United States v. Oakland Physicians Med. Ctr., LLC

• Decision Date: 12 August 2022
• Docket Number: 22-1011
• Citation: 44 F.4th 565
• Parties: UNITED STATES of America and State of Michigan ex rels. Mohamed Sy and Doshaun Edwards, Relators-Appellants, v. OAKLAND PHYSICIANS MEDICAL CENTER, LLC, dba Pontiac General Hospital; Sanyam Sharma, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

44 F.4th 565

UNITED STATES of America and State of Michigan ex rels. Mohamed Sy and Doshaun Edwards, Relators-Appellants,

v.OAKLAND PHYSICIANS MEDICAL CENTER, LLC, dba Pontiac General Hospital; Sanyam Sharma, Defendants-Appellees.

No. 22-1011

United States Court of Appeals, Sixth Circuit.

Decided and Filed: August 12, 2022

ON BRIEF: Adam S. Akeel, AKEEL & VALENTINE, PLC, Troy, Michigan, for Appellants. Kathleen H. Klaus, Jesse L. Roth, MADDIN HAUSER ROTH & HELLER, P.C., Southfield, Michigan, for Appellees.

Before: GILMAN, GRIFFIN, and THAPAR, Circuit Judges.

RONALD LEE GILMAN, Circuit Judge.

Mohamed Sy and Doshaun Edwards (the Plaintiffs) brought this qui tam action against their former employer, Oakland Physicians Medical Center, LLC, d/b/a Pontiac General Hospital, and against Sanyam Sharma, the Chief Executive Officer and Chairman of Pontiac General Hospital (the Defendants). The Plaintiffs filed their complaint under seal pursuant to 31 U.S.C. § 3730, giving the United States 60 days to investigate the claims and determine whether to intervene in the case. The government filed several ex parte motions to extend the investigation period, which ultimately spanned two-and-a-half years and ended when the government filed a notice electing not to intervene. The district court unsealed the complaint three days later and ordered the Plaintiffs to serve the Defendants, triggering the 90-day period during which the Plaintiffs were required to effectuate service of process pursuant to Rule 4(m) of the Federal Rules of Civil Procedure. But the Plaintiffs did not serve the Defendants until approximately 50 days after the time to effect service had expired.

Pursuant to Rule 12(b)(5) of the Federal Rules of Civil Procedure, the Defendants moved to dismiss the amended complaint for insufficient service of process. The court granted the motion, concluding that the Plaintiffs had failed to establish good cause for their delay and declining to grant a discretionary extension of time. For the reasons that follow, we AFFIRM the judgment of the district court.

I. BACKGROUND

The Plaintiffs were employed by Pontiac General Hospital (Pontiac) until their termination on November 22, 2017. At that time, Sy served as Pontiac's Director of Nursing, and Edwards served as a Nurse Educator. In December 2017, the Plaintiffs filed separate charges of discrimination––alleging race, gender, and religious discrimination, as well as retaliation, under Title VII––with the Equal Employment Opportunity Commission (EEOC). The EEOC, a year later, declined to pursue the charges and issued "Right to Sue" letters to the Plaintiffs. But neither of the Plaintiffs exercised their right to file a Title VII suit.

While the EEOC charges were pending, however, the Plaintiffs initiated this qui tam action against the Defendants. The action alleged that Pontiac rendered unnecessary patient procedures in order to unduly inflate its Medicare and Medicaid payments. According to the Plaintiffs, this violated the False Claims Act (FCA), 31 U.S.C. § 3729, including Pontiac's alleged retaliation for the Plaintiffs' cooperation with a Center for Medicare and Medicaid Services audit; Michigan's Medicaid FCA provisions, Mich. Comp. Laws § 400.610a(2) ; and Michigan's Whistleblower Protection Act, Mich. Comp. Laws § 15.361, et seq .

On October 23, 2020, the government declined to intervene in the qui tam action. The district court unsealed the complaint on October 26, 2020, which began the 90-day period for service under Rule 4(m). This led the Plaintiffs to file a stipulation to dismiss all but their FCA retaliation claim and their claim under Michigan's Whistleblower Protection Act, but they did not seek the issuance of a summons. They instead filed an amended complaint on January 14, 2021, setting forth their two remaining claims and adding a claim for retaliation under Michigan's Medicaid FCA, Mich. Comp. Laws § 400.610a(2). The Plaintiffs then sent the amended complaint, without attaching a summons, via certified mail to the Defendants on January 22, 2021 (within the 90-day service period).

The Plaintiffs, however, never got confirmation that the Defendants received the amended complaint. One hundred and twenty-eight days after the seal was lifted, the Plaintiffs realized that no summons had been issued. Upon realizing this oversight, the Plaintiffs sought the issuance of a summons, which was provided on March 4, 2021. The Plaintiffs then served the Defendants with the amended complaint and summons on March 15, 2021, which was approximately 50 days after the 90-day period to effect service of process had already expired.

