UNITED STATES et al v. HEALTHNET, INC.
Filing
80
Order on Motions to Dismiss and Motion to Enforce Settlement Agreement - Indiana's Motion to Dismiss, (ECF No. 42 ), is granted. HealthNet's Motion to Dismiss, (ECF No. 55 ), is denied as moot as to Count II and granted as to Count III of the Amended Complaint. Count I of Indiana's Complaint-in-Intervention 19 supersedes Count II of the Amended Complaint. Count III of the Relator's Amended Complaint is dismissed without prejudice for lack of subject-matter jurisdiction. Relator's Motion to Enforce Settlement Agreement, (ECF No. 61 ), is denied as moot. (See Order.). Signed by Judge James R. Sweeney II on 9/30/2021. (BRR)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
UNITED STATES,
STATE OF INDIANA,
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Plaintiffs,
v.
HEALTHNET, INC.,
Defendant.
JUDITH ROBINSON,
Relator.
No. 1:19-cv-04258-JRS-DML
Order on Motions to Dismiss and Motion to Enforce Settlement Agreement
Qui tam Relator Judith Robinson ("Relator") brings claims, on behalf of the United
States and the State of Indiana, against Defendant HealthNet, Inc. ("HealthNet") for
violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., and the Indiana
False Claims and Whistleblower Protection Act ("IFCA"), Ind. Code § 5-11-5.5-1 et
seq. On May 4, 2020, Indiana filed its Complaint-in-Intervention. (ECF No. 17.)
Before the Court are two motions. Indiana moves to dismiss Count III of Relator's
Amended Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of
subject-matter jurisdiction. (ECF No. 42.) HealthNet moves to dismiss Count II and
Count III of Relator's Amended Complaint under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can be granted. (ECF No. 55.)
Relator moves to enforce a settlement agreement. (ECF No. 61.) For the following
1
reasons, the motions to dismiss are granted and the motion to enforce is denied. A
joint motion, (ECF No. 77), concerning settlement between Indiana and HealthNet
and opposed by Relator, will be addressed in a separate order in due course.
I.
Background
This case arises out of United States of America & Indiana ex rel. Robinson v.
Indiana University Health, Inc. & HealthNet, Inc., No. 1:13-cv-2009-TWP-MJD (S.D.
Ind. 2013) ("Robinson I"). 1 In Robinson I, Relator alleged that HealthNet utilized
certified nurse midwives rather than physicians to treat patients with high-risk
pregnancies, against Indiana Medicaid rules. (Robinson I Compl. ¶¶ 32–42, ECF No.
1, No. 1:13-cv-2009-TWP-MJD.)
Relator additionally alleged that HealthNet
submitted claims for patient encounters even though there were no face-to-face
encounters between a patient and a physician as required by Medicaid, (Robinson I
Am. Compl. ¶¶ 90–97, ECF No. 38, No. 1:13-cv-2009-TWP-MJD), including
submitting claims for wrap-around payments for ultrasound readings without faceto-face visits, (Robinson I 2nd Am. Compl. ¶¶ 88–94, ECF No. 162, No. 1:13-CV-2009TWP-MJD).
On April 27, 2017, the United States, Indiana, Indiana University Health, Inc.
("IU Health"), and HealthNet ("Robinson I parties") executed a settlement in
Robinson I. (See Mot. Dismiss, Ex. A, ECF No. 18-1.) The parties, except for Indiana,
The Court takes judicial notice of the Robinson I docket. Judicial notice does not convert a
motion to dismiss to a motion for summary judgment. See Anderson v. Simon, 217 F.3d 472,
474–75 (7th Cir. 2000) ("In ruling on a 12(b)(6) motion, a district court may take judicial
notice of matters of public record without converting the 12(b)(6) motion into a motion for
summary judgment.").
