United States of America v. Physicians Pain Specialists of Alabama, P.C. et al

Filing 175

Order denying the 158 MOTION to Alter, Amend or Vacate, construed as a motion to reconsider; granting 156 MOTION for Leave to File Third Amended Complaint. The judgment entered in favor of Castle is vacated. The relator's third amended complaint is due 4/9/2018. Signed by Judge William H. Steele on 4/2/2018. (tgw) Modified on 4/3/2018 (tgw).

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
UNITED STATES OF AMERICA, ex rel. )
LORI L. CARVER,
)
)
Plaintiff,
)
)
v.
) CIVIL ACTION 13-0392-WS-N
)
PHYSICIANS’ PAIN SPECIALISTS OF )
ALABAMA, P.C., et al.,
)
)
Defendants.
)
ORDER
This matter is before the Court on two motions filed by the relator: a
motion to alter, amend or vacate, (Doc. 158), and a motion for leave to file a third
amended complaint. (Doc. 156). The motions address the relator’s claims against
defendant Castle Medical, LLC (“Castle”). The interested parties have submitted
briefs and evidentiary materials in support of their respective positions, (Docs.
156-58, 166, 168, 174),1 and the motions are ripe for resolution. After careful
consideration, the Court concludes the first motion is due to be denied and the
second is due to be granted.
BACKGROUND
The relator in this False Claims Act case was employed by defendant
Physicians Pain Specialists of Alabama, P.C. (“Pain”). In August 2013, she filed
this action against Pain and against the two doctors (“Ruan” and “Couch”) who
owned Pain. (Doc. 1). In August 2014, she filed a first amended complaint that
added a pharmacy as a defendant. (Doc. 8). In October 2016, the government
1

Both sides submitted corrected versions of briefs, obviating consideration of the
original versions. (Docs. 163, 167).

filed its notice of non-intervention. (Doc. 24). The relator then filed a second
amended complaint that added four more defendants, including Castle. (Doc. 29).
In December 2016, the government gave notice of non-intervention as to this
pleading. (Doc. 30).
Castle was served with process in March 2017 and filed its answer on April
10, 2017. The relator served discovery requests on Castle on June 13, 2017,
shortly after the parties filed their Rule 26(f) report. Castle ignored the requests,
and on August 2, 2017, the relator filed a motion to compel. (Doc. 124). Castle,
aware of the impending motion to compel, filed a motion for judgment on the
pleadings (“JOP”) less than two hours later. (Doc. 125). Two weeks after that,
Castle filed a motion to stay discovery pending resolution of its motion for JOP.
(Doc. 134). The Magistrate Judge denied this motion on multiple grounds,
including Castle’s conduct in permitting discovery to continue for two months
before filing its motion for JOP, long after it was in default of its discovery
obligations. (Doc. 139). In the same order, the Magistrate Judge granted the
relator’s motion to compel. (Id.).
Castle objected to the former ruling, but the Court affirmed the Magistrate
Judge, noting in particular Castle’s: (1) acquiescience in preparing and submitting
a Rule 26(f) report (which triggered the opening of discovery); (2) ignoring of the
relator’s discovery requests (which placed Castle in default and exposed to a
motion to compel); and (3) four-month delay in filing a motion for JOP that it
conceded had been available to it from the day it was served with process. (Doc.
143).2
The Court’s order affirming the Magistrate Judge was entered on
September 22, 2017. Four days later, in compliance with the Magistrate Judge’s
order granting the relator’s motion to compel, Castle produced 14,000 pages of
2

United States ex rel. Carver v. Physicians Pain Specialists, P.C., 2017 WL
4224587 (S.D. Ala. 2017).

