Rodriguez v. Our Lady of Lourdes Medical Center

• Decision Date: 30 December 2008
• Docket Number: No. 06-5207.,06-5207.
• Citation: 552 F.3d 297
• Parties: Renee RODRIGUEZ; Barbara King, In the Name of the United States Government Pursuant to the False Claims Act, 31 U.S.C. Section 3730, and Individually Pursuant to the New Jersey Conscientious Employee Protection Act, Appellants v. OUR LADY OF LOURDES MEDICAL CENTER.
• Court: U.S. Court of Appeals — Third Circuit

552 F.3d 297

Renee RODRIGUEZ; Barbara King, In the Name of the United States Government Pursuant to the False Claims Act, 31 U.S.C. Section 3730, and Individually Pursuant to the New Jersey Conscientious Employee Protection Act, Appellants v. OUR LADY OF LOURDES MEDICAL CENTER.

No. 06-5207.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a) December 1, 2008.

Filed: December 30, 2008.

As Amended January 13, 2009.

Ross Begelman, Esquire, Marc M. Orlow, Esquire, Begelman & Orlow, P.C., Cherry Hill, NJ, Counsel for Appellants.

Brian Flaherty, Esquire, Gregory A. Lomax, Esquire, Drew Wixted, Esquire, Wolf, Block, Schorr and Solis-Cohen LLP, Cherry Hill, NJ, Counsel for Appellee.

Before: AMBRO, WEIS, and VAN ANTWERPEN, Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

Renee Rodriguez and Barbara King filed a qui tam complaint pursuant to the False Claims Act, 31 U.S.C. § 3729 et seq., against their former employer, Our Lady of Lourdes Medical Center (the "Medical Center"), a New Jersey health care provider. The United States declined to intervene in the action, and the District Court ultimately dismissed the complaint for failure to state a claim for which relief can be granted. Rodriguez and King then filed a notice of appeal 56 days after the entry of judgment. We decide whether this appeal is subject to the 30-day filing deadline that generally applies to civil suits or the 60-day deadline that applies when the United States is a party.

We hold that, though the United States declined to intervene in the action, the 60-day deadline still applies and that Rodriguez and King's notice of appeal was therefore timely. Nonetheless, we affirm the District Court's dismissal on the merits.

I. Facts and Procedural History

Rodriguez and King are licensed practical nurses who were formerly employed by the Medical Center. In January 2006, they filed a qui tam complaint against the Center in the District of New Jersey, alleging fraud on the Government in violation of the False Claims Act.¹ The allegations in the complaint centered on the Bergan Lanning Health Center ("Bergan Lanning") in Camden, New Jersey. According to the complaint, Bergan Lanning is jointly operated by the Medical Center and the Camden County Department of Health and Human Services and receives funding from the federal Government. Rodriguez and King alleged that, while employed by the Medical Center, they were assigned to do work with outreach programs housed by Bergan Lanning that provide medical services to the homeless and the uninsured working poor.² They asserted that, beginning in June 2004, beneficiaries of those programs could get prescriptions filled by persons who were not licensed pharmacists under the New Jersey Pharmacy Act, N.J. Stat. Ann. § 45:1-1 et seq.³ This, they contended, amounted to a violation of the False Claims Act insofar as "allowing non-licensed individuals ... to dispense drugs in violation [of New Jersey law] constitutes a false certification ... to get a claim paid or approved by the Government." Rodriguez and King's Compl. ¶ 21.

Rodriguez and King filed their complaint under seal and served a copy on the United States Government in accordance with the requirements of the False Claims Act. 31 U.S.C. § 3730(b)(2). In February 2006, the Government declined to intervene in the case and the District Court ordered the complaint unsealed. Rodriguez v. Our Lady of Lourdes Med. Ctr., No. 06-0129, 2006 WL 3193838, at *1 (D.N.J. Nov.1, 2006). In May 2006, the Medical Center made a motion to dismiss the complaint under either Federal Rule of Civil Procedure 12(b)(6) or 9(b), contending that the complaint neither stated a prima facie case under the False Claims Act nor complied with the heightened pleading requirements that apply to allegations of fraud. On November 1, 2006, the District Court granted the motion to dismiss under Rule 12(b)(6). Rodriguez, 2006 WL 3193838, at * 2. Rodriguez and King filed a notice of appeal on December 27, 2006, 56 days later.

II. Jurisdiction

Before we can reach the merits, we must determine whether Rodriguez and King's appeal was timely.⁴ See Benn v. First Judicial Dist. of Pennsylvania, 426 F.3d 233, 237 (3d Cir.2005) ("Compliance with the Rules of Appellate Procedure for proper filing of a notice of appeal is mandatory and jurisdictional.") (internal quotation marks omitted). The timeliness of a notice of appeal is governed by Rule 4(a)(1) of the Federal Rules of Appellate Procedure. This provides in pertinent part:

(A) In a civil case, except as provided in Rule[] 4(a)(1)(B), ... the notice of appeal ... must be filed ... within 30 days after the judgment or order appealed from is entered.

