USA Ex Rel v. Lhc Group Inc.

• Decision Date: 04 October 2010
• Docket Number: No. 09-5883.,09-5883.
• Citation: 623 F.3d 287
• Parties: UNITED STATES of America ex rel., Plaintiff-Appellee, Sally Christine SUMMERS, Plaintiff-Appellant, v. LHC GROUP, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

623 F.3d 287

UNITED STATES of America ex rel., Plaintiff-Appellee,

Sally Christine SUMMERS, Plaintiff-Appellant,

v.LHC GROUP, INC., Defendant-Appellee.

No. 09-5883.

United States Court of Appeals,Sixth Circuit.

Argued: June 15, 2010.

Decided and Filed: Oct. 4, 2010.

ARGUED: Phillip L. Davidson, Nashville, Tennessee, for Appellant. William H. Jordan, Alston & Bird, LLP, Atlanta, Georgia, Ellen Bowden McIntyre, Assistant United States Attorney, Nashville, Tennessee, for Appellee. ON BRIEF: Phillip L. Davidson, Nashville, Tennessee, for Appellant. William H. Jordan, Lisa Barry Frist, Alston & Bird, LLP, Atlanta, Georgia, Ellen Bowden McIntyre, Assistant United States Attorney, Nashville, Tennessee, for Appellee.

Before: KEITH, BOGGS, and McKEAGUE, Circuit Judges.

BOGGS, J., delivered the opinion of the court, in which McKEAGUE, J., joined. KEITH, J. (pp. 299-301), delivered a separate opinion concurring in the result.

OPINION

BOGGS, Circuit Judge.

Appellant Sally Summers (“Summers”) appeals an order of the district court denying her motion under Federal Rule of Civil Procedure 59(e) to alter an earlier judgment dismissing with prejudice the claims that she had brought pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. Summers argues that the district court applied an improper legal standard by holding that her failure to comply with the FCA's requirement that complaints in qui tam actions be filed under seal was, in and of itself, fatal to her claim. She further argues that the correct legal standard is one in which the nature and circumstances of the violation are taken into account, and that the district court failed to consider those factors. We hold that the FCA's language defeats Summers's argument, and affirm.

I

Summers filed the complaint in this case on March 20, 2009. According to the complaint, Summers was, in 2008, employed as a physical therapist by the appellee LHC Group, Inc. (“LHC”), a corporation engaged in the business of providing in-home health services to patients insured by Medicare. The complaint further alleged that LHC routinely continued to recommend, provide, and bill Medicare for health services for patients even after staff members informed their managers that such care was no longer needed. Summers alleged that she herself had repeatedly complained to LHC management that these actions were fraudulent, but was told “not to mention the word fraud” and that LHC management took no action to address her concerns. She further claimed that, on December 10, 2008, LHC employed a pretextual reason to terminate her employment and that the real reason for her termination was her complaints about LHC's fraudulent actions.

Summers's complaint pled federal jurisdiction over her claims via the FCA, in that “[t]he aforementioned acts committed by the LHC management and employees constituted fraud against the United States Government in violation of 31 U.S.C. § 3729-3733 et seq., ‘The False Claims Acts.’ ” In her prayer for relief, she requested that the United States be served with process and that she be permitted to prosecute the case on its behalf if it should choose not to be a party.

According to an affidavit filed by Summers's counsel, shortly after the filing he was contacted by an employee of the clerk's office who inquired as to whether the complaint should be placed under seal. During that conversation, Summers alleges, counsel was told that the complaint “would not be logged into the [Electronic Case Filing] system until [counsel] and the Clerk's Office had discussed the proper filing method.” Appellant's Br. at 6. On March 23, 2009, that same employee of the clerk's office allegedly left counsel a voicemail message informing him that, in order to file the complaint under seal, he needed to send her an email making that request. However, when counsel called the clerk's office to confirm the relevant email address, he was told by another employee there that an email would not suffice, and instead that he would be required to file a motion to seal the case.

On March 24, 2009, prior to Summers's counsel's filing any motion to seal, the complaint was posted on PACER, the publicly-accessible Internet-based portal providing access to court filings; thus, it was available to anyone with a PACER account who was willing to pay the applicable fee for accessing court documents online. On March 26, 2009, Summers's counsel received a call from an Assistant United States Attorney informing him that the U.S. Attorney's Office had seen the case on PACER. Ibid. Finally, on March 27, 2009, counsel filed a motion to seal the case; that motion was denied by the district court three days later for failure to set forth a basis on which it should be granted.

