Court Opinion

ID: 2754385
Source: CourtListenerOpinion
Date Created: 2014-11-22 01:00:58.517766+00
Date Added: 2024-06-11T10:26:06.212090
License: Public Domain

Case: 14-60145      Document: 00512845632         Page: 1    Date Filed: 11/21/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                    No. 14-60145                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                        November 21, 2014
FRANK B. MCCUNE, JR.,                                                      Lyle W. Cayce
                                                                                Clerk
              Plaintiff–Appellant

v.

UNITED STATES DEPARTMENT OF JUSTICE; OFFICE OF UNITED
STATES ATTORNEY GENERAL, SOUTHERN DISTRICT OF
MISSISSIPPI,

              Defendants–Appellees

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:11-CV-423

Before SMITH, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
       Plaintiff–Appellant Frank McCune sued Defendants–Appellees the
United States Department of Justice and the United States Attorney’s Office
for the Southern District of Mississippi (collectively “DOJ”) for violations of the
Right to Financial Privacy Act (“RFPA”), 12 U.S.C. §§ 3401–3422, stemming

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 14-60145      Document: 00512845632        Page: 2     Date Filed: 11/21/2014

                                     No. 14-60145
from the issuance of administrative subpoenas pursuant to a health-care-fraud
investigation. The district court granted DOJ’s motion for summary judgment
on the ground that McCune’s suit was barred by RFPA’s three-year statute of
limitations. We affirm.
          I.    FACTUAL AND PROCEDURAL BACKGROUND
      McCune, a medical doctor, owned and operated several health-care
businesses in Mississippi in the 1980s and 1990s. 1 Two of these businesses—
Domicile, Inc. (“Domicile”) and Serve-U Home Health Out-Patient and
Rehabilitation Services, Inc. (“Serve-U Rehab”)—were home-health agencies.
Domicile and Serve-U Rehab each had a separate Medicare provider number
under the name “Serve-U Home Health,” and both companies were managed by
Neo-Ventures Enterprises, Inc. (“Neo-Ventures”), another business owned by
McCune. McCune’s wife, Ellen McCune, worked with these businesses as well.
      In 1997, the Department of Health and Human Services Office of the
Inspector General (“HHS OIG”) received a complaint alleging Medicare fraud by
McCune and his companies. HHS OIG investigated the allegations in
coordination with the local Medicare fiscal intermediary, Palmetto Government
Benefits Administrators, and the U.S. Attorney’s Office for the Southern District
of Mississippi. In January and June 1999 and November 2001, the U.S.
Attorney’s Office issued seven administrative subpoenas pursuant to its
authority under the Health Insurance Portability and Accountability Act
(“HIPAA”), 18 U.S.C. § 3486, to investigate criminal health-care fraud.
      The first three subpoenas, dated January 25, 1999, were directed to the
custodians of records for financial institutions where the McCunes held
accounts—Union Planters Bank, Industrial Employees Credit Union, and

      1 In its order granting summary judgment, the district court provided an exhaustive
account of the facts underlying McCune’s suit. We summarize only the facts relevant to this
appeal.
                                            2
    Case: 14-60145    Document: 00512845632    Page: 3   Date Filed: 11/21/2014

                                No. 14-60145
Merchant and Farmers Bank. Notably, the fourth subpoena, issued the same
day, was directed to the custodian of records for Neo-Ventures, one of McCune’s
companies, and was personally served on Ellen McCune. The fifth subpoena,
dated June 23, 1999, was directed to Travel Service International, a travel
agency used by the McCunes and their companies. The remaining two
subpoenas, dated November 7, 2001, were directed to American Express
Financial Services, another financial institution where the McCunes held
accounts, and to Frank McCune in his capacity as custodian of records for
Serve-U and Neo-Ventures. It is unclear whether either of the November
subpoenas was delivered.
      In 2002, the U.S. Attorney’s Office convened a grand jury to consider
charges against the McCunes. On August 12, 2002, the grand jury issued a
subpoena to the custodian of records for Merchants and Farmers Bank,
requesting documents relating to an account held by a company called Health
Systems Designers, Inc. This was apparently the only grand jury subpoena in
the case.
      On November 20, 2002, the grand jury issued an indictment that charged
the McCunes with conspiracy to commit health-care fraud, making false
statements relating to health-care matters, and embezzlement, and authorized
the Government to seek forfeiture of the proceeds of these crimes.
      On December 13, 2002, the Government filed a motion for a post-
indictment temporary restraining order and a bill of particulars specifying
additional property subject to forfeiture. The McCunes were served with copies
of both records, which listed the account numbers and exact balances of eleven
accounts held by the McCunes at Merchant and Farmers Bank and Industrial
Employees Credit Union—two of the financial institutions that had received
DOJ’s administrative subpoenas in January 1999.

