Court Opinion

ID: 4657851
Source: CourtListenerOpinion
Date Created: 2021-02-05 17:00:31.54333+00
Date Added: 2024-06-11T08:01:24.276701
License: Public Domain

FILED
                                                    United States Court of Appeals
                      UNITED STATES COURT OF APPEALS        Tenth Circuit

                             FOR THE TENTH CIRCUIT                        February 5, 2021
                         _________________________________
                                                                        Christopher M. Wolpert
                                                                            Clerk of Court
 ADVANTAGEOUS COMMUNITY
 SERVICES, LLC; ARMINDER KAUR;
 HARASPAL SINGH; HARCHI SINGH,

       Plaintiffs - Appellants,
                                                              No. 19-2211
 v.                                                (D.C. No. 1:17-CV-00525-LF-KK)
                                                               (D. N.M.)
 GARY KING; AMY LANDAU;
 ELIZABETH STALEY; MARC
 WORKMAN; CATHY STEVENSON;
 ORLANDO SANCHEZ; WALTER
 RODAS,

       Defendants - Appellees.
                      _________________________________

                             ORDER AND JUDGMENT *
                         _________________________________

Before MATHESON, LUCERO, and McHUGH, Circuit Judges.
                  _________________________________

       Advantageous Community Services, LLC (“Advantageous”) had a contract with

the New Mexico Department of Health (“NMDH”) to provide home health care to

Medicaid recipients. The Office of Attorney General of New Mexico (“OAG”) brought a

civil enforcement action against Advantageous concerning its billing practices, but the

       *
         This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
action was dismissed because an Assistant Attorney General used two inaccurately

reproduced documents at a deposition.

       Advantageous, its owner, and the owner’s sons (“Appellants”) sued seven current

or former officials of NMDH and OAG (“Appellees”) in federal district court under 42

U.S.C. § 1983. The district court dismissed some claims and granted summary judgment

to the Appellees on the remaining claims.

       Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

                                 I. BACKGROUND

                                        A. Parties

       Appellant Advantageous was a Medicaid contractor for NMDH. The individual

Appellants are Dr. Arminder Kaur, who owns Advantageous, and her sons Haraspal and

Harchi Singh, who work there and “informally share” in Advantageous’s ownership.

App., Vol. I at 24-25.

       The Appellees are seven current or former New Mexico officers and employees

sued in their individual capacities. Four were associated with the New Mexico Office of

the Attorney General:

       1. Gary King, former Attorney General;

       2. Elizabeth Staley, former Director of the Medicaid Fraud and Elder Abuse
          Division, which was charged with reviewing and prosecuting claims of
          Medicaid fraud;

       3. Amy Landau, former Assistant Attorney General (“AAG”), who prosecuted
          the enforcement action against Advantageous; and

       4. Marc Workman, former investigator.

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The three others held positions with NMDH:

       5. Cathy Stevenson, the former Director of NMDH’s Developmental Disabilities
          Support Division and current Deputy Director of NMDH;

       6. Orlando Sanchez, a former employee; and

       7. Walter Rodas, another former employee.

                                 B. Factual Background

       We draw the following facts from the district court record and the New Mexico

Court of Appeals’ opinion in State v. Advantageous Community Services, LLC, 329 P.3d

738, 739 (N.M. Ct. App. 2014), which affirmed the state district court’s dismissal of the

enforcement action against Advantageous. 1

   Advantageous’s Work as a Medicaid Contractor

       Advantageous contracted with NMDH to provide home health care to Medicaid

recipients and in turn contracted with individual caregivers to provide care. It billed the

State of New Mexico’s (“State”) Medicaid administrators to pay the caregivers.

   Background Check Requirement and Medicare Fraud Act

       NMDH requires home health care providers like Advantageous to submit a

background check application to NMDH for each of their caregivers. After NMDH

completes a background check, it sends a “clearance letter” to the provider stating

whether the background check uncovered any disqualifying convictions. NMDH creates

       1
         The federal district court took judicial notice of this opinion and accepted the
truth of its factual recitations. Because no one disputes that judicial notice was
appropriate, we do so too.