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discovery material. (Doc. 158 at 2). Castle produced an additional 313 pages of
material on October 25, 2017. (Id. at 2, 9 n.6).
On October 27, 2017, the Court entered an order granting Castle’s motion
for JOP. (Doc. 146).3 Although Castle raised a number of arguments, the Court
found one to be dispositive: that the relator failed to plead, with the particularity
required by Rule 9(b), that Castle actually submitted to the government any false
claim for payment. (Id. at 2-11). Castle’s brief requested as relief the dismissal
with prejudice of all claims against it and the entry of judgment against the relator.
(Doc. 125 at 24). The relator voiced no objection to this as the appropriate form of
relief, and the Court granted it, dismissing all claims with prejudice and entering
judgment in favor of Castle and against the relator. (Doc. 146 at 13; Doc. 147).
The instant motions were filed on November 22, 2017. Briefing was
completed on December 18, 2017, (Doc. 168), but when the Court reviewed the
briefs in January 2018, it learned that the relator – who had filed her proposed
third amended complaint and motion to alter, amend or vacate under seal – had not
sent Castle a copy of these filings. The result was that Castle quietly filed its brief
in opposition to the motions despite being in ignorance of what it was opposing.
Once the Court discovered this, it ordered the motion and proposed pleading
disclosed to Castle and afforded Castle additional time within which to file a
supplemental response to the motions. (Doc. 169). Castle has done so, (Doc.
174), thereby concluding the briefing on the motions.
DISCUSSION
Although the relator invokes Rule 59(e), her motion is not governed by that
rule. “The strictures of Rule 59(e) remain dormant … until a final judgment has
been entered.” Hertz Corp. v. Alamo Rent-A-Car, Inc., 16 F.3d 1126, 1132 (11th
3

United States ex rel. Carver v. Physicians Pain Specialists, P.C., 2017 WL
4873710 (S.D. Ala. 2017).

3

Cir. 1994). The Court entered judgment in favor of Castle, but it did not enter a
final judgment. Castle is only one of five defendants to this action; while the other
four have suffered entry of default, they remain as defendants. (Docs. 93, 99-100,
122-23). In such a situation, a judgment as to a single defendant such as Castle
constitutes a final judgment only if the Court “expressly determines that there is
no just reason for delay.” Fed. R. Civ. P. 54(b). Neither the judgment nor the
order granting the motion for JOP includes such language. The order and
judgment therefore did “not end the action as to any of the claims or parties and
may be revised at any time before the entry of a judgment adjudicating all the
claims and all the parties’ rights and liabilities.” Id. The Court’s ruling, in other
words, remains interlocutory and subject to revision. E.g., Harper v. Lawrence
County, 592 F.3d 1227, 1231 (11th Cir. 2010) (“[A] district court may reconsider
and amend interlocutory orders at any time before final judgment.”).4 The Court
therefore construes the relator’s motion as one to reconsider an interlocutory order
rather than as a motion to alter, amend or vacate a final judgment.
While the nomenclature of the relator’s motion changes, the governing
standards remain substantially the same. As the Court has ruled countless times,
“[a] motion to reconsider is only available when a party presents the court with
4

Castle’s frustration with the “technicality” that defaulted defendants remain in
the action, (Doc. 166 at 4), does not excuse compliance with the governing procedural
rules. Had Castle desired a final judgment under Rule 54(b), it was at all times free to
request one, and its failure to do so is its responsibility alone.
Castle suggests that the Court’s order and judgment worked an immediately
appealable final judgment under Czeremcha v. International Association of Machinists
and Aerospace Workers, 724 F.2d 1552 (11th Cir. 1984). (Doc. 166 at 3). Czeremcha,
however, stated only that the dismissal of a complaint terminates the action if the Court
rules that no amendment is possible or that the dismissal of the complaint constitutes a
dismissal of the action. 724 F.2d at 1554. Czeremcha was decided in the context of a
one-defendant case, and Castle identifies no principle that could extend Czeremcha so as
to override Rule 54(b) in a multi-defendant case. In any event, the Court neither
dismissed the complaint (it dismissed only the claims therein asserted against Castle),
ruled that no amendment is possible, nor stated that it was dismissing the action. Thus,
Czeremcha’s requirements are not met.
4

evidence of an intervening change in controlling law, the availability of new
evidence, or the need to correct clear error or manifest injustice.” Gibson v.
Mattox, 511 F. Supp. 2d 1182, 1185 (S.D. Ala. 2007) (internal quotes omitted).
The relator asserts that she has culled from Castle’s mammoth document
production several documents clearly demonstrating that Castle actually submitted
false claims to the government, thus triggering the “new evidence” justification for
reconsideration. (Doc. 158 at 11-14).5
As noted in the Court’s order granting the motion for JOP, such a motion
must be based on the pleadings and any judicially noticed facts. (Doc. 146 at 2).
The relator’s proffered evidence is neither and thus cannot be considered on a
motion for JOP or, by extension, on a motion to reconsider a ruling on a motion
for JOP. The relator, recognizing this difficulty, asks the Court to convert the
motion for JOP into a motion for summary judgment pursuant to Rule 12(d).
(Doc. 158 at 1). Because “[a]ll parties [have not been] given a reasonable
opportunity to present all the material that is pertinent to the motion,” Fed. R. Civ.
P. 12(d), the Court declines the relator’s invitation.
The relator’s motion to reconsider having failed, the Court turns to her
motion for leave to amend the complaint. “[W]e find it appropriate to adopt the
rule that after a complaint is dismissed the right to amend under Rule 15(a)
terminates; the plaintiff, however, may still move the court for leave to amend, and
such amendments should be granted liberally ….” Czeremcha, 724 F.2d at 1556
(footnote omitted). The rule is otherwise only if the Court states that no
5

