McCune v. United States Department of Justice et al

Filing 359

ORDER granting 313 Motion for Summary Judgment; denying 317 Motion for Partial Summary Judgment Signed by Honorable David C. Bramlette, III on 2/5/2014 (ECW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
FRANK B. MCCUNE, JR.

PLAINTIFF

VS.

CIVIL ACTION NO. 3:11-cv-423(DCB)(MTP)

UNITED STATES DEPARTMENT OF JUSTICE and
OFFICE OF UNITED STATES ATTORNEY GENERAL,
SOUTHERN DISTRICT OF MISSISSIPPI

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This cause is before the Court on the Motion for Summary
Judgment (docket entry 313) filed by the defendants United States
Department of Justice and Office of the United States Attorney
General

for

the

Southern

District

of

Mississippi

(hereafter

collectively referred to as “the DOJ” in the singular); and the
plaintiff Frank B. McCune, Jr. (“Dr. McCune”)’s Motion for Partial
Summary Judgment (docket entry 317).

Having carefully considered

the motions and responses, the memoranda of the parties and the
applicable law, and being fully advised in the premises, the Court
finds as follows:
Dr.

McCune

filed

the

instant

action

alleging

four

(4)

violations of the Right to Financial Privacy Act for failure to
provide notice of disclosure of financial records under 12 U.S.C.
§ 3417.

The DOJ submits that it is entitled to summary judgment as

there is no genuine issue of material fact, and it is entitled to
judgment as a matter of law.

Specifically, the DOJ contends that

Dr. McCune’s claims are barred by the three (3) year statute of

limitations.

In the alternative, the DOJ contends that it is

entitled to partial summary judgment: First, as to two (2) of the
four (4) subpoenas at issue, the DOJ asserts that Dr. McCune cannot
establish

that

his

personal

bank

records

were

produced

or

disclosed; Second, the DOJ asserts that it is entitled to partial
summary judgment on any claims for actual damages because Dr.
McCune cannot establish a causal connection.

Finally, the DOJ

asserts that it is entitled to partial summary judgment on any
claim for punitive damages because Dr. McCune cannot establish
willfulness.
Dr. Frank McCune owned and operated several health care
businesses in the 1980’s and 1990’s. Among the businesses he owned
were two home health agencies. Both agencies had separate Medicare
provider numbers under the name “Serve-U Home Health” (“Serve-U”),
although the Jackson location operated under the name “Domicile,
Inc.” (“Domicile”), and the Natchez location operated under the
name “Serve-U-Home Health Out-Patient and Rehabilitation Services,
Inc.” (“Serve-U Rehab”).

Both Serve-U Rehab and Domicile were

managed by Neo-Ventures Enterprises, Inc. (“Neo-Ventures”), another
company owned by Dr. McCune.

Neo-Ventures represented the home

office of these home health agencies.
Dr. McCune’s wife, Ellen McCune, also worked with these
businesses.

She signed the cost reports for the Medicare entities

and the Neo-Ventures home office.

2

She was also the fiduciary for

the companies’ pension plan.
Based on complaints, Dr. McCune and his businesses came under
investigation in the late 1990’s.

One of the investigations, a

criminal investigation by the Department of Health and Human
Services Office of Inspector General (“HHS”), led to Dr. McCune’s
indictment.
On December 15, 1997, HHS received a complaint or tip from an
informant regarding allegations of home health agency fraud by Dr.
McCune, Ellen McCune, and their businesses, Neo Ventures and ServeU, which consisted of Serve-U Rehab and Domicile (hereinafter
collectively referred to as “the McCunes”). Melear Decl. ¶ 2, Def.
Ex. A.
The informant made a number of allegations, including: (1) the
McCunes improperly received reimbursement from Medicare for a
Department of Labor (“DOL”) fine that was levied against Serve-U;
(2) the McCunes improperly received reimbursement from Medicare in
the sum of $275,000 for a computer system that was never purchased
by Serve-U; (3) employees were not receiving contributions to their
pension plans; (4) the McCunes improperly received reimbursement
from Medicare for trips to Aruba and Hawaii for the McCunes’
employees and Dr. McCune’s family members.

Id.

When HHS received

the complaint, it did not have an office in Jackson, Mississippi.
Melear Dep. 199:19-22, Def. Ex. B.

The complaint was forwarded to

the fiscal intermediary, which was Palmetto Government Benefits

3

Administrators (“Palmetto GBA”), for investigation, and the case
was closed with HHS.

Id.

In the early part of 1998, HHS opened an office in Jackson,
Mississippi.

Melear Dep. 200:3-7.