                                              3
clearance letters using templates with blank fields that are populated with information

drawn from a database.

   Investigation of Advantageous and Commencement of Enforcement Action

       In January 2006, the State opened an investigation into Advantageous’s billing

practices. The investigation revealed that six Advantageous caregivers were not cleared

through background checks before Advantageous started billing the State for their

services.

       In June 2007, OAG demanded that Advantageous repay the State for the payments

it had received for services rendered by the six caregivers. Advantageous did not

respond. NMDH placed a moratorium on Advantageous that prevented it from taking on

new Medicaid patients.

       In September 2009, the State—represented by OAG—sued Advantageous in New

Mexico state court for (1) recovery of overpayments, (2) civil penalties, and (3) breach of

contract.

   Deposition in the Civil Enforcement Action

       In the civil enforcement action, the State used “the date on the [NMDH’s]

clearance letter for each of the six [Advantageous] caregivers . . . to support its claims

that caregivers were providing services that were billed to Medicaid before” their

background checks had been completed. Advantageous Cmty. Servs., LLC, 329 P.3d at

740. Thus, “the clearance letter issued for each caregiver [was] critical to the State’s

theory of liability.” Id.

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       The State deposed Dr. Kaur in March 2011. In advance of the deposition, AAG

Landau asked Mr. Workman, an OAG investigator, to prepare information packets for

each of the six caregivers. For two of the caregivers, Mr. Workman was unable to locate

original copies of the clearance letters that had been issued in 2006.

       Mr. Workman called Mr. Rodas, an NMDH employee, to ask if NMDH had

copies of the two 2006 clearance letters. After Mr. Rodas informed Mr. Workman that

NMDH did not keep hard copies, Mr. Workman asked him to “reprint” the two clearance

letters from its electronic database. Mr. Rodas warned Mr. Workman it was impossible

to reprint accurate copies of the two letters because both the letter template and certain

information in the database had changed in the five intervening years. Mr. Rodas

generated the two letters anyway and faxed them to Mr. Workman with a cover sheet

explaining that the letters were inaccurate reproductions.

       Mr. Workman placed the two reproduced letters in the packets he was preparing

for AAG Landau, but he left out Mr. Rodas’s cover sheet. Mr. Workman did not inform

AAG Landau that the reproductions were not duplicates of the originals issued in 2006.

AAG Landau presented one or both of the letters to Dr. Kaur at her deposition.

   Dismissal of Enforcement Action and Appeal

       After the March 2011 deposition, Advantageous moved for sanctions against the

State for using the two letters at Dr. Kaur’s deposition. It also moved for summary

judgment on the merits. The state district court dismissed the enforcement action as a

litigation sanction. It also granted summary judgment on the merits.

                                              5
       The State appealed. In 2014, the New Mexico Court of Appeals affirmed the

dismissal of the enforcement action as a litigation sanction. It did not review whether

summary judgment was warranted.

                                  C. Procedural Background

   Complaint

       The Appellants brought three damages claims under 42 U.S.C. § 1983 in federal

court against all Appellees:

          Malicious prosecution and malicious abuse of process in violation of the
          Fourth and Fourteenth Amendments;

          Fabrication of evidence in violation of the Fourth and Fourteenth
          Amendments; and

          Arbitrary and capricious conduct in violation of the Fourteenth Amendment.

   Motion to Dismiss Order

       The Appellees filed a motion to dismiss. In its order, the district court dismissed

the individual Appellants’ malicious prosecution and fabrication of evidence claims with

prejudice for failure to state a claim because they were not parties to the state

enforcement action. The district court also dismissed with prejudice all of the

Appellants’ Fourteenth Amendment claims.

