U.S. v. Hillcrest Health Center

• Citation: 264 F.3d 1271
• Decision Date: 07 September 2001
• Docket Number: No. 00-6158,00-6158
• Parties: (10th Cir. 2001) UNITED STATES OF AMERICA, EX REL. JOHN A. KING, D.O., Plaintiff-Appellant, v. HILLCREST HEALTH CENTER, INC., HARVEY DRAPKIN, D.O.; JOHN B. HUGHES, D.O.; RICHARD J. LANGERMAN, SR., D.O.; TOM W. EWING, D.O.; ANTHONY L. CRUSE, D.O.; RAYMOND DIETER, D.O.; MONA MOTZ, D.O.; GLENN L. SMITH, D.O.; and JOE GOLDSTEIN, D.O., Defendants-Appellees. UNITED STATES OF AMERICA, Amicus Curiae
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1271

264 F.3d 1271 (10th Cir. 2001)

UNITED STATES OF AMERICA, EX REL. JOHN A. KING, D.O., Plaintiff-Appellant, v. HILLCREST HEALTH CENTER, INC., HARVEY DRAPKIN, D.O.; JOHN B. HUGHES, D.O.; RICHARD J. LANGERMAN, SR., D.O.; TOM W. EWING, D.O.; ANTHONY L. CRUSE, D.O.; RAYMOND DIETER, D.O.; MONA MOTZ, D.O.; GLENN L. SMITH, D.O.; and JOE GOLDSTEIN, D.O., Defendants-Appellees.

UNITED STATES OF AMERICA, Amicus Curiae.

No. 00-6158

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

September 7, 2001

Appeal from the United States District Court for the Western District of Oklahoma, (D.C. No. CIV-98-0295-W) [Copyrighted Material Omitted]

[Copyrighted Material Omitted] David J. Schenck (Weston C. Loegering, H. Esther Cochran of Hughes & Luce, Dallas, Texas; John C. McMurry, Oklahoma City, Oklahoma; John N. Goodman, Oklahoma City, Oklahoma; Christopher L. Davis, Dallas, Texas, on the briefs) of Hughes & Luce, Dallas, Texas, for Plaintiff-Appellant.

Gregory M. Luce (Jesse A. Witten, Kathleen M. Laubenstein of Jones, Day, Reavis & Pogue, Washington, D.C.; A. Scott Johnson, Mary Hanan, Nathan Lockhart of Johnson, Hanan and Heron, P.C., Oklahoma City, Oklahoma; Rick L. Denker of Denker & Butler, PLLC, Oklahoma City, Oklahoma; Randall K. Calvert, Oklahoma City, Oklahoma; John N. Hermes, M. Richard Mullins of McAfee & Taft, Oklahoma City, Oklahoma; Edward Goldman, Oklahoma City, Oklahoma; Hilton H. Walters of Rife & Walters, Oklahoma City, Oklahoma; Kevin Driskill of Driskill & Jones, Oklahoma City, Oklahoma, with him on the brief) of Jones, Day, Reavis & Pogue, Washington, D.C. for Defendants-Appellees.

Douglas Hallward-Driemeier (David W. Ogden, Assistant Attorney General; Daniel G. Webber, Jr., United States Attorney; Douglas N. Letter, Michael E. Robinson, Attorneys, Appellate

Staff, Civil Division, Department of Justice, Washington, D.C. with him on the brief) Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, D.C., for Amicus Curiae.

Before BRISCOE, MURPHY, Circuit Judges, and CROW,^* District Judge.

CROW, District Judge.

Relator John A. King, D.O. appeals the dismissal of this qui tam action brought under the False Claims Act ("Act"), 31 U.S.C. 3729-3733. The qui tam provisions of the Act permit private individuals to sue on behalf of the United States those persons or entities who allegedly have presented false or fraudulent claims to the federal government.¹ As one of its jurisdictional hurdles, the Act prohibits suits based on publicly disclosed information unless the relator or person suing is an "original source" of the information. 31 U.S.C. 3730(e)(4)(A). The principal issue presented is whether the relator Dr. King qualifies as an "original source" under 3730(e)(4)(B). Agreeing with the district court's determination that the plaintiff cannot show he meets the requirements for an original source, we affirm the district court's judgment dismissing this action for lack of subject matter jurisdiction.

I. BACKGROUND

As part of his residency training program at Oklahoma State University College of Osteopathic Medicine, Dr. King was employed as a resident physician in orthopedic surgery at the defendant Hillcrest Health Center, Inc. ("Hillcrest") from May of 1993 until his termination in March of 1995. In March of 1997, Dr. King filed a federal action, King v. Hillcrest Health Center, et al., No. 97-0401-T ("King I"), asserting claims for relief under federal civil rights statutes and state law. He alleged in part that he was terminated in retaliation for reporting that the defendants were committing Medicare and/or Medicaid fraud. The parties to King I settled that suit in January 1999, and it was dismissed with prejudice in February of 1999.