1
2
which was not a party because it declined to intervene, subsequently moved to
dismiss the action with prejudice under Federal Rule of Civil Procedure 41(a) except
as to the HealthNet wrap-around claims for the period of 2011 to 2015, for which they
sought dismissal without prejudice. (Joint Mot. to Dismiss, ECF No. 266, No. 1:13cv-2009-TWP-MJD.) Indiana consented to the voluntary dismissal. (Consent to
Dismissal by Indiana, ECF No. 267, No. 1:13-cv-2009-TWP-MJD.) On May 4, 2017,
the Robinson I court dismissed all claims with prejudice as to Relator, the United
States, and Indiana, except for the claims regarding the HealthNet wrap-around
claims for the period of 2011 to 2015, which were dismissed without prejudice to the
same parties. (See Order, No. 13-cv-2009-TWP-MJD, ECF No. 268). The Robinson I
Settlement Agreement provides for the payment of $18,000,000 to the United States
and Indiana by IU Health and HealthNet, and a payment of $4,952,000 by the United
States and Indiana to Relator. (Robinson I Settlement Agreement ¶¶ 1–5, ECF No.
18-1.) When the settlement was reached, the specific value of the HealthNet wraparound claims from 2011 to 2015 had not been determined. (Entry, 1–2, No. 1:13-cv2009-TWP-MJD, ECF No. 294.)
In March of 2018, Indiana completed its
reconciliation process and determined the wrap-around claims to be worth
$1,454,541.91. (Id. at 2.)
On June 11, 2019, Relator sought to reopen Robinson I "for the purpose of
determining the appropriate party or parties to pay the relator's share award to
Relator." (Mot. to Reopen, 2, No. 1:13-cv-2009-TWP-MJD, ECF No. 289.) Relator
asserted that "the parties [were] finally prepared to reach settlement related to [her]
3
allegations regarding the claims for wrap-around payments that HealthNet
submitted for ultrasound reads without a face-to-face patient visit." (Id. at 1.) Judge
Dinsmore denied Relator's motion to reopen Robinson I because the court had not
retained jurisdiction over the HealthNet wrap-around claims, which had already
been dismissed without prejudice under Federal Rule of Civil Procedure 41(a).
(Entry, 2, No. 1:13-cv-2009-TWP-MJD, ECF No. 294.)
On October 17, 2019, Relator commenced the instant action ("Robinson II"), and
on March 2, 2020, she amended her complaint ("Robinson II Amended Complaint"),
realleging, in Counts I and II, the HealthNet ultrasound wrap-around claims from
2011 to 2015, as well as alleging that HealthNet double billed ultrasound reviews and
encounters, that HealthNet billed Depo-Provera birth control injections without faceto-face encounters, and that HealthNet double billed Medicaid for Depo-Provera
injections in violation of the FCA and the IFCA, (see Robinson II Am. Compl. ¶¶ 28–
29, 48, 54, ECF No. 9.) Count III alleges that Relator and HealthNet reached an oral
settlement agreement whereby HealthNet would waive its claims for the Federally
Qualified Health Center ("FQHC") wrap-around reimbursement. (Robinson II Am.
Compl. ¶ 38, ECF No. 9 at 14.) In furtherance of the agreement, Relator alleges that
she and HealthNet agreed to dismiss the wrap-around claims without prejudice while
the value of the claims was being reconciled. (Id. ¶ 39, ECF No. 9 at 14.) Indiana
and the United States allegedly agreed to the terms of the agreement. (Id. ¶ 41, ECF
No. 9 at 14.) HealthNet and Relator each received consideration, with Relator's
consideration being that she was assured she would receive $399,999.02, which
4
represents a 27.5% recovery of the amount of the reconciliation. (Id. ¶¶ 39–40, ECF
No. 9 at 14.) Relator requests that the Court use its equitable powers to enforce the
terms of the oral settlement agreement and order the government to pay her the
relator's share. (Id. at 18.)
On May 4, 2020, Indiana filed its Complaint-in-Intervention, in which it
intervened as to Count II of the Amended Complaint. (ECF No. 17.) On May 12,
2020, Indiana moved to dismiss all of Relator's claims in Count I and Count II, other
than the HealthNet wrap-around claims for the period from 2011 to 2015, and all the
pre-October 17, 2013, claims in Count I and Count II. (ECF No. 18). Relator did not
oppose Indiana's partial motion to dismiss, which the Court granted, dismissing with
prejudice all claims alleged in Counts I and II, except the HealthNet wrap-around
claims for the period from October 18, 2013, to 2015 as barred by the statute of
limitations or precluded by res judicata. (Entry, ECF No. 38.) This left surviving the
HealthNet wrap-around claims for the period of October 18, 2013, to 2015 (Counts I
and II), and the request for specific performance of the purported oral settlement
agreement (Count III). (ECF No. 38 at 2.)