       On the Fourth Amendment claims, the district court said Advantageous had

alleged that the State had seized its property by (1) terminating and refusing to renew its

Medicaid contract, and (2) withholding Medicaid reimbursements. The court held

Advantageous (1) did not have a protected property interest in its Medicaid contract but

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(2) had sufficiently alleged that the withholding of Medicaid reimbursements was a

Fourth Amendment seizure. It therefore declined to dismiss Advantageous’s Fourth

Amendment claims for malicious prosecution and fabrication of evidence. 2

   Motion for Summary Judgment Order

      The Appellees moved for summary judgment on Advantageous’s remaining

Fourth Amendment claims. The district court granted the motion. It held no clearly

established law showed that the State’s withholding of Medicaid reimbursements from

Advantageous was a Fourth Amendment property seizure. Appellees were therefore

entitled to qualified immunity on Advantageous’s Fourth Amendment claims.

      The district court also rejected Advantageous’s request under Federal Rule of

Civil Procedure 56(d) to conduct additional discovery to oppose summary judgment.

                                       *   *    *   *

      The district court, having disposed of all claims, entered final judgment. The

Appellants timely appealed.

                                   II. DISCUSSION

      On appeal, the Appellants argue the district court erred by (A) dismissing the

individual Appellants’ Fourth Amendment claims; (B) granting summary judgment

against Advantageous’s Fourth Amendment claims; and (C) denying Advantageous’s

      2
        The district court said these claims “merged” into a single claim because they
were “indistinguishable.” App., Vol. I at 106-07.

                                            7
request to conduct additional discovery pursuant to Federal Rule of Civil Procedure

56(d). 3 The following discussion concludes that:

       A. The individual Appellants did not state Fourth Amendment malicious
          prosecution and fabrication of evidence claims because they were not parties to
          the state enforcement action.

       B. Advantageous’s challenge to the summary judgment ruling fails because it has
          not shown the State’s withholding of Medicaid reimbursements was a Fourth
          Amendment seizure under clearly established law.

       C. The district court’s denial of the Rule 56(d) motion should be upheld because
          further discovery would have been futile.

                 A. Individual Appellants’ Fourth Amendment Claims

       The district court dismissed the individual Appellants’ Fourth Amendment

malicious prosecution and fabrication of evidence claims with prejudice. It held the

individual Appellants had failed to state a claim because they were not parties to the state

enforcement action against Advantageous. We affirm.

       “We review de novo a district court’s Rule 12(b)(6) dismissal of a complaint for

failure to state a claim.” Doe v. Woodard, 912 F.3d 1278, 1299 (10th Cir. 2019). To

       3
          The Appellants either do not appeal or do not present adequate briefing on the
district court’s dismissal of their Fourteenth Amendment claims. Aplt. Br. at 16, 32, 35
(making three “points” on appeal); id. at 16 (summary of argument). Fourteenth
Amendment references appear on pages 38 to 46 of their opening brief. But the
Appellants neither explain why the district court erred nor develop an argument why we
should reverse. If the Appellants intended to appeal the dismissal of their Fourteenth
Amendment claims, they waived the issue by inadequately briefing it. See Burke v.
Regalado, 935 F.3d 960, 1014 (10th Cir. 2014) (“[A]n appellant may waive an issue by
inadequately briefing it.”).
        We note that almost the entire Argument section of the Appellants’ opening brief
is copy-pasted—with minor changes—from their district court briefs. Compare Aplt. Br.
at 20-46, with App., Vol. I at 51-55, 61-64, 68-70, 196-97, 200-08.
                                             8
survive a motion to dismiss, a plaintiff must plead sufficient factual allegations “to state a

claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007). To state a malicious prosecution claim, plaintiffs must show they were

prosecuted. See Mglej v. Gardner, 974 F.3d 1151, 1170 (10th Cir. 2020). Likewise, to

state a fabrication of evidence claim, plaintiffs must show that fabricated evidence was

used against them in a proceeding. See Warnick v. Cooley, 859 F.3d 746, 753 (10th Cir.