Special Agent Lynn Townsend

(now Lynn Melear) was hired to investigate health care fraud
involving federal government benefits. Melear Decl. ¶ 1. The case
involving the McCunes was one of the cases Special Agent Melear
received.

Id.

On or about July 9, 1998, Melear contacted Lori Dion with
Palmetto GBA to discuss the allegations of cost report fraud1 by
the McCunes.

Id. at ¶ 3.

Ms. Dion, an auditor, noted that no

field audit of Serve-U had been conducted since 1989.

Id.

She

also noted that a desk audit of 1997 cost reports was scheduled for
fiscal year (FY) 1999, which started July 1, 1998, and went through
June 30, 1999.

Id.

Melear also discussed some of the allegations

against the McCunes and the circumstances under which costs are
allowable.

Id.

Melear reopened HHS’s case on the McCunes on or

about August 24, 1998, and began an investigation of the matter.
Id. at ¶ 4.

She interviewed a number of individuals over the

course of the next several years, including Dr. and Mrs. McCune.

1

For a period of time, Home Health Agencies were reimbursed
for expenses incurred that were connected with the care provided
Medicare beneficiaries, based on the costs submitted on a
document known as a “cost report.” Medicare reimbursed Home
Health Agencies at 100% of reimbursable expenses claimed on the
cost report. As discussed below, the method of paying home
health agencies changed after the Balanced Budget Act of 1997.
4

As

discussed

below,

the

investigation

indictment of Dr. and Mrs. McCune.

Id.

culminated

in

an

The Office of the United

States Attorney for the Southern District of Mississippi (“USAO”)
also issued a number of subpoenas pursuant to its authority under
18 U.S.C. § 3486, which authorizes the issuance of administrative
subpoenas to investigate, inter alia, federal health care offenses.
The record indicates that the USAO issued subpoenas to Union
Planters Bank, Industrial Employees Credit Union (now Members
Exchange Credit Union (“MECU”)), and Merchant and Farmers Bank
(“M&F”) on January 25, 1999, for financial records belonging to Dr.
McCune, Mrs. McCune, Serve-U, Neo-Ventures and Domicile.

Union

Planters Subpoena, Def. Ex. C; MECU Subpoena, Def. Ex. D; M&F
Subpoena, Def. Ex. E.

On the same day, the USAO issued a subpoena

to

among

Mrs.

McCune

for,

other

things,

banking

statements,

American Express statements, and gas credit card statements for the
Serve-U home health agencies and Neo-Ventures.
Subpoena, Def. Ex. F.

Ellen McCune

Also, on June 23, 1999, the USAO issued a

subpoena to a travel agency for travel documents related to the
McCunes.

Travel Subpoena, Def. Ex. G.

In November of 2001, the USAO also drafted a subpoena dated
November 7, 2001, to Dr. Frank McCune as the custodian of records
for Neo-Ventures and Serve-U as well as American Express Financial
Services (now Ameriprise). Ameriprise Subpoena, Def. Ex. H. There
is no indication as to whether these subpoenas were actually

5

served. The subpoena that was drafted for Ameriprise requested any
and all documentation related to any accounts owned directly or
indirectly by, among others, Dr. McCune and Neo-Ventures, Inc.
As

previously

mentioned,

HHS

forwarded

the

complaint

it

received in December of 1997 to the fiscal intermediary, Palmetto
GBA.

The complaint would have come through Palmetto GBA’s fraud/

integrity unit to the Audit Division, which was supervised by Lori
Dion for investigation.2 Dion Decl. ¶ 2, Def. Ex. I.
On June 16, 1998, within six months of the referral to
Palmetto GBA, Palmetto GBA selected Serve-U Rehab and Domicile for
desk reviews of their respective FY 1997 cost reports.
at ¶ 3.

Dion Decl.

Palmetto GBA requested information from the McCunes

related to the companies’ accruals including the pension plan. Id.
The items requested with respect to the focused desk review
were all items that would be requested in any focused desk review,
except that the review of Serve-U Rehab also requested information
related to leases.
1999.

Id.

Id.

The focused reviews concluded on June 28,

These reviews resulted in a notice of overpayment of

$291,706 with respect to Serve-U Rehab, and $825,052 with respect

2

With respect to Palmetto GBA and its work, they were only
concerned with the two home health agencies, Serve-U Rehab and
Domicile, and their home office, Neo-Ventures. Both of the home
health agencies had their own Medicare provider numbers.
Domicile’s Medicare provider number was 25-7130, and Serve-U
Rehab’s Medicare provider number was 25-7310. The home office
Neo-Ventures also submitted a cost report, and was subject to
audit.
6

to Domicile.