II.
Legal Standard
To survive a motion to dismiss for failure to state a claim, a plaintiff must allege
"enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678
5
(2009). Thus, a "plaintiff must do better than putting a few words on paper that, in
the hands of an imaginative reader, might suggest that something has happened to
her that might be redressed by the law." Swanson v. Citibank, N.A., 614 F.3d 400,
403 (7th Cir. 2010) (emphasis in original).
In essence, the standard for a 12(b)(1) motion to dismiss for lack of subject-matter
jurisdiction is the same as the standard for a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6). See Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995).
In considering a Rule 12(b)(6) motion to dismiss, the Court takes the complaint's
factual allegations as true and draws all reasonable inferences in the plaintiff’s favor.
Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019). The
Court need not "accept as true a legal conclusion couched as a factual allegation."
Papasan v. Allain, 478 U.S. 265, 286 (1986). "[I]f a plaintiff pleads facts that show
its suit [is] barred . . . , it may plead itself out of court under a Rule 12(b)(6) analysis."
Orgone Capital, 912 F.3d at 1044 (quoting Whirlpool Fin. Corp. v. GN Holdings, Inc.,
67 F.3d 605, 608 (7th Cir. 1995)); Bogie v. Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013)
(on a motion to dismiss "district courts are free to consider 'any facts set forth in the
complaint that undermine the plaintiff’s claim'") (quoting Hamilton v. O'Leary, 976
F.2d 341, 343 (7th Cir. 1992)). If it grants a motion to dismiss, the Court will normally
allow leave to amend the complaint unless amendment would be "futile or otherwise
unwarranted." O'Boyle v. Real Time Resolutions, Inc., 910 F.3d 338, 347 (7th Cir.
2018).
6
III.
Indiana's Motion to Dismiss
Count III of the Amended Complaint aims to enforce a previous oral settlement
agreement entered into by HealthNet to dismiss Relator's claims arising out of the
FQHC wrap-around claims. Relator seeks payment of the relator's share allegedly
owed to her based on that oral settlement agreement. She asks the Court to use its
equitable powers to enforce the terms of the alleged oral settlement agreement with
HealthNet, to award her a relator's share, and to order Indiana and/or the United
States to pay the relator's share, costs, interest, and attorney fees.
Indiana moves to dismiss Count III of the Amended Complaint under Federal Rule
of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction.
Specifically,
Indiana argues (1) both that the Amended Complaint does not contain enough wellpleaded allegations to plausibly suggest that Relator has standing to pursue the
injunctive relief sought in Count III and that there is in fact no subject matter
jurisdiction, and (2) that Count III violates the Eleventh Amendment. The Court will
only discuss Indiana's first argument as that is sufficient for the Court to decide
Indiana's motion.
"To establish Article III standing, a plaintiff must show (1) it has suffered an
injury in fact that is (a) concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action
of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision." Silha v. ACT, Inc., 807 F.3d 169, 173 (7th
Cir. 2015) (quoting Friends of the Earth, Inc. v. Laidlaw Env't. Servs. (TOC), Inc., 528
7
U.S. 167, 180–81 (2000)) (internal citations omitted). The plaintiff bears the burden
of establishing the elements of Article III standing. Lujan v. Defs. of Wildlife, 504
U.S. 555, 561 (1992).
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S.
765, 772 (2000), holds that it is the government's injury in fact that gives a relator
standing—not the relator's injury in fact, which "does not even fully materialize until
the litigation is completed and the relator prevails." Id. at 773. Relator, however,
misunderstands the holding in Vermont Agency and her citation to the dissenting
opinion in Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 298
(2008) (Roberts, C.J., dissenting), is not precedential.
See Mason v. Gate Auto.
Holdings, Inc., 14-cv-00426, 2015 WL 134236, at *1 (S.D. Ind. Jan. 9, 2015). The
Supreme Court found "that adequate basis for the relator's suit for his bounty is to
be found in the doctrine that an assignee of a claim has standing to assert the injury
in fact suffered by the assignor." Vermont Agency, 529 U.S. at 773. Accordingly, the
Supreme Court concluded that "the United States' injury in fact suffices to confer
standing on" the relator.
Id. at 774 (emphasis added); see also Espenscheid v.
