United States ex rel. Hayes v. Allstate Ins. Co.
| Decision Date | 04 April 2017 |
| Docket Number | August Term, 2016,Docket No. 16-705 |
| Citation | 853 F.3d 80 |
| Parties | UNITED STATES of America, EX REL. J. Michael HAYES, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Daimler Chrysler Insurance Company, Erie Insurance Company of New York, Erie Insurance Exchange, Inc., Erie Indemnity Company, Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Foremost Insurance Group, Geico, Insurance, GMAC Insurance, Kemper Independence Insurance Company, Liberty Mutual Insurance Company, Liberty Mutual Group, Liberty Mutual Holding Company, Inc., Metropolitan Group Property and Casualty Insurance Company, Metropolitan Property and Casualty Insurance Company, Nationwide General Insurance Company, Nationwide Financial Services Incorporated, Nationwide Mutual Insurance Company, New York Central Mutual Fire Insurance Company, Preferred Mutual Insurance Company, Progressive Insurance Company, The Progressive Corporation, Inc., Republic-Franklin Insurance Company, Utica Mutual Insurance Company, Graphics Arts Mutual Insurance Company, Utica National Insurance Company of Texas, Utica National Insurance Company of Ohio, Utica National Assurance Company, Utica Lloyd's of Texas, Utica Specialty Risk Insurance Company, Founders Insurance Company, Founders Insurance Company of Michigan, Utica National Insurance Group, State Farm Mutual Automobile Insurance Company, Hartford Financial Services Group, Inc., Travelers Insurance Group Holding, Inc., Travelers Property Casualty Corporation, The Travelers Companies, Inc., Zurich North America, FedEx Corporation, FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks, FedEx Supply Chain Solutions, FedEx Services, J.B. Hunt Transport Services, Incorporated, U-Haul International, and The Erie Insurance Company, Defendants-Appellees, Allstate Corporation, CastlePoint National Insurance Company, Specialty Underwriters Alliance, Inc., Tower Group Companies, Maiden Holding LTD, Kemper Corporation, Medical Liability Mutual Insurance Company, Nationwide Corporation, New York State Insurance Reciprocal, The Prudential Insurance Company of America, Prudential Financial, Inc., Heartland Express, Incorporated, Nationwide, Farmers Insurance Group Companies, Farmers Underwriters Association, AIG, Berkshire Hathaway Inc., Nationwide Mutual Insurance Intercompany Pool, Nationwide, Zurich Financial Services AG, and Zurich Insurance Group AG, Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
J. Michael Hayes (Peter M. Jasen, Buffalo, NY, on the brief), for Plaintiff-Appellant.
John W. Campbell , Federal Express Corporation, Memphis, TN, for Defendants-Appellees FedEx Corporation, Federal Express Corporation, FedEx Ground Package System Inc., FedEx Freight Corporation, FedEx Office and Print Services, Inc., FedEx Custom Critical, Inc., FedEx Trade Networks Inc., FedEx Supply Chain Systems, Inc., and FedEx Corporate Services, Inc.
David L. Yohai (Lori L. Pines and John P. Mastando III, on the brief), Weil, Gotshal & Manges LLP, New York, NY, for Defendants-Appellees Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, and Foremost Property and Casualty Insurance Company.
Bryce L. Friedman, Simpson Thatcher & Bartlett LLP, New York, NY; Deborah L. Stein, Simpson Thatcher & Bartlett LLP, Los Angeles, CA, for Defendants-Appellees Travelers Insurance Group Holding, Inc., Travelers Property Casualty Corporation, and The Travelers Companies, Inc.
Jonathan M. Freiman, Wiggin and Dana LLP, New Haven, CT, for Defendant-Appellee Hartford Financial Services Group, Inc.
Sharon Angelino, Goldberg Segalla LLP, Buffalo, NY, for Defendants-Appellees J.B. Hunt Transport Services Inc., Founders Insurance Company, Founders
Insurance Company of Michigan, Graphic Arts Mutual Insurance Company, Republic-Franklin Insurance Company, Utica Mutual Insurance Company, Utica National Insurance Company of Texas, Utica National Insurance Company of Ohio, Utica National Assurance Company, Utica Lloyd's of Texas, Utica Specialty Risk Insurance Company, and Utica National Insurance Group.
Heath J. Szymczak, Bond, Schoeneck & King, PLLC, Buffalo, NY, for Defendants-Appellees Erie Insurance Company of New York, Erie Insurance Exchange, Inc., Erie Indemnity Company, and The Erie Insurance Company.
Steven M. Levy and Alan S. Gilbert, Dentons US LLP, Chicago IL; Sean C. Cenawood, Dentons US LLP, New York, NY; Sharon Angelino, Goldberg Segalla LLP, Buffalo, NY, for Defendants-Appellees Allstate Insurance Company, Allstate Indemnity Company, Kemper Independence Insurance Company, Metropolitan Group Property and Casualty Insurance Company, Metropolitan Property and Casualty Insurance Company; and Defendants Kemper Corporation and The Allstate Corporation.
Suzanne O. Galbato, Bond, Schoeneck & King, PLLC, Syracuse, NY, for Defendant-Appellee Preferred Mutual Insurance Company.
Terrance M. Connors, Connors LLP, Buffalo, NY; Michael K. Loucks, Skadden, Arps, Slate, Meagher & Flom LLP, Boston, MA, for Defendants-Appellees Progressive Insurance Company and The Progressive Corporation, Inc.
