428 F.3d 1008 (11th Cir. 2005), 05-11868, Corsello v. Lincare, Inc.

Docket Nº:05-11868
Citation:428 F.3d 1008
Party Name:Kirk S. CORSELLO, Plaintiff-Appellant, v. LINCARE, INC., Lincare Holdings, Inc., Rotech, Inc., Alan Varraux, M.D., Rotech Medical Corporation, Defendants-Appellees, Lincare Healthcare Group, Inc., American Home Patient, Inc., et al., Defendants.
Case Date:October 20, 2005
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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428 F.3d 1008 (11th Cir. 2005)

Kirk S. CORSELLO, Plaintiff-Appellant,

v.

LINCARE, INC., Lincare Holdings, Inc., Rotech, Inc., Alan Varraux, M.D., Rotech Medical Corporation, Defendants-Appellees,

Lincare Healthcare Group, Inc., American Home Patient, Inc., et al., Defendants.

No. 05-11868

United States Court of Appeals, Eleventh Circuit.

Oct. 20, 2005

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[Copyrighted Material Omitted]

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Frederick M. Morgan, Jr., Volkemia, Thomas, Miller, Burkett, Scott & Merry Co., LPA, Cincinnati, OH, Scott A. Powell, Bruce J. McKee, Hare, Wynn, Newll & Newton, Birmingham, AL, Mike Bothwell, G. mark Simpson, Bothwell and Simpson, P.C., Roswell, GA, for Plaintiff-Appellant.

Benjamin E. Fox, John Earl Floyd, Bondurant, Mixson & Elmore, LLP, John D. Dalbey, Chilvis, Cochran, Larkins & Bever, LLP, Atlanta, GA, Roger S. Goldman, Stephen J. Spiegelhalter, Latham & Watkins LLP, Martha Purcell Rogers, Ober, Kaler, Grimes & Shriver, P.C., Washington, DC, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Georgia,

Before TJOFLAT, DUBINA and PRYOR, Circuit Judges.

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PER CURIAM:

The issue in this qui tam action, brought under the False Claims Act, is whether a former sales employee of multiple defendants pleaded fraud with particularity, under Federal Rule of Civil Procedure 9(b), by baldly asserting that improper practices "resulted in the submission of false claims." Kirk S. Corsello appeals both the dismissal of his complaint for failure to plead fraud with particularity and the denial of his motion to file a third amended complaint. Because the complaint failed to provide any factual support that false claims were actually submitted to the government and a third amendment of the complaint more than five years after the commencement of this action would have been futile, we affirm.

I. BACKGROUND

In 1998, Corsello brought a qui tam action under the False Claims Act against 56 entities and 99 John Does and John Doe Corporations. Corsello alleged that while he was employed by two of the defendants, they engaged in various fraudulent schemes, including paying illegal kickbacks to physicians to induce referrals, falsifying cetificates of medical necessity to provide unnecessary treatment, and billing for unnecessary or non-existent treatment to obtain Medicare payments unlawfully. Corsello failed to serve process on the defendants with his original complaint, but instead moved to file an amended complaint. On June 18, 1999, the district court granted Corsello's motion to file an amended complaint but warned Corsello that "[t]he Qui Tam Act was not enacted in order to give the relator an unlimited opportunity to perfect its complaint" and that "the amended complaint shall fully comport with the requirement of [Federal Rule of Civil Procedure 9(b)]." Corsello served the first amended complaint on July 18, 1999, but then filed a second amended complaint on January 13, 2000, to cure some of the deficiencies in his earlier complaints and further reduce the number of defendants.

In his amended complaint, Corsello alleged that Lincare, Inc., Lincare Holdings, Inc., Rotech, Inc., Alan Varraux, M.D., Rotech Medical Corporation, and American Home Patient, Inc., violated the False Claims Act by submitting false Medicare claims and conspiring to defraud the government. 31 U.S.C. § 3729(a)(1), (a)(2), (a)(3). Lincare, Inc. and Lincare Holdings, Inc. (collectively Lincare), Rotech, Inc. and Rotech Medical Corporation (collectively Rotech), and American Home Patient, Inc. are nationwide providers of oxygen services and equipment to patients in their homes. Varraux is a physician specializing in pulmonology. Corsello was employed by Lincare as the Center Manager for the South Orlando Center from 1995 to 1997. After Corsello was terminated by Lincare, he worked for Rotech as a Regional Sales Support employee from 1998 until his termination in 1999.

On March 9, 2001, the district court granted a motion to dismiss Corsello's claims against Lincare, American Home Patient, Inc., and Varraux because Corsello failed to plead fraud with particularity. Corsello appealed, but this Court dismissed the appeal because the district court had not yet adjudicated Corsello's claims against Rotech. Rotech then moved to dismiss the second amended complaint for failure to state a claim. Corsello responded to Rotech's motion to dismiss and proposed to file a third amended complaint. The district court granted the motion to dismiss on the ground that Corsello's complaint failed to plead fraud with particularity. The district court also denied Corsello's motion to file a third amended complaint because Corsello had

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waited over a year since the dismissal of his claims against the other defendants, had not explained why he did not plead the necessary facts in the previous versions of his complaint, and had not offered an amendment that cured the deficiencies of his complaint.

II. STANDARD OF REVIEW

This appeal is governed by two standards of review. First, this Court reviews de novo a dismissal for failure to state a claim upon which relief may be granted. United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1307 n.11 (11th Cir. 2002). On a motion to dismiss for failure to state a claim, we accept as true the facts as alleged in the complaint. Id. at 1303 n.2. Second, we review the denial of a motion to amend a complaint for abuse of discretion. Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001). The underlying legal conclusion of whether a particular amendment to the complaint would have been futile is reviewed de novo . See Harris v. Ivax Corp., 182 F.3d 799, 802-03 (11th Cir. 1999).

III. DISCUSSION

Corsello appeals both the dismissal of his complaint and the denial of his motion to amend the complaint. We first consider whether the district court erred in dismissing Corsello's claims under the False Claims Act for failure to plead fraud with particularity. We then address whether the district court erred in denying Corsello's motion to file a third amended complaint.

A. The District Court Correctly Dismissed the Complaint for Failure to Comply with Rule 9(b)

Sections 3729(a)(1) and (a)(2) of the False Claims Act subject to civil liability entities that knowingly submit false or fraudulent claims to the government for payment or approval. Clausen, 290 F.3d at 1309. Liability under the False Claims Act arises from the submission of a fraudulent claim to the government, not the disregard of government regulations...

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