                                      3
    Case: 14-60145      Document: 00512845632   Page: 4   Date Filed: 11/21/2014

                                 No. 14-60145
      On January 22, 2003, the grand jury issued a superseding indictment.
The superseding indictment altered only the forfeiture count, which now listed
one additional parcel of real property and the account information first
published in the Government’s TRO motion and bill of particulars.
      On January 29, 2003, the Jackson Clarion–Ledger—the McCunes’ local
newspaper—published an article on the new indictment. The article, titled
“New medical fraud indictment,” reported that “[t]he new indictment s[ought]
the forfeiture of funds in 12 bank accounts, totaling nearly $600,000.” A jury
acquitted the McCunes of all charges in May 2003.
      Six years later, in May 2009, the McCunes received a letter from the
Office of the U.S. Attorney for the Southern District of Mississippi. The letter
stated the following:
             A review of our records records indicates that in January and
      June 1999 and in November 2011, this office issued administrative
      subpoenas to American Express Financial Service, Merchant &
      Farmers Bank, Industrial Employees Credit Union and Planters
      Bank, seeking to obtain certain financial records pertaining to you.
      Based on my review of the records in our possession, it appears
      that you were not provided notice of the issuance of these
      subpoenas as is required by Title 12, United States Code, Section
      3405. In the event notice was provided to you, I ask that you kindly
      inform me of such as soon as possible. Otherwise, I encourage you
      to review the remedies available to you, which can be found at Title
      12, United States Code, Section 3417.
      On July 13, 2011, McCune filed suit in the United States District Court
for the Southern District of Mississippi against DOJ, Merchant and Farmers
Bank, Members Exchange Credit Union, Regions Financial Corporation, and
Ameriprise Financial Services. He alleged that DOJ had served the 1999 and
2001 administrative subpoenas on financial institutions without the required
certification and without prior or contemporaneous notice to him, in violation of
12 U.S.C. §§ 3403(b) and 3405. He further alleged that the named financial

                                       4
    Case: 14-60145    Document: 00512845632     Page: 5   Date Filed: 11/21/2014

                                 No. 14-60145
institutions released his financial records in violation of RFPA and Mississippi
law. McCune later agreed to dismiss each of the financial-institution defendants,
and both McCune and DOJ filed cross-motions for summary judgment.
      The district court granted DOJ’s motion and denied McCune’s motion. It
concluded that McCune’s suit was time-barred, reasoning that McCune had
constructive notice of the facts giving rise to his suit by January 2003, and it
correspondingly declined to reach DOJ’s and McCune’s other arguments. This
appeal followed.
                     II.   STANDARD OF REVIEW
      The district court had original jurisdiction over McCune’s RFPA claims
under 28 U.S.C. § 1331, and had supplemental jurisdiction over McCune’s
state-law claims under 28 U.S.C. § 1367(a). This Court has jurisdiction under
28 U.S.C. § 1291.
      We review a grant of summary judgment de novo, applying the same
legal standards as the district court. Am. Home Assurance Co. v. United Space
Alliance, LLC, 378 F.3d 482, 486 (5th Cir. 2004). Summary judgment is
appropriate only “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A court considering summary judgment must construe all
facts and evidence in the light most favorable to the non-movant, must draw
all reasonable inferences in favor of the non-movant, and must refrain from
making credibility determinations and weighing the evidence. Haverda v. Hays
Cnty., 723 F.3d 586, 591 (5th Cir. 2013). To defeat summary judgment, “the
non-movant must go beyond the pleadings and come forward with specific facts
indicating a genuine issue for trial.” LeMaire v. La. Dep’t of Transp. & Dev.,
480 F.3d 383, 387 (5th Cir. 2007).

                                       5
     Case: 14-60145       Document: 00512845632          Page: 6     Date Filed: 11/21/2014

                                       No. 14-60145
                                III.    DISCUSSION
       The principal issue on appeal is whether McCune’s claims are time-
barred. RFPA provides that “[a]n action to enforce any provision of this chapter
may be brought in any appropriate United States district court without regard
to the amount in controversy within three years from the date on which the
violation occurs or the date of discovery of such violation, whichever is later.”
12 U.S.C. § 3416. “Limitations periods in statutes waiving sovereign immunity
are jurisdictional,” Ramming v. United States, 281 F.3d 158, 165 (5th Cir.
2001) (per curiam), and we adhere to a “general policy” of narrowly construing
such statutes against waiver of immunity, In re FEMA Trailer Formaldehyde
Prods. Liab. Litig., 646 F.3d 185, 191 (5th Cir. 2011) (per curiam). In addition,
“the party claiming federal subject matter jurisdiction”—here, McCune—
“bears the burden of proving it.” Epps v. Bexar-Medina-Atascosa Cntys. Water
Improvement Dist. No. 1, 665 F.2d 594, 595 (5th Cir. 1982).
       Because, by either party’s account, McCune discovered—or should have
discovered—the violation after it was completed, the “date of discovery” is
determinative of this appeal. As a general matter, 2 under the discovery rule “a
limitations period begins to run when a claimant discovers the facts that give
rise to a claim and not when a claimant discovers that those facts constitute a
legal violation.” Mack v. Equable Ascent Fin., L.L.C., 748 F.3d 663, 665–66 (5th
Cir. 2014) (per curiam). The facts relevant to this rule are (1) the existence of
an injury and (2) the identity of the person who inflicted it. Stewart v. Parish