DirectStat USA, LLC, 688 F.3d 872, 876 (7th Cir. 2012) (interpreting Vermont
Agency).
Relator has standing to bring Counts I and II as a partial assignee of the
government's damages claim. She does not have partial assignee standing to bring
Count III, however. As to Count III, her injury in fact does not materialize until the
8
qui tam action is completed and recovery is made. At issue, then, is whether her
injury in fact has materialized.
There are two types of challenges to subject-matter jurisdiction: factual and facial
challenges. See Apex Digit., Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir.
2009).
"A factual challenge contends that 'there is in fact no subject matter
jurisdiction,' even if the pleadings are formally sufficient." Silha, 807 F.3d at 173
(quoting Apex Digit., 572 F.3d at 444) (emphasis in original). "In reviewing a factual
challenge, the court may look beyond the pleadings and view any evidence submitted
to determine if subject matter jurisdiction exists." Id. Once evidence is proffered
calling a plaintiff's standing into question, "[t]he presumption of correctness that
[courts] accord to a complaint's allegations falls away . . . and the plaintiff bears the
burden of coming forward with competent proof that standing exists." Apex Digit.,
572 F.3d at 444 (internal citations omitted).
"In contrast, a facial challenge argues that the plaintiff has not sufficiently
'alleged a basis of subject matter jurisdiction.'" Silha, 807 F.3d at 173 (quoting Apex
Dig, 572 F.3d at 443) (emphasis in original). "In reviewing a facial challenge, the
court must accept all well-pleaded factual allegations as true and draw all reasonable
inferences in favor of the plaintiff." Id. (citing Apex Dig, 572 F.3d at 443–44).
Here, Indiana brings both facial and factual challenges. The Court will only
address Indiana's factual challenge, as that is sufficient to decide its motion. Indiana
argues that, even if the Court were to hold that Count III was sufficiently pleaded as
to subject-matter jurisdiction, the Court in fact has no subject-matter jurisdiction.
9
For the following reasons, assuming arguendo that Relator sufficiently pleaded
sufficient factual allegations to establish this Court has subject-matter jurisdiction
over Count III, the Court finds that there is in fact no subject-matter jurisdiction for
it to hear Count III.
A right to a relator's share is "an interest that is merely a 'byproduct' of the suit
itself and cannot give rise to a cognizable injury in fact for Article III standing
purposes" until the qui tam action is completed and recovery is made. Vermont
Agency, 529 U.S. at 773. Indiana argues that for Relator to have a legally cognizable
right to her share, she must have entered into an enforceable oral agreement with
HealthNet to settle the wrap-around claims on behalf of the United States and
Indiana.
State law governs a suit to enforce a settlement agreement. Dillard v. Starcon
Int'l, Inc., 483 F.3d 502, 507 (7th Cir. 2007). "A settlement agreement . . . is enforced
just like any other contract." Lynch, Inc. v. SamataMason Inc., 279 F.3d 487, 489
(7th Cir. 2002) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 380–81
(1994)). "[I]n order to be enforceable, an agreement must be sufficiently certain and
definite in all of the essential terms so that a court may ascertain when and whether
it has been performed." Druco Rests., Inc. v. Steak n Shake Enters., Inc., 765 F.3d
776, 783 (7th Cir. 2014) (citation omitted). Under Indiana law, an oral agreement
that is to be reduced to writing is enforceable, see Wolvos v. Meyer, 668 N.E.2d 671,
674 (Ind. 1996), but an agreement to agree is not enforceable, see Mays v. Trump Ind.,
Inc., 255 F.3d 351, 357–58 (7th Cir. 2001).
10
Relator asserts that the following allegations establish the existence of the oral
settlement agreement: that she and HealthNet settled the FQHC wrap-around issue
by an oral agreement in which HealthNet would agree to release any claims it had
for the FQHC wrap-around reimbursement from Indiana Medicaid while Myers &
Stauffer determined their value; that there was consideration received by HealthNet
and by Relator; that Indiana and the United States approved the terms of the
agreement; and that based on HealthNet and Relator's agreement, the action was
dismissed without prejudice on May 3, 2017, with Indiana's express consent.
(Robinson II Am. Compl. ¶¶ 38–43, ECF No. 9 at 14.) The value of the claims released
was not known at the time HealthNet and Relator entered into their alleged
agreement. (Id. ¶ 39, ECF No. 9 at 14.)
