United States of America et al v. Performance Accounts Receivable, LLC, et al

Filing 405

ORDER granting in part and denying in part Defendant Billy Nerren Marlow, Jr.'s Motion 356 for Partial Summary Judgment. Signed by District Judge Halil S. Ozerden on 12/21/2023. (STR)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
UNITED STATES ex rel. MITCHELL
D. MONSOUR and WALTON
STEPHEN VAUGHAN

RELATORS

v.

Civil No. 1:16cv38-HSO-BWR

PERFORMANCE ACCOUNTS
RECEIVABLE, LLC, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT BILLY NERREN MARLOW, JR.’S
MOTION [356] FOR PARTIAL SUMMARY JUDGMENT
BEFORE THE COURT is Defendant Billy Nerren Marlow, Jr.’s Motion [356]
for Partial Summary Judgment, which seeks dismissal of certain of Relators
Mitchell D. Monsour and Walton Stephen Vaughan’s claims under the False Claims
Act, 31 U.S.C. § 3729, et seq., based upon the expiration of the relevant statute of
limitations. After due consideration of the Motion [356], the parties’ submissions,
and relevant legal authority, the Court finds that the Motion [356] should be
granted in part and denied in part, and that Relators Mitchell D. Monsour and
Walton Stephen Vaughan’s claims against Defendant Billy Nerren Marlow, Jr.
based on Medicare cost reports submitted for payment by North Sunflower Medical
Center and Tallahatchie General Hospital before October 18, 2012, should be
dismissed with prejudice based upon the expiration of the relevant statute of
limitations.
1

I. BACKGROUND
A.

Factual background

1.

Medicare cost reports
In 2016, Mitchell D. Monsour and Walton Stephen Vaughan (“Relators”),

acting as Relators on behalf of the United States, filed a Complaint [3] in this Court
under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. Relators have since
amended their Complaint twice. The Second Amended Complaint [228], the current
operative pleading, names as Defendants Performance Accounts Receivable, LLC,
Performance Capital Leasing, LLC, Wade Walters, Billy Nerren Marlow, Jr., Wayne
Walters, CAH Management-Franklin Services LLC, Revenue Cycle ManagementFranklin LLC, Donald J. Blackwood II, Sunflower Management Holding Company
LLC, and Watkins Ward & Stafford PLLC (collectively “Defendants”). 1 2d Am.
Compl. [228] at 3-5. Relators allege that Defendants violated the FCA by submitting
Medicare cost reports that included unallowable costs. See generally id. A more
detailed discussion of Medicare cost reports is contained in the Court’s Order [381]
Granting Defendants Donald J. Blackwood II, and Sunflower Management Holding
Company LLC’s Motion [279] for Partial Summary Judgment, which is adopted and
incorporated herein by reference. See Order [381].

The Court dismissed Watkins Ward & Stafford PLLC from this case on November 9, 2022. See
Order [255] at 23-24. Performance Capital Leasing, LLC was dismissed on June 1, 2023, on Relators’
Motion [274] to Voluntarily Dismiss. See Order [278] at 2-3. The other Defendants listed in the
Second Amended Complaint [228] remain.
1

2

2.

North Sunflower Medical Center
Relators allege that in 2007, Defendant Wade Walters formed an entity

named Performance Accounts Receivable, LLC (“PAR”) and entered into a “Revenue
Cycle Management Services Agreement” with North Sunflower Medical Center
(“NSMC”), where NSMC paid PAR seven percent of all revenue it received from “all
medical or other services to all patients for all ‘inpatient, outpatient, swing bed and
(geriatric psychiatric services)’ . . . .” 2d Am. Compl. [228] at 16. 2 PAR promised to
perform “Business Office Management as well as Revenue Cycle Management
Services for [NSMC].” Id. at 17. Defendant Billy Nerren Marlow, Jr. (“Marlow”)
served as Administrator of NSMC from 2004 until 2012, and as the Executive
Director of NSMC from 2004 through 2015. Id. Relators assert that either as
Administrator or Executive Director, Marlow signed the 2007 agreement between
PAR and NSMC, as well as approved payments to PAR. Id. Marlow “signed
successor agreements between the same parties entitling PAR, through October of
2015, to the same compensation.” Id.
Between 2009 and 2016, Marlow allegedly personally approved
$15,159,398.52 in payments to PAR under the agreements, with monthly payments
at times exceeding $250,000.00. Id. at 17-18. By signing the annual Medicare cost
reports, which included the payments to PAR, “Marlow affirmed that those costs
were reasonable, necessary, and allowable under Medicare cost report laws . . . .” Id.
at 18. Additionally, by signing the Medicare cost reports, Marlow certified to
In September 2014, NSMC renewed its contract with PAR, but reduced the percentage it received
from seven percent to five percent. 2d Am. Compl. [228] at 24.
2

3

Medicare officials that he examined the representations made within each cost
report, and “that all such expenses or costs for all relevant services had been
privided [sic] in compliance with Medicare laws and regulations.” Id. According to
Relators, all such certifications made by Marlow with respect to Medicare cost
reports and the payments by NSMC to PAR “were knowingly false when made,
making each such cost report a materially false statement and a legally false claim
(for future per diem Medicare payments) within the meaning of the False Claims
Act.” Id. Specifically, Relators assert Marlow knew the costs NSMC paid to PAR
were not commercially necessary or related to the market value of the work
performed, and thus were not allowable costs to be included in Medicare cost
reports as represented. Id. at 20-21.
In 2012, Defendant Wayne Walters was “installed” as Administrator of
NSMC by Wade Walters (his brother) and Marlow, who retained the role of
Executive Director. Id. at 21-22. Relators contend that, from July 2012 through
June 2015, Defendant Wayne Walters in his role as Administrator of NSMC,
“knowingly agreed to the continuance of all NSMC agreements with and payments
to his brother, Wade Walters,” and thus agreed to all transactions with Wade
Walters. Id. at 23. In August 2012, Marlow allegedly misrepresented to the NSMC
Board that PAR was performing the same service as another billing and collections
company the hospital had previously used, Perot Company (“Perot”). Id. Instead,
Perot only received a percentage of collections based on work its own employees did,
as opposed to PAR, which received a percentage of all revenue NSMC received. Id.

4

PAR also arranged and recommended the acquisition of new services to maximize
Medicare reimbursement, whereas Perot only engaged in billing and collection
activities. Id. Relators maintain that Defendant Wayne Walters “agreed for Marlow
to make such misrepresentations to the NSMC Board, knowing that they were
materially false.” Id. at 24.
As a result of the foregoing, Relators assert that from 2012 through 2014
Marlow, along with Wade Walters, Wayne Walters, and PAR, caused Medicare to
pay NSMC at least an additional $14,403,757.00 in “per diem” amounts based upon
Medicare claims submitted for payment after March 2010. Id. at 25.
3.

