Doe v. Preferred Care Inc. et al

Filing 45

MEMORANDUM OPINION & ORDER: (1) The Court construes the parties' Joint Stipulation of Dismissal as a Motion; (2) The Stipulation is GRANTED; (3) The following claims made by the United States and Relator Susan Helton against Preferred Care Inc. , Preferred Care, Inc. d/b/a Preferred Care of Delaware, Inc., Preferred Care Partners Management Group, LP, PCPMG, LLC, Kentucky Partners Management, LLC, Stanton Health Facilities, L.P. d/b/a Stanton Health and Rehabilitation Center, and Thomas D. Scott are DISMISSED WITH PREJUDICE; (4) All other remaining allegations against the Settling Defendants are DISMISSED WITHOUT PREJUDICE as to USA and DISMISSED WITH PREJUDICE as to Relator Helton; (5) The claims on which the United States has neither intervened nor declined to intervene an intervention decision is now MOOT; (6) The Stipulation does not apply to claims asserted against Reliant Pro Rehab, LLC or Reliant Rehabilitation Holdings, Inc. Signed by Judge Joseph M. Hood on 8/2/2018.(JJ)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
)
)
)
)
)
)
)
)
)
)
)
)
)
)

UNITED STATES OF AMERICA,
ex rel. JANE DOE,
Plaintiff,
v.
PREFERRED CARE, INC.,
et al.,
Defendants.

Civil No. 16-cv-478-JHM

MEMORANDUM OPINION &
ORDER

*****
Most of this False Claims Act case has been resolved.

The

parties have worked out settlement agreements involving nearly
every claim and every defendant.
defendant remains.

But not all.

At least one

The settling parties have filed a Joint

Stipulation of Dismissal under Federal Rule of Civil Procedure 41.
[DE 44].

That rule, however, allows only dismissal of actions,

not individual claims.

And because the current settlements do not

dispose of the entire action, the parties have taken the wrong
procedural course to reach their desired destination.
But no matter.

The Court will still allow the parties’

stipulation to go forward, just under a different rule because the
Court construes filings “by their substantive content and not by
their labels.”

See Coleman v. Ohio State Univ. Med. Ctr., No.

2:11-cv-0049, 2011 WL 3273531, at *3 (S.D. Ohio Aug. 1, 2011).
1

Rule 21 provides the proper mechanism by which to achieve the
desired result.

See Fed. R. Civ. P. 21 (“On motion or on its own,

the court may at any time, on just terms, add or drop a party.”).
And under that rule, the stipulation is GRANTED.
This is a False Claims Act filed against several defendants.
The United States has intervened in part, and the parties have
advised the Court that they have reached settlements.

On those

claims, the parties have filed a Joint Stipulation of Dismissal.
[DE 44].

But the parties note that “[t]hese stipulations of

dismissal do not apply to any claim asserted against Reliant Pro
Rehab, LLC or Reliant Rehabilitation Holdings, Inc.”
Reliant

has

not

reached

a

settlement

and

will

[Id., p. 2].
stick

regardless of the stipulation filed by other parties.

around

In other

words, the stipulation gets rid of only a portion of the claims—
not the entire action.
In this circuit, Rule 41 does not operate this way.

The rule

permits plaintiffs to dismiss only the entire controversy, not a
portion of the claims.

See Philip Carey Mfg. Co. v. Taylor, 286

F.2d 782, 785 (6th Cir. 1961).

“In the Sixth Circuit, a notice of

dismissal under Rule 41(a)(1)(A)(i) can only be used to dismiss
all

claims

parties.”

against

all

defendants,

individual

claims

or

EQT Gathering, LLC v. A Tract of Property Situated in

2

not

Knott Cty., Ky., No. 12-58-ART, 2012 WL 3644968, at *1 (E.D. Ky.
Aug. 24, 2012).
Other circuits disagree.

See, e.g., Van Leeuwen v. Bank of

Am., N.A., 304 F.R.D. 691, 693–94 (D. Utah 2015) (discussing the
circuit split and citing cases).

The Sixth Circuit has itself

muddled Rule 41’s contours when it affirmed a district court’s
Rule 41 dismissal of all claims against one defendant, but not the
entire action.

See Banque de Depots v. Nat’l Bank of Detroit, 491

F.2d 753, 757 (6th Cir. 1974).

The Circuit has since recognized

that the “Sixth Circuit’s interpretation of Rule 41 is unclear.”
Letherer v. Alger Grp., LLC, 328 F.3d 262, 265–66 (6th Cir. 2001)
overruled on other grounds by Blackburn v. Oaktree Capital Mgmt.,
LLC, 511 F.3d 633, 636 (6th Cir. 2008).

But in Letherer the Court

assumed that dismissal of anything less than an entire action
implicated Rule 21, not Rule 41.

See id.

And even if Banque

conflicts with Taylor, this Court would be bound to follow the
earlier published decision.