Despite these allegations, Indiana says it is implausible an oral settlement
agreement exists between Relator and HealthNet. First, Indiana points to paragraph
five of the Amended Complaint, in which Relator stated that "[o]n May 4, 2017, the
[Robinson I] action was settled, except for the violations regarding the FQHC wraparound payments . . . which claims were dismissed without prejudice, and subject to
re-filing." (Robinson II Am. Compl. ¶ 5, ECF No. 9 at 3–4 (emphasis in original).)
Indiana contends that this statement "tends to show there was no settlement
agreement as alleged in Count III." (Mem. Law Supp. Mot. Dismiss 12, ECF No. 43.)
Indiana points to the Robinson I Settlement Agreement's integration clause.
(ECF No. 18-1.) While the Robinson I Settlement Agreement provided for payment
of $18,000,000 to the United States and Indiana by IU Health and HealthNet, and a
11
payment of $4,952,000 to Relator by the United States and Indiana, (ECF No. 18-1
at 7–8), Indiana highlights that the agreement did not mention any agreement
between HealthNet and Relator regarding the wrap-around claims. The Robinson I
Settlement Agreement instead provided for the dismissal of the wrap-around claims
without prejudice and contained the following integration clause:
Except for the HealthNet CIA, or to the extent the State and HealthNet
have entered into a separate settlement agreement, or as explicitly
stated above, this Agreement constitutes the complete agreement
between the Parties. This Agreement may not be amended except by
written consent of the Parties.
(Settlement Agreement, ECF No. 18-1 at 27.) "Parties" is a defined term in the
agreement and refers to the United States, Indiana, IU Health, HealthNet, and
Relator. (ECF No. 18-1 at 4.) Indiana contends that this integration clause therefore
tends to contradict Relator's allegations that she and HealthNet had settled the wraparound claims.
Again, once evidence is proffered calling a plaintiff's standing into question, "[t]he
presumption of correctness that [courts] accord to a complaint's allegations falls away
. . . and the plaintiff bears the burden of coming forward with competent proof that
standing exists." Apex Digit., 572 F.3d at 444 (internal citations omitted). Relator
does not point to evidence to rebut Indiana's evidence, but she instead argues that
because the language of the settlement agreement specifically excludes her wraparound claims and her share to those claims from the settlement agreement, the
integration clause does not belie the existence of Relator's oral settlement agreement.
However, the settlement agreement merely excludes a release of those claims, while
12
have other provisions that apply to them, for example, the dismissal of them. Also,
Indiana responds by pointing to evidence that shows what it believes to be another
contradiction. Indiana points to Relator's Motion to Reopen Robinson I, in which
Relator asserted that "the parties [were] finally prepared to reach a settlement
related to [her] allegations regarding the claims for wrap-around payments" and that
a "settlement agreement to that effect is currently in the works." (Robinson I Mot. to
Reopen, 1, 3, ECF No. 289, No. 1:13-cv-2009-TWP-MJD, ECF No. 289.) Indiana
argues that if Relator and HealthNet had reached an oral agreement between the
time the rest of the Robinson I claims were settled in September of 2016 and the time
she sought to reopen Robinson I in June of 2019, she would have clearly mentioned
that oral agreement.
Omission of such detail, Indiana asserts, reduces the
plausibility that an oral settlement agreement exists.
But Relator asserts there is a record of the oral settlement agreement, which she
claims Judge Dinsmore made in 2019. However, no such record was made of any oral
agreement in Judge Dinsmore's July 17, 2019 Entry on Motion to Reopen Case.
(Entry Regarding Mot. Reopen Case, ECF No. 294, No. 13-cv-2009-TWP-MJD.)
Relator quotes a lengthy portion of Judge Dinsmore's Entry, (ECF No. 52 at 12), but
these passages in no way support her assertion that Judge Dinsmore made a record
of the purported oral settlement agreement between herself and HealthNet. In fact,
Judge Dinsmore denied Relator's Motion to Reopen because the court did not retain
jurisdiction over the wrap-around claims that were dismissed without prejudice
under the Federal Rule of Civil Procedure 41(a). Moreover, Judge Dinsmore wrote
13
that "even if the Court could exercise jurisdiction as to the settlement agreement . . .
such [agreement] did not purport to resolve the wrap-around claims."