Tallahatchie General Hospital
In 2010, Wade Walters and Marlow formed Sunflower CAH Management

Group LLC (“Sunflower Management”), which was initially owned entirely by
Marlow before Defendant Donald J. Blackwood II (“Blackwood”) became a part
owner in 2011. Id. In 2010, TGH entered into an agreement with Sunflower CAH
Management LLC, giving the company management powers over the hospital,
including the ability to hire and fire the TGH Chief Executive Officer and
Administrator. Id. at 25-26. TGH also entered into a contract with Sunflower
Revenue Cycle Management LLC (“Sunflower RCM”), a separate entity, to “perform
‘revenue cycle services’ for TGH[.]” Id. at 27.
As part of Sunflower Management’s agreement with TGH, it received five
percent of the total net amount it collected for all patient and non-patient services
TGH provided. 2d Am. Compl. [228] at 26. Sunflower RCM had a similar

5

agreement with TGH, which included the same provision but at a seven-percent
rate of the total net amount collected. Id. at 28. Since November 2010, TGH has
allegedly paid Sunflower Management at least $8,927,043 in fractional fees and has
paid to Sunflower RCM at least $10,807,069 in fractional fees. Id. 27, 29. Relators
allege that none of these payments were commercially reasonable or necessary and
were not within any range of what is competitive in the market. Id. at 29-30. Thus,
all such payments were not allowable costs to be included in Medicare cost reports
submitted by TGH. Id. at 30.
Relators assert that despite this, Marlow, among others, agreed with
Sunflower Management, Sunflower RCM, and TGH for each Medicare cost report
submitted by TGH to include “the amounts of all such costs to TGH of paying that
year all such fractional fees to Sunflower Management and Sunflower RCM,
inherently, knowingly, and falsely representing to Medicare cost report reviewers
that all such costs were reasonable, necessary and allowable.” Id. at 31. Blackwood
and Marlow allegedly distributed to themselves over $14.6 million in profits from
fractional fee payments by TGH. Id. at 31. Relators assert this conduct by Marlow
and Blackwood “caused the submission by TGH of false cost reports and false
monetary claims to Medicare . . . in violation of the False Claims Act. 31 U.S.C. §
3729.” Id. at 34.
B.

Procedural History
On February 8, 2016, Monsour and Vaughan, acting as Relators on behalf of

the United States (collectively “Relators”), filed a Complaint [3] in this Court

6

advancing claims under the FCA. See Compl. [3]; 31 U.S.C. § 3279 et seq. The
Attorney General of the United States of America (“United States” or “the
Government”) was served with the Complaint [3] on April 18, 2016, Memo. [5] at 1
(filed under seal), and “it appears the United States Attorney was provided a copy of
the disclosure on or about May 5, 2016[,]” id. The Government declined to
intervene. Not. [13] at 1. On October 18, 2018, Relators filed a Motion [107] for
Leave to File First Amended Complaint, attaching a copy of the Proposed First
Amended Complaint [107-1], [107-2]. See Mot. [107]; Proposed 1st Am. Compl. [1071], [107-2]. That Motion [107] was denied without prejudice when this case was
stayed on October 26, 2018, due to former Defendant Hope Thomley’s (“Thomley”)
criminal indictment on Medicare fraud. 3 Orders [116], [117], at 1. The Order [116]
denying the motion stated that “[t]he Court, having determined that this case
should be stayed and administratively closed, finds that the pending Motion to
Amend (ECF No. 107) . . . should be denied without prejudice to the parties’
rights to reassert any unresolved issue when the stay is lifted.” Order [116] at 1
(emphasis added).
Over time Relators filed three separate Motions [119], [125], [133] to Reopen
the Case and Lift Stay, the first two of which were denied due to the ongoing
criminal proceedings. Text Only Order, April 4, 2019; Text Only Order, August 23,
2019. Following the resolution of the criminal case, the third Motion [133] to Reopen
Case and Lift Stay was granted, and this case was reopened on May 21, 2021. Order
Former Defendant Hope Thomley was named as a defendant in Relators’ Original Complaint [3]
and was dismissed on June 11, 2021. See Order [154] at 2.
3

7

[149] at 1. Relators refiled their Motion [150] for Leave to File First Amended
Complaint on May 24, 2021, again attaching a copy of their Proposed First
Amended Complaint [150-1]. See Mot. [150]; Proposed 1st Am. Compl. [150-1]. This
Motion [150] was granted and Relators filed their First Amended Complaint [158]
on July 2, 2021. Text Only Order, July 1, 2021; see also 1st Am. Compl. [158].
Relators have since filed a Motion [226] for Leave to File their Second Amended
Complaint [228] on April 28, 2022, which the Court granted on June 30, 2022. See
Mot. [226]; Text Order, June 30, 2022; see also 2d Am. Compl. [228]. The Second
Amended Complaint [228] alleges that Defendants violated the FCA by submitting
Medicare cost reports that included unallowable costs. See generally 2d Am. Compl.
[228].
C.

Billy Marlow’s Motion [356] for Partial Summary Judgment

1.

Marlow’s Motion [356]
Marlow’s Motion [356] for Partial Summary Judgment requests that the

Court dismiss Relators’ claims against him involving Medicare cost reports
submitted for payment by NSMC before May 24, 2015, and by TGH before April 28,
2016, on grounds that such claims are time-barred by the FCA’s six-year statute of
limitations. Mot. [356] at 1; see also 31 U.S.C. § 3731 (b)(1). Marlow argues that
since the first Motion [107] for Leave to File Amended Complaint, filed on October
18, 2018, was denied, the statute of limitations was not tolled and instead only
tolled when Relators filed their second Motion [150] for Leave, which was ultimately
granted, on May 24, 2021. Mem. [357] at 10. He asserts this is because the Court’s

8

Order [117] administratively staying the case did not explicitly toll the statute of
limitations. Id. at 11; see also Order [117].
Thus, in Marlow’s view, all claims against him based on Medicare cost
reports submitted by NSMC for payment before May 24, 2015, are time-barred.
Mem. [357] at 10. Marlow asserts that only NSMC claims were properly asserted in
the First Amended Complaint [158], such that claims against him related to TGH
were not properly asserted until Relators filed their Second Amended Complaint
[228] on July 1, 2022. Id. at 10-11. Marlow maintains that this is because the claims
based on cost reports submitted by TGH to Medicare involving fees paid to
Sunflower Management and Sunflower RCM were not asserted by Relators until
they filed their Motion [226] for Leave to File Second Amended Complaint on April
28, 2022. Id. Only then was the statute of limitations tolled, such that Marlow
argues that all claims against him related to TGH’s Medicare cost reports submitted
for payment before April 28, 2016, are time-barred. Id. at 14.
2.

Relators’ Response [386]
Relators respond that the filing of their first Motion [107] for Leave to File

Amended Complaint on October 18, 2018, tolled the statute of limitations, citing the
Court’s previous Order [382] holding such as it related to Defendant Wayne
Walters. Resp. [386] at 3-4 (citing Order [382] at 36). Relators argue the reasoning
in the Court’s Order [382] applies equally to the timeliness of the claims against
Marlow. Id. at 4.

9

As it relates to the TGH claims specifically, Relators maintain that the claims
in the Second Amended Complaint [228] relate back to the First Amended
Complaint [158] under Federal Rule of Civil Procedure 15(c)(1)(B) and based upon
the filing of the 2018 Motion [107] to amend. Id. at 7-10; see also Fed. R. Civ. P.
15(c)(1)(B). They assert that the Second Amended Complaint [228] merely amplified
the allegations already made, and that Marlow was placed on notice of the FCA
claims against him as it related to TGH when Relators filed their 2018 Motion [107]
for Leave to File First Amended Complaint. Resp. [386] at 7-10. For this reason, the
statute of limitations was tolled as to TGH claims against Marlow on October 18,
2018, making all claims based on TGH’s Medicare cost reports filed after October
18, 2012, timely. Id.
3.

