IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-51386

UNITED STATES OF AMERICA ex rel, MARGARET TAYLOR-VICK

Plaintiff-Appellant

v.

MEDICAL DOCTOR J. SCOTT SMITH; MEDICAL DOCTOR DONALD W.

FLOYD; MEDICAL DOCTOR DAVID J. POWER; MEDICAL DOCTOR

DANIEL G. NELSON; ORTHOPAEDIC CENTER OF MIDLAND,

PROFESSIONAL LLC, doing business as Southwest Orthorpaedic and Spine

Center

Defendants-Appellees

Appeal from the United States District Court 

for the Western District of Texas

Before KING, GARZA, and BENAVIDES, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Relator-Appellant Margaret Taylor Vick (“Vick” or “Relator”) appeals the

decision of the District Court, which granted summary judgment in favor of

Defendants-Appellees: J. Scott Smith, MD; Donald W. Floyd, MD; David J.

Power, MD; Daniel G. Nelson, MD (collectively, “Doctors”); and the Orthopedic

Center of Midland Professional LLC d/b/a Southwest Orthopedic and Spine

Center (“Southwest”). The District Court finally disposed of all Vick’s claims

under the False Claims Act, 31 U.S.C. §§ 3729-33 (“FCA”). We affirm.

I

United States Court of Appeals

Fifth Circuit

F I L E D

January 4, 2008

Charles R. Fulbruge III

Clerk
No. 06-51386

1 To obtain Medicare payments for their services, physicians must submit claims, which

use codes to identify the services provided. The amount of a Medicare payment due a physician

is determined by the particular code(s) specified in a claim. “Up-coding” is the practice of

submitting claims that are erroneous because they specify codes for higher-paying services

than those that a physician actually provided.

2

Southwest is a medical facility that provides orthopedic care. Vick was

Southwest’s officer manager from January 1997 until she was terminated in

June 2002. Defendants Smith, Floyd, Power, and Nelson are medical doctors

who specialize in orthopedics and provide medical care at Southwest. This

appeal arises from allegedly improper Medicare billing practices at Southwest.

During the course of her employment at Southwest, Vick came to suspect

that the Doctors, in particular Smith, were “up-coding” their patient visits to

obtain higher Medicare payments for the services provided during those visits.1

According to Vick, the codes used by Smith required that he spend fifteen

minutes with each patient. This, however, would have been impossible because,

according to Vick, Smith saw 50 to 80 patients each day. Vick further alleged

that Power and Floyd were made aware of Smith’s allegedly improper billing

practices and that, in response, they instructed Southwest staff to “down-code”

some of his claims.

In June 2002, Vick took her concerns about the billing practices at

Southwestto theFBI. Vick spoke with the FBI and provided certain information

and documents, which she claimed substantiated her allegations. Later that

month, Southwest placed Vick on a trial separation from her position as office

manager; Southwest ultimately terminated her. During her trial separation,

Vick remained employed by Southwest but no longer had access to the

documents that she had been providing to the FBI.

In August 2002, Vick filed this lawsuit. The United States declined to

intervene on March 31, 2003. Because she had no direct knowledge of actual

instances of “up-coding,” Vick sought to make her case through circumstantial
No. 06-51386

3

evidence. Specifically, Vick employed an expert witness (“Britton”) to analyze

Defendants’ billing records and determine whether there was a pattern of “upcoding”from which the Court could draw an inference of scienter under theFCA.

Defendants likewise employed an expert(“Ellis”) to analyze their billing records.

After analyzing Defendants’ billing records, Britton testified repeatedly

that she “did not know what the intent of the physicians was,” but that she

believed there was a pattern sufficient to indicate that false claims may be

occurring. Ellis, in contrast, did not find “a pattern of billing improprieties” or

“any fraudulent claims.” Ellis did, however, determine that the Defendants had

“some documentation issues that need improvement,” but that, “in general,” they

“undercode[d]” more often than they “upcode[d]” thereby “costing the practice

revenue” and actually undercharging Medicare rather than overcharging

Medicare. Britton, too, found evidence of “undercoding” during her analysis of

Defendants’ records. 

After three and a half years of discovery, the District Court granted

summary judgmentin favor of Defendants. Specifically, the District Court found

that “Relator has not produced any evidence which creates a fact issue

concerning the . . . scienter element” of her FCA claim, and that, “[a]t the most,

Relator has shown innocent mistakes and negligence,” which are not FCA

violations. Accordingly, the District Court held that summary judgment was

proper because Vick had “presented no evidence . . . to sustain the scienter

element of her claim.”

II

Summary judgment is proper “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The moving

party “bears the initial responsibility of informing the District Court of the basis
No. 06-51386

4

of its motion, and identifying those portions of ‘the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits,

if any,’ which it believes demonstrates the absence of a genuine issue of material

fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing Fed. R. Civ. P.

