US EX REL. STINSON, LYONS, ET AL. v. Blue Cross, Inc., No. CV 489-224.

CourtUnited States District Courts. 11th Circuit. United States District Court (Southern District of Georgia)
Writing for the CourtEDENFIELD
Citation755 F. Supp. 1040
PartiesUNITED STATES of America ex rel. STINSON, LYONS, GERLIN & BUSTAMANTE, P.A., Plaintiffs, v. BLUE CROSS BLUE SHIELD OF GEORGIA, INC., Defendant.
Docket NumberNo. CV 489-224.
Decision Date18 October 1990

755 F. Supp. 1040

UNITED STATES of America ex rel. STINSON, LYONS, GERLIN & BUSTAMANTE, P.A., Plaintiffs,
v.
BLUE CROSS BLUE SHIELD OF GEORGIA, INC., Defendant.

No. CV 489-224.

United States District Court, S.D. Georgia, Savannah Division.

October 18, 1990.


755 F. Supp. 1041
COPYRIGHT MATERIAL OMITTED
755 F. Supp. 1042
COPYRIGHT MATERIAL OMITTED
755 F. Supp. 1043
Luis C. Bustamante, Tracy E. Tomlin, Miami, Fla., for plaintiffs

William H. Major, William B. Brown, Atlanta, Ga., Emmett B. Lewis, Washington, D.C., Stuart M. Gerson, Hinton R. Pierce, Lawrence B. Lee, Savannah, Ga., Michael F. Hertz, Steve Altman, Stanley E. Alderson, Attorneys, Civ. Div., Dept. of Justice, Washington, D.C., Sam P. Inglesby, Jr., Savannah, Ga., for defendant.

ORDER

EDENFIELD, Chief Judge.

The defendant, Blue Cross Blue Shield of Georgia ("BC-GA") has moved to dismiss this action, questioning the Court's subject-matter jurisdiction under the qui tam provisions of the False Claims Act, 31 U.S.C. §§ 3729-31 (1988) hereinafter "FCA", as amended by the False Claims Act Amendments of 1986, Pub.L. No. 99-562, 100 Stat. 3153 (1986) hereinafter "FCA Amendments". In addition, BC-GA moves to dismiss, or, in the alternative, for a more definite statement, on the ground that the qui tam plaintiff, Stinson, Lyons, Gerlin, & Bustamante, P.A. ("Stinson Lyons"), has not pleaded its allegations of fraud with the particularity required by Fed.R.Civ.P. 9(b). The jurisdictional issue presents, among other things, a question of statutory construction. The Court does not find BC-GA's jurisdictional arguments persuasive. The Court agrees with BC-GA, however, that Stinson Lyons has not pleaded its complaint with the required particularity. For reasons developed in more detail below, the Court DENIES BC-GA's motion to dismiss, and GRANTS BC-GA's motion for a more definite statement.

BACKGROUND

A. Facts and Procedural History

Stinson Lyons has brought this suit against BC-GA, alleging that BC-GA has defrauded the government by shifting responsibility for the payment of insurance claims to Medicare when, under section 116(a) of the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"), it should not have done so. When workers aged 65-69 ("the working aged") enjoy both Medicare and an employer group health coverage plan, and are still working when they receive benefits, TEFRA requires that Medicare remain the secondary insurer, and that the private insurer pay primary. Stinson Lyons alleges that BC-GA knew of and understood its contractual and legal obligations under TEFRA, but nevertheless tricked Medicare into paying as a primary insurer when BC-GA should have paid primary. The effect of these actions, says Stinson Lyons, was that BC-GA ended up paying out much less than it should have, at the taxpayers' expense, in situations where an insured was covered both by Medicare and private insurance under BC-GA. According to the complaint, BC-GA also concealed and avoided its responsibility to Medicare under TEFRA in certain other situations.

