Griffith et al v. Conn et al

Filing 36

MEMORANDUM OPINION & ORDER: 1) The amended complaint 28 and 31 is UNSEALED. 2) US' motion to seal the amended complaint for 60 days 35 is DENIED. 3) Plaintiffs SHALL SERVE the amended complaint 28 & the US' notice of decision not to intervene 14 on the defendants within 30 days (by 8/28/13). Signed by Judge Amul R. Thapar on 7/30/2013. (RKT) cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
PIKEVILLE
UNITED STATES OF AMERICA ex rel.
JENNIFER L. GRIFFITH and SARAH
CARVER,
Plaintiffs,
v.
ERIC C. CONN, et al.,
Defendants.

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Civil No. 11-157-ART
MEMORANDUM OPINION
AND ORDER

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The United States has moved to reseal this False Claims Act action in light of the
relators’ amended complaint. R. 35. The motion raises a question of whether certain
requirements in the Act apply to amended complaints. The Court need not resolve the
question because even under the United States’ interpretation of the Act, the motion should
be denied.
BACKGROUND
Jennifer Griffith and Sarah Carver brought this action on behalf of the United States
under the False Claims Act, 31 U.S.C. §§ 3729–3733. Their suit is against Eric C. Conn, a
Kentucky lawyer, and David B. Daugherty, an administrative law judge for the Social
Security Administration. See R. 2 at 2. The complaint alleges that Daugherty sought out
cases involving Conn’s clients, conducted sham proceedings, and awarded those clients
benefits they were not entitled to receive. See id. at 16–19. Conn then collected attorney’s
fees for those claims. See id. at 2.

The False Claims Act authorizes qui tam actions, in which private plaintiffs like
Griffith and Carver (known as relators) bring civil suits for violations of the Act in the
government’s name. See 31 U.S.C. § 3730(b). If the suit is successful, the relators receive
anywhere from fifteen to thirty percent of the amount recovered. See id. § 3730(d). By
giving relators a stake in the outcome of these cases, the Act incentivizes relators to discover
and investigate fraud against the government. See United States ex rel. Poteet v. Medtronic,
Inc., 552 F.3d 503, 507 (6th Cir. 2009).
The Act contains a unique set of procedural requirements. Complaints are filed under
seal and served on the United States along with “all material evidence and information” the
relator has in its possession. See 31 U.S.C. § 3730(b)(2). The United States has sixty days to
decide whether to intervene and take over the case. See id.; see also id. § 3730(b)(3)
(permitting a court to grant an extension of the sixty-day period if the United States
demonstrates “good cause” for the extension). Those sixty days allow the United States “the
chance to determine whether it was already investigating the claims” and “whether it wished
to intervene” before the defendants were “tipped off that they were under investigation.”
United States ex rel. Summers v. LHC Grp., Inc., 623 F.3d 287, 292 (6th Cir. 2010)
(quotations omitted).

After the United States decides whether or not to intervene, the

complaint is ordered unsealed and served on the defendant. See 31 U.S.C. § 3730(b)(2).
This case has gone through all of those steps. The complaint was filed under seal on
October 11, 2011. R. 2. The United States sought and received several extensions of its
time—over 400 days—to decide whether to intervene. See R. 18 at 3 (summarizing the
procedural history of this case). After the United States decided not to intervene, this Court
lifted the seal on the case and ordered the complaint served on the defendants. R. 18 at 6.
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DISCUSSION
The relators have filed an amended complaint, and the United States argues that this
case must go through those steps again. R. 28; R. 35. As the United States sees it,
“complaint” as used in the Act means both original and amended complaints. R. 35 at 2.
That interpretation is neither consistent with the Act’s text nor required to effectuate the
Act’s purpose. But, the Court need not resolve the interpretation question because even
under the United States’ reading of the Act, the case should not be resealed.
For starters, the Act refers only to “the complaint” and does not once mention “the
amended complaint.” Statutory interpretation starts (unsurprisingly) with the statutory text.
See United States v. Turner, 465 F.3d 667, 671 (6th Cir. 2006). When read in context with
the rest of the Act, the omission of “amended complaint” appears intentional. The Act is
written in chronological order—it lays out the different rights of the relator and the United
States from the start of an action to the end. The Act first creates a procedure for the United
States to decide whether to assume the lead in the action. It then addresses the roles and
rights of the United States, relator, and defendant during the rest of the action.