Id.

The reviews found that there were unsupported

accrued expenses including vacation, mileage and pension as well as
unsupported professional fees.

Id.

The McCunes were notified of the results of the focused
reviews on December 29, 1999, in two separate letters, one for each
institution.

Id.

The home office also was selected for a full

desk review on July 13, 1998, for review of its FY 1997 cost
report.

Dion Decl. ¶ 4.

The review of the home office lasted

until July 8, 1999, and was followed by a full audit from July 12,
1999, to July 30, 1999.

Id.

Serve-U Rehab and Domicile were also

selected for desk review on December 18, 1998, for a review of
their respective FY 1998 cost reports.

Dion Decl. ¶ 5.

reviews were completed on May 30, 2000.

Id.

These

The review of

Domicile resulted in an overpayment of $427,386, and the review of
Serve-U Rehab resulted in an overpayment of $21,083.

Id.

The

McCunes were notified of these overpayments in separate letters
dated September 30, 2000.

Id.

Lori Dion unequivocally testified that she did not consider
Dr. McCune’s personal financial records in any of the audits and
desk reviews conducted by her division and under her supervision.
Dion Dep. 126:9-128:3, Def. Ex. U. She testified that “[t]here was
no need, in the course of the Medicare audit, to review personal
banking records.”

Id. at 128:2-3.

The DOL’s Employee Benefits Security Administration (“EBSA”)

7

is charged with assuring the security of the retirement, health and
other workplace-related benefits of employees.
1, Def. Ex. J.
criminal

McConnell Decl. ¶

Among other things, the EBSA conducts civil and

investigations

regarding

employee

benefits

plans,

including matters related to compliance issues and fraudulent
activity.

Id.

In July of 1998, EBSA began receiving complaints about the
handling

of

the

Neo-Ventures’

Employee

Pension

Plan,

and

by

February 24, 1999, EBSA had received six complaints from employees.
McConnell Decl. ¶ 2.

In July of 1998, an employee reported that

the company was having financial difficulty and that there was no
distribution.

Id.

In December of 1998, an employee reported that

he or she was terminated in 1996 and still had not received his or
her distribution.

Id.

In January of 1999, three

employees

complained to ESBA: each had not received distributions he or she
was due and reported other irregularities — one employee having
completed the distribution paperwork in July 1997, and another in
July 1998.

Id.

On February 24, 1999, another employee reported

that he or she did not receive his or her distribution despite
having completed his or her paperwork in July of 1998.

Id.

Based

on these complaints,3 EBSA opened a civil investigation into the

3

EBSA received one additional complaint on March 10, 1999,
in which an employee indicated he or she had received statements
for the last two quarters and had serious questions or concerns
about them. McConnell Decl. ¶ 2. In addition to the complaints
regarding the pension plan, ESBA also received complaints about
8

Neo-Ventures employee benefits plan.
assigned the case.
26, 1999.

Id. at ¶ 3.

Auditor Niki McConnell was

She opened her case on February

Id.

Auditor McConnell conducted her investigation on several
issues related to the Neo-Ventures pension plan.

One of the key

issues the investigation covered was whether Neo-Ventures was
contributing monies it had received from Medicare for contribution
to the Neo-Ventures employees’ pension plan.4

McConnell Decl. ¶ 4.

For FY 1996, 1997, and 1998, Neo-Ventures, because it was the
parent or managing company of the Medicare entities Serve-U Home
Health and Domicile, received reimbursement from Medicare for
contributions that it claimed it was making to its employees’
pension plans.

Id. at ¶ 5.

Neo-Ventures claimed the pension plan

contributions as expenses on its home office cost reports.

Id.

Medicare

the

regulations

required

that

the

company

pay

contributions into the employees’ pension plans within one year of
the end of the fiscal year.
done

so.

requesting

Auditor
and/or

Id.

McConnell

The McCunes admittedly had not

conducted

subpoenaing

a

her

number

investigation

of

documents

by
and

cessation of Neo-Ventures’ health care plan in February of 1999
despite the fact that the employees’ contributions to the plan
were still deducted from their paychecks. Id.
4

The investigation also determined that the pension plan
failed to timely pay distributions, unreasonably withheld
“surrender fees” from the distribution, failed to apply the
vesting schedule properly, and failed to maintain a fidelity
bond.
9

interviewing a number of witnesses, including Mrs. McCune who was
the pension plan trustee.

McConnell Decl. ¶ 6.

also a fiduciary of the pension plan.

Id.

Dr. McCune was
McConnell also

consulted with Special Agent Melear regarding how home health
agencies and cost reports worked.
Ex. K.