While King I was pending, Dr. King filed this qui tam action under seal on February 27, 1998, alleging that the defendants had conspired to submit and had submitted false or fraudulent claims for medical services and procedures billed under Medicare and/or Medicaid. The United States declined to intervene, and the district court in June of 1999 ordered the complaint unsealed and served. The defendants moved to dismiss the plaintiff's first amended complaint arguing, inter alia: (1) that the district court lacked subject matter jurisdiction because King I constituted a public disclosure of information and Dr. King did not qualify as an "original source" of the information, and (2) that the dismissal with prejudice of King I bars this action under the doctrine of res judicata. Besides opposing the defendants' motions, the plaintiff moved for leave to file a second amended complaint.

A. District Court's Order Dismissing on Res Judicata Grounds

Considering first the challenge to its subject matter jurisdiction, the district court found the proposed second amended complaint to have sufficiently alleged that Dr. King had direct and independent knowledge of the defendants' fraudulent schemes and had gained this knowledge from his own efforts and personal observations. A plaintiff claiming to be an "original source" also must allege that he voluntarily provided the relevant information to the federal government prior to filing the qui tam suit. With respect to this pleading requirement, the district court concluded:

Because the defendants have not contested King's allegation that he did voluntarily provide the information prior to filing this lawsuit, the Court finds for purposes of Rule 12(b)(6) that King has sufficiently alleged that he is an "original source" of the information and that the Court has subject matter jurisdiction over his claims.

(II Aplt. App. at 324). Turning away the subject matter jurisdiction challenge, the district court granted the motions to dismiss on res judicata grounds finding an identity of causes of action in King I and the qui tam suit. The district court also denied Dr. King's motion to amend on futility grounds.

B. First Rule 59(e) Motion and Amicus Curiae Brief

Dr. King filed a Rule 59(e) motion asking the court to reconsider its res judicata analysis. In response, the United States of America ("United States") filed an amicus curiae brief concurring with the relator's position on the res judicata issue and notifying the district court "that it has no record of the relator providing any information to the government on which the allegations in the qui tam are based at any time prior to February 27, 1998, the date the complaint was filed." (II Aplt. App. at 365-66). The district court promptly followed up with a brief order saying it had "reviewed" the United States' amicus curiae brief and giving the parties an additional eight days "to file responses, if they so choose, to the arguments, authorities and statements contained therein." (II Aplt. App. at 369).

In the additional time provided by the district court, the defendants filed their response on February 22, 2000, and Dr. King filed none. The defendants addressed not only the res judicata arguments but the government's statement that Dr. King had not provided it with information before filing the qui tam complaint. The defendants pointed out that the district court had been misled by the allegation in Dr. King's proposed second amended complaint that he had provided the government with a statement of all material evidence and information when he filed his original qui tam complaint. While the district court had characterized and denied their prior "facial attack" on subject matter jurisdiction, the defendants maintained the government's filing suggested facts showing the lack of subject matter jurisdiction. The defendants called on the court to consider the government's brief in dismissing this action pursuant to Fed. R. Civ. P. 12(h)(3). Prior to the district court's second dismissal order filed seven days later, Dr. King did not seek leave to file a reply or supplemental brief.

C. District Court's Second Dismissal Order

On February 29, 2000, the district court vacated its prior order of dismissal on res judicata grounds and dismissed the action for lack of subject matter jurisdiction. The district court held:

The defendants contested only the timeliness of King's disclosure of information to the government in connection with King I. The defendants did not contest the timeliness of the disclosure vis-a-vis the qui tam action, and the Court found King had sufficiently alleged for purposes of the pending Motions to Dismiss that he was an "original source" of the information, and that the Court therefore had subject matter jurisdiction over his claims.

The United States has now advised the Court and opposing counsel in its amicus curiae brief that it has no record of King providing any information about the allegations giving rise to this lawsuit prior to February 27, 1998, the date the original complaint was filed. In light of the government's clarification about King's actions, the Court concludes that reconsideration of its Order is necessary to the extent the Court now finds King did not provide the information on which the allegations in the qui tam action are based prior to filing the FCA action. King therefore does not qualify as an "original source," and, consequently, this action is barred. E.g., Spectrum, 190 F.3d at 1157 (FCA specifically bars all qui tam actions based on publicly disclosed information unless person bringing action was "original source" of information).

(II Aplt. App. at 387-88). Relying on Fed. R. Civ. P. 12(h)(3), the district court based its jurisdictional ruling on the suggested facts stated in the government's amicus curiae brief rather than the allegation appearing in Dr. King's proposed second amended complaint or the statement in Dr. King's memorandum of law filed on November 4, 1999, that he had "provided detailed information organized in notebooks to the U.S. Attorney in Oklahoma City and to the Department of Justice prior to filing this action." (II Aplt. App. at 387).

D. Dr. King's Second Rule 59(e) Mo...