United States of America et al v. Halifax Hospital Medical Center et al

Filing 554

ORDER denying 496 Motion for Judgment on the Pleadings. Signed by Judge Gregory A. Presnell on 2/6/2014. (ED)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
USA and ELIN BAKLID-KUNZ,
Plaintiffs,
v.

Case No: 6:09-cv-1002-Orl-31TBS

HALIFAX HOSPITAL MEDICAL
CENTER and HALIFAX STAFFING,
INC.,
Defendants.

ORDER
This matter comes before the Court on the Motion for Judgment on the Pleadings (Doc.
496) filed by the Defendants (henceforth, collectively, “Halifax”) and the responses thereto (Doc.
505, 511) filed by the Plaintiffs.
I.

Background

In this matter, the Relator, Elin Baklid-Kunz, alleges that the Defendants violated the False
Claims Act, 31 U.S.C. §§ 3729-3733 (henceforth, the “FCA”), by overbilling Medicare. The
FCA permits a private person – a relator – to bring a qui tam action “for the person and for the
United States Government” against the alleged violator of the FCA “in the name of the
Government”. 31 U.S.C. § 3730(b)(1). Any person found to have violated the FCA is liable to
the Government for a civil penalty in the amount of $5500 to $1100 plus three times the amount of
damages sustained by the Government. 31 U.S.C. § 3729(a)(1), 28 U.S.C. § 2461. The relator
receives a share of any proceeds of the action. 31 U.S.C. § 3730(b)(1).
Halifax contends that relators lack standing under Article III of the Constitution to seek a
civil penalty under the FCA. (Doc. 496 at 3). Halifax also contends that the FCA’s delegation

of civil law enforcement authority to seek civil penalties to vindicate public rights violates the
Appointments Claus of Article II of the Constitution. (Doc. 496 at 3). By way of the instant
motion, Halifax seeks judgment on the pleadings on both these issues.
II.

Legal Standard

Rule 12(c) of the Federal Rules of Civil Procedure provides that
After the pleadings are closed but within such time as not to delay
the trial, any party may move for judgment on the pleadings. If, on
a motion for judgment on the pleadings, matters outside the
pleadings are presented to and not excluded by the court, the motion
shall be treated as one for summary judgment and disposed of as
provided in Rule 56.
Judgment on the pleadings under Rule 12(c) is appropriate when there are no material facts in
dispute, and judgment may be rendered by considering the substance of the pleadings and any
judicially noticed facts. Horsley v. Rivera, 292 F.3d 695, 701 (11th Cir.2002).
The standard applied to a Rule 12(c) motion is essentially if not entirely identical to the
standard applied to a Rule 12(b)(6) motion. See ThunderWave, Inc. v. Carnival Corp., 954
F.Supp. 1562, 1564 (S.D.Fla.1997) (citing cases). In considering a motion to dismiss under Rule
12(b)(6) for failure to state a claim, the court must accept all allegations in the complaint as true
and construe them in the light most favorable to the plaintiff. Castro v. Sec’y of Homeland Sec.,
472 F.3d 1334, 1336 (11th Cir.2006). District courts apply a fairly restrictive standard in ruling
on motions for judgment on the pleadings. Bryan Ashley Int'l, Inc. v. Shelby Williams Indus.,
Inc., 932 F.Supp. 290, 291 (S.D.Fla.1996) (citing 5A Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 1368 at 222 (2004)).

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III.