(B) When the United States ... is a party, the notice of appeal may be filed by any party within 60 days after the judgment or order appealed from is entered.

Fed. R.App. P. 4(a)(1)(A), (B). Because the notice of appeal here was filed 56 days after the District Court's entry of judgment, its timeliness hinges on whether the United States still counts as a "party" to a private False Claims Act action for Rule 4(a)(1) purposes when it initially declines to intervene.

This is an issue of first impression for our Court and one over which courts of appeals have split. The Courts of Appeals for the Fifth, Seventh and Ninth Circuits apply the 60-day deadline under these circumstances. See United States ex rel. Lu v. Ou, 368 F.3d 773 (7th Cir.2004); United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3d 304 (5th Cir.1999); United States ex rel. Haycock v. Hughes Aircraft Co., 98 F.3d 1100 (9th Cir.1996). The Courts of Appeals for the Second and Tenth Circuits apply the 30-day deadline. See United States ex rel. Eisenstein v. City of New York, 540 F.3d 94 (2d Cir. 2008); United States ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327 (10th Cir.1978) (per curiam).

What makes this issue difficult is the neither fish nor fowl nature of the Government's relationship to a qui tam action under the False Claims Act.⁵ The Act empowers a private litigant to bring an action "in the name of the Government." 31 U.S.C. § 3730(b)(1). The private litigant must initially serve the complaint on the Government under seal. § 3730(b)(2). The Government then has 60 days to determine whether to "proceed with the action, in which case the action shall be conducted by [it]," or else decline to do so, "in which case the person bringing the action shall have the right to conduct the action." § 3730(b)(4)(A), (B).

Even when the Government declines to intervene initially, it still retains the right to continue involvement in the case in various ways. It may require that it "be served with copies of all pleadings filed in the action," and may, upon a showing of "good cause," intervene in the action "at a later date." § 3730(c)(3). Indeed, in this case, the Government, in declining to take over the action, requested specifically that it be served with all pleadings and sent all Orders issued by the Court, and noted that it reserved the right to intervene at a later date for good cause. Moreover, should the private False Claims Act suit succeed, the Government is entitled to at least 70% of the award. § 3730(d)(2). Finally, although this Court has not yet ruled on the matter, most courts have held that the Government retains the right to veto any settlement agreement reached by a private False Claims Act plaintiff. See United States ex rel. Ridenour v. Kaiser-Hill Co., LLC, 397 F.3d 925, 931 n. 8 (10th Cir. 2005); United States ex rel. Doyle v. Health Possibilities, P.S.C., 207 F.3d 335, 339 (6th Cir.2000); Searcy v. Philips Elecs. N. Am. Corp., 117 F.3d 154, 159-160 (5th Cir.1997). But see United States ex rel. Killingsworth v. Northrop Corp., 25 F.3d 715, 722 (9th Cir.1994) (holding that the Government's right to prevent a private plaintiff from dismissing a False Claims Act suit without its consent only applies during the initial 60-day period during which the Government can elect to take over the action).

The question we face, then, is whether all of this is enough to make the United States a "party" for Rule 4(a)(1) purposes, even when it has initially conceded to a private party "the right to conduct the action." § 3730(b)(4)(B). In answering this question, we do not find it dispositive to dwell on the meaning of the word "party." On the one hand, the United States' "name is on all the papers as the plaintiff," Haycock, 98 F.3d at 1102, which certainly makes it look like a party to the action, as does the fact that it stands to receive the bulk of any award obtained, § 3730(d)(2). On the other hand, as the Court of Appeals for the Second Circuit has noted, "[t]he inability to participate without moving to intervene is ... not consistent with the principal characteristics of being a party to litigation." Eisenstein, 540 F.3d at 98; see also Petrofsky, 588 F.2d at 1329 (stating that a qui tam plaintiff's proceeding in the name of the United States is "merely a statutory formality").

We do, however, join our colleagues in the Fifth, Seventh and Ninth Circuits in finding significant that, even when it declines to intervene, the United States remains a party to a qui tam action in the literal sense, i.e., its name is on the caption. See Ou, 368 F.3d at 775; Russell, 193 F.3d at 307-08; Haycock, 98 F.3d at 1102. Applying the shorter deadline may confuse litigants who, based on a literal reading on Rule 4(a)(1), assume that the longer deadline applies. It is especially important, when interpreting procedural rules, that we avoid any reading likely to cause confusion. See Fed.R.Civ.P. 1 (requiring that the Federal Rules of Civil Procedure "be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding"); Russell, 193 F.3d at 308 (reading Rule 1 of the Federal Rules of Civil Procedure as "a...