Marlow’s Reply [400]
In his Reply [400], Marlow argues that the Court should reconsider its Order

[382] granting in part and denying in part partial summary judgment as it related
to Defendant Wayne Walters. Reply [400] at 2-12. He contends that a motion to
amend that is denied cannot toll the statute of limitations. Id. at 5-8. Marlow then
asserts that the stay entered by the Court did not operate as an extraordinary
circumstance beyond Relators’ control because Relators could have filed their First
Amended Complaint before October 2018, or sought reconsideration of the Order
[117] to stay. Id. at 8-11.
Defendant also cites United States v. Corp. Management, Incorporated, to
argue that the First Amended Complaint [158] did not base its allegations on the

10

same facts as those in the Second Amended Complaint. Id. at 12-15 (citing United
States v. Corp. Mgmt., Inc., 78 F.4th 727, 742-43 (5th Cir. 2023)). Marlow posits
that the First Amended Complaint [158] and the Second Amended Complaint [228]
base their allegations on different contracts between TGH and certain entities. Id.
Specifically, that the First Amended Complaint [158] only makes allegations
involving Sunflower Management’s contract, and makes no mention of the
Sunflower RCM contract. Id. Marlow reasons that, as set out in Corporate
Management’s discussion of United States ex rel. Miller v. Bill Harbert International
Construction, Incorporated, the different contracts constituted different transactions
or occurrences such that Rule 15(c)(1)(B) cannot relate them back. Id. (citing Corp.
Mgmt., Inc., 78 F.4th at 742-43 (discussing United States ex rel. Miller v. Bill
Harbert Int’l Constr., Inc., 608 F.3d 871, 882 (D.C. Cir. 2010)).
II. DISCUSSION
A.

Relevant legal authority

1.

Summary judgment standard
Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). The movant bears the “the initial burden of
informing the district court of the basis for its motion, and identifying those
portions of the record which it believes demonstrate the absence of a genuine issue
of material fact.” Taita Chem. Co. v. Westlake Styrene Corp., 246 F.3d 377, 385 (5th
Cir. 2001) (quotation omitted); see also Aries Bldg. Sys., LLC v. Pike Cnty.,

11

Mississippi, 5:16-CV-16-DCB-MTP, 2017 WL 4678225, at *2 (S.D. Miss. Oct. 17,
2017).
If a movant carries its initial burden, the nonmovant must then present
evidence beyond the pleadings that demonstrates “specific facts showing that there
is a genuine issue for trial.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994); see Guzman v. Allstate Assurance Co., 18 F.4th 157, 160 (5th Cir. 2021). To
rebut a properly supported motion for summary judgment, the nonmovant must
show, with “significant probative evidence,” that there exists a genuine issue of
material fact for resolution at trial. Hamilton v. Segue Software, Inc., 232 F.3d 473,
477 (5th Cir. 2000). “‘If the evidence is merely colorable, or is not significantly
probative,’ summary judgment is appropriate.” Cutting Underwater Techs. USA,
Inc. v. ENI U.S. Operating Co., 671 F.3d 512, 516 (5th Cir. 2012) (quoting Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A court must “view the evidence in
the light most favorable to the nonmovant and construe all reasonable inferences in
[his] favor” and “may not evaluate the credibility of the witnesses, weigh the
evidence, or resolve factual disputes.” Guzman, 18 F.4th at 160 (quotation omitted).
2.

The FCA’s statute of limitations
The FCA provides that:
(b) A civil action under section 3730 may not be brought—
(1) more than 6 years after the date on which the violation of section
3729 is committed, or
(2) more than 3 years after the date when facts material to the right of
action are known or reasonably should have been known by the official
of the United States charged with responsibility to act in the
12

circumstances, but in no event more than 10 years after the date on
which the violation is committed,
whichever occurs last.
31 U.S.C. § 3731(b).
The FCA thus sets forth two limitations periods upon which a relator may
rely to bring FCA claims. Cochise Consultancy, Inc. v. United States ex rel. Hunt,
139 S. Ct. 1507, 1510 (2019) (“The False Claims Act contains two limitations periods
that apply to a ‘civil action under section 3730 . . . .’”). “Whichever period provides
the later date serves as the limitations period.” Id. None of the parties to the
present Motion [356] have argued or suggested that the three-year statute of
limitations applies, so the Court will confine its analysis to the FCA’s six-year
limitations period, see generally Memo. [357]; Resp. [386]; Reply [400], which allows
a relator to bring an action six years from the date on which the violation was
committed, id. at 1513
3.

Federal Rule of Civil Procedure 15(c)

Under Federal Rule of Civil Procedure 15(c)(1),
An amendment to a pleading relates back to the date of the original
pleading when: . . .
(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out–or attempted to be set out–
in the original pleading; or
(C) the amendment changes the party or the naming of the party against
whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within
the period provided by Rule 4(m) for serving the summons and
complaint, the party to be brought in by amendment:

13

(i) received such notice of the action that it will not be prejudiced in
defending on the merits; and
(ii) knew or should have known that the action would have been brought
against it, but for a mistake concerning the proper party’s identity.
Fed. R. Civ. P. 15(c)(1)(B)-(C).
Rule 15(c) “allows amendments otherwise time-barred to ‘relate back’ to the
date of the original pleading.” Fed. Deposit Ins. Corp. v. Bennett, 898 F.2d 477, 479
(5th Cir. 1990). “Newly asserted claims relate back if they are premised on the
same or similar allegations as those in the original filing.” United States v. Alaniz, 5
F.4th 632, 636 (5th Cir. 2021). “Amendments that correct technical deficiencies in a
pleading or serve to expand the facts alleged in the original pleading satisfy the
relation back requirements of rule 15(c).” McClellon v. Lone Star Gas Co., 66 F.3d
98, 102 (5th Cir. 1995) (quoting 6A Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1497 at 74 (2d ed. 1990)). “Similarly, if an
amendment simply restates with greater particularity or amplifies the details of the
complaint, then the amendment qualifies as information that the complainant
‘attempted to set forth.’” Id. (quoting Wright & Miller, supra, § 1497 at 76). On the
other hand, if the alteration “in an amended complaint is ‘so substantial that it
cannot be said that the defendant was given adequate notice of the conduct,
transaction, or occurrence that forms the basis of the claim or defense, then the
amendment will not relate back.’” Federal Deposit Ins. Corp. v. Conner, 20 F.3d
1376, 1386 (5th Cir. 1994) (quoting Wright & Miller, supra, § 1496 at 79).

14

B.

Analysis

1.