Analysis
A. Standing

Article III of the Constitution confines the federal courts to adjudicating actual “cases” and
“controversies.” The case or controversy requirement defines with respect to the judicial branch
the idea of separation of powers on which the federal government is founded. Allen v. Wright,
468 U.S. 737, 750, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). The several doctrines that have
grown up to elaborate the case or controversy requirement -- standing, mootness, ripeness,
political question and the like -- are “founded in a concern about the proper – and properly limited
– role of the courts in a democratic society.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 498, 95
S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975)). The doctrine that requires a litigant to have “standing”
to invoke the power of a federal court is perhaps the most important of these doctrines. Id.
To establish standing for purposes of Article III, a plaintiff must establish three things.
First, she must demonstrate “injury in fact” – a harm that is both “concrete” and “actual or
imminent, not conjectural or hypothetical.” Second, she must demonstrate causation – a fairly
traceable connection between the alleged injury in fact and the alleged conduct of the defendant.
And third, she must demonstrate redressability – a “substantial likelihood” that the requested relief
will remedy the alleged injury in fact. Vermont Agency of Natural Resources v. U.S. ex. rel.
Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 1861-62, 146 L.Ed.2d 836 (2000) (internal citations
omitted).
It is settled that Congress cannot erase the standing requirements of Article III by
statutorily granting the right to sue to a person who would not otherwise have standing. Raines v.
Byrd, 521 U.S. 811, 820 n. 3, 117 S.Ct. 2312, 2318, 138 L.Ed.2d 849 (1997). Halifax argues that
the FCA violates this principle by creating a cause of action that allows private individuals to seek

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penalties for the vindication of public rights – something those individuals would not otherwise
have standing to do.
In Vermont Agency of Natural Resources, the Supreme Court found “no room for doubt
that a qui tam relator under the FCA has Article III standing.” Id. at 778, 120 S.Ct. at 1865. The
Supreme Court found support for this conclusion in two separate areas of the law: (1) the wellestablished principle that the assignee of a claim has standing to assert the injury in fact suffered
by the assignor, and (2) the long tradition of qui tam actions in England, the American colonies,
and the early United States. Id. at 773-74, 120 S.Ct. at 1863. While addressing the issue of
assignee standing, the Supreme Court noted that the FCA “can reasonably be regarded as effecting
a partial assignment of the Government’s damages claim.” Id. at 773, 120 S.Ct. at 1863. Based
largely on this statement, Halifax argues that the Vermont Agency of Natural Resources court
upheld only “a relator’s standing to seek damages under the FCA” and did not address “relators’
standing to seek civil penalties for violation of the sovereign’s laws.” (Doc. 496 at 6).
It is true that the Vermont Agency of Natural Resources only the addressed the general
question of a relator’s standing to proceed under the FCA rather than standing to pursue a
particular type of claim pursuant to that statute. However, there is nothing in the opinion to
suggest that a relator’s standing to pursue recovery of the Government’s damages under the FCA
differs from a relator’s standing to pursue a civil penalty under the FCA. To the contrary, the
analysis utilized in Vermont Agency of Natural Resources supports a finding that qui tam relators
have standing to pursue both of these sorts of claims.
The Vermont Agency of Natural Resources court noted that the relator in that case was
pursuing both damages and penalties but did not distinguish between them, stating that the
complaint “asserts an injury to the United States – both the injury to its sovereignty arising from

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the violation of its laws … and the proprietary injury resulting from the alleged fraud.” 1 Id. at
771, 120 S.Ct. at 1862. Ultimately, the court concluded that “the United States’ injury in fact
suffices to confer standing on respondent Stevens.” Id. at 774, 120 S.Ct. at 1863. In doing so,
the court did not intimate that only the Government’s proprietary injury, rather than the injury to
its sovereignty, could constitute the “injury in fact” to support standing.
The second element considered by the Vermont Agency of Natural Resources court – the
history of qui tam actions in England and America -- more directly rebuts the position taken by
Halifax here. The court stated that Article III’s restriction of the judicial power to cases and
controversies “must be understood to mean cases and controversies of the sort traditionally
amenable to, and resolved by, the judicial process.” Id. (internal quotations omitted). In
assessing whether the types of suits authorized by the FCA were these sorts of cases and
controversies, the court traced the history of qui tam suits in England as far back as the end of the
13th century, when individuals who had suffered injury began bringing actions in the royal courts
on both their own and the Crown’s behalf. Id. at 774, 120 S.Ct. at 1863. These suits were a
device to allow litigants to get their private claims into the respected royal courts, and they began
to fall out of favor starting in the 14th century, as the royal courts extended their jurisdiction to
suits involving wholly private wrongs. Id. at 775, 120 S.Ct. 1863.
At about this same time, however, Parliament began enacting statutes explicitly providing
for qui tam suits, including suits permitting relators to recover penalties:
These [statutes] were of two types: those that allowed injured parties
to sue in vindication of their own interests (as well as the Crown’s),
see, e.g., Statute Providing a Remedy for Him Who Is Wrongfully
1

The relator had asserted that the Vermont Agency of Natural Resources had violated the
FCA by overstating the amount of time spent by its employees on federally funded projects,
thereby inducing the federal government to disburse more grant money than the agency was
entitled to receive. Id. at 770, 120 S.Ct. at 1861.