(Entry
Regarding Mot. Reopen Case, 3–4, ECF No. 294, 13-cv-2009-TWP-MJD.)
In total, then, Indiana's proffered evidence suggests that it is implausible there
was an oral settlement with respect to the wrap-around claims. Relator has not come
forward with competent proof that an oral settlement agreement exists.
She
therefore has not shown that she has factual standing to pursue Count III. This is
because, without an oral settlement agreement, Relator does not have an interest
related to injury in fact. See Vermont Agency, 529 U.S. at 773 ("[T]he 'right' [Relator]
seeks to vindicate does not even fully materialize until the litigation is complete and
the relator prevails."). Accordingly, the Court lacks subject-matter jurisdiction over
Count III.
Indiana raised a factual challenge and proffered evidence calling Relator's
standing into question, which dispelled the presumption of correctness the Court
normally gives to a plaintiff's complaint. Namely, Indiana's evidence contradicted
Relator's allegation that she made an oral settlement agreement with HealthNet to
settle the wrap-around claims.
Indiana's evidence showed that no settlement
agreement exists and Relator failed to come forward with competent proof showing
that she made an oral agreement with HealthNet to settle the wrap around claims.
Therefore, the Court finds that Relator has not met her burden to show that she
suffered an injury in fact and she therefore lacks standing to bring Count III.
Indiana's Motion to Dismiss is granted and Count III is dismissed without
14
prejudice. See Morrison v. YTB Int'l, Inc., 649 F.3d 533, 535 (7th Cir. 2011) (stating
that jurisdictional dismissal under Rule 12(b)(1) is without prejudice). As a result,
Relator's Motion to Enforce Settlement Agreement is denied as moot.
IV.
HealthNet's Motion to Dismiss
HealthNet moves to dismiss Count II and Count III of the Amended Complaint
under Federal Rule of Civil Procedure 12(b)(6). With respect to Count II, HealthNet
alleges that Relator fails to state a claim to relief against HealthNet because Indiana
has intervened in this case and filed its own complaint, which supersedes Relator's
duplicative pleading.
Count I of Indiana's Complaint-in-Intervention supersedes Count II of the
Amended Complaint. Under the IFCA, a relator "may bring a civil action for a
violation of [IFCA] on behalf of the person and on behalf of the state." Ind. Code § 511-5.5-4(a); Ind. Code § 5-11-5.7-4(a). Once the relator initiates a civil action for
violation of the IFCA, "[t]he state may elect to intervene and proceed with the action
. . . ." See Ind. Code § 5-11- 5.5-4(c); Ind. Code § 5-11-5.7-4(c). "If the attorney general
. . . intervenes in an action . . . the attorney general . . . is responsible for prosecuting
the action and is not bound by an act of the [relator] who initially filed the complaint."
Ind. Code § 5-11-5.5-5(a); Ind. Code § 5-11-5.7-5(a).
Indiana may file its own
complaint-in-intervention, or it may amend the relator's complaint to include new
claims or to "clarify or add detail to the claims in which the state is intervening[.]"
Ind. Code § 5-11-5.7-5(a). Indiana may even settle or dismiss the action over the
relator's objections.
Ind. Code § 5-11-5.5-5(b)-(c); Ind. Code § 5-11-5.7-5(b)-(c).
15
Moreover, the relator's participation in the litigation may be limited to the extent her
"unrestricted participation" will interfere with or delay "the prosecution of the case
by the attorney general," "involve the presentation of repetitious or irrelevant
evidence," or cause "undue burden or unnecessary expense[.]" Ind. Code § 5-11-5.55(d); Ind. Code § 5-11-5.7-5(d).
Once the government intervenes in a qui tam action brought by a relator, the
government's complaint-in-intervention becomes the operative complaint as to all
claims in which the government has intervened, but the relator retains the right to
continue as a party to the action. United States ex rel. Sansbury v. LB & B Assocs.,
Inc., 58 F. Supp. 3d 37, 47 (D.D.C. 2014); see also United States ex rel. Brooks v.
Stevens-Henager Coll., Inc., 359 F. Supp. 3d 1088, 1127 (D. Utah 2019) ("The
Government's complaint superseded the relators' complaint and became the
operative pleading.").