Whether Relators have shown entitlement to tolling of the six-year statute of
limitations as to their NSMC claims against Marlow
The Court has previously addressed this question as it relates to Defendant

Wayne Walters, and for the same reasons given in its Order [382] Granting in Part
and Denying in Part Summary Judgment, the Court finds the statute of limitations
should be tolled as to Relators’ NSMC claims against Marlow. Order [382] at 28-36.
The parties do not dispute that the six-year statute of limitations period set
forth at § 3731(b)(1) controls. See Mem. [357] at 1; Resp. [305] at 3. Marlow argues
that as to the NSMC claims against him, the six-year period was tolled three days
after the stay was lifted when Relators filed their second Motion [150] for Leave to
File Amended Complaint on May 24, 2021, Mem. [357] at 10; see also Order [149],
meaning that any NSMC claims against Marlow based on Medicare cost reports
submitted before May 24, 2015, are time-barred, see 31 U.S.C. § 3731(b)(1).
Relators maintain that the “equities in this case vividly illustrate the
procedural justice” of tolling the statute of limitations upon the filing of a motion to
amend. Resp. [386] at 6. In their view, the statute of limitations was tolled upon the
filing of their first Motion [107] for Leave to Amend on October 18, 2018, prior to
the entry of the stay. Id. If the period was tolled upon the filing of the 2018 Moton
[107], Relators can pursue NSMC claims against Marlow based on Medicare cost
reports submitted for payment after October 18, 2012. See 31 U.S.C. § 3731(b)(1).
The parties do not dispute that the filing of a motion for leave to file an
amended complaint that is subsequently granted tolls the statute of limitations.
15

Mem. [357] at 10, Resp. [386] at 4-6. As such, it is undisputed that, at the latest, the
statute of limitations was tolled as to the NSMC claims when Relators filed their
Motion [150] for Leave to File Amended Complaint on May 24, 2021. Mem. [357] at
10, Resp. [386] at 4-6. The dispute is whether the Motion [107] for Leave filed on
October 18, 2018, which was denied, tolled the statute of limitations sooner.
Marlow argues that since the the Motion [107] for Leave filed on October 18,
2018, was denied due to the Court staying this case, see Order [116], and because
the Court’s Order [117] administratively staying the case did not explicitly state
that it tolled the statute of limitations, the statute continued to run, Mem. [387] at
11. Relators disagree.
In Hughes v. Region VII Area Agency on Aging, the Sixth Circuit addressed
similar facts and found tolling was appropriate where a motion to amend had been
denied. 542 F.3d 169, 188 (6th Cir. 2008). The initial motion for leave to amend was
denied because plaintiff “failed to comply with a local court rule requiring ‘a movant
to seek concurrence in the relief requested before filing a motion with this Court.’”
Id. The plaintiff there eventually complied with the local rule, leave was granted,
and the plaintiff filed a second amended complaint. Id. The Sixth Circuit held that
defendants were not prejudiced because the substance of plaintiff’s claims was made
known to them upon the filing of the motion to amend, even though it had initially
been denied. 4 Id. at 188-89.

Notably the district court’s denial of plaintiff’s motion in Hughes made no mention of tolling the
statute of limitations. See Hughes v. Region VII Area Agency on Aging, et al., No. 04-10355-BC (E.D.
Mich. July 27, 2006). Instead, it only denied the motion without prejudice. Id. at 2.
4

16

In both of Relators’ Motions [107], [150] for Leave to Amend and the attached
complaints, they did not change the facts or grounds upon which their claims were
based, as both Motions [107], [150] attached Proposed First Amended Complaints
[107-1], [107-2], [150-1], which were based on the “same general pattern of
transactions originally and currently alleged [in the Original Complaint [3]],
involving Medicare cost reports filed by the same three rural hospitals . . . .” Mot.
[107] at 2; Mot. [150] at 2; see also generally Proposed 1st Am. Compl. [107-1], [1072]; Proposed 1st Am. Compl. [150-1]. The Proposed First Amended Complaints
[107-1], [107-2], [150-1] “invok[ed] the same initial three subsections of the False
Claims Act . . . .” Mot. [107] at 3; Mot. [150] at 3; see also generally Proposed 1st Am.
Compl. [107-1], [107-2]; Proposed 1st Am. Compl. [150-1]. The only differences were
that the proposed amendments described the same transactions in greater detail,
added multiple parties, and conformed themselves to the Court’s Order [105]
Granting in Part and Denying in Part Summary Judgment. Mot. [107] at 3; Mot.
[150] at 3; see also generally Proposed 1st Am. Compl. [107-1], [107-2]; Proposed 1st
Am. Compl. [150-1].
Relators first sought leave to file a first amended complaint on October 18,
2018, one day before former Defendant Thomley moved to stay proceedings. See
Mots. [107], [111]. Before Relators had an opportunity to respond, the Magistrate
Judge ordered the case stayed, and in doing so denied Relators’ Motion [107]
“without prejudice to the parties’ rights to reassert any unresolved issue when the
stay is lifted.” Order [116] at 1; see also Order [117]. Relators then “diligently []

17

pursued relief[,]” Sehr v. Val Verde Hosp. Corp., 368 F. Supp. 3d 1106, 1108 (W.D.
Tex. 2019), by filing three Motions [119], [125], [133] to Reopen Case and Lift Stay,
see Mots. [119], [125], [133]. As Relators had no control over when the United States
Attorney brought criminal charges against Thomley, or how quickly the criminal
case progressed, the stay administratively closing the case operated as an “an
external obstacl[e] to timely filing” which was brought on by circumstances “beyond
[Relators’] control.” Farmer v. D & O Contractors, Inc., 640 F. App’x 302, 306 (5th
Cir. 2016) (quoting Menominee Indian Tribe of Wisconsin v. United States, 577 U.S.
250, 256 (2016)).
It would unfairly punish Relators, who otherwise would have tolled the
statute of limitations with the filing of their Motion [107] on October 18, 2018,
because the Court opted to administratively close the case in the interests of
protecting Thomley’s Fifth Amendment rights. See Order [117] at 1. This is
particularly true here, where the public filing of the 2018 Motion [107] and the
attached Proposed First Amended Complaint [107-1], [107-2] placed Defendant
Marlow on notice of the potential NSMC claims against him, removing any
potential risk of prejudice. See, e.g., Hughes, 542 F.3d at 188-89.
Alternatively, even if Marlow is correct that the Court’s Order [117] staying
this case had to expressly toll the statute of limitations in order for tolling to apply,
the Court explicitly stated it was denying Relators’ Motion [107] to Amend
“without prejudice to the parties’ rights to reassert any unresolved issue
when the stay is lifted.” Order [116] at 1 (emphasis added). Strict application of the

18

statute of limitations here would in essence be treating the Court’s Order [116] as a
denial with prejudice, which by its terms it was not. See Khoury v. Thota, No. 2020578, 2021 WL 3919248 (5th Cir. Sept. 1, 2021) (unpublished) (holding that where
a dismissal without prejudice may effectively operate as a final disposition of the
claims due to a statute of limitations, it is treated as a dismissal with prejudice)
(quoting Boazman v. Econ. Lab’y, Inc., 537 F.2d 210, 213 (5th Cir. 1976);
Nottingham v. Warden, Bill Clements Unit, 837 F.3d 438, 441 (5th Cir. 2016)
(treating a Rule 41(b) dismissal without prejudice as one with prejudice where the
statute of limitations would prevent refiling of the claims) (citing Coleman v.
Sweetin, 745 F.3d 756, 766 (5th Cir. 2014) (per curiam)). As such, it seems clear
that by reserving to Relators the right to refile their motion to reassert any
unresolved issues, this encompassed the later presentation of claims that would
have otherwise been timely. See Order [116].
In sum, Relators’ first Motion [107] for Leave tolled the six-year statute of
limitations as to the NSMC claims against Marlow on October 18, 2018. Therefore,
Relators may bring claims against Marlow based on Medicare cost reports
submitted by NSMC after October 18, 2012. Relators base their NSMC claims
against Marlow on conduct beginning in February 2007. 2d Am. Compl. [228] at 1625. Thus, only a partial summary judgment dismissing Relators’ NSMC claims
against Marlow based on Medicare cost reports submitted before October 18, 2012,
is warranted.

19

2.

