United States ex rel. Osheroff v. Humana, Inc.

• Decision Date: 16 January 2015
• Docket Number: No. 13–15278.,13–15278.
• Parties: UNITED STATES of America ex rel. Marc OSHEROFF, Plaintiff–Appellant, v. HUMANA, INC., et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

776 F.3d 805

UNITED STATES of America ex rel. Marc OSHEROFF, Plaintiff–Appellant,

v.HUMANA, INC., et al., Defendants–Appellees.

No. 13–15278.

United States Court of Appeals,Eleventh Circuit.

Jan. 16, 2015.

Jonathan Kroner, Jonathan Kroner Law Office, Miami Beach, FL, Gary P. Timin, Squire Sanders (U.S.), LLP, Tampa, FL, for Plaintiff–Appellant.

David Jeffrey Leviss, K. Lee Blalack, II, Sara Zdeb, Amanda M. Santella, O'Melveny & Myers, LLP, Washington, DC, Andrew Russell Kruppa, Daniel Christopher Mazanee, Squire Patton Boggs (U.S.) LLP, John Clifford Hanson, II, The Barthet Firm, Miami, FL, for Defendants–Appellees.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 1:10–cv–24486–RNS.

Before TJOFLAT, JILL PRYOR and FAY, Circuit Judges.

JILL PRYOR, Circuit Judge:

This appeal follows the district court's dismissal of a qui tam complaint upon holding that the lawsuit was barred by the public disclosure provision of the False Claims Act. After careful review of the record and the briefs, and with the benefit of oral argument, we affirm.

I.

Relator Marc Osheroff operates medical office buildings in Miami and has considered opening a health clinic there since the early 2000s. While doing market research on health clinics, Mr. Osheroff learned that many area clinics provide a variety of free services to patients. Upon learning of these programs, Mr. Osheroff began to research the clinics' services in more detail by interviewing employees and patients. Mr. Osheroff has never been employed by or done business with any of the defendants.

Mr. Osheroff filed this qui tam action under seal on December 16, 2010, and the United States declined to intervene. Mr. Osheroff amended his complaint in December 2011, reducing the named defendants to three clinics and several health insurers that contract with the clinics. The clinics are Pasteur Medical Center, Inc. (“Pasteur”); CAC–Florida Medical Centers, LLC (“CAC”); and MCCI Group Holdings, LLC, which reached a settlement with Mr. Osheroff prior to this appeal. The health insurers are Humana Inc.; Humana Health Insurance Company of Florida, Inc.; Humana Medical Plan, Inc.; and CarePlus Health Plans, Inc., a subsidiary of Humana Inc. (collectively, the “Humana defendants”). The Humana defendants all provide Medicare Advantage health plans to the clinics' patients and are paid by Medicare on a per-patient basis; the plans in turn pay the clinics based on patient enrollment.

The amended complaint includes information Mr. Osheroff gathered through his interviews, as well as information from the clinics' websites. Specifically, Mr. Osheroff alleges that the clinics provided, and the Humana defendants either knew of or promoted, a variety of free services for patients and health plan members, including transportation, meals, spa and salon services, and entertainment. The amended complaint includes a great amount of detail about these services. For example, the amended complaint alleges that: the clinics used limo-class vehicles to transport patients and “nearly all trips ... contained two or fewer passengers even though the vehicles seat 8, 10 or more” passengers, Am. Compl. at 21, ¶ 130; CAC limos took 93 trips to Mr. Osheroff's medical office buildings in early 2010, 88 of which carried two or fewer people, id.; lunch at a CAC clinic on October 7, 2010 included “white rice, meat, [and] plantains, but the options change daily,” id. at 29, ¶ 201; lunch at a Pasteur clinic on June 17, 2010 included “rice and beans, meat, bread, soft drink, and vegetables,” id. at 31, ¶ 219; the clinics provided takeaway containers for lunch, id. at 29, ¶ 203; and the clinics held holiday and birthday parties with meals, soda, and cake. Id. at 32, ¶ 221.

Mr. Osheroff alleges that the clinics offered these services without regard for medical purpose or financial need and that the value of the services is more than nominal. To show the worth of the clinics' services, the amended complaint includes the price of comparable services, including the taxi and limo rates in Miami–Dade County, id. at 23, ¶¶ 138–42, and the price of a Cuban sandwich and a hot lunch special at a local restaurant. Id. at 37, ¶¶ 247–48.