       2  This Court has not yet had occasion to construe RFPA’s limitations provision. The
district court relied heavily on two out-of-circuit district court cases that found RFPA claims
time-barred on similar facts—Giannone v. Bank of America, N.A., 812 F. Supp. 2d 216
(E.D.N.Y. 2011), and Raikos v. Bloomfield State Bank, 703 F. Supp. 1365 (S.D. Ind. 1989)—
and the parties now dispute the relevance of these cases. We find it unnecessary to resolve
this argument, as we are not bound by either case, and the undisputed facts before us support
the conclusion that McCune had inquiry notice of the facts supporting his claim by May 2003
at the latest.
                                              6
    Case: 14-60145     Document: 00512845632      Page: 7   Date Filed: 11/21/2014

                                  No. 14-60145
of Jefferson, 951 F.2d 681, 684 (5th Cir. 1992); see also In re FEMA, 646 F.3d
at 190 (“Pursuant to [the discovery] rule, a claim accrues when a plaintiff
knows both her injury and its cause.”). A claimant need not have actual
knowledge of these facts “if the circumstances would lead a reasonable person
to investigate further.” Piotrowski v. City of Hous., 51 F.3d 512, 516 (5th Cir.
1995) (citing Jensen v. Snellings, 841 F.2d 600, 606 (5th Cir. 1988) (“Under
federal law, the limitations period commences when the aggrieved party has
either knowledge of the violation or notice of facts which, in the exercise of due
diligence, would have led to actual knowledge thereof.” (internal quotation
marks omitted))). That is, a claimant may be charged with constructive notice
of the relevant facts if, in the exercise of due diligence, he should have acquired
actual knowledge of the latter. See id. at 516 n.12 (citing cases applying this
“is or should be aware” standard to the calculation of limitations periods).
      McCune asserts that he neither knew nor should have known of (1) his
injury and (2) its cause until he received the letter from the U.S. Attorney’s
Office in May 2009. He rests this argument on the premise that his “injury”
was “the statutory penalty of $100.00 per violation [of RFPA] or actual
damages” and its “cause” was DOJ’s violation of RFPA.
      McCune misapprehends the nature of an “injury” for purposes of the
discovery rule. As explained above, the limitations period commences when a
claimant learns of the facts giving rise to a cause of action, not when a claimant
learns that those facts present a violation of law. Mack, 748 F.3d at 665–66.
McCune’s “injury” was the release of his financial records without the required
certification and notice, not the statutory damages prescribed for a RFPA
violation or any actual damages McCune claims to have suffered as a result of
the disclosure. The relevant inquiry is therefore when McCune was or, in due
diligence, should have been aware that DOJ accessed his financial records
without the necessary certification and notice.
                                        7
    Case: 14-60145     Document: 00512845632      Page: 8   Date Filed: 11/21/2014

                                   No. 14-60145
      The evidence in the record, even when viewed in the light most favorable
to McCune, indicates that McCune had inquiry notice of this “injury” and its
cause by May 2003 at the latest.
      At the outset, one of DOJ’s January 25, 1999 subpoenas was directed to
the custodian of records for Neo-Ventures, one of McCune’s companies, and
was served on Ellen McCune. This subpoena sought payroll registers,
American Express statements, gas-credit-card statements, accounts-payable
records, vehicle logs, general ledgers, trial balances, and bank statements—
records suggesting a government investigation into the company’s finances.
      Once the prosecution commenced in 2002, the evidence indicative of
government intrusion became more stark. The Government’s post-indictment
TRO application and bill of particulars, both served on the McCunes’ counsel
on December 13, 2002, listed the account numbers and exact balances of eleven
accounts held by the McCunes at two of the financial institutions that had
received DOJ’s January 25, 1999 subpoenas. The superseding indictment,
issued January 22, 2003, reprinted the financial information that had first
appeared a month before in the Government’s post-indictment TRO
application and bill of particulars. McCune acknowledged that only he and the
financial institutions where he maintained his accounts possessed the
information that appeared in these records, and he admitted that he was aware
that the Government must have obtained this information from the financial
institutions themselves. In fact, he now “admits he knew DOJ had access to
his financial records when the superseding indictment [issued] but did not
know how [the records] were obtained or the pertinent fact that they were
obtained illegally.”
      Moreover, McCune conceded that “on or around January 23, 2003,” he
saw the Jackson Clarion–Ledger story reporting on the “funds in 12 bank
accounts . . . totaling nearly $600,000” listed in the superseding indictment.
                                        8
     Case: 14-60145       Document: 00512845632          Page: 9     Date Filed: 11/21/2014