McConnell Dep. 31:16-32:6, Def.

McConnell received and considered for her investigation

statements related to the pension plan, cost report information,
and other documentary evidence.

McConnell Decl. ¶ 6.

McConnell

did not receive or consider in her investigation Dr. McCune’s
personal financial records.

McConnell Dep. 43:8-12, 53:19-24,

55:8-11; McConnell Decl. ¶ 6.
The investigation revealed that Medicare allotted $705,053 in
Medicare funds for the pension plan for FY 1996, but the McCunes
only paid $100,000 of that money into the pension plan because of
cash flow problems.
allotted

$229,095

McConnell Decl. ¶ 7.
and

$220,866

respectively, for the pension plan.

for

FY

In addition, Medicare
1997

and

Id. at ¶¶ 8-9.

FY

1998,

The McCunes

paid none of these funds into the pension plan. Id. Consequently,
at the conclusion of the investigation, the pension plan was due a
total of $1,055,014.

Id. at ¶ 10.

The investigation concluded

that instead of contributing this amount to the pension plan, the
monies were used for day-to-day business operations such as payroll
and expenses.

Id. at ¶ 11.

As noted in a letter sent to Ellen

McCune, the investigation concluded that the McCunes were in

10

violation of the fiduciary provisions of ERISA.

Id. at ¶ 12.

Auditor McConnell testified that EBSA took no civil action
against the McCunes. Because the monies had not actually been paid
to the plan as required by Medicare, they were not plan assets, and
there was no civil remedy where there were no plan assets involved.
McConnell Dep. 29:3-30:12; 63:16-24.

However, EBSA did inform the

McCunes, in a letter written to Ellen McCune, that EBSA was
authorized to forward the results of the investigation to any other
government agency that was authorized to take corrective action.
McConnell Decl. ¶ 12.

In addition, EBSA informed the McCunes that

although EBSA chose not to bring legal action at that time, it
could review its decision at a later date.

Id.

Auditor McConnell

closed her civil investigation on August 13, 2001.

Id. at ¶ 13.

At some point after her civil investigation was closed,
Auditor McConnell was asked to join the investigation by HHS and/or
the USAO.

McConnell Dep. 24:15-25:13; McConnell Decl. ¶ 14.

Consequently, Auditor McConnell opened a criminal matter on Frank
and Ellen McCune on February 4, 2002.

McConnell Decl. ¶ 14.

By

that date, Neo-Ventures and the other McCune health care businesses
had ceased operation.
2003.

The criminal matter was closed on June 11,

Id.
The investigation’s prosecutive summary was presented to the

USAO in 2002, and the USAO opened a matter on Neo-Ventures, Dr.
McCune and Mrs. McCune in July of 2002.

11

Dowdy Dep. 20:10-21, Ex.

L.

The prosecutive summary was prepared by Lynn Melear with the

assistance of DOL Auditor McConnell (as to the pension plan issues)
and Auditor Lori Dion (as to the cost report issues).
63:8-64:5.

Melear Dep.

The prosecutive summary was attached to a memo written

by AUSA Anderson and submitted as a part of the Indictment Review
Committee (IRC) Memo.

IRC Memo, Ex. M.

The prosecutive summary set forth the evidence that could
support an indictment for conspiracy to commit health care fraud,
embezzlement from a health care program, and false statements
relating to a health care program.

IRC Memo.

The embezzlement

charge involved a claim by the government that Medicare paid three
McCune

businesses

(Neo

Ventures,

Serve-U

Rehab

and

Domicile)

$649,069 in reimbursements that the McCunes claimed were paid to
the pension fund of these companies for FY 1996 and 1997, when in
fact the McCunes only paid $100,000 into the pension funds.

Id.

The prosecutive report indicated that Medicare was owed $549,069.
Id.

The false statements charge related to reimbursement for

expenses claimed on the cost reports for the pension fund and
travel expenses as well as the failure to disclose a related party
(HSDI, another company owned by Dr. McCune).

Id.

The prosecutive

summary contains a detailed list of exhibits used to support the
findings of the investigation and charges. Anderson Dep. 33:19-25,
Ex. N; IRC Memo.

Dr. McCune’s personal banking records were not

used to support the findings of the investigation or the proposed

12

charges.

Anderson Dep. 39:1-40:5, 80:12-18; IRC Memo.

On or about November 20, 2002, the grand jury issued its
indictment.

Indictment, Ex. O.

The grand jury indicted Dr. and

Mrs. McCune on one (1) count of conspiracy to commit health care
fraud, six (6) counts of making false statements related to
submission of their cost reports for FY 1997 and FY 1998, and one
(1) count of embezzlement related to the failure to pay the pension
funds reimbursed by Medicare into the pension plan. Id. There was
also one (1) count of forfeiture.