2018); see also McDonough v. Smith, 139 S. Ct. 2149, 2156 (2019) (“the most analogous

common-law tort” to fabrication of evidence is malicious prosecution).

       The individual Appellants were not parties to the state enforcement action. They

therefore did not state malicious prosecution or fabrication of evidence claims. The

individual Appellants provide no valid argument to the contrary. Aplt. Br. at 35-46. We

affirm the district court’s dismissal of these claims.

                   B.      Advantageous’s Fourth Amendment Claims

       The district court granted summary judgment against Advantageous’s Fourth

Amendment claims on numerous grounds, including the Appellees’ qualified immunity.

We affirm because Advantageous fails to contest on appeal the district court’s

determination that no clearly established law showed there was a Fourth Amendment

seizure.

       When a defendant in a § 1983 action moves for summary judgment based on

qualified immunity, the plaintiff must show (1) the defendant violated a federal

constitutional or statutory right, which (2) was clearly established at the time of the

defendant’s conduct. See Pearson v. Callahan, 555 U.S. 223, 232 (2009); Est. of Booker

                                              9
v. Gomez, 745 F.3d 405, 411 (10th Cir. 2014). We have discretion to address the second

element first and decline to address the first. See Pearson, 555 U.S. at 236-37.

       In its summary judgment order, the district court held that the Appellees were

entitled to qualified immunity because no clearly established law showed that the State’s

alleged withholding of Medicaid reimbursements from Advantageous was a property

seizure under the Fourth Amendment. App., Vol. II at 372-74. The Appellants fail to

dispute this holding in their opening brief and therefore waived the issue. See Burke v.

Regalado, 935 F.3d 960, 1018 n.44 (10th Cir. 2019). We affirm the district court’s grant

of summary judgment against Advantageous’s Fourth Amendment claims. 4

                       C.     Advantageous’s Rule 56(d) Request

       The district court denied Advantageous’s request under Federal Rule of Civil

Procedure 56(d) for further discovery to oppose summary judgment. We review that

decision for an abuse of discretion. Gutierrez v. Cobos, 841 F.3d 895, 908 (10th Cir.

2016). The district court mistakenly thought Advantageous had failed to submit a Rule

56(d) affidavit. Although the court erred by not considering Advantageous’s Rule 56(d)

       4
         We could also affirm on four other grounds. First, no clearly established law
recognizes a Fourth Amendment malicious prosecution or fabrication of evidence claim
based on a property seizure, as opposed to the seizure of a person. See Mglej, 974 F.3d at
1170 (for a malicious prosecution claim “a plaintiff must show . . . the defendant caused
the plaintiff’s continued confinement or prosecution” (quotations omitted)). Second, no
clearly established law recognizes a malicious prosecution or fabrication of evidence
claim relating to a civil enforcement action. Third, no evidence showed the state
enforcement action was initiated and continued without probable cause. Fourth, no
evidence showed a relationship between the State’s withholding of Medicaid
reimbursements and the state enforcement action. See App., Vol. II at 371-72.

                                            10
affidavit, 5 it did not abuse its discretion in denying Advantageous’s Rule 56(d) request

because additional discovery would have been futile. No amount of discovery would

have overcome the lack of clearly established law on Advantageous’s seizure claims. We

therefore affirm the district court’s denial of Advantageous’s Rule 56(d) request.

                                   III. CONCLUSION

       We affirm the district court’s judgment.

                                              Entered for the Court

                                              Scott M. Matheson, Jr.
                                              Circuit Judge

       5
        The district court probably overlooked Advantageous’s Rule 56(d) affidavit
because Advantageous first invoked Rule 56(d) in its April 2019 opposition to the
Appellees’ summary judgment motion, and later filed its Rule 56(d) affidavit in a June
2019 docket entry—long after briefing had concluded on the summary judgment motion.

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