755 F. Supp. 1044

How Stinson Lyons came to learn of this alleged fraud is important to the resolution of whether the Court has subject matter jurisdiction. Several years ago, Stinson Lyons represented a Mr. Leonard in an action brought by Mr. Leonard to redress injuries he sustained in a car crash. Provident Life & Accident Insurance Co. v. Leonard, No. 85-10113 CA(15) (Fla. Dade Co. Cir.Ct. March 1985), rev'd, 526 So.2d 721 (Fla.Dist.Ct.App.1988) ("the Leonard litigation"). During the course of the Leonard litigation, Stinson Lyons became aware of what it considered to be illegal claims handling practices of Mr. Leonard's insurer, Provident Life & Accident Insurance Company ("Provident"). Through discovery in the Leonard litigation, Stinson Lyons obtained internal corporate memoranda from Provident. One of these memoranda addressed Provident's method of processing claims for the working aged. The memorandum recommended changing the procedure to comply with Medicare regulations promulgated in the wake of TEFRA. Another, entitled "Policy Issue, Medicare Reimbursement," discussed several alternative methods of coordinating the payment of medical benefits between Provident and Medicare. That document contains a list of nine insurance carriers supposedly contacted by Provident, and next to the names of three carriers is the phrase "Same as us." One of the three is the defendant BC-GA. Stinson Lyons argues that this phrase indicates that someone at BC-GA admitted to someone at Provident that BC-GA is also defrauding the government in precisely the same way as Provident.

Stinson Lyons instituted a qui tam action against Provident based on the documents it acquired in the Leonard litigation. See United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Provident Life & Accident Ins. Co., 721 F.Supp. 1247 (S.D.Fla.1989) ("the Provident litigation"). Subsequently, armed only with the notation "Same as us," Stinson Lyons filed identical qui tam actions against BC-GA and the other two carriers mentioned. See United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co. of Am., 736 F.Supp. 614 (D.N.J.1990); United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Pan American Life Ins. Co., No. 90-411 (E.D.La.).

B. The FCA Generally

The purpose of the FCA is to recover money fraudulently taken from the government. E.g., United States ex rel. Houck v. Folding Carton Admin. Comm., 881 F.2d 494, 504 (7th Cir.1989) (citing United States ex rel. Marcus v. Hess, 317 U.S. 537, 551, 63 S.Ct. 379, 387, 87 L.Ed. 443 (1943)), cert. denied, ___ U.S. ___, 110 S.Ct. 1471, 108 L.Ed.2d 609 (1990) hereinafter "Houck". The FCA provides that, under certain circumstances, a private party — called a qui tam plaintiff or private citizen relator — may bring an action on the United States's behalf to recover fraudulently taken funds. Houck, 881 F.2d at 504; see Avco Corp. v. United States Dep't of Justice, 884 F.2d 621, 622 (D.C.Cir.1989). By allowing a qui tam plaintiff to share with the government any proceeds of the action, United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 1903 n. 11, 104 L.Ed.2d 487 (1989), the Act provides financial incentives to private parties to expose and prosecute fraud against government. United States v. Burmah Oil Co., 558 F.2d 43, 45 (2d Cir.), cert. denied, 434 U.S. 967, 98 S.Ct. 511, 54 L.Ed.2d 454 (1977). In addition to a share in the proceeds, the FCA Amendments of 1986 now authorize awards of attorney's fees to prevailing qui tam plaintiffs. 31 U.S.C. § 3730(d)(1) (1988); see S.Rep. No. 345, 99th Cong., 2d Sess. 29, reprinted in 1986 U.S.Code Cong. & Admin.News 5266, 5294. hereinafter USCCAN.

By allowing certain private parties to sue on behalf of the government, the FCA creates a statutory exception to the general rule regarding standing to sue. United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 460 (5th Cir.1977), cert. denied, 434 U.S. 1035, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978). Congress, in passing the FCA, conferred standing on qui tam plaintiffs by assigning to them a portion of

755 F. Supp. 1045
the government's interest in the action. United States ex rel. Stillwell v. Hughes Helicopters, Inc., 714 F.Supp. 1084, 1098 (C.D.Cal.1989). See generally Comment, The Standing of Qui Tam Relators Under the False Claims Act, 57 U.Chi.L.Rev. 543 (1990). The FCA, as amended, however, does not confer this standing to sue on all private parties. Parties who fall within certain exceptions to the FCA may not initiate qui tam actions, for district courts have no jurisdiction over their claims
(e) Certain Actions Barred. ...
. . . . .
(4)(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a Congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

31 U.S.C. § 3730(e) (1988) (emphasis added).

BC-GA contends that this Court does not have jurisdiction because Stinson Lyons bases this action on information publicly disclosed "in a criminal, civil, or administrative hearing" within the meaning of the statute. It further contends that Stinson Lyons is not an "original source" exception. These contentions raise important questions of statutory construction of the FCA, as amended. Before the Court may address these questions, however, it must first determine whether, as BC-GA contends, Stinson Lyons is collaterally estopped from claiming that this Court has jurisdiction because the New Jersey federal district court disclaimed jurisdiction in Provident, 736 F.Supp. 614 (D.N.J.1990).

