Aldridge v. Cain
| Docket Number | Civil Action 1:20-cv-321 HTW-MTP |
| Decision Date | 30 March 2022 |
| Parties | JAMES ALDRIDGE PLAINTIFF v. HAROLD (TED) CAIN, JULIE P. CAIN, HTC ENTERPRISES, LLC HTC ELITE, L.P., EVAN TRACE CAIN GST TRUST, LOGAN PATRICK CAIN GST TRUST AND LUCINDA K. SLOAN DEFENDANTS |
| Court | U.S. District Court — Southern District of Mississippi |
Before the Court is a motion [doc. no. 23] brought by four of the Defendants herein, namely: Harold (Ted) Cain; Julie P. Cain HTC Enterprises, LLC; and HTC Elite L.P., asking this court to dismiss this action pursuant to Rule 12(b)(1)[1] and 12(b)(6)[2] of the Federal Rules of Civil Procedure, contending that Plaintiff lacks standing to bring this litigation, and for Plaintiff's failure to state a claim upon which relief may be granted. The remaining Defendants the Evan Trace Cain GST Trust, the Logan Patrick Cain GST Trust and Lucinda K. Sloan, have filed a joinder to this motion and adopt the same arguments. The Plaintiff here James Aldridge (“Aldridge” or “Relator”), opposes the motion, arguing that he has standing to bring this lawsuit and, thus, dismissal is not appropriate. Briefing has been completed and the court now makes its ruling.
Subject matter jurisdiction of this court arises out of 28 U.S.C §1331, [3] as a federal question is presented by Plaintiff's claims under 28 U.S.C. §3304(b), [4] a federal statute. Section 3304(b) is a part of the Fraudulent Transfer Act. It provides that a transfer is fraudulent if such transfer is made by a debtor of the United States with the intent to hinder, delay or defraud a creditor; or if the debtor did not receive a reasonably equivalent value in exchange for the transfer and the remaining assets of the debtor were unreasonably small in relation to the transaction; or if the debtor did not receive a reasonably equivalent value in exchange for the transfer and the debtor incurred or reasonably believed he would incur, debts beyond his ability to pay as they became due.
Subject matter jurisdiction is also present here based on diversity of citizenship as provided by 28 U.S.C. §1332.[5] Plaintiff Aldridge is a citizen of the State of Alabama. The Defendants are citizens of the State of Mississippi. The amount in controversy on the face of the Complaint exceeds $32, 000, 000, an amount well in excess of the $75, 000 jurisdictional amount, exclusive of interest and costs.
Plaintiff also brings claims under Mississippi state law in accordance with Miss. Code Ann. § 15-3-107, [6] the State's version of the Uniform Fraudulent Transfers Act. Much like its federal counterpart, this statute also provides that a transfer made by a debtor is fraudulent if the debtor made the transfer with actual intent to hinder, delay or defraud a creditor of the debtor. Unlike the federal act, the state law applies to any creditor, and not just to the United States.
Venue is appropriate in this, the Southern District of Mississippi, as the underlying judgment under the False Claims Act was obtained in this district and the allegedly fraudulent transfers were made or attempted in this district.
When considering a motion to dismiss under Rule 12(b)(6), the Court accepts the plaintiff's factual allegations as true and makes reasonable inferences in the plaintiff's favor. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To proceed, the complaint “must contain a short and plain statement of the claim showing that the pleader is entitled to relief.” Id. at 677-78 (quotation marks and citation omitted). This requires “more than an unadorned, the defendant-unlawfully-harmed-me accusation, ” but the complaint need not have “detailed factual allegations.” Id. at 678 (quotation marks and citation omitted). Plaintiff's claims must also be plausible on their face, which means there is “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citation omitted).
A federal court properly dismisses a case for lack of subject matter jurisdiction when it lacks the statutory or constitutional power to adjudicate the case. Home Builders Assn. of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir.1998). “The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). “Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist.” Id. A pleading stating a claim for relief must contain “a short and plain statement of the grounds for the court's jurisdiction[.]” Fed.R.Civ.P. 8(a)(1). Celestine v. TransWood, Inc., 467 Fed.Appx. 317, 318 (5th Cir. 2012). See New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir. 2008)(“the party seeking to assert federal jurisdiction has the burden of proving by a preponderance of the evidence that subject matter jurisdiction exists”).
This lawsuit is brought by James Aldridge, who was the Relator in a qui tam[7]case brought pursuant to the False Claims Act (“FCA”), [8] 31 U.S.C. § 3729 et seq. The FCA is a federal enactment that provides for enforcement by means of a qui tam action. The False Claims Act, as the name implies, imposes civil liability upon any person who, inter alia, “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” to an officer or employee of the United States Government ... 31 U.S.C. § 3729(a). An FCA action may be commenced (1) by the Government itself, or (2) by a private person (the Relator) “for the person and for the United States Government” against the alleged false claimant, in the name of the Government. § 3730(b)(1).[9] See Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 769 (2000).
Aldridge, the Plaintiff here, filed such a qui tam action under the FCA against Harold T. (“Ted”) Cain (hereafter “Ted Cain”); Julie Cain; two of Ted Cain's businesses (Stone County Hospital and Corporate Management, Inc.); and two other individual officers of one of the companies, alleging that they had committed Medicare Fraud. See United States ex rel. Aldridge v. Corporate Management, Inc., et al, 1:16-CV-369 HTW-LGI (“hereafter referred to as “Aldridge v. CMI”). Ted Cain was the owner of numerous health related businesses, as well as having ownership in several non-health related businesses in South Mississippi. At the time of the aforenamed lawsuit, Ted Cain was the sole owner of Stone County Hospital in Wiggins, Mississippi, a Critical Access Hospital.[10] His wife, Julie Cain, at various periods, was the hospital administrator for Stone County Hospital, a paid consultant for the hospital, or a paid member of its board of directors. Corporate Management, Inc., (“CMI”) was a management company owned by Ted Cain that provided administrative services to his health provider entities and some of his other businesses.
Aldridge filed this qui tam lawsuit in 2007, under the provisions of §3730(b) of the FCA, on behalf of himself and the United States Government, alleging that Ted Cain; Julie Cain; Stone County Hospital; Corporate Management, Inc.; Thomas Kuluz (Chief Financial Officer for CMI); and Starann Lamier (Chief Operations Officer for CMI), had defrauded the Medicare program, a program of the United States Government. Qui tam lawsuits are empowered by the provisions of § 3730(b) of the FCA. That section provides as follows:
(b) Actions by private persons.--(1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.
31 U.S.C. § 3730(b).
After a period of investigation, the United States intervened in the lawsuit in 2015, as provided for in Subsections (b)(2)and (b)(3) of §3730 of the FCA, which provide as follows:
31 U.S.C. § 3730(b)(2) - (b)(3) .
This qui tam case was tried before a twelve-person jury beginning in January of 2020. At the end of the trial and after a verdict, this court entered a final judgment in May of 2020. Attorneys for the United States primarily conducted the litigation, as provided for in the FCA. The attorney for the Relator, however, was also an active participant in the trial, examining and cross-examining witnesses, arguing motions and evidentiary matters, in accordance with §3730(c)(1) of the FCA, which states:
(c) Rights of the parties to qui tam actions.--(1) If the Government proceeds with the action, it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action. Such person shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (2).
31 U.S.C. §3730(c)(1)
As provided for in the above section, the Relator in the Aldridge v. CMI case, continued “as a party to the action.”
The duly constituted jury which...
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