56(c)). Once the moving party fulfills this responsibility, the non-moving party

must “go beyond the pleadings and by her own affidavits, or by ‘depositions,

answers to interrogatories, and admissions on file,’ designate ‘specific facts

showing that there is a genuine issue of material fact for trial.’” Id. at 324

(quoting Fed. R. Civ. P. 56(e)). A genuine issue of material fact exists “if the

evidence is such that a reasonable jury could return a verdictfor the non-moving

party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). We review a

grant of summary judgment de novo, viewing all evidence in the light most

favorable to the nonmoving party and drawing all reasonable inferences in that

party’s favor. See Crawford v. Formosa Plastics Corp., Louisiana, 234 F.3d 899,

902 (5th Cir. 2000).

A

The first issue is whether Defendants had the requisite knowledge or

scienter to be liable under the FCA. The FCA provides for civil liability against:

Any person who -- (1) 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; (2) knowingly

makes, uses, or causes to be made or used, a false record or

statement to get a false or fraudulent claim paid or approved by the

Government; [or] (3) conspires to defraud the Government by

getting a false or fraudulent claim allowed or paid . . . .

31 U.S.C. § 3729(a) (emphasis added). For the purposes of the FCA, the term

“knowingly” means: 

that a person, with respect to information -- (1) has actual

knowledge of the information; (2) acts in deliberate ignorance of the

truth or falsity of the information; or (3) acts in reckless disregard
No. 06-51386

5

of the truth or falsity of the information, and no proof of specific

intent to defraud is required.

31 U.S.C. § 3729(b). With respect to the scienter issue, the District Court found

that Vick “had no actual knowledge of false claims knowingly presented by the

Defendants” and that, instead, her claim “relie[d] on the review of patient

medical records by her expert witness, Wendy Britton.” Taking into

consideration “the review of records by her expert, Ms. Britton,” the District

Court concluded that the “Relator has presented no evidence . . . to sustain the

scienter element of [her] claim.” Accordingly, the District Court held that “the

Relator has failed to show any evidence supporting the requisite scienter on the

part of Defendants . . . necessary to bring a claim under the False Claims Act.”

Vick raises several arguments in support of her contention that there is

a genuine issue of material fact as to whether Defendants had the requisite

scienter. First, Vick contends that this Court disfavors granting summary

judgment on an issue that turns on a state-of-mind determination, like scienter.

Second, Vick contends that, although she has no direct evidence of scienter, she

has provided adequate circumstantial evidence of scienter. Specifically, Vick

contends thatthe evidence analyzed by her expert, Ms. Britton, shows a pattern

of erroneous billing, which, when combined with Vick’s testimony that the

Doctors were aware of certain billing anomalies, adds up to an inference of

scienter. Finally, Vick argues that unless the Defendants can point to evidence

establishing the absence of scienter, then the summary judgment standard

requires that we draw an inference of scienter in her favor. 

Defendants counter that Vick has no knowledge or direct evidence of

scienter and that, at most, she could identify only negligent billing errors and

mistakes which are not offenses under the FCA. Defendants further contend

that neither Vick nor her expert Britton presented circumstantial evidence
No. 06-51386

2 Defendants spend much oftheir argument pointing out the putative flaws in Britton’s

methodology, as though this were a Daubert hearing, rather than arguing that,

notwithstanding Britton’s conclusions, summary judgment was proper. We need not consider

these arguments.

6

sufficient to support an inference of scienter.2 Finally, in the alternative,

Defendants argue that Vick did not even allege, let alone prove, scienter on the

part of Defendants Floyd, Power, and Nelson. Because we find that there is no

genuine issue of material fact suggesting that the Doctors had the requisite

scienter to create FCA liability, we need not address this alternative argument.

It is indeed well-settled, as Vick points out, that we hesitate to grant

summary judgment when a case turns on a state of mind determination. See

International Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1265 (5th Cir. 1991)

(“we have emphasized repeatedly that cases which turn on the moving party’s

state of mind are not well-suited for summary judgment”). It also is possible for

an FCA relator, like Vick, to establish the scienter element of her claim through

circumstantial evidence. See Financial Acquisition Partners LP v. Blackwell,

440 F.3d 278, 287 (5th Cir. 2006) (“Circumstantial evidence can support a

scienter inference.”). Nevertheless, these principles do not control the outcome

of this case. Reviewing the record in the light most favorable to Vick and

drawing all reasonable inferences in her favor, see Hockman v. Westward

Communications, LLC, 407 F.3d 317, 325 (5th Cir. 2004), we find that she

cannot prevail.