Whether the 2018 Motion [107] for Leave tolled the six-year statute of
limitations as to the TGH claims against Marlow
Marlow maintains that the TGH claims were not properly asserted against

him until Relators filed their Second Amended Complaint [228] on July 1, 2022, and
were only tolled when Relators filed their Motion [226] for Leave to File Second
Amended Complaint on April 28, 2022. Mem. [357] at 10-11. Thus, even if the
statute of limitations was tolled as to the NSMC claims in the First Amended
Complaint [158], it was not tolled as to the TGH claims based on Medicare cost
reports submitted for payment before April 28, 2016. Id. at 10-14. Relators respond
that the Second Amended Complaint [228] merely amplified the TGH claims
asserted in the First Amended Complaint [158], such that they relate back to the
First Amended Complaint [158] under Rule 15(c)(1)(B), and are subject to the
tolling based upon the filing of the 2018 Motion [107] to Amend. Id. at 7-10; see also
Fed. R. Civ. P. 15(c)(1)(B). Marlow argues the claims do not relate back because the
First Amended Complaint [158] and Second Amended Complaint [228] base their
allegations on different contracts between TGH and different Sunflower entities.
Reply [400] at 12-15 (citing Corp. Mgmt., Inc., 78 F.4th at 742-43 (discussing Miller,
608 F.3d at 882)).
To resolve this question the Court must determine whether the allegations in
the Proposed First Amended Complaint [107-1], [107-2] attached to the 2018 Motion
[107] for Leave were sufficient to permit the Second Amended Complaint [228] to
relate back to them.

20

Under Federal Rule of Civil Procedure 15(c)(1)(B),
An amendment to a pleading relates back to the date of the original
pleading when: . . .
(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out–or attempted to be set out–
in the original pleading . . . .
Fed. R. Civ. P. 15(c)(1)(B).
This Court has previously applied Rule 15(c)(1)(B) to FCA claims. See, e.g.,
United States ex rel. Rigsby v. State Farm Fire and Cas. Co., No. 1:06-CV-433-HSOJCG, 2021 WL 1170086, at *15-17 (S.D. Miss. Mar. 26, 2021); see also United States
v. Kaplan, Inc., 517 F. App’x 534, 536 (9th Cir. 2013); United States ex rel. Woodard
v. DaVita, Inc., No. 1:05-CV-227, 2010 WL 11531271, at *14 (E.D. Tex. Dec. 21,
2010) (collecting cases).
In Rigsby, the first amended complaint alleged that State Farm used its
XacTotal software to make determinations regarding total flood loss on homeowners
insurance claims following Hurricane Katrina. Id. at *17. The Court concluded that
even though XacTotal was not a line-by-line estimating software, this was
nevertheless sufficient for the second amended complaint, which was filed almost
15-years later, to relate back its allegations that State Farm was required to
perform line-by-line estimates as to each property and failed to do so. Rigsby, 2021
WL 1170086, at *17. The assertion that State Farm was required to use line-by-line
estimation, which predominated the second amended complaint, related back to the
first amended complaint even though the first amended complaint made no mention
of a line-by-line procedure and only mentioned the use of XacTotal in one
21

paragraph. See generally 1st Am. Compl. [16], 2d Am. Compl. [1623], United States
ex rel. Rigsby v. State Farm Fire & Cas. Co., No. 1:06-CV-433-HSO-JCG, 2021 WL
1170086 (S.D. Miss. Mar. 26, 2021). The Court found that because the two
complaints set out the same “central theme[,]” that State Farm had improperly used
an expedited procedure, the assertions in each complaint were born out of “the same
conduct, transaction, or occurrence.” Rigsby, 2021 WL 1170086, at *15-17. This was
sufficient for them to relate back under Rule 15(c)(1)(B).
As in Rigsby, the central theme in both the Proposed First Amended
Complaint [107-1], [107-2], which was ultimately filed after a second Motion [150]
for Leave, 5 and the Second Amended Complaint [228] is the same. The Proposed
First Amended Complaint [107-1], [107-2], raised the following allegations against
Marlow as it related to TGH:
82. In 2010, Defendant Billy Marlow formed Sunflower CAH
Management Group, LLC (“Sunflower CAH Management”) for the
purpose of receiving, on the model earlier demonstrated by Wade
Walters, fractional fees from other cost-reimbursed CAH hospitals in
rural Mississippi based on the amounts of their revenue. Defendant
Wade Walters served as a “consultant” to Sunflower CAH Management.
83. In 2010 or 2011, Sunflower CAH Management, which at that time
was owned entirely by Defendant Marlow, entered a fractional-fee
“management contract” with Tallahatchie General Hospital (“TGH”),
The TGH allegations made in the First Amended Complaint [158] are substantively identical to
those made in the Proposed First Amended Complaint [107-1], [107-2]. Compare 1st Am. Compl.
[158] at 35-38, 43-45, with Proposed 1st Am. Compl. [107-2] at 5-7, 13-15. The only differences
relating to the TGH allegations are that the First Amended Complaint added “Marlow and” in
paragraph 85, replaced the phrase “and effectively to select” with “select and” in paragraph 83,
added the word “purportedly” in paragraph 98, and added the word “entire” in paragraph 99.
Compare 1st Am. Compl. [158] at 36-37, 44-45, with Proposed 1st Am. Compl. [107-2] at 6, 14-15. As
to the rest of the First Amended Complaint [158], the only material substantive difference is the
addition of CAH Management Franklin Services LLC and Revenue Cycle Management Franklin
LLC as Defendants, which the Court has already addressed in its previous Order [382]. See Order
[382] at 28 n.4.
5

22

itself a CAH Hospital based in Charleston, Mississippi, under which
TGH gave to Sunflower CAH Management the power to employ, and
effectively to select, the Administrator charged with running TGH, and
thus to control TGH’s operations. In return, TGH also became
contractually obligated to pay Sunflower CAH Management seven
percent (7%) of all of the revenue TGH collected.
84. In March of 2011, Defendants Marlow and Wade Walters used the
new power of Sunflower CAH Management over TGH to cause TGH to
enter multiple contracts with Wade Walters, initially through the
Walters-owned entity Prime Care Management Group LLC, under
which that entity would establish, manage, and recruit patients for, a
new [intensive outpatient service “IOP”] at TGH. . . .
...
86. Defendants Billy Marlow and Wade Walters, and Sunflower CAH
Management (along with the TGH Administrator it appointed), caused
TGH to pay Walters-owned Prime Care Management Group, between
(and including) 2011 and 2014, a total of $2,104,137, all of which was
falsely included in TGH’s cost report as purportedly allowable costs.
Those inclusions of those IOP costs, when adjusted to account for (a) the
fraction of Medicare patients at TGH (relative to all patients), (b) the
amounts of annual cost report “settlements” during those years, and (c)
TGH’s entitlement as a CAH to reimbursement equal to 101% of
allowable Medicare-related costs, resulted in additional and unlawful
“per diem” amounts to be paid by Medicare to TGH in amounts totaling
approximately $2,607,811.
...
97. Beginning in 2010, Defendants Billy Marlow and Wade Walters,
demonstrating and using their managerial influence and control
(through “Sunflower CAH Management” and otherwise) over TGH,
caused TGH to enter a contract with Walters-owned Delta Staffing LLC,
under which TGH became obligated to pay Walters (through his Delta
Staffing LLC entity) to utilize nurses and other health care providers
employed as “contract employees” by Delta Staffing. TGH’s contract
with Delta Staffing LLC was signed on behalf of TGH, as its “Chief
Executive Officer,” by Defendant Billy Marlow.
98. In April of 2011, Defendants Billy Marlow and Wade Walters,
through their substantial influence on TGH by virtue of Marlow’s
control of TGH’s “management company” Sunflower CAH Management
23