The Anti–Kickback Statute (“AKS”), 42 U.S.C. § 1320a–7b(b), prohibits knowingly offering or providing remuneration for the purpose of inducing the recipient to purchase a good or service for which payment may be made under a federal health care program. The Civil Monetary Penalties Law (“CMPL”), 42 U.S.C. § 1320a–7a(5), similarly prohibits offering or providing remuneration for the purpose of influencing the recipients to order or receive care from a particular provider, payment for which may be made under Medicare. The amended complaint alleges that the defendants' actions violated both statutes. Mr. Osheroff also alleges that this conduct violated the False Claims Act (“FCA”), 31 U.S.C. §§ 3729–3733, under an implied certification theory.¹

The defendant clinics and the Humana defendants moved to dismiss the amended complaint, and the district court granted the motions. Mr. Osheroff moved for reconsideration of the dismissal, which the district court denied. Mr. Osheroff timely appealed.

II.

We review a district court's decision on a motion to dismiss de novo. Martes v. Chief Exec. Officer of S. Broward Hosp. Dist., 683 F.3d 1323, 1325 (11th Cir.2012). We also review questions of statutory interpretation and retroactivity de novo. Gonzalez v. McNary, 980 F.2d 1418, 1419 (11th Cir.1993); Goldsmith v. City of Atmore, 996 F.2d 1155, 1159 (11th Cir.1993). We review a district court's denial of an evidentiary hearing for an abuse of discretion. United States v. Brown, 441 F.3d 1330, 1350 (11th Cir.2006).

III.

The FCA prohibits fraud against government programs. Section 3730 of the act allows either the United States government or private citizens to file civil lawsuits to enforce the FCA, but it bars private qui tam suits based on publicly disclosed information. In 2010, Congress amended the FCA's public disclosure bar as part of the Patient Protection and Affordable Care Act (“PPACA”), Pub.L. No. 111–148, 124 Stat. 119 (2010). This case raises issues related to the impact of the amendments and the current application of the public disclosure bar. In this appeal, we must decide four questions: (1) whether the 2010 amendments to § 3730 of the FCA apply retroactively; (2) whether the amended public disclosure bar remains jurisdictional in nature; (3) whether the district court erred in considering documents extrinsic to the complaint and not holding an evidentiary hearing; and (4) whether the FCA's public disclosure provision bars this action. We address each question in turn.

A.

The district court held that the 2010 amendments to the public disclosure provision do not apply retroactively, citing Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 559 U.S. 280, 283 n. 1, 130 S.Ct. 1396, 176 L.Ed.2d 225 (2010). The court applied the prior version of § 3730 to alleged conduct that occurred before the effective date of the amendments, March 23, 2010, and the amended version to conduct that occurred after that date.

Mr. Osheroff argues that the amended statute should apply to all conduct alleged in the amended complaint, regardless of when it occurred. But he waived this argument because he failed to raise it in the district court. See Sterling Fin. Inv. Grp., Inc. v. Hammer, 393 F.3d 1223, 1226 (11th Cir.2004). In fact, his argument in the district court assumed the opposite. While he contended that certain state court filings should not be considered because the amended § 3730 removed them from the realm of “public” disclosures, he made this argument only in relation to alleged conduct that occurred on or after March 23, 2010, effectively conceding that the statute does not apply retroactively. Accordingly, we hold that Mr. Osheroff has waived his argument regarding retroactive application of the amendments. For purposes of this appeal, we will apply the amended FCA provisions only prospectively.

B.

Next, we must decide whether the amended statute is jurisdictional or presents grounds for dismissal for failure to state a claim.² Before 2010, the FCA's public disclosure bar provided that “[n]o court shall have jurisdiction” over an action based on publicly disclosed allegations or transactions. 31 U.S.C. § 3730(e)(4) (2006). The PPACA amended this section, which now provides that a “court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed” in certain enumerated sources. 31 U.S.C. § 3730(e)(4) (2012).

The prior version of § 3730(e)(4) was explicitly a jurisdictional bar, and motions to dismiss based on this section were considered under Federal Rule of Civil Procedure 12(b)(1). See Rockwell Int'l Corp. v. United States, 549 U.S. 457, 467–68, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007). Some courts have held that the amended version of § 3730(e)(4) merely provides grounds for dismissal, rather than a jurisdictional bar. See, e.g., United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 916–917 (4th Cir.2013), petition for cert. filed, ––– U.S. ––––, ––– S.Ct. ––––, ––– L.Ed.2d ––––, 82 U.S.L.W. 3586 (2014) (No. 13–1162) (“In our view, these changes make it clear that the public-disclosure bar is no longer a jurisdiction-removing provision.”); United States ex rel. Harman v. Trinity Indus., No. 2:12–CV–00089–JRG, 2014 WL 47258, at *3 (E.D.Tex. Jan. 6, 2014) (“[The 2010 revision] recharacterizes the public disclosure bar as a ground for dismissal—effectively, an affirmative defense—rather than a jurisdictional bar.”). Here, however, the district court assumed that the amended statute presents the same jurisdictional bar as the prior version and analyzed the defendants' ...