Id.

The indictment does not

mention Dr. McCune’s personal bank records or finances, and the
charges therein were not based on Dr. McCune’s personal bank
records or finances.

Anderson Dep. 45:13-49:9, 79:1-20, 80:19-25;

Melear Dep. 71:6-72:20, 117:12-118:12; Indictment.
On

or

about

January

superseding indictment.

22,

2003,

the

grand

jury

Superseding Indictment, Ex. P.

issued

a

None of

the substantive counts of the indictment were materially changed.
Anderson Dep. 62:25-63:18; Superseding Indictment.

However, the

superseding indictment listed substitute assets in the general
forfeiture count.

Id.

The substitute assets consisted of, among

other things, one (1) certificate of deposit (“CD”) belonging to
Dr. McCune at Merchant & Farmers Bank, and two (2) CDs belonging to
Dr. McCune at Members Exchange.

Id.

Dr. McCune testified that he

would have been aware of the substitute assets mentioned in the
superseding indictment.

McCune Dep. (Vol. II) 109:6-112:9, Ex. Q.

13

See also Anderson Dep. 63:19-64:24.

He also testified that he was

aware of a newspaper article that detailed the listing of his bank
account information from the superseding indictment.

McCune Dep.

(Vol. I) 74:19-75:3, Ex. R.
At the trial of the matter, there were no exhibits introduced
that

pertained

to

Dr.

McCune’s

personal

financial

records.

Anderson Dep. 138:25-139:15; Gov’t Ex. List, Ex. S. Dr. McCune has
pointed to no testimony at trail regarding his personal financial
records.
According to notice provided to Palmetto GBA, Serve-U Rehab
ceased operation as a home health agency on July 20, 1999, and
Domicile ceased operation as a home health agency on April 1, 2000.
Dion Decl. ¶ 6.

Notably, Serve-U Rehab closed before the McCunes

were notified of the results of any of the audits or desk reviews
as those notices did not occur until December 1999.

The two

entities also ceased operation well before the November 2002
indictment.
website,

According to the Mississippi Secretary of State’s

Serve-U

Rehab,

Domicile

and

Neo-Ventures

were

all

administratively dissolved on December 28, 2001. See Serve-U Rehab
filings, https://business.sos.state.ms.us/corp/soskb/Filings.asp?
142395; Domicile filings, https:// business. sos. state. ms. us/
corp/soskb/Filings.asp?317853;

Neo-Ventures

filings,

https://

business.sos.state.ms.us/corp/soskb/Filings.asp?169576.
According to Dr. McCune, between 87 % to 95 % of the business

14

that Domicile and Serve-U Rehab did came from Medicare.

McCune

Dep. (Vol. I) 35:25-36:10.
In 1997, Congress passed the Balanced Budget Act of 1997 (the
“BBA”), which implemented the Interim Payment System (“IPS”).

The

United States District Court for the Northern District of Texas set
forth the crux of the IPS:
Medicare has traditionally reimbursed HHAs pursuant to a
reasonable cost system which mandated that the HHAs be
reimbursed
for
services
rendered
to
Medicare
beneficiaries in accordance with the reasonable costs
that they incurred, with the reasonable costs capped by
a predetermined maximum limit. However, in an effort to
control costs and reduce fraud and abuse in the home
health care system, Congress modified the traditional
reasonable cost reimbursement method in the BBA. Pub.L.
No. 105–33, §§ 4602 & 4603.
Congress directed that,
effective October 1, 1999, and not later than October 1,
2003, HHAs be paid under a Prospective Payment System
(“PPS”) similar to the one utilized for other Medicare
providers such as hospitals.
Pub.L. No. 105–33, §
4603(a), codified at 42 U.S.C. § 1395ff(a),(b). Until
that system can be implemented, Congress required HCFA to
implement an Interim Payment System (“IPS”). Id., § 4602
codified at 42 U.S.C. § 1395x(v)(1)(L).
Congress
intended that, in many cases, HHA’s total annual payments
under the IPS for treating the same number of
beneficiaries as they had before the BBA would be lower
than before Congress passed the BBA.
Under the IPS, HHAs are to be paid for cost reporting
periods beginning on or after October 1, 1997, based on
the lowest of three calculations:
1) The HHAs actual reasonable allowable costs;
2) A revised aggregate per-visit limit not to
exceed 105% of the median per-visit costs;
3) A new aggregate per-beneficiary limit.
42 U.S.C. § 1395x(v)(1)(L).

