Source: http://openjurist.org/print/555890
Timestamp: 2015-11-26 01:11:10
Document Index: 17337802

Matched Legal Cases: ['§ 3729', '§ 3730', '§ 3729', '§ 3729', '§ 3730', '§ 3729', '§ 3730', '§ 3730']

384 F3d 168 United States Reagan v. East Texas Medical Center Regional Healthcare System
Home > 384 F3d 168 United States Reagan v. East Texas Medical Center Regional Healthcare System
384 F3d 168 United States Reagan v. East Texas Medical Center Regional Healthcare System 384 F.3d 168
UNITED STATES of America, ex rel., Sally A. REAGAN, Plaintiffs-Appellants,v.EAST TEXAS MEDICAL CENTER REGIONAL HEALTHCARE SYSTEM; et al., Defendants,East Texas Medical Center Regional Healthcare System; East Texas Medical Center Regional Health Facilities; East Texas Medical Center;, Defendants-Appellees.
No. 03-20376.
John Robert Craddock (argued), Barnett & Craddock, Houston, TX, for Plaintiff-Appellant.
Bruce W. Bowman, Jr. (argued), Julia Fields Pendery, Eric Gordon Walraven, Godwin Gruber, Dallas, TX, for Defendants-Appellees.
Douglas Harry Hallward-Driemeier (argued), Michael S. Raab, U.S. Dept. of Justice, Civ. Div.-App. Staff, Washington, DC, for Amicus Curiae, U.S.
Sally A. Reagan filed this qui tam lawsuit under the False Claims Act, 31 U.S.C. § 3729 et seq. The district court granted summary judgment in favor of the defendants, holding that the suit was barred by the Act's jurisdictional bar (31 U.S.C. § 3730(e)(4)(A)) and, alternatively, that Reagan's claims failed on the merits. Reagan appeals and we affirm.
* The University Park Hospital ("UPH") facility is owned by the East Texas Medical Center ("ETMC"), a subsidiary of the East Texas Hospital Foundation ("East Texas"). The UPH facility was built in the early 1980s as the cooperative project of Mother Frances Hospital ("Mother Frances") and East Texas Regional Health Care Facilities ("ET Facilities"). In January 1983 the Texas Health Facilities Commission issued a Certificate of Need ("CON") authorizing Mother Frances and ET Facilities to construct and operate UPH. The CON directed that the UPH project costs must not exceed $5,378,250. Moreover, the CON directed that $3,753,611 of the project costs be financed through the issuance of revenue bonds and that East Texas contribute $2,000,000 to the project. Contrary to the CON, however, East Texas never contributed the $2 million that it had promised and, instead, the project was financed through a bond issue of $5.6 million. Subsequently, UPH recognized that the project costs were going to exceed the anticipated amount and, consequently, the CON was amended to require the completion costs for the UPH project not to exceed $6,286,993. Finally, in 1995 UPH was completed for a total cost of $6.2 million.
UPH leases its facilities from East Texas at an annual cost of $726,000. UPH also purchases other "ancillary" services from the East Texas defendants — laundry, maintenance, radiology, laboratory services, etc.1
In April 1991 Sally Reagan ("Reagan") was hired as the executive director of UPH. Reagan alleges that, during her tenure at UPH she became suspicious of certain "financial irregularities", namely false Medicare reporting; she further alleges that in May 1992 she was terminated because she began to investigate these "irregularities".2
Following her termination, Reagan reported her suspicions to the Health Care Financing Administration ("HCFA"), the federal agency that administers the Medicare program for the United States Department of Health and Human Services ("HHS"). Reagan also reported her suspicions to Blue Cross and Blue Shield of Texas ("BCBS"), the fiscal intermediary between the HCFA and individual Medicare claimants in Texas.3 Finally, Reagan filed a lawsuit against UPH, East Texas Medical Center, and others in Texas state court, alleging that she was terminated because she refused to go along with the defendants' alleged illegal Medicare reporting.
While the state court lawsuit was still pending, Reagan filed the instant action, on behalf of the United States government, under the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729, et seq., ("FCA") and the government chose not to intervene.4 Specifically, Reagan alleged claims under §§ 3729(a)(1)-(3) and (7) of the Act.
Reagan's qui tam complaint alleged false statements to the government in essentially three general categories. First, Reagan claimed that UPH misrepresented its compliance with the CON requirements in reports filed with BCBS. Second, she alleged that UPH falsely certified that it was in compliance with applicable Medicare regulations. Specifically, Reagan argued that UPH did not pay "reasonable" rates for goods and services purchased from East Texas, its parent, and failed to keep proper records of its actual expenditures. Finally, Reagan alleged that UPH misstated its status as a "related party" to East Texas and, as a result, received reimbursements to which it was not entitled.5 The district court granted summary judgment in favor of the appellees, holding that Reagan's qui tam suit was barred by the Act's jurisdictional bar (31 U.S.C. § 3730(e)(4)(A)) and, alternatively, that Reagan's claims under §§ 3729(a)(1), (2) and (7) failed on the merits.
We must first address whether the district court properly dismissed Reagan's claims for lack of jurisdiction under the FCA's "public disclosure bar", found at 31 U.S.C. § 3730(e)(4). If the jurisdictional bar applies, then dismissal was proper and we need go no further. "[A] challenge under the FCA jurisdictional bar is necessarily intertwined with the merits" and is, therefore, properly treated as a motion for summary judgment. United States ex. rel. Laird v. Lockheed Martin Eng'g & Sci. Servs., Co., 336 F.3d 346, 350 (5th Cir.2003) (citations and quotations omitted).
A grant of summary judgment is reviewed de novo, using the same standard as applied by the district court. Id. at 350-51; Performance Autoplex II Ltd. v. Mid-Continent Casualty Co., 322 F.3d 847, 853 (5th Cir.2003). A grant of summary judgment is proper if, viewing the evidence and inferences drawn from that evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir.2001). At the summary judgment stage, a court may not weigh the evidence or evaluate the credibility of witnesses, and all justifiable inferences will be made in the non-moving party's favor. Morris v. Covan Worldwide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
* In general terms the FCA permits certain "suits by private parties on behalf of the United States against anyone submitting a false claim to the government". Laird, 336 F.3d at 351.6
The district court held that Reagan's FCA claims were barred under the "public disclosure" provision set forth in 31 U.S.C. § 3730(e)(4)(A). Under this provision:
No court shall have jurisdiction over an action ... 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 investigations, or from the news media, unless ... the person bringing the action is an original source of the information.
This jurisdictional inquiry requires us to consider three questions: "(1) whether there has been a `public disclosure' of allegations or transactions, (2) whether the qui tam action is `based upon' such publicly disclosed allegations, and (3) if so, whether the relator is the `original source' of the information." Laird, 336 F.3d at 352 (citing Federal Recovery Services, Inc. v. Crescent City E.M.S., 72 F.3d 447, 451 (5th Cir.1995)). The purpose of this jurisdictional bar is to accommodate the primary goals of the False Claims Act: (1) "promot