The

complaint is the first step in a qui tam action; it is what sets the Act’s wheels in motion. So,
it is reasonable to conclude that the Act is concerned with the complaint and not the amended
complaint, which, by definition, is filed only after the Act’s procedures are underway.
Sticking with the plain language of the Act is not a mere exercise in literalism;
instead, it is consistent with the purpose of the Act. To see why, consider the two times at
which an amended complaint can be filed. First, a relator can file his amended complaint
during the United States’ time to decide whether to intervene. At that point, the case is still
under seal, so the amended complaint does not tip off the defendant. The United States may
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file for an extension of its time to decide based on the amended complaint. See 31 U.S.C. §
3730(b)(3) (permitting an extension for “good cause”). The filing of the amended complaint
does not affect the United States’ ability to “ascertain the status quo and come to a decision
as to whether it will intervene.” Summers, 623 F.3d at 292 (describing the purpose of the
sixty-day seal requirement). Second, a relator can file his amended complaint after the
United States decided not to intervene and the Court unseals the complaint. By that point,
the defendant is aware of the claims against him. The United States knows the status of its
own related civil or criminal investigations (if any) from its initial investigation. In other
words, the United States has already “ascertain[ed] the status quo.” Id. The purpose of the
sixty-day seal requirement has been accomplished, and there is no need to reseal the case
again in light of the amended complaint. If the amended complaint causes the United States
to change its mind and want to intervene, the United States may do so. See 31 U.S.C. §
3730(c)(4). In sum, the purpose of the sixty-day seal requirement is accomplished as long as
the complaint is filed under seal. So, interpreting the Act to apply to only complaints, and
not amended complaints, is consistent with the Act’s purpose.
The United States urges the Court to adopt the following rule: If an amended
complaint adds new defendants, claims, or substantial details, the seal requirement applies.
R. 35-1 at 2–3. Several district courts have approved that rule. See United States ex rel.
Davis v. Prince, 766 F. Supp. 2d 679, 684 (E.D. Va. 2011); United States ex rel. McCurdy v.
Gen. Dynamics Nat. Steel & Shipbuilding, No. 07CV982 BTM (CAB), 2010 WL 1608411,
at *1 (S.D. Cal. Apr. 20, 2010). Others have rejected it. See United States ex rel. Branch
Consultants, L.L.C. v. Allstate Ins. Co., 668 F. Supp. 2d 780, 803 (E.D. La. 2009); Wisz ex
rel. United States v. C/HCA Dev., Inc., 31 F. Supp. 2d 1068, 1069 (N.D. Ill. 1998); United
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States ex rel. Milam v. Regents of Univ. of Cal., 912 F. Supp. 868, 890 (D. Md. 1995). The
Court need not side with one set of courts over the other because even under the United
States’ preferred interpretation, the case should not be resealed.
The United States argues that the rule applies in this case because of nine paragraphs
of the amended complaint. R. 35-1 at 2–3. There, the relators allege that the Conn submitted
false or fraudulent medical records in support of his clients’ benefit claims. R. 28 at 35–36
¶¶ 71–74. The relators also allege that Daugherty approved those claims, and the Social
Security Administration reversed or investigated some of those decisions. Id. at 36–37 ¶ 75,
78–79. The United States simply points to those allegations without explaining why it needs
more time to “[re]ascertain the status quo” in light of them. Summers, 623 F.3d at 292
Those paragraphs are not substantially different than the original complaint, so they
do not support resealing this case. See Prince, 766 F. Supp. 2d at 684 (holding that the
resealing requirement did not apply because the amended complaint was “substantially
similar to the original complaint”); McCurdy, 2010 WL 1608411, at *1 (suggesting the
same).

The original complaint alleges that Conn submitted claims for benefits that

Daugherty approved, even though the claims lacked merit. An obvious inference is that any
medical records included with claims from Conn were just for show, to avoid detection. If
the claims lacked merit, then any medical records supporting those claims would likely be
false. The United States does not claim that it could not have drawn and investigated that
inference in the time before it decided not to intervene. In fact, it is quite obvious that a
thorough investigation—one that took at least 400 days—surely investigated the logical
inferences from the plaintiffs’ complaint. For that reason, the United States does not need

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additional time to decide whether to intervene, and the sixty-day seal requirement does not
apply to the amended complaint.
CONCLUSION
Accordingly, it is ORDERED that:
(1)

The amended complaint, R. 28 and R. 31, is UNSEALED.

(2)

The United States’ motion to seal the amended complaint for sixty days, R. 35,
is DENIED.

(3)

The plaintiffs SHALL SERVE the amended complaint, R. 28, and the United
States’ notice of decision not to intervene, R. 14, on the defendants within
thirty days (by Wednesday, August 28, 2013). See R. 30 at ¶ 2.

This the 30th day of July, 2013.

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