Group LLC, caused TGH to become obligated to pay Wade Walters,
through his entity Prime Care Management Group LLC (owned and
controlled entirely by Walters), to establish and operate for TGH a
“Rehabilitation Services” program in the name of and at TGH,
purportedly delivering occupational, physical, and speech pathology
rehabilitation services, in consideration of which Walters (through
Prime Care Management Group LLC) was paid $10,000 each month for
“managing” such a rehabilitation operation (in addition to TGH’s
obligation to reimburse Prime Care for its expenses in paying a
physician actually to deliver services).
99. In 2011, Defendants Marlow and Wade Walters, as further
demonstration and use of their influence over TGH and its “managing
company,” also caused TGH to become obligated to pay Wade Walters
(through the Defendant Performance Capital Leasing LLC, owned and
controlled entirely by Walters) lease payments in order for TGH to lease
from [Performance Capital Leasing LLC (“PCL”)] sixteen hospital beds.
Though TGH made lease payments of over $180,000 to PCL during a
lease period of less than five years, TGH valued the beds at the end of
that period at only $1,000 per bed for the purpose of buying the beds
outright from PCL.
Proposed 1st Am. Compl. [107-2] at 5-7, 13-15.
In comparison, as it relates to TGH claims against Marlow, the Second
Amended Complaint alleges that:
59. During 2010, Defendants Billy Marlow and Wade Walters formed
the entity “Sunflower CAH Management Group LLC” (hereafter called
“Sunflower Management”), initially owned entirely by Marlow but
owned in part by Marlow and in part by Defendant Jim Blackwood from
February 2011 until September 2019 (since which time it has been
owned indirectly but entirely by Blackwood).
60. On or about November 11, 2010, Wade Walters and Billy Marlow
convinced the Board of Trustees of the Tallahathchie General Hospital
(hereafter called “TGH”), and TGH in a written contract agreed, to shift
and delegate to Sunflower Management (and thus, initially, to Billy
Marlow) the power to hire and fire the TGH Chief Executive Officer
(“Administrator”), and the further powers to take all actions which in
the discretion of Sunflower Management were necessary to manage and
bind TGH in its operations, including the hiring, firing and discipline of
employees and the purchasing and selling of property and services.
24

61. As part of the same November 11, 2010 Agreement between TGH
and Sunflower Management, TGH became obligated each month to pay
(and to this day is still contractually obligated to pay) Sunflower
Management fully five percent (5%) of “the total amounts collected
during the preceding calendar month for any and all patient and nonpatient services provided by” TGH, reduced only by (a) any refunds paid
by TGH and (b) County property tax revenues received by TGH.
62. The contractual and mathematical basis for calculating all fee
payments by TGH to Sunflower Management during all months since
November 2010 have therefore been made based on that calculation of
5% of TGH’s total collections, regardless of the number of hours worked
by any personnel of Sunflower Management in the interest of TGH. All
such monthly fractional fee payments made by TGH to Sunflower
Management have also had no economic relationship with, and have
been grossly in excess of, both (a) the price or costs for which TGH could
have procured the same management services from alternative
providers, and thus (b) the true value in a competitive marketplace of
any such services provided by Sunflower Management to TGH.
63. On or about November 10, 2013, Defendants Marlow and Blackwood
agreed with TGH to renew the same contractual arrangement under the
same terms (described in Paragraphs 60 and 61above [sic]), an
arrangement which still governs the financial relationship between
TGH and Sunflower Management.
64. Since November of 2010, TGH has paid Sunflower Management, and
Defendants Marlow and Blackwood as overt acts pursuant to the
contracts described above have received through Sunflower
Management, at least $8,927,043 in fractional fees because of the
contractual arrangement described above.
65. Also on November 11, 2010, Defendants Wade Walters and Billy
Marlow also convinced TGH to enter a separate “Revenue Management
and Consulting Agreement” with a separate entity, owned entirely by
Billy Marlow and named “Sunflower Revenue Cycle Management LLC”
(hereafter called “Sunflower RCM”).
66. Under that separate contract, Sunflower RCM purportedly was to
perform “revenue cycle services” for TGH, involving the preparation,
submission and collection of bills and claims to insurers and uninsured
patients for medical services provided by TGH.

25

67. As compensation by TGH for such purported additional services by
Sunflower RCM, the same Agreement required TGH to pay to Sunflower
RCM a further amount each month equal to seven percent (7%) of “the
total amounts collected during the preceding calendar month for any
and all patient and non-patient services” provided by TGH (again
subtracting only “refunds” paid by TGH and County property tax
revenue receipts). Their two fractional fee contracts, combined, entitled
the jointly-owned Sunflower Management and Sunflower RCM to
receive twelve percent (12%) of TGH’s total collections as so defined.
68. On or about November 10, 2013, Defendants Marlow and Blackwood
agreed with TGH to renew the same contractual arrangement between
TGH and Sunflower RCM under the same terms (described in
Paragraphs 66 and 67 above), an arrangement which still governs the
financial relationship between TGH and Sunflower RCM.
69. From November of 2010 until the present time, substantially all of
the actual “revenue cycle services” involving the actual preparation,
submission and collection of bills and claims to insurers and uninsured
patients of TGH have actually been performed not by employees of or at
the expense of Sunflower RCM, but instead by employees of and at the
expense of TGH itself, through TGH’s own “revenue cycle” and “billing”
personnel paid by TGH through its payroll.
70. Sunflower RCM has in fact never employed any person to perform
any services for TGH, or for anyone or anything else, during its entire
existence.
71. Nevertheless, TGH since 2011 has paid directly to Sunflower RCM
(and thus, indirectly, to Defendant Marlow and, as of February of 2011,
to Defendant Blackwood) at least $10,807,069 in fractional fees
pursuant to the fractional fee contracts described above between TGH
and Sunflower RCM.
72. All such fee payments by TGH to Sunflower RCM have been made
each month since 2010 as a fraction of total collections by TGH as
defined above, a basis for compensation which does not in itself depend
on whether any personnel paid by Sunflower RCM had performed any
particular services for TGH. The amounts of all such fee payments have
also had no economic relationship with, and have been grossly in excess
of, both (a) the price or costs for which TGH could have procured the
same “revenue cycle services” from alternative providers, and thus (b)
the true value in a competitive marketplace of any such services
provided by Sunflower RCH (even if any had been provided) to TGH.
26

