Court Opinion

ID: 4444907
Source: CourtListenerOpinion
Date Created: 2019-10-08 00:00:22.139943+00
Date Added: 2024-06-11T14:53:06.970004
License: Public Domain

Case: 18-11472       Document: 00515148385         Page: 1     Date Filed: 10/07/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                        October 7, 2019
                                       No. 18-11472
                                                                         Lyle W. Cayce
                                                                              Clerk
United States of America, ex rel, EDWARD HENDRICKSON,

               Plaintiff - Appellant

v.

BANK OF AMERICA, N.A.; WELLS FARGO BANK, N.A.; CITIBANK, N.A.;
COMERICA BANK; WELLS FARGO BANK N.A., as successor in interest to
Wachovia Bank National Association; JP MORGAN CHASE BANK, N.A.;
MANUFACTURERS AND TRADERS TRUST COMPANY; SEACOAST
NATIONAL BANK; FIFTH THIRD BANK; PNC BANK, N. A.; THE
NORTHERN TRUST COMPANY; FROST BANK; THE AMERICAN
NATIONAL BANK OF TEXAS; CENTRUE BANK; AMARILLO NATIONAL
BANK;

               Defendants - Appellees

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 3:16-CV-292

Before BARKSDALE, STEWART, and COSTA, Circuit Judges.
PER CURIAM:*
       At issue is whether the district court properly dismissed, with prejudice,
a reverse-false-claims action (pursued under 31 U.S.C. § 3729(a)(1)(G)) on two

       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.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.
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                                 No. 18-11472
independent grounds:       the False Claims Act’s (FCA) public-disclosure
provision, 31 U.S.C. § 3730(e)(4), barred the action; and the complaint failed to
plead the alleged scheme with sufficient detail. AFFIRMED.
                                        I.
      Relator Edward Hendrickson, a former fraud investigator in the
Department of Veterans Affairs (VA) Office of the Inspector General, alleged
15 banks knowingly and improperly avoided their regulatory obligation to
return government-benefit payments they received for beneficiaries they knew
to be deceased. See 31 C.F.R. § 210.10(a) (2019) (“A[ ] [bank] shall return any
benefit payments received after [it] becomes aware of the death or legal
incapacity of a recipient or the death of a beneficiary, regardless of the manner
in which the [bank] discovers such information.”). They had to know so, he
alleged, because the Social Security Administration’s (SSA) procedures require
it to send death notification entries (DNEs) to receiving depository financial
institutions, including defendants, once the SSA learns of a recipient’s death.
      On 23 March 2010, an amendment to the FCA’s public-disclosure bar,
31 U.S.C. § 3730(e)(4), became law. Patient Protection and Affordable Care
Act, Pub. L. No. 111-148, § 10104, 124 Stat. 119, 901–02 (2010).             The
amendment removed the public-disclosure-bar’s jurisdictional provision.
Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 387 n.2 (5th Cir. 2017) (“We
agree with our sister circuits that the public[-]disclosure bar is no longer
jurisdictional.”).   Because of the FCA’s six-year statute of limitations,
Hendrickson’s action, filed 2 February 2016, implicates both the former and
current versions of that bar, as the district court recognized.
      Defendant banks filed, inter alia, a Federal Rule of Civil Procedure
12(b)(6) motion to dismiss based on, among other things, the public-disclosure
bar, attaching 16 documents they claimed constituted public disclosures, and
stating in their supporting brief that “[t]his Court may elect to treat this
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                                  No. 18-11472
motion as either a Rule 12(b)(6) [motion] or a motion for summary judgment”.
Resolving the public-disclosure ground first, because it was jurisdictional with
respect to the portion of Hendrickson’s claims from 2 February to 23 March
2010, the district court dismissed under Rule 12(b)(6) (or, alternatively,
converted from a motion to dismiss to summary judgment, as Rule 12(d)
requires when considering matters beyond the pleadings, and granted
summary judgment) because the public-disclosure bar applied. U.S. ex rel.
Hendrickson v. Bank of Am., N.A., 343 F. Supp. 3d 610, 623 n.7, 630 & n.24
(N.D. Tex. 2018). After concluding the documents the banks offered to support
their motion constituted public disclosures, it held six of them disclosed
substantially the same allegations as the complaint. Id. at 625, 628–29. It
then concluded Hendrickson was not an original source because he learned of
the alleged misconduct through his employment as a VA fraud investigator.
Id. at 629–30.
      In the alternative, the court dismissed Hendrickson’s action pursuant to
Rules 12(b)(6) and 9(b). Id. at 631. It ruled the complaint failed Rule 9(b)’s
particularity requirement because, inter alia, it failed to distinguish among
defendants or present necessary details of the alleged scheme. Id. at 632–36.
                                            II.
      In addition to the motion’s being properly converted to one for summary
judgment, a motion to dismiss based on the FCA’s public-disclosure bar is
“necessarily intertwined with the merits and is, therefore, properly treated as
a motion for summary judgment”. U.S. ex rel. Jamison v. McKesson Corp.,
649 F.3d 322, 326 (5th Cir. 2011) (internal quotation marks and citation
omitted). A summary judgment is reviewed de novo and is proper if, viewing
the evidence in the light most favorable to the non-movant, “there is no genuine
dispute a[s] to any material fact and the movant is entitled to judgment as a
matter of law”. Id. (citing Fed. R. Civ. P. 56(a)).
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                                   No. 18-11472
       The public-disclosure bar has three elements:                 (1) a public
disclosure    (2) containing “substantially the same allegations” as the
complaint, and (3) the relator is not the information’s “original source”.
31 U.S.C. § 3730(e)(4). Not disputing that the six documents constituted public
disclosures, Hendrickson claims they do not disclose substantially the same
allegations as his complaint because they do not reference DNEs or name
specific banks. The banks respond that the documents’ disclosures are as
specific as the complaint, which fails to allege particular instances of their
receiving DNEs or differentiate allegations made against each defendant.
      A dismissal pursuant to Rules 12(b)(6) and 9(b) is also reviewed de novo.
U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 & n.8 (5th Cir. 2009). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation
omitted).    Hendrickson claims his complaint provided fair notice and
sufficiently alleged a fraudulent scheme.          The banks counter that the
complaint neither differentiates among them nor alleges any particular facts
showing a fraudulent scheme ever existed. (Although Hendrickson contended
at oral argument that Rule 9(b) does not apply to his reverse-false-claim action
because, in his view, the operative statute, 31 U.S.C. § 3729(a)(1)(G), requires
proof of breach of an obligation, not proof of fraud, he concedes he did not raise
this issue until then. It goes without saying that we do not consider this
belated contention. See, e.g., Zuccarello v. Exxon Corp., 756 F.2d 402, 407–08
(5th Cir. 1985) (holding issue raised only at oral argument waived).)
      Essentially for the reasons stated in the district court’s opinion,
343 F. Supp. 3d 610, summary judgment and, in the alternative, Rule 12(b)(6)
dismissal were proper.       Further amendment to the complaint would be
unavailing following summary judgment because “there [is] no longer existent
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                                 No. 18-11472
a claim to be amended”. Mitsubishi Aircraft Int’l, Inc. v. Brady, 780 F.2d 1199,
1203 (5th Cir. 1986). (In any event, Hendrickson did not seek in district court,
and does not seek on appeal, leave to amend.)
                                           III.
      For the foregoing reasons, the judgment is AFFIRMED.

Judge Costa would affirm only on the ground that the complaint fails to meet
Rule 9(b)’s particularity standard.

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