15

Greater Dallas Home Health Care Alliance v. United States, 36
F.Supp.2d 765, 766-67 (N.D. Tex. 1999).
Dr. McCune testified that the IPS negatively impacted his
business, describing it as “some sort of sequestration.”
Dep. (Vol. 1) 52:3-20.

McCune

Dr. McCune agreed with his attorney’s

statements during the criminal trial that Dr. McCune’s businesses
were paying $64 to take care of a patient and Medicare was only
reimbursing him $55.

McCune Dep. (Vol. II) 44:4-45:13.

In her deposition, Lori Dion recollected the BBA had such a
severe impact on many home health businesses that they closed or
filed for bankruptcy.

Dion Dep. 146:10-18.

In fact, Palmetto GBA

records demonstrate that from 1997 to 1999, the McCune businesses
had several rate adjustments that resulted in at least $160,000 in
overpayments.

Dion Decl. ¶ 8.

Lori Dion’s audit department had

nothing to do with setting the rates of any Medicare entity,
including the McCune businesses.

Id.

In addition to the overpayments caused by the interim rate,
the McCune businesses also had overpayments resulting from Medical
reviews.

Serve-U Rehab underwent an intensive medical review in

February of 1999.

Id. at ¶ 9.

The medical review was conducted

after Serve-U Rehab rejected a consent settlement offer made to it
on October 8, 1998.

Id.

The medical review of randomly selected

claims led to a determination that Serve-U Rehab submitted claims
for services that were not reasonable and necessary, resulting in

16

an overpayment of $417,704.00.

Id.

this overpayment in December 1999.

The McCunes were notified of
Id.

Also, in March of 1999, Domicile underwent an intense medical
review because its billing data demonstrated that it may be billing
inappropriately for services.

Dion Decl. ¶ 10.

This medical

review resulted in a determination that some services submitted
were not reasonable and necessary, resulting in an overpayment of
$239,067.97. Id. The McCunes were notified of this overpayment in
December of 1999.

Id.

In 1996, Congress passed the Health Insurance Portability and
Accountability Act (“HIPAA”), in part to “combat waste, fraud and
abuse in health insurance.”

PL 104-191 (HR 3103)(Aug. 21, 1996).

HIPAA granted the Department of Justice the authority to issue
administrative subpoenas to investigate health care fraud criminal
cases, 18 U.S.C. § 3486.
The subpoenas that were issued in this case in January of 1999
were issued in the course of a criminal investigation into health
care fraud.

Special Agent Melear testified that in fraud or white

collar crime cases, including health care fraud, it is typical to
issue a subpoena for financial records.

Melear Dep. 149:10-24.

AUSA Anderson testified that during the time in question, he
did not believe that the Right to Financial Privacy Act applied to
subpoenas issue under § 3486.
Melear Dep. 97:25-99-2.

Anderson Dep. 15:18-16:1.

See also

In fact, in 2009, during a review of

17

administrative subpoenas issued under § 3486, it could not be
determined if notice was issued in any of those cases.
75:21-77:10.

Dowdy Dep.

There were approximately twenty-three (23) subpoenas

issued for the financial records of an individual during an eleven
(11) year period in a number of cases, including the case involving
Dr. McCune. Dowdy Dep. 119:14-120:23. All of these subpoenas were
issued in the same manner.
any way differently.

Dr. McCune’s case was not treated in

Dowdy Dep. 127:19-128:1.

Thus, in 2009, the

USAO determined that it would send a letter to each individual for
which such a subpoena was issued.

The letter stated that it did

not appear that notice was provided to them, but if notice was
provided, the USAO asked that the individual provide a copy of such
notice.

The letter also advised the individual of his/her rights

under the Right to Financial Privacy Act.

See letters at Def. Ex.

T (redacted by the defendant to protect the privacy of individuals
not involved in this lawsuit).
On October 27, 2011, the plaintiff filed his Second Amended
Complaint (“Complaint”).

The Complaint asserts claims pursuant to

the Right to Financial Privacy Act for (1) failure to provide
notice of the issuance of subpoenas as required by Title 12, United
States Code, Section 3405 (Complaint, ¶ 19); and (2) failing to
provide certification as required by Title 12, United States Code,
Section 3403(b) (Complaint, ¶ 31).
claims

against

the

financial

The Complaint also contains

institutions,

18

which

have

been

dismissed from this action by agreement of the parties.
The defendant moves for summary judgment on several grounds.
Federal Rule of Civil Procedure 56 provides that summary judgment
should issue where there is no genuine dispute of a material fact,
and the moving party is entitled to judgment as a matter of law.
McGarry v. University of Mississippi Medical Center, 2008 WL
3822447, at *2 (S.D. Miss. Aug. 12, 2008).

