United States of America et al v. AseraCare Inc et al
MEMORANDUM OPINION AND ORDER re Defendants Motion for Reconsideration of Order Granting Governments Motion to Intervene (Doc. 136); for reasons as stated within, the court CONFIRMS its July 7, 2012 Order, granting the Governments Motion to Intervene. Signed by Judge Karon O Bowdre on 9/24/12. (SAC )
2012 Sep-24 PM 03:03
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
UNITED STATES OF AMERICA;
DEBORA PARADIES, LONDON
LEWIS; and ROBERT MANLEY,
and GGNSC ADMINISTRATIVE
SERVICES d/b/a Golden Living
f/k/a Beverly Enterprises Inc.,
CIVIL ACTION NO:
MEMORANDUM OPINION AND ORDER
This matter comes before the court on “Defendants’ Motion for Reconsideration of Order
Granting Government’s Motion to Intervene.” (Doc. 136). The court granted the Motion for
Reconsideration and now reconsiders its July 3, 2012 Order, granting the Government’s Motion
to Intervene. The Defendants argue that the Government’s intervention will cause undue
prejudice and delay the adjudication in contravention of Rule 24(b). Fed. R. Civ. Pro. 24(b)(3).
The Government argues that the court should allow intervention “for good cause” under the False
Claims Act because of the discovery of new evidence after the initial intervention deadline. See
31 U.S.C. § 3730(c)(3). The court does not find the Defendants’ arguments for reversing its
decision granting the Government’s motion to intervene persuasive, and thus the court will
CONFIRM its July 3, 2012 Order, granting the Government’s Motion to Intervene.
The court granted the Government’s motion to intervene on July 3, 2012. (Doc. 115). The
court held a status conference on August 28, 2012. As a result of that status conference, the court
entered a revised scheduling order and consolidated Paradies (Civil Action No. 2:12-cv-245KOB) and Micca (Civil Action No. 2:12-cv-2264-KOB) for discovery purposes. (Doc. 135).
Three days later, the Defendants filed the motion for reconsideration of the court’s order granting
the Government’s motion to intervene. (Doc. 136). The court granted the motion for
reconsideration (doc. 138) and allowed a written response from the Government (doc. 141) and a
reply from the Defendants (doc. 142).
Under the False Claims Act, when the government declines to intervene in the qui tam
case initially, it may intervene at a later time upon a showing of good cause under 31 U.S.C.
§ 3730(c)(3). The Act does not define “good cause,” but courts have found good cause in cases
where the government realized the magnitude of the alleged fraud was much larger than it had
originally anticipated; where the government received additional and new evidence about the
case; and where intervention would protect the interests of the relators. See U.S. ex rel. Hall v.
Schwartzman, 887 F. Supp. 60, 62 (E.D. N.Y. 1995) (granting government intervention when the
government had “uncovered information suggesting that the scope of the alleged fraud [was]
more extensive than originally anticipated”); U.S. ex rel. Stone v. Rockwell Intern. Corp., 950 F.
Supp. 1046, 1049 (D. Colo. 1996) (“Even if good cause requires a showing of new evidence, the
government has sustained that burden”); Id. (“Such reading leads us to the conclusion that the
‘good cause’ requirement of § 3730(c)(3) was intended to protect the interests of the relator.”
(quoting 29 U.S.C. § 3730(c)(3))).
In addition, the legislative history of the Act suggests that Congress intended for the
Government to be able to intervene upon the discovery of new information. See S. Rep. No. 99345, at 26 to 27 (1986) (discussing that the discovery of new evidence “could escalate the
magnitude or complexity of the fraud, causing the Government to reevaluate its initial
assessment or [make] it difficult for the qui tam relator to litigate alone”).
The Government claims that after its initial decision not to intervene in this case, it
discovered new relevant information and evidence of the Defendants’ fraud. See Doc. 108, at 3
(“On several occasions after May 16, 2011, representatives of the United States met with counsel
for AseraCare to discuss the United States’ investigation, including new information that
AseraCare provided to the United States since May 2011"). The relators support the
Government’s intervention in this case.