73. None of the over $19 million in total fractional fee payments made
by TGH since 2010 to Sunflower Management and Sunflower RCM
combined have been commercially reasonable or necessary in their
amounts (or in the contractual basis for calculating their amounts), and
none have been within any range of compensation ordinarily charged in
any competitive marketplace for what services were promised to or
actually performed for TGH. All such fee payments were therefore not
reasonable, necessary or customary for the delivery of TGH’s health care
services to Medicare patients, were out of line with payments for such
services by other hospitals in the competitive marketplace, and were
otherwise not allowable costs for the purpose of being included in any
Medicare cost report prepared for or submitted by TGH, within the
meaning of 42 U.S.C. § 1395x(v)(1)(A) or 42 C.F.R. § 413.9.
...
75. Nevertheless, and in knowing violation of all such statutory and
regulatory restrictions on costs legally allowed to be included on
Medicare cost reports of CAH hospitals, Defendants Billy Marlow (from
2010 through September 2019), Jim Blackwood (from February 2011
until today), and Wayne Walters (between July 2014 and January 2016),
each agreed with Sunflower Management, Sunflower RCM, TGH, and
WWS for each annual Medicare cost report submitted by TGH to include
(among many other “general and administrative” costs) the amounts of
all such costs to TGH of paying that year all such fractional fees to
Sunflower Management and Sunflower RCM, inherently, knowingly,
and falsely representing to Medicare cost report reviewers that all such
costs were reasonable, necessary and allowable. WWS falsely
represented to TGH that cost reports including such costs were
“suitable” for submission by TGH to Medicare, and Blackwood signed all
such cost reports on behalf of TGH.
76. Between September of 2011 and September of 2020 alone, from the
over $19 million paid by TGH in combined fractional fees to Sunflower
Management and Sunflower RCM, Defendants Billy Marlow, Jim
Blackwood and Wayne Walters disbursed to themselves (or otherwise to
their own benefit), over and above all salary and bonus payments to Jim
Blackwood and all other operational “costs” to Sunflower Management
and Sunflower RCM, over $14.6 million in net profits. (Profits equal to
one-third of overall profits were disbursed to Defendant Wayne Walters
only between July 2014 and January of 2016.)
...
27

79. Nevertheless, Defendants Marlow, Blackwood, Wayne Walters
(between July of 2014 and January 2016), and WWS each agreed with
TGH, Sunflower Management and Sunflower RCM, and with one
another, for TGH to submit to Medicare cost report reviewers cost
reports for 2011 through 2020 which included, as purportedly allowable,
the amounts of all such profits, in knowing violation of Medicare laws
relating to related organizations.
80. Beginning in July of 2014, Defendants Billy Marlow, Jim Blackwood,
and Wayne Walters together formed Defendant Sunflower Management
Holding Company LLC (hereafter called “Sunflower Holding”), and
assigned exclusive ownership of Sunflower Management and Sunflower
RCM to Sunflower Holding, which continually since July of 2014 has
been the owner of both such entities (each of which continues to contract
directly with TGH). Billy Marlow, Jim Blackwood, and Wayne Walters
each owned one-third of the ownership interests in Sunflower Holding,
until January of 2016, after which Billy Marlow and Jim Blackwood
each owned one-half of the ownership intersets [sic] in Sunflower
Holding. Since September of 2019, Defendant Jim Blackwood has been
the sole owner directly of Sunflower Holding, and thus indirectly the
sole owner of both Sunflower Management and Sunflower RCM.
81. Since its formation as the owner of Sunflower Management and
Sunflower RCM in July of 2014, Sunflower Holding has received all
fractional fee payments thereafter made by TGH, has disbursed all
profits as described above, and has agreed with Marlow, Blackwood,
(Wayne) Walters, TGH, Sunflower Management, Sunflower RCM, and
WWS to receive the benefit of TGH’s fractional fee payments, to disburse
the profits from those payments, to have the amounts of those payments
(and profits therefrom) included as purported allowable costs to TGH,
and to otherwise carry out to its benefit the operation described above,
in knowing violation of the statutes and regulations also described
above.
82. All such conduct by each such Defendant, and all transactions and
related conduct described above concerning all fractional fee contracts
and payments by TGH, caused the submission by TGH of false cost
reports and false monetary claims to Medicare (with false “claims”
including both the cost reports themselves and each monthly claim
thereafter for per diem payments by Medicare for each Medicare eligible
patient of TGH), in violation of the False Claims Act. 31 U.S.C. § 3729.
2d Am. Compl. [228] at 25-34, 47-49.
28

The foregoing reveals that in the Proposed First Amended Complaint [107-1],
[107-2], Relators set out or attempted to set out allegations that Marlow, through
his management company or companies, caused TGH to enter into management
contracts and to include unallowed expenses in its cost reports. See Proposed 1st
Am. Compl. [107-2] at 5-7, 13-15. This is the same essential theory Relators
advance against Marlow in the Second Amended Complaint [228] as to TGH, even
though a new contract with a new, but closely related, entity was added. See 2d Am.
Compl. [228] at 25-34.
Beyond adding factual detail, the primary differences between the Proposed
First Amended Complaint [107-1], [107-2] and the Second Amended Complaint
[228] are that the latter: (1) implicates Blackwood and Wayne Walters as Marlow’s
accomplices; (2) drops its allegations of management contracts with companies
other than Sunflower Management; and (3) includes allegations related to a
revenue cycle management contract with Sunflower RCM. Compare id., with
Proposed 1st Am. Compl.[107-2] at 5-7, 13-15. However, the central theme or core
theory of liability remains the same, that Marlow and others, through these various
companies, caused TGH to enter into various management contracts and to submit
“false cost reports and false monetary claims to Medicare.” 2d Am. Compl. [228] at
25-34.
As such, the Court finds that the Second Amended Complaint [228] merely
amplifies and corrects the claims that were set out, or attempted to be set out, in
the Proposed First Amended Complaint [107-1], [107-2]. Fifth Circuit precedent
29

has held more than once that such amplifications permit relation back. Newberry v.
Cent. of Georgia Ry. Co., 276 F. 337, 339 (5th Cir. 1921) (“‘If the amendment merely
expanded or amplified what was alleged in support of the cause of action already
asserted, it related back to the commencement of the action and was not affected by
the intervening lapse of time.”); see also McClellon, 66 F.3d at 102; Conner, 20 F.3d
at 1386 (“Conversely, if a plaintiff seeks to correct a technical difficulty, state a new
legal theory of relief, or amplify the facts alleged in the prior complaint, then
relation back is allowed.”).
For example, in United States v. Johnson, the Fifth Circuit allowed plaintiffs
to relate back their negligence allegations against the United States arising out of
seven specific plane crashes on their property, where the original complaint
“contained no allegation of any specific crash or illegal low-level flight; and it
contained no allegation of any negligence on the part of the United States in
connection with any crash or crashes or any flight or flights.” 228 F.2d 40, 41-42
(5th Cir. 1961); see also Bennett, 898 F.2d at 480 (citing Johnson in support of
allowing relation back even where a plaintiff wholly changed their theory of
liability). In Gray v. Upchurch, a case from this District, the Court permitted the
relation back of RICO claims where the original complaint only contained common
law fraud allegations. See No. 505-CV-210-KS-JMR, 2006 WL 3694604, at *2-4 (S.D.
Miss. Dec. 13, 2006). The Court applied the relation back doctrine even though the
amended complaint added additional facts because the claims arose from the same
factual background. Id. at *4 (finding the amended complaint “further develop[ed]