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Pursued in the Court of Admiralty, 2 Hen. IV, ch. 11 (1400), and —
more relevant here — those that allowed informers to obtain a
portion of the penalty as a bounty for their information, even if
they had not suffered an injury themselves, see, e.g., Statute
Prohibiting the Sale of Wares After the Close of Fair, 5 Edw. III, ch.
5 (1331); see generally Common Informers Act, 14 & 15 Geo. VI,
ch. 39, sched. (1951) (listing informer statutes).
Vermont Agency of Natural Resources, 529 U.S. at 775, 120 S.Ct. at 1864 (emphasis added). The
Court also noted that several of the American colonies passed statutes expressly authorizing qui
tam suits, including a 1692 New York statute permitting informers to sue for and receive a share
of a fine imposed upon officers who neglected their duties to pursue privateers and pirates. Id. at
776, 120 S.Ct. at 1864. Further, the court noted, the First Congress enacted a “considerable
number” of so-called “informer statutes,” including inter alia one that allowed census takers to sue
for and receive half of the penalty imposed upon marshals who failed to file census returns and
another that allowed informers to receive the full penalty paid by customs officials for failing to
post a fee schedule. Id. at 777 n. 5, 6, 120 S.Ct. at 1864 (citing Act of Mar. 1, 1790, ch. 2, § 3, 1
Stat. 102, and Act of July 31, 1789, ch. 5, § 29, 1 Stat. 44-45).
The historical review by the Vermont Agency of Natural Resources court establishes, not
just what was at issue in that case -- that qui tam suits are properly considered to be “cases” or
“controversies” and that relators have standing to pursue them -- but that qui tam suits in which the
relator recovers a fine have long been recognized as falling within the judicial power as set forth
in Article III. As such, relators would also have standing to pursue civil penalties under the FCA.
Halifax argues that Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 118 S.Ct.
1003, 140 L.Ed.2d 210 (1998) establishes that private citizens have no standing to pursue claims
for penalties under circumstances such as those presented in the instant case. In Steel Co., a
group of private citizens alleged that the defendant had violated the Emergency Planning and
Community Right-To-Know Act of 1986 (“EPCRA”) by failing to file chemical inventory forms

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and toxic chemical release forms. Id. at 86-88. The EPCRA had a citizen-suit provision that
authorized civil penalties, and the citizens’ group in Steel Co. sought such penalties. Id. at 88.
Ultimately, the Supreme Court found that the citizens’ group lacked standing and dismissed the
case. Id. at 107, 118 S.Ct. at 1019.
Halifax reads Steel Co. too broadly, as there are several significant distinctions between
that case and this one. For one thing, Steel Co. was not a qui tam case; the citizens’ group was
asserting a violation of its own interest in receiving the information required by the statute, not the
interest of the Government. Second, Steel Co. did not address the issue that, in Halifax’s
interpretation, lies at the heart of the standing issue in the instant case: whether the violation of a
private citizen’s interest in seeing federal law obeyed can constitute an “injury in fact” for
purposes of standing.
As appears from the above, respondent asserts petitioner’s failure to
provide EPCRA information in a timely fashion, and the lingering
effects of that failure, as the injury in fact to itself and its members.
We have not had occasion to decide whether being deprived of
information that is supposed to be disclosed under EPCRA — or at
least being deprived of it when one has a particular plan for its use
— is a concrete injury in fact that satisfies Article III. Cf. Lujan v.
Defenders of Wildlife, 504 U.S., at 578, 112 S.Ct., at 2145–2146.
And we need not reach that question in the present case because,
assuming injury in fact, the complaint fails the third test of standing,
redressability.
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 105 (1998) (emphasis added). The Supreme
Court found that the civil penalty authorized by the EPCRA – the only form of damages
authorized by the act – could not remedy the citizen group’s alleged injury, because any such
penalty would be paid entirely to the Government. Id. at 106-07, 118 S.Ct. at 1018-19. Because
the relief authorized by the ECPRA could not remedy the citizens’ group’s alleged injury, the
citizens’ group lacked standing to proceed. Id. at 107, 118 S.Ct. at 1019. In contrast, the Relator