The Defendants argue that the Government’s intervention will result in duplicative
discovery and undue prejudice. Under Rule 24(b)(1)(A), the court may allow a party to intervene
who “is given a conditional right to intervene by a federal statute.” Fed. R. Civ. Pro. 24(b)(1)(A).
Under the False Claims Act, the Government is given a conditional right to intervene in qui tam
actions “for good cause” once the initial intervention period has expired. 31 U.S.C. § 3730(c)(3).
In deciding whether to allow a party to intervene, the court “must consider whether the
intervention will unduly delay or prejudice the adjudication of the original parties’ rights.” Fed.
R. Civ. Pro. 24(b)(3).
As discussed at the August 28, 2012 status conference, the court is not persuaded that the
government’s intervention and accompanying revised scheduling order (doc. 137), including an
appropriate discovery period, will unduly prejudice the Defendants. The discovery conducted in
this case before it was transferred from the Eastern District of Wisconsin to this court was
minimal, and the Wisconsin court recognized that the discovery was “only in the early stages”
when it transferred the case to this court. (Doc. 99, at 8). This court recognizes the need for
further meaningful discovery on the alleged fraud perpetrated by the Defendants.
The additional discovery that the Defendants may have to engage in because of the
Government’s intervention “is not sufficient
. . . to deny any intervention absent a showing of
undue prejudice.” U.S. ex rel. Hall v. Schwartzman, 887 F. Supp. 60, at 62. Here, the court has
not found any showing of undue prejudice, and thus a possibility of broader discovery is not
enough to deny the Government’s intervention.
The Defendants also argue that under United States v. Jefferson County, the court should
not allow the Government to intervene because the motion to intervene was not timely filed. 720
F.2d 1511, 1519 (11th Cir. 1983). The court is unaware of any court that has analyzed the
Government’s motion to intervene in a False Claims Act qui tam action under Jefferson’s factors
for permissive intervention. The court agrees with the Government in that “the very nature of
government intervention in FCA cases creates circumstances and considerations not present in
ordinary cases involving a non-party’s efforts to intervene under Rule 24.” Doc. 141, at 4. The
court, however, finds that the Government is entitled to intervention, even assuming the Jefferson
framework does apply to this situation.
Under Jefferson, the district court must consider four factors when deciding whether to
(1) the length of time during which the would-be intervenor knew or reasonably
should have known of his interest in the case before he petitioned for leave to
intervene; (2) the extent of prejudice to the existing parties as a result of the
would-be intervenor's failure to apply as soon as he knew or reasonably should
have known of his interest; (3) the extent of prejudice to the would-be intervenor
if his petition is denied; and (4) the existence of unusual circumstances militating
either for or against a determination that the application is timely.
Id. at 1516. First, the Government gained new information in the time between when it initially
declined to intervene and its February 20, 2012 Motion to Intervene. Additionally, the
Government filed its Motion to Intervene within one month of the case being transferred to this
court. Second, as already discussed, the court does not find any significant prejudice to the
Defendants as a result of the Government’s intervention. Third, the Government’s intervention in
a False Claims Act case serves to protect the public interest which is of “paramount importance”
in cases such as this one. U.S. ex rel. Stone v. Rockwell Intern. Corp., 950 F. Supp. 1046 at 1049.
Finally, the unusual circumstances of a qui tam action under the False Claims Act and the
unususal and prolonged procedural history of this particular case “militate” for the finding of
timeliness and allowing the Government to intervene. Jefferson, 720 F.2d at 1516.
The court is satisfied that the new evidence involving AseraCare’s hospice operations and
Medicare claims and the “full support” of the relators justify the Government’s intervention in
this case. U.S. ex rel. Stone v. Rockwell Intern. Corp., 950 F. Supp. at 1049. Additionally, under
the general intervention considerations of Rule 24 and Jefferson, the court finds that the
Defendants will not suffer any undue prejudice as a result of the Government’s intervention in
this case. Thus, the court CONFIRMS its July 7, 2012 Order, granting the Government’s Motion
DONE and ORDERED this 24th day of September, 2012.
KARON OWEN BOWDRE
UNITED STATES DISTRICT JUDGE
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