United States ex rel. Michaels v. Agape Senior Community, Inc.

848 F.3d 330, 2017 WL 588356
CourtCourt of Appeals for the Fourth Circuit
DecidedFebruary 14, 2017
Docket15-2145, 15-2147
StatusPublished
Cited by82 cases

This text of 848 F.3d 330 (United States ex rel. Michaels v. Agape Senior Community, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Michaels v. Agape Senior Community, Inc., 848 F.3d 330, 2017 WL 588356 (4th Cir. 2017).

Opinion

*333 KING, Circuit Judge:

In this qui tam action under the False Claims Act (the “FCA”), defendant Agape Senior Community, Inc., and the twenty-three other defendants (collectively, “Agape”) are affiliated entities that operate elder care facilities throughout South Carolina. 1 The relators, Brianna Michaels and Amy Whitesides, are former Agape employees who allege that Agape fraudulently billed Medicare and other federal health care programs for services to thousands of patients — services that were not actually provided, or that were provided to patients who were not eligible for them. The United States Government was entitled, but declined, to intervene.

To establish liability and damages, the relators sought to rely on statistical sampling. The district court determined, however, that using statistical sampling to prove their case would be improper (the “statistical sampling ruling”). Additionally, the court rejected a proposed settlement between the relators and Agape, because the Attorney General of the United States objected to it. In so doing, the court concluded that the Government — despite not having intervened in an FCA qui tam action — possesses an unreviewable veto authority over the action’s proposed settlement (the “unreviewable veto ruling”).

The district court certified both its statistical sampling and unreviewable veto rulings for these interlocutory appeals under 28 U.S.C. § 1292(b). We thereafter granted the petitions for permission to appeal submitted to this Court by the rela-tors (seeking an appeal from both rulings) and by Agape (requesting an appeal from the unreviewable veto ruling only). As explained below, we affirm the unreviewable veto ruling and dismiss as improvidently granted the relators’ appeal as to the statistical sampling ruling.

I.

A.

The FCA, codified at 31 U.S.C. §§ 3729-3733, authorizes a private individual (i.e., a relator) to initiate and pursue an action in the name of the United States Government (a qui tam action) to seek civil remedies for fraud against the Government. See 31 U.S.C. § 3730(b)(1). Pursuant to § 3730(b)(1), the qui tam “action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.”

At the outset of the qui tam action, the relator’s complaint must be served on the Government, filed in camera, and kept under seal for at least sixty days, with no service of process on the defendant until the court so orders. See 31 U.S.C. § 3730(b)(2). During the sixty-day period after it receives the complaint, the Government may elect to intervene in the qui tam action. Id. Specifically, before the expiration of the sixty-day period — or any exten *334 sion thereof under § 3730(b)(3) — the Government must either (A) “proceed with the action” by assuming primary responsibility for the action’s prosecution, or (B) “notify the court that it declines to take over the action” from the relator, who will then “have the right to conduct the action.” Id. § 3730(b)(4)(A)-(B). If the Government declines to intervene during the initial sixty-day (or extended) period, the court may nevertheless permit its intervention “at a later date upon a showing of good cause.” Id. § 3730(c)(3).

Once the Government intervenes, the relator retains the right to continue as a party to the action, subject to certain limitations. See 31 U.S.C. § 3730(c)(1). For example, the Government is authorized to settle the action over the relator’s objection, but only “if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances.” Id. § 3730(c)(2)(B).

When the qui tam action is successful, the relator is entitled to share with the Government in the award. See 31 U.S.C. § 3730(d)(l)-(4). The amount of. the relator’s share depends on whether the Government intervened in the action. If the Government did not intervene, “the person bringing the action or settling the claim shall receive an amount which the court decides is reasonable for collecting the civil penalty and damages.” Id. § 3730(d)(2) (specifying that such “amount shall be not less than 25 percent and not more than 30 percent of the proceeds of the action or settlement”).

B.

Here, the relators served their initial Complaint on the Government and, on December 7, 2012, filed it under seal in the District of South Carolina. The district court extended the Government’s deadline for its intervention decision to March 5, 2013. By its notice of that date, the Government declined to intervene but called attention to the consent-for-dismissal provision of § 3730(b)(1), requesting that the relators and Agape solicit the Attorney General’s written consent before asking the court to rule on any proposed dismissal. Two days later, on March 7, 2013, the court unsealed the Complaint and directed the relators to serve it on Agape.

The relators filed their operative Second Aménded Complaint on March 6, 2014, and discovery ensued. 2 Although the relators and Agape dispute the exact numbers, they agree that Agape admitted more than 10,000 patients to its facilities in South Carolina and submitted more than 50,000 claims to federal health care programs during the relevant time period. The rela-tors sought to use statistical sampling to prove their case in order to avoid the cost of reviewing each patient’s chart to identify which claims were fraudulent — a task that the relators said would take their experts four to nine hours per patient, at a rate of $400 per hour, potentially totalling more than $36 million. For its part, Agape opposed the use of any evidentiary form of statistical sampling. Thus, the district court received briefing and conducted a hearing on the issue. By Order of March 16, 2015, the court made its statistical sampling ruling “that based on the facts of this case, statistical sampling would be improper.” See United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 0:12-cv-03466, at 2 (D.S.C. Mar. 16, 2015), ECF No. 255 (the “March 2015 Order”).

*335 Meanwhile, the relators, Agape, and the Government had mediated unsuccessfully in November 2014, and the relators and Agape had mediated again — without the Government’s knowledge — in January 2015. The proposed settlement between the relators and Agape emerged from the second mediation. Relying on § 3780(b)(1), the Attorney General objected to the proposed settlement.

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Bluebook (online)
848 F.3d 330, 2017 WL 588356, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-michaels-v-agape-senior-community-inc-ca4-2017.