The Court follows the

standard set forth in Fed.R.Civ.P. 56(c), as interpreted by the
United States Supreme Court:
[A] party seeking summary judgment always bears the
initial responsibility of informing the district court of
the basis of its motion, and identifying those portions
of
the
pleadings,
depositions,
answers
to
interrogatories, and admissions on file, together with
the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

After the

moving party has met this initial burden, “[t]he evidence of the
non-movant is to be believed, and all justifiable inferences are to
be drawn in his favor.”
242, 255 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S.

Fed.R.Civ.P. 56(e), however, does not permit the

nonmoving party to avoid summary judgment by resting on the
pleadings, but “requires the nonmoving party to go beyond the
pleadings and by [his] own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial.”
Celotex, 477 U.S. at 324.

Moreover, the mere existence of a

19

scintilla of evidence in support of the non-movant’s position is
insufficient; there must be evidence on which the jury could
reasonable find for the non-movant.

Anderson, 477 U.S. at 251-52.

The defendant’s first ground for summary judgment is that the
statute of limitations has run on any claim Dr. McCune would have
under the Right to Financial Privacy Act (“RFPA”).

The defendant

asserts that Dr. McCune was aware at least by January of 2003 that
the DOJ had access to his personal financial records.

He was

required to bring any action he had under the RFPA before January
of 2006, but this action was not filed until July 13, 2011.
Any action under the RFPA must be filed “within three years
from the date on which the violation occurs or the date of
discovery of such violation, whichever is later.”
3416.

12 U.S.C. §

“The date of discovery is not the date when plaintiff

realizes he has a legal cause of action; rather, it is the date on
which plaintiff becomes aware of the alleged injury.”

Giannone v.

Bank of America, 812 F.Supp.2d 216, 220-21 (E.D. N.Y. 2011)(citing
United States v. Kubrick, 444 U.S. 111, 122 (1979)).

Because the

RFPA represents a limited waiver of the United States’ sovereign
immunity, the statute of limitations contained therein must be
“scrupulously followed.”

Raikos v. Bloomfield State Bank, 703 F.

Supp. 1365, 1367 (S.D. Ind. 1989).
burden

to

establish

the

facts

Also, it is the plaintiff’s

supporting

jurisdictional facts by competent proof.

20

the

allegation

Id. at 1368.

of

In Giannone, the United States Secret Service had obtained the
relevant financial information from the plaintiff’s financial
institution in 2005, but the plaintiff did not file suit until
2010.

812 F.Supp.2d at 221.

The court found that the plaintiff

was barred by the statute of limitations from bringing a claim
under the RFPA.

Id.

The plaintiff argued that he did not become

aware of the inappropriate contact between the Secret Service and
his bank until he received a letter informing him of the call
between his bank and a Secret Service agent.

Id.

The court,

however, determined that the plaintiff was aware of the facts
surrounding the violation earlier when the Secret Service Agent
testified that he learned of the plaintiff’s name from the bank
during a phone call.

Id.

The court found that “[f]or purposes of

the statute of limitations, plaintiff was aware of the allegedly
illicit

exchange

of

information

after

this

testimony,

when

considering the testimony in combination with other information
that plaintiff was already made aware of during the course of the
criminal prosecution.”

Id. at 221-222.

The court in Raikos reached a similar conclusion, rejecting
the plaintiff’s argument that he did not learn of the violation of
the RFPA until February 1985.

703 F.Supp. at 1368.

The court

found that the plaintiff’s earlier sworn testimony indicated that
he had learned of the informal disclosure of bank information
during the criminal discovery process.

21

Id.

The court therefore

found that the plaintiff had discovered the violation seven (7)
years before he actually filed his suit, and his action was timebarred.

Id.

The DOJ urges the Court to reach the same result in this case,
and in support shows the following: Special Agent Melear states
that she copied any bank records obtained for production to the
defense during the criminal prosecution.

Melear Dep. 95:16-96:1.

In addition, the grand jury issued a superseding indictment listing
Dr. McCune’s bank account information in January of 2003.

Thus,

Dr. McCune knew that the DOJ had gained access to his bank records
by at least January of 2003, and his cause of action is therefore
time-barred.

Def. Memo., p. 18.

