United States ex rel. Hanks v. United States

• Decision Date: 03 June 2020
• Docket Number: August Term 2019,No. 18-3376,18-3376
• Parties: UNITED STATES of America EX REL. Don HANKS, Plaintiff-Appellant, v. UNITED STATES of America, Real Party in Interest, Intervenor-Appellee, Florida Cancer Specialists, Gulfcoast Oncology Associates, Integrated Community Oncology Network, LLC, United States Oncology Specialty, LP, Hematology and Oncology Associates of the Treasure Coast, Mid-Florida Hematology and Oncology Centers, Pasco Hernando Oncology Associates, P.A., Cancer Institute of Florida, P.A., Coastal Oncology PL, Stuart Oncology Associates, P.A., Ayub Sokoi, Matzkowitz, and Sennabaum, David Dresdner, M.D., Georgia Cancer Specialists, Northwest Georgia Oncology Centers, PC, Augusta Oncology Associates, Central Georgia Cancer Care, Southeast Georgia Hematology Oncology Associates, P.C., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

961 F.3d 131

UNITED STATES of America EX REL. Don HANKS, Plaintiff-Appellant,

v. UNITED STATES of America, Real Party in Interest, Intervenor-Appellee,Florida Cancer Specialists, Gulfcoast Oncology Associates, Integrated Community Oncology Network, LLC, United States Oncology Specialty, LP, Hematology and Oncology Associates of the Treasure Coast, Mid-Florida Hematology and Oncology Centers, Pasco Hernando Oncology Associates, P.A., Cancer Institute of Florida, P.A., Coastal Oncology PL, Stuart Oncology Associates, P.A., Ayub Sokoi, Matzkowitz, and Sennabaum, David Dresdner, M.D., Georgia Cancer Specialists, Northwest Georgia Oncology Centers, PC, Augusta Oncology Associates, Central Georgia Cancer Care, Southeast Georgia Hematology Oncology Associates, P.C., Defendants-Appellees.^*

No. 18-3376

August Term 2019

United States Court of Appeals, Second Circuit.

Argued: February 3, 2020

Decided: June 3, 2020

ROB HENNIG, Hennig Ruiz & Singh, P.C., Los Angeles, CA, for Plaintiff-Appellant United States of America ex rel. Don Hanks.

JULIE CIAMPORCERO AVETTA, (Bruce R. Ellisen, on the brief) for Richard E. Zuckerman, Principal Deputy Assistant Attorney General, Department of Justice, Washington, DC, Richard P. Donaghue, United States Attorney for the Eastern District of New York, of counsel, for Appellee United States of America.

LAWRENCE M. KRAUSS, Foley & Lardner LLP, Boston, MA, (Rachel Kramer, Michael P. Matthews, on the brief) for Defendants-Appellees Florida Cancer Specialists & Research Institute, LLC, Ayub, Sokoi, Matzkowitz and Sennabaum, M.D.s, P.A. d/b/a New Hope Cancer Center, Coastal Oncology, P.L., J. Paonessa, M.D., P.A. (Gulfcoast Oncology Associates), and Pasco Hernando Oncology Associates, P.A.

JOSEPH R. PALMORE, Morrison & Foerster LLP, Washington, DC, (Samuel B. Goldstein, Joshua Hill, Jr., Lena H. Hughes, on the brief) for Defendant-Appellee U.S. Oncology Specialty, LP.

JEREMY P. BURNETTE, Akerman LLP, Atlanta, GA, for Defendants-Appellees Central Georgia Cancer Care, P.C., Georgia Cancer Specialists I, P.C., and Southeast Georgia Hematology Oncology Associates, P.C.

JAMES W. BOSWELL, III, King & Spalding LLP, Atlanta, GA, (Michael E. Paulhus, Jennifer S. Lewin, on the brief) for Defendant-Appellee Northwest Georgia Oncology Centers, P.C.

Before: JACOBS, SULLIVAN, Circuit Judges, and FURMAN, District Judge.¹

Dennis Jacobs, Circuit Judge:

Relator Don Hanks brings this qui tam action asserting claims on behalf of the United States under the False Claims Act, 31 U.S.C. § 3729 et seq. (the "FCA"), and on behalf of certain states under state law analogs. Appeal is taken from the dismissal of the Fifth Amended Complaint, which (like the earlier complaints) alleges that certain healthcare providers, physician oncology practices, and group purchasing organizations (collectively, "Defendants-Appellees"² ), and others, conspired with pharmaceutical company Amgen, Inc. ("Amgen") to purchase Amgen drugs at discounted rates with knowledge that Amgen would fail to report the discounts to government agencies. It is alleged that these unreported discounts resulted in: (1) increased sales of Amgen products; and (2) inflated reimbursements to healthcare providers who prescribed--and in some cases over-prescribed--those products.

The United States District Court for the Eastern District of New York (Johnson, J. ) dismissed the claims, without prejudice, under the FCA's first-to-file rule, 31 U.S.C. § 3730(b)(5), on the ground that the core allegations had been raised in earlier lawsuits by other plaintiffs. In the alternative, the district court held that the claims were barred by Federal Rule of Civil Procedure 9(b) for failure to allege fraud with sufficient particularity. But in reaching its decision the district court elided the issue of whether the FCA's public disclosure bar, 31 U.S.C. § 3730(e)(4), deprived the court of jurisdiction. Because federal courts are not generally permitted to assume the existence of subject-matter jurisdiction, we vacate and remand for the district court to determine whether the public disclosure bar applies to Hanks’ claims. The other issues in the case will abide a further appeal in the event the district court has jurisdiction to decide them.