The relator also argues that Ruan’s admission of a conspiracy to defraud the
government is of itself sufficient to satisfy Rule 9(b) with respect to the actual submission
of false claims to the government. (Doc. 158 at 14-16). This is not the argument the
relator made in opposition to Castle’s motion for JOP, (Doc. 133 at 14-18, 26), so it
cannot form the basis of a successful motion to reconsider. Moreover, the argument runs
up against the Eleventh Circuit authority cited by the Court for the proposition that
particularized allegations regarding the fraudulent scheme do not suffice as particularized
allegations of the actual submission to the government of fraudulent claims. (Doc. 146 at
8).

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amendment is possible or that dismissal of the complaint also constitutes dismissal
of the action. Id. at 1554 n.4 and 1556 n.6. As discussed in note 4, supra, the
Court did neither. The relator’s ability to move for leave to amend thus remains
intact.6
When considering a motion for leave to amend, “[t]he court should freely
give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). “The Supreme
Court has emphasized that leave to amend must be granted absent a specific,
significant reason for denial ….” Spanish Broadcasting System, Inc. v. Clear
Channel Communications, Inc., 376 F.3d 1065, 1077 (11th Cir. 2004). Such
reasons include undue delay, undue prejudice to the defendant, and futility of
amendment. Id. Castle claims all three.
Castle’s futility argument depends on its unsupported assumption that the
only way a relator can satisfy Rule 9(b) is if she possesses “firsthand knowledge”
that the defendant actually submitted false claims. (Doc. 166 at 15-16; Doc. 174
at 15-17). Because the allegations of the proposed amended complaint regarding
Castle’s submission of false claims to the government is based on documents the
relator received in discovery, Castle concludes that her proposed pleading would
be subject to dismissal were it allowed.
As the Court noted in its previous order, what is required is “some indicia
of reliability.” United States ex rel. Clausen v. Laboratory Corporation of
America, Inc., 290 F.3d 1301, 1311 (11th Cir. 2002). While sufficient indicia of
reliability may be shown by the relator’s “personal knowledge that the Defendants
actually submitted” false claims to the government, United States ex rel. Mastej v.
Health Management Associates, Inc., 591 Fed. Appx. 696, 707 (11th Cir. 2014), it
6

While “[a] district court is not required to grant a plaintiff leave to amend his
complaint sua sponte when the plaintiff, who is represented by counsel, never filed a
motion to amend nor requested leave to amend before the district court,” Wagner v.
Daewoo Heavy Industries America Corp., 314 F.3d 541, 542 (11th Cir. 2002) (en banc),
that exception does not apply here, where the relator has expressly sought leave to
amend.

6

is not the only way. The Clausen Court, for example, indicated that a relator could
provide sufficient indicia of reliability by presenting billing information obtained
from the government. 290 F.3d at 1314 n.25. The Clausen Court similarly
indicated that sufficient indicia of reliability could be found in second-hand
allegations regarding the defendant’s billing policies and practices. Id. at 1312.
Because Castle has failed to demonstrate that the exclusive means of satisfying
Rule 9(b) is through the relator’s firsthand knowledge of the submission of false
claims, its argument must fail.7
Within the portion of its briefs addressing the motion to alter, amend or
vacate, Castle raises the additional futility argument that the relator is precluded
by law from using discovery from Castle in support of her complaint. (Doc. 166
at 10-12; Doc. 174 at 10-12). As it did in pursuing its motion to stay discovery
pending a ruling on its motion for JOP, Castle relies on cases standing for the
proposition that a plaintiff is not, over timely objection, entitled to discovery
before adequately pleading her claim. As the Court previously ruled, however,
“[t]he discovery rules protect those who seek their protection.” (Doc. 143 at 6).
By cooperating in the presentation of a Rule 26(f) report and then sitting idly by
after being served with discovery requests until it was in default of its discovery
obligations, Castle forfeited any right to rely on the general rule.
Castle argues that the relator unduly delayed in seeking to amend her
complaint because she learned in July 2017 that Castle intended to challenge the
sufficiency of her pleading by a motion for JOP and yet did not file the instant
motion for leave to amend until October 2017, three months later. (Doc. 166 at 89, 16-17; Doc. 174 at 8-10, 17-18). The relator’s amended complaint, however, is
based on documents she received only on September 26, 2017, a mere month
7

Because Castle presents no argument regarding the strength vel non of the
evidence the relator has culled from its document production regarding the actual
submission of false claims to the government, the Court does not consider whether that
evidence provides adequate indicia of reliability to satisfy Rule 9(b).