Two days after Relator filed the Amended Complaint, Indiana filed its Notice of
Election to Intervene, (ECF No. 11 at 2), and on May 4, 2020, Indiana filed its
Complaint-in-Intervention, (ECF No. 17). Like Count II of the Relator's Amended
Complaint, Count I of Indiana's Complaint-in-Intervention alleges that HealthNet
violated the IFCA by submitting claims to reimbursement for FQHC payments
without conducting a face-to-face encounter, under Indiana Code § 5-11-5.5-2(b)(1)
and § 5-11-5.5-2(b)(2). (See Robinson II Am. Compl. ¶¶ 53–57, ECF No. 9 at 16–17;
Ind. Complaint-in-Intervention ¶¶ 72–79, ECF No. 17 at 26–27.)
16
The parties seem to agree that Indiana's intervention means Relator cannot
proceed on Count II. The only dispute is whether the Court should dismiss Count II,
or deny the motion to dismiss as moot. Relator points the Court to United States v.
Public Warehousing Co. K.S.C., which holds that "the appropriate action for the Court
to take when a defendant moves to dismiss those portions of a relator's complaint
that have been superseded by government intervention is to deny the motion as moot
as it relates to the intervened claims." 242 F. Supp. 3d 1351, 1357 (N.D. Ga. 2017).
While HealthNet maintains that the Court should dismiss Count II, it acknowledges
that the result is the same whether the Court denies as moot HealthNet's motion or
grants it. HealthNet maintains that the Court should dismiss Count II. HealthNet
points to United States ex rel. Raggio v. Jacintoport Int'l, LLC, where the court
dismissed a relator's claims that were identical to the government's claims in its
complaint-in-intervention to avoid an "undue burden or unnecessary expense . . .
[given the] similarity between the two complaints." No. 10-01908, 2013 WL 2462109,
at *2 (D.D.C. June 7, 2013).
Finding no Seventh Circuit precedent on this issue, the Court looks to the
reasoning in each of Public Warehousing and Raggio.
The court in Public
Warehousing reasoned that although multiple parties have standing to assert the
government's claims in a qui tam action, "the fact remains that only one claim exists."
242 F. Supp. 3d at 1357.
The court therefore found that once the government
intervened, its complaint was the operative complaint "as to all claims in which the
government ha[d] intervened." Id. Importantly, the court focused on specific claims.
17
The court in Raggio, however, focused on the relator's and government's entire
complaints, because the relator's and government's claims were identical in their
respective complaints. 2013 WL 2462109, at *2. Therefore, the Court found that
dismissal of the relator's entire complaint was warranted. Id.
Here, HealthNet focuses on a single count instead of the entire Amended
Complaint because Indiana has only intervened as to Count II. This action, then, is
more similar to the situation in Public Warehousing. Besides the similarities, the
Court also looks to common pleading practices. For example, if a plaintiff amends
her pleading under Federal Rule of Civil Procedure 15(a)(1), the Court does not
dismiss the original complaint. Rather, the amended complaint simply becomes the
operative complaint. Similarly, in qui tam action in which the government does not
intervene, when a relator amends his or her complaint, the amended complaint
becomes the operative complaint.
See United States ex rel. Absher v. Momence
Meadows Nursing Ctr., Inc, 764 F.3d 699, 704 n.4 (7th Cir. 2014). The Court finds
that the better practice here is to simply deny HealthNet's motion to dismiss as moot
as to Count II. Accordingly, HealthNet's motion is denied as moot as to Count II
and granted as to Count III of the Amended Complaint for lack of subject matter
jurisdiction as address in granting Indiana's motion.
V.
Conclusion
Indiana's Motion to Dismiss, (ECF No. 42), is granted. HealthNet's Motion to
Dismiss, (ECF No. 55), is denied as moot as to Count II and granted as to Count
III of the Amended Complaint.
Count I of Indiana's Complaint-in-Intervention
18
supersedes Count II of the Amended Complaint. Count III of the Relator's Amended
Complaint is dismissed without prejudice for lack of subject-matter jurisdiction.
Relator's Motion to Enforce Settlement Agreement, (ECF No. 61), is denied as moot.
SO ORDERED.
Date: 9/30/2021
Distribution by CM/ECF to all counsel of record
19
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?