But we must first establish the existence of appellate jurisdiction, which Defendants-Appellees contest on the basis that Hanks’ notice of appeal was untimely. See Williams v. KFC Nat'l Mgmt. Co., 391 F.3d 411, 415 (2d Cir. 2004) (holding that filing of a timely notice of appeal is "mandatory and jurisdictional" (internal quotation marks omitted)). We conclude in Point I that appellate jurisdiction exists.

I

Hanks filed a notice of appeal on November 7, 2018, 51 days after the district court entered judgment on September 18. While parties ordinarily have 30 days from the entry of judgment to file a notice of appeal, Federal Rule of Appellate Procedure 4(a)(1)(B) requires that notice be filed within 60 days "if one of the parties is ... the United States." In December 2012, the United States intervened with respect to Hanks’ claims against Amgen, and it orchestrated the settlement of those claims, which were formally dismissed by a so-ordered stipulation on November 21, 2013. The United States has never formally withdrawn as a party, and has continued to monitor the case, as reflected in its efforts to protect an alleged tax-related interest in a setoff of funds owed to Hanks under the government's settlement with Amgen.

The motion to dismiss emphasizes that the United States intervened in this case for a limited purpose that was accomplished by the Amgen settlement; it later declined to intervene after the filing of a third amended complaint; and it took no further position through the subsequent iterations, including the Fifth Amended Complaint from which this appeal is taken. Relying on United States ex rel. Eisenstein v. City of New York, Defendants-Appellees argue that monitoring--which the government may do for every qui tam action--is insufficient to make the United States a party. See 556 U.S. 928, 935-36, 129 S.Ct. 2230, 173 L.Ed.2d 1255 (2009) (holding that the government's statutory entitlement to receive pleadings and deposition transcripts in FCA cases in which it does not intervene does not confer party status on the United States).

The Federal Rules of Appellate Procedure do not define "party," but the motion to dismiss is defeated by precedent and the plain wording of the rule. "The stated criterion [for the 60-day deadline] is whether the United States is a party to the action ... and not whether the United States is concerned with the particular order sought to be appealed ...." United States v. Am. Soc'y of Composers, Authors and Publishers ("ASCAP"), 331 F.2d 117, 119 (2d Cir. 1964) (citing the former Fed. R. Civ. P. 73(a), the predecessor to Rule 4(a)(1)(B) ). See Cohen v. Empire Blue Cross & Blue Shield, 176 F.3d 35, 40 (2d Cir. 1999) (noting similarly). ASCAP deemed it "undesirable to read into a procedural statute or rule, fixing the time within which action may be taken, a hidden exception or qualification that will result in the rights of clients being sacrificed when capable counsel have reasonably relied on the language." Id. Accordingly, we have stated--albeit arguably in dicta--that "the 60–day deadline is applicable if the United States was a party to the action at any stage of the litigation ." Cohen, 176 F.3d at 40 (emphasis added).

Here, in the qui tam context, we decline to read into Rule 4(a)(1)(B) a trap that snaps when the United States: (1) has formally intervened in the matter; (2) has not formally withdrawn as a party; and (3) has continued to participate in proceedings before the district court, by monitoring or otherwise. In United States ex rel. Eisenstein v. City of New York, we held that the United States is not a "party" for purposes of Rule 4(a)(1)(B) in a qui tam action in which it never intervened. 540 F.3d 94, 101 (2d Cir. 2008), aff'd sub nom. United States ex rel. Eisenstein v. City of New York, New York, 556 U.S. 928, 129 S.Ct. 2230, 173 L.Ed.2d 1255 (2009). In such circumstances, we reasoned, "[a]ll parties [are] aware the government [has] disclaimed any participation in the suit." Id. (quoting United States ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327, 1329 (10th Cir. 1978) ). By the same token, the parties here are aware that the government intervened and did not withdraw.

Intervention without withdrawal enables the government to continue active participation in the ongoing proceedings. Thus here, after the filing of the Fifth Amended Complaint and the government's decision to decline intervention, the government participated actively: it moved the court to permit setoff of funds owed to Hanks pursuant to the government's settlement with Amgen, in order to satisfy certain outstanding federal tax liabilities (the "Setoff Motion"). Moreover, although the United States need not have "ha[ve] an interest in the appeal" to qualify as a party for purposes of Rule 4(a)(1)(B), Cohen, 176 F.3d at 40, the United States has actively participated in this appeal, urging a partial remand for the district court to address the Setoff Motion, which had yet to be resolved when the district court dismissed the action.

Defendants-Appellees focus on the government's decision not to intervene with respect to the Fifth Amended Complaint, and cite the principle that "[t]he Court cannot ... designat[e] the United states a ‘party’ even after it has declined to assume the rights and burdens attendant to full party status." Eisenstein, 556 U.S. at 934, 129 S.Ct. 2230. But, as the Ninth Circuit observed, the Supreme Court in Eisenstein "did not call for a claim-by-claim analysis, or otherwise indicate that party-status is contingent on anything other than whether [the government] ‘intervenes in accordance with the procedures established by federal law.’ " United States ex rel. Bennett v....