7

before she filed her motion, and Castle does not explain how she could have
moved for leave to amend before receiving and reviewing the documents on which
the proposed amendment is based. Given that Castle produced about 14,000 pages
of paper, the relator’s motion was filed with almost breathtaking speed.8 Nor
does Castle cite any authority for the proposition that three months is such a long
delay as to justify denial of a motion for leave to amend; the Eleventh Circuit
cases upholding denials of leave to amend based on undue delay involve delays
measured in years and/or extending beyond key deadlines.9
Finally, Castle argues that it will be unduly prejudiced if amendment is
allowed because it will lose the benefit of the previous dismissal of the relator’s
claims and will be required to defend this lawsuit, at considerable expense. (Doc.
166 at 17-19; Doc. 174 at 18-20). The mere fact that amendment would result in
reinstatement of claims that have been dismissed does not constitute undue
prejudice for purposes of Rule 15(a)(2). On the contrary, “[g]ranting leave to
amend is especially appropriate … when the trial court has dismissed the
8

A stack of 14,000 pages of paper would rise almost five feet high.

9

See, e.g., Reese v. Herbert, 527 F.3d 1253, 1263 (11th Cir. 2008) (seven weeks
after close of discovery, after dispositive motions filed); Florida Evergreen Foliage v.
E.I. DuPont de Nemours & Co., 470 F.3d 1036, 1040-41 (11th Cir. 2006) (“years” after
complaint filed, and after several dispositive motions and certified questions were
resolved, and during interlocutory appeal); Andrx Pharmaceuticals, Inc. v. Elan Corp.,
421 F.3d 1227, 1237 (11th Cir. 2005) (over a year after complaint filed); Carruthers v.
BSA Advertising, Inc., 357 F.3d 1213, 1214, 1218 (11th Cir. 2004) (over a year and a half
after complaint filed, and six months after the deadline for amendments); Laurie v.
Alabama Court of Criminal Appeals, 256 F.3d 1266, 1275 (11th Cir. 2001) (well over a
year after complaint filed, and long after the deadline for amendments); Brewer-Giorgio
v. Producers Video, Inc., 216 F.3d 1281, 1284 (11th Cir. 2000) (over a year after
complaint filed, and eight months after the deadline for amendments); Jennings v. BIC
Corp., 181 F.3d 1250, 1258 (11th Cir. 1999) (almost three years after complaint filed, and
five months after the deadline for amendments); Burger King Corp. v. Weaver, 169 F.3d
1310, 1319 (11th Cir. 1999) (over three years after complaint filed); Campbell v. Emory
Clinic, 166 F.3d 1157, 1162 (11th Cir. 1999) (over five years after complaint filed, and
after discovery ended and dispositive motions filed); Hester, 941 F.2d at 1578-79 (over
two years after complaint filed).

8

complaint for failure to state a claim,” unless the defendant shows undue prejudice
resulting from particular circumstances. Griggs v. Hinds Junior College, 563 F.2d
179, 180 (5th Cir. 1977); accord Thomas v. Farmville Manufacturing Co., 705
F.2d 1307, 1307-08 (11th Cir. 1983); Marrero v. City of Hialeah, 625 F.2d 499,
512 (5th Cir. 1980). And as the Court has noted, “[i]t is well-settled that
allegations that an amendment will require the expenditure of some additional
time, effort, or money do not constitute undue prejudice” sufficient to justify
denying a motion under Rule 15(a)(2). Allstate Insurance Co. v. Regions Bank,
2014 WL 4162264 at *6 (S.D. Ala. 2014) (internal quotes omitted).
CONCLUSION
For the reasons set forth above, the relator’s motion to alter, amend or
vacate, construed as a motion to reconsider, is denied, and her motion for leave to
file a third amended complaint is granted. The judgment entered in favor of
Castle is vacated. The relator is ordered to file and serve her third amended
complaint on or before April 9, 2018.
DONE and ORDERED this 2nd day of April, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE

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