                                       No. 14-60145
And as the trial approached in May 2003, McCune was given access to the
Government’s evidence, which included a summary of his bank account
balances and several Merchant and Farmer’s Bank statements, as well as the
names of numerous employees of Merchant and Farmer’s Bank who were
expected to testify. 3 Nevertheless, neither McCune nor his counsel ever
undertook any investigation to ascertain how DOJ obtained McCune’s
financial information.
       McCune asserts that any such investigation would have been futile, as
the RFPA violations were “concealed” by the grand jury proceedings. In effect,
McCune argues that he is excused of his duty of diligence because he
reasonably assumed that his financial records were released pursuant to a
grand jury subpoena—a process that is exempt from RFPA, see 12 U.S.C.
§ 3413(i). As a reasonable litigant, the logic goes, McCune saw “nothing odd or
ami[ss]” in the appearance of his financial information in the Government’s
records, so he neither knew nor should have known of the Government’s failure
to comply with RFPA.
       McCune’s argument fails for two reasons. First, the grand jury
subpoenaed only a subset of the records at issue here. The grand jury issued just
one subpoena in this case—to Merchant and Farmer’s Bank—but the TRO
motion, bill of particulars, superseding indictment, and trial exhibit list included
references to accounts held at both Merchant and Farmer’s Bank and Industrial
Employees Credit Union. In addition, the grand jury subpoena sought records
pertaining only to a company named Health Systems Designers, Inc., while the
administrative subpoenas requested records relating to the McCunes

       3 Notably, two of the Government agents involved in the McCunes’ prosecution—
Assistant United States Attorney Robert Anderson and Special Agent Lynn Melear—indicated
that they would have provided the bank records to the McCunes during discovery, and
Anderson specifically testified that he maintained an open file policy “for all [of his] cases.”
                                               9
    Case: 14-60145       Document: 00512845632         Page: 10     Date Filed: 11/21/2014

                                      No. 14-60145
themselves as well as a number of entities they owned. 4 Correspondingly, if
McCune had asked the Government how it had acquired his financial
information, it would have been obligated to explain both sets of accounts and all
named entities. Even if the Government intended to “conceal” its administrative
subpoenas behind the grand jury subpoena, it could not have succeeded.
       Second, and more fundamentally, McCune’s position rests entirely on
conjecture. McCune can only speculate as to how his counsel would have
responded to a request to investigate the acquisition of his financial records,
whether a “diligent inquiry” would have ceased upon learning of the subpoena,
and whether the Government would have responded with a motion to dismiss
based on the grand jury exception at § 3413(i), because none of this happened.
We will not countenance McCune’s failure to conduct even a minimal
investigation by indulging his assumptions and engaging in speculation.
       In sum, even accepting McCune’s claim that he was not aware of the
critical fact that DOJ had obtained his financial information illegally, a simple
inquiry to the prosecution or a motion before the court would have revealed the
source of the information. We agree with the district court that the
circumstances present here “would [have led] a reasonable person to
investigate further,” Piotrowski, 51 F.3d at 516, and that McCune had “notice
of facts which, in the exercise of due diligence, would have led to actual
knowledge” of the RFPA violation, Jensen, 841 F.2d at 606 (internal quotation
marks omitted). The Government’s apparent use of a lawful means to discover
some of the contested information does not relieve McCune of his obligation of
diligent investigation as to the remainder. As a result, we find that the three-
year limitations period commenced in May 2003, at the latest—nearly eight

       4  In light of these discrepancies, McCune misrepresents the record when he avers that
“[i]t is without dispute that the financial information in the superseding indictment came
from a grand jury subpoena.”
                                             10
   Case: 14-60145     Document: 00512845632     Page: 11   Date Filed: 11/21/2014

                                 No. 14-60145
years before McCune filed suit. In light of the jurisdictional nature of RFPA’s
limitations period, we agree with the district court that McCune has not
discharged his burden to establish the timeliness of his suit and, in turn, the
subject-matter jurisdiction of the federal courts. Because we affirm the district
court’s limitations ruling, we do not reach its denial of McCune’s motion for
partial summary judgment on the issue of RFPA liability.
                           IV.   CONCLUSION
      For the foregoing reasons, we AFFIRM the dismissal of McCune’s suit.

                                       11