ANALYSIS

A. Collateral Estoppel

Initially, BC-GA argues that Stinson Lyons is precluded from invoking the Court's jurisdiction because it "has already litigated and lost those same issues in New Jersey." It urges that for the Court to address the statutory issue of subject-matter jurisdiction is to condone forum-shopping by Stinson Lyons. BC-GA contends that the doctrine of collateral estoppel applies because the Prudential court faced the precise jurisdictional issue, involving Stinson Lyons, that is before this Court. Stinson Lyons argues in response that the Prudential court decided only "pure unmixed questions of law," and therefore the doctrine has no application here. Neither party is wholly correct.

For the proposition that the...

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44 practice notes
  • Seneca Nation of Indians v. State of N.Y., No. 85-CV-411C.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • October 31, 1998
    ...construction (Item 72, at 33). United States ex. rel Stinson, Lyons, Gerlin and Bustamante, P.A. v. Blue Cross Blue Shield of Georgia, 755 F.Supp. 1040, 1046 (S.D.Ga. 1990). As the Second Circuit has Especially, where pure questions of law are presented, courts and commentators both have re......
  • Miller v. Holzmann, Civil Action No. 95-1231 (RCL).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • August 12, 2008
    ...relator's amended complaint); United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Ga., Inc., 755 F.Supp. 1040, 1044 (S.D.Ga.1990) (noting that "the FCA Amendments of 1986 now authorize awards of attorney's fees to prevailing qui tam plaintiffs" befor......
  • U.S. ex rel. Butler v. Magellan Health Services, No. 97-1925-CIV-T-17B.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • November 5, 1999
    ...See Wang v. FMC Corp., 975 F.2d 1412, 1416 (9th Cir.1992); see also United States ex rel. Stinson v. Blue Cross Blue Shield of Georgia, 755 F.Supp. 1040, 1050 (S.D.Ga. 1990) [hereinafter "Stinson Under the rough language of the statute, a public disclosure can occur (1) in a criminal, civil......
  • Peters v. Amoco Oil Co., No. Civ.A. 96-D-940-N.
    • United States
    • United States District Courts. 11th Circuit. Middle District of Alabama
    • June 21, 1999
    ...a relaxed pleading standard." Id. (quoting United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield, 755 F.Supp. 1040, 1052 (S.D.Ga. 1990) ("Blue Cross")). Further, the complaint must also "allege that the necessary information lies within the defendant's co......
  • Request a trial to view additional results
44 cases
  • Seneca Nation of Indians v. State of N.Y., No. 85-CV-411C.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • October 31, 1998
    ...construction (Item 72, at 33). United States ex. rel Stinson, Lyons, Gerlin and Bustamante, P.A. v. Blue Cross Blue Shield of Georgia, 755 F.Supp. 1040, 1046 (S.D.Ga. 1990). As the Second Circuit has Especially, where pure questions of law are presented, courts and commentators both have re......
  • Miller v. Holzmann, Civil Action No. 95-1231 (RCL).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • August 12, 2008
    ...relator's amended complaint); United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Ga., Inc., 755 F.Supp. 1040, 1044 (S.D.Ga.1990) (noting that "the FCA Amendments of 1986 now authorize awards of attorney's fees to prevailing qui tam plaintiffs" befor......
  • U.S. ex rel. Butler v. Magellan Health Services, No. 97-1925-CIV-T-17B.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • November 5, 1999
    ...See Wang v. FMC Corp., 975 F.2d 1412, 1416 (9th Cir.1992); see also United States ex rel. Stinson v. Blue Cross Blue Shield of Georgia, 755 F.Supp. 1040, 1050 (S.D.Ga. 1990) [hereinafter "Stinson Under the rough language of the statute, a public disclosure can occur (1) in a criminal, civil......
  • Peters v. Amoco Oil Co., No. Civ.A. 96-D-940-N.
    • United States
    • United States District Courts. 11th Circuit. Middle District of Alabama
    • June 21, 1999
    ...a relaxed pleading standard." Id. (quoting United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield, 755 F.Supp. 1040, 1052 (S.D.Ga. 1990) ("Blue Cross")). Further, the complaint must also "allege that the necessary information lies within the defendant's co......
  • Request a trial to view additional results

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