On April 26, 2021, the Defendants moved to dismiss the amended complaint under Rule 12(b)(5) of the Federal Rules of Civil Procedure for insufficient service of process. The district court granted the motion, concluding that the Plaintiffs had failed to establish good cause for their delay and declining to grant a discretionary extension of time. In response, the Plaintiffs moved the court to reconsider its original decision, but the court declined to do so. This timely appeal followed.

II. ANALYSIS

A. Standard of review

We review a district court's judgment dismissing a complaint for failure to effect timely service of process under the abuse-of-discretion standard. Byrd v. Stone , 94 F.3d 217, 219 (6th Cir. 1996). "A district court abuses its discretion when it relies on clearly erroneous findings of fact, or when it improperly applies the law or uses an[ ] erroneous legal standard." Romstadt v. Allstate Ins. Co. , 59 F.3d 608, 615 (6th Cir. 1995) (citation omitted). We may reverse only if we are "firmly convinced that a mistake has been made, i.e., when we are left with a definite and firm conviction that the trial court committed a clear error of judgment." United States v. Heavrin , 330 F.3d 723, 727 (6th Cir. 2003) (citation omitted).

B. The relevant test

Rule 4(m) of the Federal Rules of Civil Procedure sets forth the timeline for effecting service of process, as well as the scenarios that warrant enlarging that timeframe. The Rule states:

If a defendant is not served within 90 days after the complaint is filed, the court—on motion or on its own after notice to the plaintiff—must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.

Rule 4's service-of-process requirements apply to claims brought under the FCA. See 31 U.S.C. § 3730(b)(3) ("The defendant shall not be required to respond to any complaint filed under this section until 20 days after the complaint is unsealed and served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure."). Thus, once a qui tam action is unsealed, plaintiffs must serve defendants within the 90-day period prescribed by Rule 4.

How a district court should respond to a motion to enlarge the time for service of process depends on the circumstances. If a plaintiff demonstrates good cause for the failure to timely serve process, the court must extend the time for service. Fed. R. Civ. P. 4(m). But absent a finding of good cause, the court retains discretion as to whether or not to enlarge that timeframe. Henderson v. United States , 517 U.S. 654, 662, 116 S.Ct. 1638, 134 L.Ed.2d 880 (1996). On appeal, the Plaintiffs in the case before us do not challenge the court's determination that they failed to establish good cause for their delayed service of process. They instead limit their argument to the court's decision to not grant a discretionary extension of time despite the Plaintiffs' lack of good cause. We will therefore focus on whether the court abused its discretion by declining to enlarge the service-of-process period under these circumstances.

This court has not yet announced a test that district courts should employ when assessing whether to exercise their discretion to enlarge the service-of-process period. The district courts in this circuit, however, including the district court in the present case, have consistently balanced the following five factors:

[whether] (1) a significant extension of time was required; (2) an extension of time would prejudice the defendant other than the inherent "prejudice" in having to defend the suit; (3) the defendant had actual notice of the lawsuit; (4) a dismissal without prejudice would substantially prejudice the plaintiff; i.e., would his lawsuit be time-barred; and (5) the plaintiff had made any good faith efforts at effecting proper service of process.

Slenzka v. Landstar Ranger, Inc ., 204 F.R.D. 322, 326 (E.D. Mich. 2001) ; see also In re Ohio Execution Protocol Litig. , 370 F. Supp. 3d 812, 821 (S.D. Ohio 2019).

Other circuits have looked to the Advisory Committee's note to Rule 4 for guidance. See Petrucelli v. Bohringer & Ratzinger , 46 F.3d 1298, 1305–06 (3d Cir. 1995) ("The Advisory Committee['s] note provides some guidance as to what factors the district court should consider when deciding to exercise its discretion to extend time for service in the absence of a finding of good cause."). The Advisory Committee's note explains that expanding the service-of-process timeline "may be justified, for example, if the applicable statute of limitations would bar the refiled action, or if the defendant is evading service or conceals a defect in attempted service." Fed. R. Civ. P. 4(m) (1993) (Advisory Committee's note to 1993 amendment); see also Morrissey v. Mayorkas , 17 F.4th 1150, 1160 (D.C. Cir. 2021). Additional factors that courts have mentioned include whether the plaintiff was diligent in correcting the service deficiencies, Jones v. Ramos , 12 F.4th 745, 749 (7th Cir. 2021), and whether the plaintiff was a pro se litigant deserving of additional latitude to correct defects in the service of process, Kurka v. Iowa County , 628 F.3d 953, 958 (8th Cir. 2010).

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