Kleban & Samor, PC, Southport, CT, Leonard C. Homer, Ray M. Shepard, Ober, Kaler, Grimes, and Shriver, Baltimore, MD, Stephen Damian Rose, Michael P. Ruark, Adam G. Snyder, Inslee, Best Doezie & Ryder, Bellevue, WA, Martha Purcell Rogers, Attorney, Ober, Kaler, Grimes & Shriver, Washington, DC, for Defendant.

OPINION

GOETTEL, District Judge.

Defendant, Yale-New Haven Hospital ("Yale"), has moved this Court to dismiss this action for lack of subject matter jurisdiction pursuant to Rules 12(b)(1) and 12(h)(3), Fed.R.Civ.P. [Doc. # 190]. Yale asserts that this Court lacks subject matter jurisdiction under § 3730(e)(4) of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-33, because the allegations in the complaint are based upon substantially identical allegations publicly disclosed before the qui tam complaint was filed and because the Relator, Kevin Cosens, is not the "original source" of the information.

I. Legal Standard for Ruling on a Motion to Dismiss

In evaluating a motion to dismiss pursuant to Rule 12(b)(1), Fed.R.Civ.P., this Court must first determine whether it is confronted with a facial or factual challenge to its jurisdiction. See Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir.2000); 2 Moore's Federal Practice, § 12.30[4] (2002 3d ed.) In this case, the jurisdictional challenge raised by Yale unquestionably is factual in nature. The Relator has alleged in his complaint that he is the original source of the information set forth therein, that there has been no prior public disclosure, and that if such public disclosure has occurred, he was the original source of such allegations. (Compl. ¶ 142.) Yale does not challenge the sufficiency of the pleadings in this regard. Rather, it contests on a factual basis the failure of the Relator's jurisdictional claims to comply with the requirements set forth in 31 U.S.C. § 3730(e)(4) of the FCA.

Because Yale's jurisdictional challenge is factual in nature, our consideration of this motion is not limited to the face of the complaint. Robinson v. Government of Malaysia, 269 F.3d 133, 141 (2d Cir.2001); 2 Moore's at § 12.30[4]. Instead, the Court may consider and weigh evidence outside the pleadings to determine if it has jurisdiction. Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 932 (2d Cir.1998); see also Robinson, 269 F.3d at 141 (holding that, if the resolution of a factual issue is necessary for a ruling on a motion to dismiss, the court must go beyond the pleadings and resolve any disputed issues of fact).

Once the defendant challenges the factual basis of the plaintiff's claim of subject matter jurisdiction, the plaintiff bears the burden of going forward with evidence demonstrating the existence of federal subject matter jurisdiction over his complaint. See Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994); Fisher v. Federal Bureau of Investigation, 94 F.Supp.2d 213, 215 (D.Conn.2000).

II. Procedural Background

On March 31, 1994, Relator Kevin Cosens, a private citizen who served as a sales representative and clinical support person for cadiovascular device manufacturers, filed a qui tam action under the FCA in the United States District Court for the Western District of Washington. His complaint alleged that Yale-New Haven Hospital and 131 other clinical trial hospitals had fraudulently billed Medicare and other federal health care programs for medical procedures and related services involving investigational or experimental cardiac devices, which were not covered under Medicare or other applicable programs. The cardiac devices included over 57 different types and models of atherectomy devices, lasers, stents, prosthetic cardiac valves, pacemakers and pacemaker leads, automatic implantable cardiac defibrillators and leads, ablation catheters, angioplasty devices, balloon valvuloplasty devices, and vascular grafts.

On April 4, 2002, the action against Yale was severed and transferred to the District of Connecticut.

Prior to this transfer, nine of the original defendants, including Yale, filed in the Western District of Washington a motion to dismiss for lack of subject matter jurisdiction, raising the same arguments now presented in the instant motion. On March 6, 2002, Judge Robert S. Lasnik declined to rule on the motion and ordered it stricken on the ground that the motion was premature, since the Relator could decide to amend his complaint before service or not pursue the case altogether. (Order Regarding Motions to Dismiss and to Preclude Government Intervention at 6, Case No. C94-474L (W.D.Wash. Mar. 6, 2002)).

On June 27, 2002, Yale filed the instant motion. Following a full briefing, including the submission of affidavits and other supporting evidence by all parties, the Court heard oral argument of counsel on September 5, 2002. No additional evidence was presented at this hearing.

On August 15, 2002, the United States filed its notice of intention to intervene, but to date has not filed an amended complaint in this action.

On September 30, 2002, the United States and Relator Cosens filed with the United States Judicial Panel on Multidistrict Litigation a joint motion to transfer this case and 38 other cases, pending in 27 federal districts, to the Western District of Washington for coordinated or consolidated pretrial proceedings, pursuant to 28 U.S.C. § 1407. That motion has not yet been ruled upon. In the meantime, this Court's jurisdiction continues until any transfer ruling becomes effective. With respect to pending motions, the Court has been encouraged by the Multidistrict Litigation Panel to rule these motions, "unless the motion raises issues likely to arise in other actions in the transferee court, should [they] order transfer, and would best be decided there."¹ (Letter from Hon. Wm. Terrell Hodges to All Involved Judges of 10/11/02.) Because the motion to transfer this case to Multidistrict Litigation is for pretrial purposes only, and because the pending motion to dismiss concerns our very power to hear this case and, as discussed below, is somewhat dependent on the facts of this specific case, we will proceed with a decision on this motion.

III. Subject Matter Jurisdiction Under the FCA

Under the FCA, a private party may maintain a qui tam action based on publicly disclosed allegations of fraud or fraudulent transactions only if the party qualifies as "an original source of th[is] information." 31 U.S.C. § 3730(e)(4)(A); United States ex rel. Kreindler & Kreindler v United Technologies Corp., 985 F.2d 1148, 1157 (2d Cir.), cert. denied, 508 U.S. 973, 113 S.Ct. 2962, 125 L.Ed.2d 663 (1993). Section 3730(e)(4)(A) restricts the subject matter jurisdiction of a court over private-plaintiff suits in the following manner:

No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

The statute then defines "original source" as

an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

31 U.S.C. § 3730(e)(4)(B). This section, which was added by the 1986 amendments to the FCA, attempts to "strike a balance between encouraging private citizens to expose fraud and avoiding parasitic actions by opportunists who attempt to capitalize on public information without seriously contributing to the disclosure of the fraud." United States ex rel. Doe v. John Doe Corp., 960 F.2d 318, 321 (2d Cir.1992) (discussing history of the 1986 amendments); United States ex rel. Findley v. FPC-Boron Employees' Club, 105 F.3d 675, 679-81 (D.C.Cir.1997) (discussing the development of the public disclosure bar).²

Section 3730(e)(4) creates a two-part test. First this Court must determine whether the allegations or transactions on which the qui tam action is based were publicly disclosed in one of the ways listed in the statute. Doe, 960 F.2d at 323. Second, if the Court determines that the relator's claim is based upon allegations or transactions that were publicly disclosed in a manner set forth in § 3730(e)(4)(A), then the Court must consider whether the relator qualifies as an "original source." Id. at 322, n. 3.

With respect to the first issue, in order to qualify as a "public disclosure," there must have been (1) a "public" disclosure (2) of "transactions or allegations" (3) in a "criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media," and (4) the relator's action must be "based upon" that public disclosure. Id. at 322-34. "If and only if there has been such a public disclosure," do we then inquire into whether the relator is the "original source," within the meaning of § 3730(e)(4)(B). A-1 Ambulance Serv., Inc. v. California, 202 F.3d 1238, 1243 (9th Cir.), cert. denied, 529...