United States v. Planned Parenthood of Houston

Case: 13-20206 Document: 00512651962 Page: 1 Date Filed: 06/04/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
June 4, 2014
No. 13-20206 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA; THE STATE OF TEXAS, ex rel, ABBY
KRISTEN JOHNSON,
Plaintiff - Appellant
v.
PLANNED PARENTHOOD OF HOUSTON AND SOUTHEAST TEXAS,
INCORPORATED,
Defendant - Appellee
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:10-CV-3496
Before KING, HAYNES, and GRAVES, Circuit Judges.
PER CURIAM:*
Abby Kristen Johnson (“Johnson”), acting as relator on behalf of the
United States and the State of Texas, brought suit against Planned
Parenthood Gulf Coast, a.k.a. Planned Parenthood of Houston and Southeast
Texas, Inc. (“Planned Parenthood”), alleging that it engaged in fraudulent
billing practices in violation of the False Claims Act (“FCA”), 31 U.S.C. § 3729,
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 13-20206 Document: 00512651962 Page: 2 Date Filed: 06/04/2014
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et seq., and the Texas Medicaid Fraud Prevention Act (“TMFPA”), TEX. HUM.
RES. CODE § 36.001, et seq. Planned Parenthood filed a Federal Rule of Civil
Procedure 12(b)(1) motion to dismiss, arguing that the district court lacked
subject matter jurisdiction because of a previously-filed qui tam suit that
alleged the same fraudulent scheme. The district court granted the motion
and denied Johnson’s Federal Rule of Civil Procedure 60(b)(6) motion filed
after the court had dismissed the case. Johnson timely appealed. We AFFIRM.
I. Factual and Procedural Background
Johnson, a former Planned Parenthood employee, sued Planned
Parenthood, alleging that it repeatedly filed various false, fraudulent, and/or
ineligible claims for Medicaid reimbursements with both state and federal
billing agencies. Specifically, she alleged that Planned Parenthood: (a) falsely
billed the Texas Women’s Health Program 1 (“TWHP”) for non-reimbursable
procedures and services performed during a client visit when the primary
purpose of the visit was not for contraceptive management as required by the
TWHP; (b) falsely billed the TWHP for unperformed laboratory tests, and
supported such false billings with false notations in client charts; (c) falsely
billed non-contraceptive management-related procedures and services by
making false notations in client charts and not referring those clients to
another physician or clinic for treatment; (d) filed more than 87,000 false
claims with the TWHP, from which it wrongfully received and retained
reimbursements totaling at least $5,701,055; and (e) acknowledged to Johnson
and other employees that it would conceal from the TWHP that it had received
improper reimbursements from it and would retain such reimbursements.
1 The TWHP is a Title XIX Medicaid waiver program jointly funded by the federal and
state governments. Planned Parenthood Ass’n of Hidalgo Cnty. Tex., Inc. v. Suehs, 692 F.3d
343, 346 (5th Cir. 2012). At the time Johnson filed this complaint, the TWHP was largely
federally funded. Id.
2
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Prior to Johnson’s action, Karen Reynolds (“Reynolds”), acting as relator
on behalf of the United States and the State of Texas, filed a qui tam suit in
the Eastern District of Texas against Planned Parenthood for treble damages
and civil penalties also arising from alleged fraudulent billing activity in
violation of the FCA and TMFPA. Reynolds alleged the following conduct: (a)
billing for medical services not rendered; (b) billing for unnecessary medical
services; (c) creating false information relative to billing in medical records; (d)
creating false documentation in an attempt to demonstrate compliance with
various governmental program requirements; and (e) conspiring to violate the
FCA and TMFPA. See United States ex rel. Karen Reynolds v. Planned
Parenthood of Hous. & Se. Tex., Inc., et al., Case No. 9:09-cv-00124-RC. After
Johnson’s Original Complaint and Second Amended Complaint were unsealed,
Planned Parenthood moved to dismiss Johnson’s action, alleging that the
district court lacked subject matter jurisdiction over the case because the
action is barred under the FCA’s and TMFPA’s “first-to-file” bar. The district
court granted Planned Parenthood’s motion to dismiss, and Johnson timely
appealed.