30

the factual underpinnings of their fraud claims” and “more specifically explain[ed]
how the fraud was allegedly perpetrated against the plaintiffs”).
The facts in this case fall within the range of amplification allowed in the
foregoing cases. Relators’ Proposed First Amended Complaint [107-1], [107-2] set
out, or attempted to set out, FCA allegations based on the same or related Medicare
cost reports upon which the Second Amended Complaint [228] bases its allegations.
Compare 2d Am. Compl. [228] at 25-34, with Proposed 1st Am. Compl. [107-2] at 57, 13-15. The fact that the Second Amended Complaint fleshed out or refined these
allegations after discovery does not substantially change the factual underpinning
of the FCA claims. Had Relators been able to file it, the claims in the Proposed First
Amended Complaint [107-1], [107-2], while perhaps in need of refinement and
clarity, were sufficient to place Marlow on notice that Relators were bringing claims
against him related to management contracts at TGH and Medicare cost reports
submitted by TGH. See Proposed 1st Am. Compl. [107-2] at 5-7, 13-15. Additionally,
Relators did eventually make these claims; when Relators filed their First Amended
Complaint [158], they brought substantively identical TGH allegations as outlined
in the Proposed First Amended Complaint [107-1], [107-2]. Compare 1st Am. Compl.
[158] at 35-38, 44-45, with Proposed 1st Am. Compl. [107-2] at 5-7, 13-15.
Defendant cites United States v. Corporate Management, Incorporated in
support of his contention that the claims do not relate back. Reply [400] at 12-15. In
Corporate Management, the Fifth Circuit analyzed the relation back doctrine set out
in 31 U.S.C. § 3731, which allows the Government to relate back its own or

31

amended complaint to the relators’ original complaint after intervening “‘to the
extent that the claim of the Government arises out of the conduct, transactions, or
occurrences set forth, or attempted to be set forth, in the prior complaint of
[relators.]’” Corp. Mgmt., Inc., 78 F.4th at 742-43 (emphasis omitted) (quoting 31
U.S.C. § 3731(c)). The Fifth Circuit analogized the statute to Federal Rule of Civil
Procedure 15, and held that “relation back is generally improper when, though a
new pleading shares some elements in common with the original pleading, it faults
the defendant for conduct different than that alleged in the original complaint.” Id.
The initial complaint in Corporate Management asserted that defendants
“falsified their claims by engaging in a number of practices including fraudulent
cost reporting, inflating supply costs, manipulating the swing bed status of the
hospitals controlled by [the management company] . . . , and improperly waiving copayments and deductibles[,]” whereas the latter complaint set out that defendants
“abused the special Medicare rules for Critical Access Hospitals by improperly
claiming expenses for the [defendant’s] excessive and unwarranted compensation
for work not performed and for [defendant’s] personal luxury automobiles . . . .”
Corp. Mgmt., Inc., 78 F.4th at 743 (quotations omitted). The Fifth Circuit found that
the different factual underpinnings of these claims were too dissimilar to allow
relation back. Id.
That is not the case here. Unlike in Corporate Management, the core
allegations that Marlow through various corporate entities caused TGH to submit
false Medicare cost reports based on management contracts appears in Relators’

32

Proposed First Amended Complaint [107-1], [107-2], their First Amended
Complaint [158], and the Second Amended Complaint [228]. Compare 2d Am.
Compl. [228] at 25-34, with Proposed 1st Am. Compl. [107-2] at 5-7, 13-15, and 1st
Am. Compl. [158] at 35-38, 44-45. All these pleadings focus their allegations on
Marlow causing TGH to enter into management contracts and causing TGH to
improperly include their costs in its Medicare cost reports. See 2d Am. Compl. [228]
at 25-34; 1st Am. Compl. [158] at 35-38, 44-45; Proposed 1st Am. Compl. [107-2] at
5-7, 13-15.
In addition, even though the Sunflower Management contract mentioned in
the Proposed First Amended Complaint [107-1], [107-2], and First Amended
Complaint [158] is a separate contract, its similarity to the Sunflower RCM contract
in the Second Amended Complaint [228] in both creation and operation was such
that this was sufficient to plead that the transactions or occurrences were closely
related enough to allow relation back under Rule 15(c)(2). Marlow essentially relies
on Corporate Management to assert that two contracts cannot encompass the same
transaction or occurrence. Reply [400] at 12-15 (citing Corp. Mgmt., Inc., 78 F.4th at
742 (discussing Miller, 608 F.3d at 882)). However, Miller is easily distinguishable
from this case; the two contracts here were entered into on the same day, and both
involved management work at TGH. 2d Am. Compl. [228] at 25-29. Additionally,
both contracts operated on the same fractional fee model upon which Relators
ground their FCA allegations. Id.

33

In Miller, the relevant contracts were entered into in different years, involved
different bidders in an alleged bid-rigging process, and related to completely
different projects. See Miller, 608 F.3d 871, 881 (D.C. Cir. 2010). Miller highlighted
the important differences of each contract in reaching its conclusions. See id. (“In
this case, all three contracts are similar only in that each was funded by the USAID
and required work related to sewer systems in Egypt.”). As such, Miller’s conclusion
that “because each contract is unique and no two involved the same ‘conduct,
transaction[ ], or occurrence[ ]’” was specific to the facts of that case and is easily
distinguishable from this case. See id. at 881-82 (alteration in original). Marlow
only cites the foregoing excerpt from Miller, but a review of the entire sentence
supports the court’s holding in that case. See id. (“Allegations concerning Contract
20A do not fairly encompass Contracts 07 or 29 because each contract is unique and
no two involved the same “conduct, transaction[ ], or occurrence[ ].”) (alteration in
original). It is clear that Miller was speaking specifically to those contracts, and not
stating a general rule that different contracts can never involve the same “conduct,
transaction, or occurrence.” Fed. R. Civ. P. 15(c)(1)(B).
In sum, the Proposed First Amended Complaint [107-1], [107-2] and First
Amended Complaint [158] would have allowed for relation back under Rule
15(c)(1)(B) but for the stay. As such, Relators’ first Motion [107] for Leave filed on
October 18, 2018, also tolled the six-year statute of limitations as to the TGH claims
against Marlow, and Relators may bring claims against Marlow based on Medicare
cost reports submitted by TGH after October 18, 2012. A partial summary judgment

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dismissing Relators’ TGH claims against Marlow based on Medicare cost reports
submitted before October 18, 2012, is warranted.
III. CONCLUSION
To the extent the Court has not addressed any of the parties’ remaining
arguments, 6 it has considered them and determined that they would not alter the
result. Defendant Billy Marlow’s Motion [356] for Partial Summary Judgment
should be granted in part and denied in part.
IT IS, THEREFORE, ORDERED AND ADJUDGED that, Defendant Billy
Nerren Marlow, Jr.’s Motion [356] for Partial Summary Judgment is GRANTED
IN PART and DENIED IN PART, and all claims against Defendant Billy Nerren
Malow, Jr. asserted by Relators based on Medicare cost reports for Tallahatchie
General Hospital and North Sunflower Medical Center submitted for payment
before October 28, 2012, are DISMISSED WITH PREJUDICE as time-barred.
SO ORDERED AND ADJUDGED, this the 21st day of December, 2023.

s/Halil Suleyman Ozerden

HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE

Additionally, to the extent Marlow may argue that he did not have notice of this lawsuit until he
was named as Defendant upon the filing of the First Amended Complaint [158] on July 2, 2021, the
Court highlights that in an exhibit to Blackwood and Sunflower Holding’s Motion [333] to Strike
Robert F. Church’s Expert Testimony, which Marlow has joined, see Joinder [351], Blackwood
declares that TGH and Sunflower Holding ended its engagement with Robert F. Church when it
discovered he was an expert witness in this case in the fall of 2018, Blackwood Decl. [333-3] at 2-3.
Based on this assertion and Marlow’s involvement with other current and former defendants, it
strains credulity to believe Marlow had no notice of the ongoing litigation against TGH before or at
the time of the filing of the 2018 Motion [107] for Leave, especially where Marlow was a “coprincipal/owner” of Sunflower Holding at the time. Joinder [351] at 1.
6

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