It is a long-established rule of this Circuit that to show a violation of the

FCA,the evidence must demonstrate “‘guilty knowledge of a purpose on the part

of [the defendant]to cheat the Government,’” United States v. Aerodex, Inc., 469

F.2d 1003, 1007 (5th Cir. 1972) (quoting United States v. Priola, 272 F.2d 589,

594 (5th Cir. 1959)), or “‘knowledge or guilty intent,’” Aerodex, 469 F.2d at 1007

(quoting United States v. Ridglea State Bank, 357 F.2d 495, 498 (5th Cir. 1966));
No. 06-51386

7

see also United States v. Hangar One, Inc., 563 F.2d 1155, 1157 (5th Cir. 1977).

The Aerodex Courtfound the requisite intent because the defendants contracted

with the government to supply a particular type of aircraft bearings, but, when

the defendants could not procure them, they falsely labeled other bearings and

substituted them for those specified in the contract. 469 F.2d at 1008. The

plaintiffs in Hangar One survived summary judgment by submitting affidavits

of workers attesting that they had personally facilitated frauds on the

Government by failing to inspect artillery shells before shipping them and, in

some cases, by including defective artillery shells in shipments bound for the

government. 563 F.2d at 1157-58. But in Priola, the Court held that the

defendant lacked the requisite intent, even though she signed certain purchase

orders underlying the false claims, because the Government could not establish

that she had “guilty knowledge” of a plan to cheat the Government. 272 F.2d at

592-94. Under these precedents, a relator, like Vick, cannot survive summary

judgment merely by submitting evidence of false claims; she must have evidence

that the defendants knowingly or recklessly cheated the government.

Neither Vick nor Britton have adduced evidence which creates a genuine

issue of material fact as to whether Defendants knowingly or recklessly cheated

the government. Neither has personal knowledge of whether Defendants had

the intent necessary to be liable under the FCA. Indeed, Vick cannot point to a

single instance in which Defendants submitted a false claim to Medicare, let

alone an instance in which Defendants knowingly or recklessly submitted such

a claim. For her part, Britton did identify what she believed to be a pattern of

erroneous billing that might support an inference of scienter, but at the same

time Britton acknowledged that this erroneous billing included not only overbilling but also under-billing))showing that Defendants were merely negligent

billers, which does not offend the FCA. Based on the evidence adduced, we

cannot find a genuine fact issue that would preclude summary judgment.
No. 06-51386

8

B

The second issue is whether Vick’s lack of evidence concerning scienter is

due to Defendants’ non-compliance with her discovery requests. The District

Court found no such non-compliance, specifically observing that “over the past

three and a half years in which this case was pending before the Court, the

Relator has had sufficient time and opportunity to obtain evidence from

Defendants . . . [and] ample opportunity to inspect documents and other

potential evidence . . . .”

Vick argues that summary judgment was premature because the District

Court did not permit full discovery of the medical records necessary to

substantiate her claims. Specifically, Vick argues that she would have survived

summary judgment had the District Court ordered Defendants to produce paper

documents rather than only electronic copies. In response, Defendants assert

that they fully complied with all Vick’s discovery requests,that electronic copies

of documents are the equivalent of photocopies, and that Vick did not even

bother to review many of the documents provided to her.

We review the discovery decisions of a District Court for abuse of

discretion, including a decision, as here, to forego additional discovery and rule

on a summary judgment motion. See Moore v. Willis Independent School Dist.,

233 F.3d 871, 876 (5th Cir. 2000) (holding that the District Court did not abuse

its discretion in granting summary judgment against the plaintiffs without first

allowing them leave to depose the defendants) (citations omitted). We will

affirm unless the discovery decision is arbitrary or clearly unreasonable. See id.

In affirming the grant of summary judgment against the plaintiffs in

Moore, we observed that the lawsuit had been pending for fourteen months

before the summary judgment ruling and that the plaintiffs made only a

“conclusional argument” that they should have been allowed further discovery,

but did not state “what relevant evidence they expected to uncover with
No. 06-51386

3 Because we reject all of Vick’s arguments, we need not reach Defendants’ alternative

argument that the original source doctrine bars this suit.

9

additional discovery.” Vick has even less ground to stand on than did the Moore

plaintiffs: her case had been pending for three and a half years when summary

judgment was granted; there is no indication in the record that Defendants have

withheld documents improperly; and Vick cannot cogently explain how paper

records would succeed in proving her case where electronic records have failed.

The District Court has no obligation to placate Vick by continuing discovery

indefinitely. All good things, including discovery, must come to an end. The

District Court did not abuse its discretion in granting summary judgment after

three and a half years of discovery.3 See id.

III

For the foregoing reasons, we affirm the judgment of the District Court.

AFFIRMED.