Following the district court’s order dismissing Johnson’s Second
Amended Complaint, the Reynolds case settled (hereinafter, “Reynolds
settlement”). Johnson then filed a Rule 60(b)(6) motion, claiming that the
Reynolds settlement originally was going to include language acknowledging
that the fraud scheme alleged in Reynolds’ complaint was distinct from the
scheme alleged in Johnson’s complaint. Such language was never included in
the settlement. The district court denied her motion, and Johnson amended
her notice of appeal to include the district court’s denial of her Rule 60(b)(6)
motion.
3
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II. Discussion
A. Motion to Dismiss
We review the district court’s dismissal for lack of subject matter
jurisdiction de novo as to the application of the law and for clear error as to any
disputed factual findings. United States ex rel. Branch Consultants v. Allstate
Ins. Co., 560 F.3d 371, 376 (5th Cir. 2009). Subject matter jurisdiction is
determined at the time the action is brought. Home Capital Collateral, Inc. v.
FDIC, 96 F.3d 760, 762 (5th Cir. 1996). The plaintiff has the burden of
establishing subject matter jurisdiction. Arena v. Graybar Elec. Co., 669 F.3d
214, 223 (5th Cir. 2012).
Under certain circumstances, the FCA permits “suits by private parties
on behalf of the United States against anyone submitting a false claim to the
government[.]” Branch, 560 F.3d at 376 (citation and internal quotation marks
omitted). The FCA’s qui tam provisions seek to encourage suits from
whistleblowers with “genuinely valuable information,” while also discouraging
“opportunistic plaintiffs from filing parasitic lawsuits 2 that merely feed off
previous disclosures of fraud.” Id. To achieve these goals, there are a number
of jurisdictional limits on the FCA’s qui tam provisions, including its first-to-
file bar, which provides that the district court lacks subject matter jurisdiction
to hear the claim if a previously-filed suit contains the same “material
elements” or “essential facts” as the later-filed suit. See id. at 377–78. The
focus is on whether an investigation into the first claim would uncover the
same fraudulent activity alleged in the second claim. See id. at 378. The first-
to-file bar is a relatively broad bar to later-filed actions. See, e.g., Branch, 560
2 Nothing in this record suggests that Johnson’s lawsuit was “parasitic.” Indeed,
there is no indication that Johnson was aware of Reynolds’s lawsuit when Johnson filed her
suit, and it appears Johnson’s suit was based upon her own knowledge. However, the first-
to-file bar still applies. See Branch, 560 F.3d at 377-78. Any resulting unfairness is a matter
for Congress, not this court.
4
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F.3d at 377 (noting that “a ‘broader bar’ furthers the purpose of the FCA’s qui
tam provisions by ensuring a ‘race to the courthouse among eligible relators,
which may spur the prompt reporting of fraud’”) (citation omitted). The
TMFPA has a similar first-to-file bar. 3
Reynolds’ complaint alleged that Planned Parenthood fraudulently
billed Title XIX Medicaid as well as other federal and state programs, but did
not specifically mention any particular Medicaid programs. The Johnson
complaint, on the other hand, specifically alleged that Planned Parenthood
falsely billed the TWHP. However, because both the Johnson and Reynolds
complaints allege that Planned Parenthood’s billing practices caused them to
fraudulently receive funding from United States and Texas Medicaid
programs, it is likely that an investigation into the allegations contained in
Reynolds’ complaint would have uncovered the same fraudulent activity
alleged by Johnson’s complaint, especially given that the TWHP is a federally-
funded Texas Medicaid program. See Suehs, 692 F.3d at 346. Considering that
this court has previously held that fraudulent filings occurring in different
states would be discovered through a thorough investigation into the filing
system of an insurance company, it is likely that an investigation into
fraudulent Medicaid filings would uncover fraudulent filings for related
programs, as the alleged fraudulent activity occurred within the same offices.