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here is asserting the Government’s interest, and a portion of any penalty would be payable to the
Government. Accordingly, the reasoning behind Steel Co. is no bar to standing in this case. 2
Halifax has not identified any favorable appellate decisions directly on point – i.e.,
decisions concluding that qui tam relators lack standing to pursue civil penalties. On the other
hand, the two appellate courts that have considered this precise issue concluded that relators
possess the necessary standing. See United States ex rel. Bunk v. Gosselin World Wide Moving, -F.3d --, 2013 WL 6671270 (4th Cir. Dec. 19, 2013) (holding that relator possessed standing to
pursue civil penalty under FCA even though relator elected not to pursue any claim for damage)
and see Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321 (Fed. Cir. 2010) (holding that relator
possessed standing by way of partial assignment of government’s interest to pursue civil penalty
claim in false marking qui tam action).
For all of the foregoing reasons, the Court concludes that Relator possesses standing to
pursue her claim for a civil penalty in the instant case.
B. Appointments Clause
The Appointments Clause of Article II of the Constitution provides that the President
shall nominate, and, by and with the Advice and Consent of the
Senate, shall appoint Ambassadors, other public Ministers and
Consuls, Judges of the supreme Court, and all other Officers of the
United States, whose Appointments are not herein otherwise
provided for, and which shall be established by Law: but the
Congress may by Law vest the Appointment of such inferior
Officers, as they think proper, in the President alone, in the Courts
of Law, or in the Heads of Departments.

2

In fact, the Steel Co. court suggested the opposite, stating that “the civil penalties
authorized by the [ECPRA] … might be viewed as a sort of compensation or redress to respondent
if they were payable to respondent.” Id. at 106, 118 S.Ct. at 1018.

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U.S. Const. Art. II, § 2, cl. 2. Halifax argues that civil litigation vindicating public rights can only
be conducted by “Officers of the United States,” who must be appointed in accordance with
Article II, and that the FCA is unconstitutional insofar as it permits non-appointed private parties
to conduct such litigation.
This question is more easily disposed of than the question of standing. As Halifax notes,
four courts of appeal have considered this argument, and each has rejected it. See United States
ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 787, 805 (10th Cir. 2002); Riley v. St. Luke’s
Episcopal Hosp., 252 F.3d 749, 757-58 (5th Cir. 2001) (en banc); United States ex rel. Taxpayers
Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1041 (6th Cir. 1994); United States ex rel. Kelly v.
Boeing Co., 9 F.3d 743, 758 (9th Cir. 1993).
The decision in Rockwell Int’l Corp. is instructive. It rests in large part on the case of
United States v. Germaine, 99 U.S. 508, 511-12, 25 L.Ed. 482 (1878), in which the Supreme Court
stated that the definition of an officer “embraces the ideas of tenure, duration, emolument, and
duties, and the latter were continuing and permanent, not temporary.” Rockwell Int’l Corp., 282
F.3d at 805. Concluding that relators meet none of these requirements, the Rockwell Int’l Corp.
determined that qui tam relators were not “officers” within the meaning of Article II and that the
FCA’s qui tam provisions therefore did not run afoul of the Appointments Clause. For the same
reasons, this Court rejects Halifax’s argument to the contrary.

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IV.

Conclusion

In consideration of the foregoing, it is hereby
ORDERED that the Motion for Judgment on the Pleadings (Doc. 496) is DENIED.
DONE and ORDERED in Chambers, Orlando, Florida on February 6, 2014.

Copies furnished to:
Counsel of Record
Unrepresented Party

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