Douglas W. Baruch and Anayansi Rodriquez Carbo, Fried, Frank, Harris, Shriver & Jacobson LLP, Washington, D.C.; Dan David Kohane, Hurwitz & Fine, P.C., Buffalo, NY, for Defendant-Appellee State Farm Mutual Automobile Insurance Company.
Michael J. Willett, Gibson, McAskill & Crosby, LLP, Buffalo, NY, for Defendant-Appellee Zurich North America.
Stephen Sozio, Jones Day, Cleveland, OH; Matthew Corcoran, Jones Day, Columbus, OH; Mark C. Davis, Lippes Mathias Wexler Friedman LLP, Buffalo, NY, for Defendants-Appellees Nationwide General Insurance Company, Nationwide Financial Services Incorporated, and Nationwide Mutual Insurance Company.
Eric Dranoff, Saretsky Katz & Dranoff, LLP, New York, NY, for Defendant-Appellee New York Central Mutual Fire Insurance Company.
Susan L. Swatski, Hill Wallack LLP, Princeton, NJ, for Defendant-Appellee CorePointe Insurance Company f/k/a Daimler Chrysler Insurance Company.
Barry I. Levy, Cheryl F. Korman, and Brian L. Bank, Rivkin Radler LLP, Uniondale, NY, for Defendant-Appellee Geico, Insurance.
Kevin J. Fee and Amy C. Gross, Duane Morris LLP, New York, NY: Dennis R. McCoy, Barclay Damon, LLP, Buffalo, NY, for Defendants-Appellees Liberty Mutual Insurance Company, Liberty Mutual Group, and Liberty Mutual Holding Company, Inc.
Kevin M. Hogan, Phillips Lytle LLP, Buffalo, NY, for Defendant-Appellee U-Haul International.
Before: Katzmann, Chief Judge, Pooler and Lynch, Circuit Judges.
Relator J. Michael Hayes appeals from the district court's dismissal with prejudice of his False Claims Act ("FCA") qui tam action as a sanction pursuant to Federal Rule of Civil Procedure 11. On appeal, Hayes argues that the misstatements in his complaint were not made in bad faith and did not justify the sanction of dismissal. He further argues that he should have been granted leave to amend his complaint. Although all of the defendants contend that the district court's imposition of the sanction of dismissal and denial of leave to amend were proper, several defendants, those not affiliated with Federal Express Corporation (hereinafter the "non-FedEx defendants"), additionally argue that the district court lacked subject matter jurisdiction over the action and consequently did not err by dismissing it. We address in this opinion only the non-FedEx defendants' challenge to the district court's subject matter jurisdiction, and we discuss Hayes's argument that the sanction of dismissal was wrongfully imposed in a separate summary order filed simultaneously with this opinion.
In this FCA qui tam action, see 31 U.S.C. § 3729 et seq ., relator Hayes alleged that the defendant companies, which are primarily, but not exclusively, liability insurance companies, have been systematically and intentionally noncompliant with their obligations under the Medicare Secondary Payer Act to reimburse Medicare for certain payments made on behalf of Medicare beneficiaries. As is discussed more fully in the accompanying summary order, Hayes alleged that he had personal knowledge of each defendant's participation in a nationwide scheme to defraud Medicare. The assigned magistrate judge and district court ultimately concluded that Hayes had no such knowledge and had acted in bad faith by falsely purporting to have it. As a result, the district court dismissed the action with prejudice as to Hayes as a sanction under Federal Rule of Civil Procedure 11.
Hayes appeals from that decision. Although all of the defendants contend that the district court correctly dismissed Hayes's complaint as a sanction, the non-FedEx defendants also advance an alternative basis for affirming the district court: that the district court lacked subject matter jurisdiction over Hayes's action because Hayes did not satisfy the FCA's first-to-file rule. The non-FedEx defendants raised this argument to the district court (although they had not raised it before the magistrate judge), but the district court did not address it.
Because "every federal appellate court has a special obligation to ‘satisfy itself not only of its own jurisdiction, but also [of] that of the lower courts in a cause under review," we will consider the non-FedEx defendants' contention that the district court lacked subject matter jurisdiction. Arnold v. Lucks , 392 F.3d 512, 517 (2d Cir. 2004) (internal quotation marks omitted).
As relevant to Hayes's claim, the FCA imposes liability on any person who "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government." 31 U.S.C. § 3729(a)(1)(G). "The FCA may be enforced not just through litigation brought by the Government itself, but also through civil qui tam actions that are filed by private parties, called relators, ‘in the name of the Government.’ " Kellogg Brown &...
To continue reading
Request your trial
- United States v. Percoco
-
United States ex rel. Hanks v. U.S. Oncology Speciality, LLP
...rule is not jurisdictional and instead bears on the merits of whether a plaintiff has stated a claim." United States ex rel. Hayes v. Allstate Ins. Co. , 853 F.3d 80, 85 (2d Cir.), cert. denied , ––– U.S. ––––, 138 S.Ct. 199, 199 L.Ed.2d 116 (2017). This first-to-file argument, therefore, m......
-
United States v. Univ. of TN Med. Ctr. Home Care Servs.
... UNITED STATES OF AMERICA, ex rel. LEANN MARSHALL, and LEANN MARSHALL, INDIVIDUALLY, Plaintiffs/Relators, ... United ... States ex rel. Branch Consultants v. Allstate Ins. Co. , ... 560 F.3d 371 (5th Cir. 2009) (“ Branch Consultants ... Cir. 2019) (same); United States ex rel. Hayes v ... Allstate Ins. Co. , 853 F.3d 80, 84 (2d Cir. 2017) ... ...
- United States v. George