See Branch, 560 F.3d at 378. 4
3 The FCA’s first-to-file bar states that “[w]hen a person brings an action under this
subsection, no person other than the Government may intervene or bring a related action
based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The TMFPA’s
first-to-file bar operates the same way as the FCA’s first-to-file bar. See TEX. HUM. RES.
CODE § 36.106 (“A person other than the state may not intervene or bring a related action
based on the facts underlying a pending action brought under this subchapter.”). Neither
side argues that the two statutes should be applied differently in this case.
Branch concerned a first-filed claim alleging insurance fraud arising out of wind
4
damage and flood damage claims for Mississippi properties. 560 F.3d at 374. The second
5
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Johnson’s second argument is that her allegations of fraud were different
in kind because Reynolds alleged that fraud involved billing for medical
services not performed whereas Johnson alleged that the services were
performed but improperly coded. However, both complaints essentially allege
that fraud was committed by altering patient records and billing Medicaid
programs for services other than those rendered, and the additional, specific
facts added by Johnson are not sufficient to make the alleged fraudulent
activity sufficiently distinct to avoid the first-to-file bar. See Branch, 560 F.3d
at 378 (holding that the relator cannot avoid the first-to-file bar “by simply
adding factual details . . . to the essential or material elements of a fraud claim
against the same defendant”). 5
B. Denial of Rule 60(b)(6) Motion
To prevail in a Rule 60(b)(6) motion, the plaintiff must show that
“extraordinary circumstances” apply. Adams v. Thaler, 679 F.3d 312, 319 (5th
Cir. 2012). Johnson’s Rule 60(b)(6) motion purports to make the district court
“aware of developments in the Reynolds case,” specifically that Johnson’s
counsel participated in settlement discussions in which the parties agreed to
state that the Reynolds settlement did not apply to Johnson’s complaint.
complaint contained identical allegations, except that it also alleged facts concerning ten
additional properties in Louisiana. Id. at 378. Branch was precluded from bringing these
claims under the first-to-file bar even though they alleged different geographic locations
because an investigation into the fraudulent scheme alleged in the first complaint would
result in finding identical fraudulent behavior, even across geographic locations. Id.
5In passing, Johnson argues that because Planned Parenthood had moved to dismiss
Reynolds’ complaint for failure to state a claim under Rule 12(b)(6), that complaint could not
have sufficiently placed the government on notice of any fraudulent scheme, much less the
one she alleged. Whatever the merits of such an argument in a hypothetical case of a “bare
bones” complaint, we conclude it lacks merit as to the particular complaint filed by Reynolds.
See Branch, 560 F.3d at 378 n.10.
6
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We have previously held that a settlement is irrelevant to the first-to-
file analysis because the first-to-file analysis requires comparison of the two
original complaints. See United States ex rel. Smart v. Health, No. 13-40785,
2014 WL 1474282, at *1 (5th Cir. April 16, 2014) (unpublished); 6 see also
United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 328 (5th Cir.
2011) (holding that the original complaint is the appropriate complaint for
determining whether the FCA’s public disclosure jurisdictional bar applies).
Therefore, the fact of the settlement negotiations does not rise to the level of
an extraordinary circumstance because it would not alter the analysis
performed by the district court. See Adams, 679 F.3d at 319. Accordingly, the
district court did not abuse its discretion in denying the Rule 60(b)(6) motion.
See Pease v. Pakhoed Corp., 980 F.2d 995, 998 (5th Cir. 1993).
AFFIRMED.
6Although Smart is not controlling precedent, we cite it for its persuasive authority.
See Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5TH CIR. R. 47.5.4).
7