On April 15, 2009, LHC moved to dismiss the complaint. As a basis for its motion, LHC argued, pursuant to Federal Rule of Civil Procedure 12(b)(1), that the failure of Summers's counsel to file the complaint under seal violated the requirements of the FCA, leaving the court without subject matter jurisdiction. LHC also argued in the alternative that, pursuant to Federal Rule of Civil Procedure 12(b)(6), Summers had failed to state a claim on which relief could be granted. ¹ Before the district court could rule on LHC's motion to dismiss, Summers filed a motion to amend her complaint on April 22, 2009. Rather than attaching her proposed amended complaint to that motion, however, she filed it as a separate, and publicly-available, docket entry. She then filed yet another publicly-available version of the complaint, styled “Substituted Amended Complaint,” on April 23, 2009, without the district court's permission.

The district court granted LHC's motion to dismiss on June 11, 2009. United States ex rel. Summers v. LHC Grp. Inc., No. 3:09-CV-277, 2009 WL 1651503 (M.D. Tenn. June 11, 2009). In so doing, the court found it unnecessary to reach the question of whether a failure to meet the FCA's in camera filing requirements presented a jurisdictional bar, instead holding that “the failure in this case to file [the] complaint in camera and under seal is a fatal deficiency that requires dismissal of this action with prejudice as to the relator ... both because her failure to comply with the statute deprives her of the ability to pursue the remedy created by the statute, and because the same failure incurably frustrates the underlying purposes of the procedural requirements.” ² Id. at *6. The district court explicitly held that the dismissal was without prejudice as to the United States. Ibid. Summers subsequently filed a motion to alter the judgment pursuant to Rule 59(e) on June 19, 2009, which was denied in a marginal order by the district court on July 8, 2009 “for the reasons set forth in the previous Memo and Judgment” granting LHC's motion to dismiss.

This timely appeal followed.

II

Although we generally review a denial of a motion to alter or amend a judgment for abuse of discretion, we address questions of law presented in such proceedings de novo. Huff v. Metro. Life Ins. Co., 675 F.2d 119, 122 n. 5 (6th Cir.1982). Moreover, we specifically review de novo the district court's statutory interpretation of the FCA. See United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 641 (6th Cir.2003). Where, as here, “a statutory right is being pursued ... and the defense raised is that the plaintiff or defendant does not come within the purview of the statute, the judicial acceptance of this defense, however it is accomplished, is the death knell of the litigation and has the same effect as a dismissal on the merits.” Rogers v. Stratton Indus., Inc., 798 F.2d 913, 917 (6th Cir.1986).

III

A

The False Claims Act imposes liability on “[a]ny person who ... knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1) (2006) (amended 2009). ³ The FCA further authorizes private persons to bring civil actions for violations of section 3729 in the Government's name, and entitles those persons to a portion of the amount recovered thereby. 31 U.S.C. § 3730(b)(1) (2006) (amended 2009); 31 U.S.C. § 3730(d) (2006) (amended 2009). In such qui tam actions, however, the complaint is not immediately made available to the public or even to the defendant; instead,

[a] copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the Government pursuant to Rule 4(d)(4) of the Federal Rules of Civil Procedure. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.

Id. at § 3730(b)(2) (footnote omitted). Thus the statute that creates the cause of action at issue and authorizes qui tam plaintiffs to pursue it also specifies that the complaint be filed under seal.

Originally, the FCA was enacted in 1863 to respond to rampant fraud in Civil War defense contracts. Am. Textile Mfrs. Inst., Inc. v. The Ltd., Inc., 190 F.3d 729, 733 (6th Cir.1999); S.Rep. No. 99-345, at 8 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5273. At the time of its passage, enforcement of a statute via the creation of a qui tam cause of action had been a long-accepted practice dating from at least the thirteenth century. Note, The History and Development of Qui Tam, 1972 Wash. U.L.Q. 81, 83 (1972) (citing 3 W. Blackstone, Commentaries on the Laws of England 160 (1st ed. 1768)). Nevertheless, and despite the necessity of ensuring enforcement of the Act with a minimum expenditure of resources from the already-stretched wartime government, the original FCA's qui tam enforcement structure was not implemented...