See Wallace v. FedEx Corp., 764 F.3d

571, 583 (6th Cir. 2014) (“one panel of [the Sixth Circuit] cannot
overrule another panel’s published decision.”).
And district courts in this circuit routinely apply Taylor
when

plaintiffs

controversy.

attempt

to

dismiss

less

than

the

entire

See, e.g., See, e.g., Sheet Metal Workers’ Nat’l

Pension Fund Bd. of Trs. v. Courtad, Inc., No. 5:12-cv-2738, 2013

3

WL 3893556, at *4 (N.D. Ohio July 26, 2014) (“A plaintiff seeking
to dismiss only one defendant from an action must move the Court
to do so under Rule 21.”); SAAP Energy v. Greenwich Ins. Co., No.
1:12-CV-00098-TBR, 2014 WL 12726322, at *2-4 (W.D. Ky. May 21,
2014); Columbia Gas Transmission, LLC v. Raven Co., Inc., Civil
No. 12-72-ART, 2014 WL 12650688, at *1 (E.D. Ky. Mar. 6, 2014)
(Rule 41 motion must dismiss “all claims against all defendants,
not individual claims or parties”); CNX Gas Co., LLC v. Miller
Energy Res., Inc., No. 3:11-CV-362-TAV-CCS, 2014 WL 11638566, at
*2 (E.D. Tenn. Jan. 8, 2014) (“Rule 41(a)(2) . . . is not the
correct procedural vehicle for . . . dismissal of one of multiple
parties”); EQT Gathering, LLC v. A Tract of Property Situated in
Knott Cty., Ky., No. 12-58-ART, 2012 WL 3644968, at *2 (E.D. Ky.
Aug. 24, 2012) (Rule 41 dismissals may only “eliminate all claims
against all defendants”); Barrientos v. UT-Battelle, LLC, 284 F.
Supp. 2d 908, 916 (S.D. Ohio 2003) (“voluntary dismissal under
[Rule 41(a)(2)] is only available to dismiss entire actions, not
single claims.”).
As in those cases, so it is here.

Plaintiffs may not dismiss

only some of the claims or defendants under Rule 41.

Taylor

commands that parties use Rule 21 to dismiss only portions of
claims or defendants.

4

Curious, though, that a Court may intervene in the Rule 41
context.
order

After all, the rule allows dismissal without a court

and

“explicitly

leaves

the

option

to

dismiss

in

the

plaintiff’s hands; once the plaintiff gives his notice, the lawsuit
is no more.”

Aamot v. Kassel, 1 F.3d 441, 444 (6th Cir. 1993).

“Civil Rule 41(a)(1)(A)(ii) orders, generally speaking, are ‘selfexecuting’ and do ‘not require judicial approval.’” Exact Software
N. Am., Inc. v. DeMoisey, 718 F.3d 535, 540 (6th Cir. 2013)
(quoting Green v. Nevers, 111 F.3d 1295, 1301 (6 Cir. 1997)).
Indeed, under Rule 41 the parties do not ask for an order of
dismissal;

they

instead

tell

the

Court

about

the

dismissal.

Usually, permission is superfluous.
Usually, but not always.

Courts “may decline to permit a

voluntary dismissal when required to avoid short-circuiting the
judicial process, or to safeguard interests of persons entitled to
the court’s special protection.”

Green, 111 F.3d at 1301.

And

among the reasons for judicial intervention is when a party
attempts to dismiss less than the entire action.
Rule

41

notice

ineffective.”

purporting

to

dismiss

certain

In short, “a
claims

is

Malik v. F-19 Holdings, LLC, NO. 5:15-130-KKC, 2016

WL 2939150, at *4 (E.D. Ky. May 19, 2016).
So the parties here cannot use Rule 41. They must take a
detour.

Rule 21 provides the alternate path.

5

See Taylor, 286

F.2d at 785.

The end result is the same.

some parties are leaving this lawsuit.
meaningless.

Rule 41 or Rule 21,

But the distinction is not

First, because “[d]ropping less than the entirety of

an action . . . risks prejudice to the other parties.”
Gathering, LLC, 2012 WL 3644968, at *3.

EQT

And second because this

is federal court where “[e]specially here, the rules matter.”
ECIMOS, LLC v. Nortek Global HVAC, LLC, --- F. App’x ---, 2018 WL
2459915, at *1 (6th Cir. June 1, 2018).

This Court will enforce

the rules.
Accordingly, for the reasons stated herein, IT IS ORDERED as
follows:
(1)

That the Court construes the parties’ Joint Stipulation
of Dismissal under Rule 41(a)(1) as a Motion under Rule
21;

(2)

The Stipulation is GRANTED;

(3)

That the following claims made by the United States and
Relator Susan Helton against Defendants Preferred Care
Inc.,

Preferred

Delaware,

Inc.,

Care,

Inc.

Preferred

d/b/a
Care

Preferred
Partners

Care

of

Management

Group, LP, PCPMG, LLC, Kentucky Partners Management,
LLC,

Stanton

Health

Facilities,

L.P.

d/b/a

Stanton

Health and Rehabilitation Center, and Thomas D. Scott
(“Settling Defendants”) are DISMISSED WITH PREJUDICE:

6

(i) that the Settling Defendants knowingly submitted or
caused the submission of, false or fraudulent claims for
payment

to

materially

Medicare

and

substandard

Medicaid

and/or

by

(a)

worthless

providing

services

to

certain residents of Stanton between July 1, 2012 and
April 30, 2015, and (b) entering resource utilization
group (“RUG”) codes that did not accurately reflect the
anticipated amount of assistance with activities of
daily

living

that

was

medically

necessary

and/or

provided to residents of Stanton between July 1, 2012
and October 31, 2017;
(4)

That

all

other

remaining

allegations

against

the

Settling Defendants are DISMISSED WITHOUT PREJUDICE as
to the United States and DISMISSED WITH PREJUDICE as to
Relator Helton;
(5)

That as to the claims on which the United States has
neither

intervened

nor

declined

to

intervene

an

intervention decision is now MOOT
(6)

That the Stipulation does not apply to any claim asserted
against Reliant Pro Rehab, LLC or Reliant Rehabilitation
Holdings, Inc.
This the 2nd day of August, 2018.

7

8