In response, the plaintiff points out that “discovery” for
statute of limitations purposes occurs when a plaintiff knows both
(1) that he or she has been injured; and (2) who inflicted the
injury. See Kubrick, 444 U.S. at 122. The Supreme Court reasoned:
That [a plaintiff] has been injured in fact may be
unknown or unknowable until the injury manifests itself;
and the facts about causation may be in the control of
the putative defendant, unavailable to the plaintiff or
at least very difficult to obtain. The prospect is not
so bleak for a plaintiff in possession of the critical
facts that he has been hurt and who has inflicted the
injury. He is no longer at the mercy of the latter.
Id.

Dr. McCune contends that until he “received Assistant U.S.

Attorney Scott Gilbert’s letter dated May 7, 2009, he knew neither
of these critical facts.”

Pl. Memo., p. 3.

Although the DOJ alleges that Special Agent Melear provided
22

copies of “any bank records obtained” during Dr. McCune’s criminal
prosecution, and that the superseding grand jury indictment listed
his bank account information, Dr. McCune insists that neither of
these allegations establishes that he knew the DOJ obtained his
personal financial information illegally.

Id.

The plaintiff also

contends that his
personal financial information could conceivably have
been obtained by DOJ legally during the secret grand jury
proceedings, without Dr. McCune’s knowledge, instead of
several
years/months
earlier
by
DOJ’s
illegal
administrative subpoenas. Because Dr. McCune’s personal
information could have been disclosed during the secret
grand jury proceedings, and the only two facts alleged by
DOJ refer to post-grand jury events, DOJ has alleged
nothing that supports summary judgment based on the RFPA
statute of limitations. In the alternative, and at a
minimum, there are genuine issues of material facts about
Dr. McCune’s knowledge that preclude summary judgment.
Id. at pp. 3-4.
In rebuttal, the DOJ shows that the plaintiff does not dispute
that he actually knew the DOJ had access to his bank records in
January of 2003.

Def. Rebuttal Memo., p. 2.

The defendant also

points out that “[a]t a minimum, Plaintiff, through reasonable
diligence, could have discovered all of the facts necessary to
proceed on his cause of action in January 2003.”

Id.

The plaintiff does not dispute that the Court must examine
this issue in the context of the United States’ waiver of sovereign
immunity.

Where, as here, the United States has waived its

sovereign immunity and allows suit for monetary damages, the waiver
is limited, and the court must strictly construe it.
23

Raikos, 703

F. Supp. at 1367 (noting that statute of limitations for RFPA must
be

“scrupulously

followed”);

see

also

In

re

FEMA

Trailer

Formaldehyde Prods. Liability Litig., 646 F.3d 185, 191 (5th Cir.
2011)(noting “the jurisdictional nature of the FTCA’s statute of
limitations and the general policy of construing narrowly statutes
that waive sovereign immunity”).
Neither does the plaintiff dispute that he knew the DOJ had
access to his financial records in January of 2003.

Inasmuch as

the “injury” in this case would be disclosure of his financial
records, the plaintiff knew of the injury.

Although it is not

clear from his response, the plaintiff may be contending that his
injury would be the closing of his business and his criminal trial.
However, that would not be the injury.

The RFPA protects only

against disclosure of financial records.

It is not a guarantor of

one’s business or protection from prosecution.

Thus, at most, the

alleged closing of his business and criminal trial would be
damages, not the injury protected by the RFPA.
The plaintiff also knew, or at the very least, through
reasonable diligence, should have known, of the cause of his
injury. Dr. McCune attempts to avoid the statute of limitations by
arguing that (1) the discovery rule does not apply in his case, and
(2) even if it does apply, a reasonably diligent plaintiff would
not have discovered the violations prior to May of 2009.
First, the plaintiff attempts to avoid his obligation under

24

the discovery rule by invoking Merck & Co., Inc. v. Reynolds, 559
U.S. 633 (2010). He contends that Merck stands for the proposition
that he has no obligation to inquire or investigate to determine
whether he has a cause of action once he discovers his injury.
plaintiff’s reliance on Merck is misplaced.

The

First of all, the

Supreme Court stated that its interpretation of the discovery rule
in Merck was limited to the statute of limitations applicable to a
securities fraud action under § 10(b) of the Securities Exchange
Act of 1934.

Id. at 648 (noting that its holding was with respect

to “‘discovery’ as used in this statute”); see also SEC v. Bartek,
484 Fed. Appx. 949, 954-55 (5th Cir. 2012)(noting that Merck is
limited to its context).
argument, Merck

Second, contrary to the plaintiff’s

does not stand for the proposition that the

plaintiff does not need to make reasonable inquiry as a part of due
diligence.

In fact, the Merck Court noted that “[i]n determining

the time at which ‘discovery’ of those ‘facts’ occurred, terms such
as ‘inquiry notice’ and ‘storm warnings’ may be useful to the
extent

that

they

identify

when

facts

would

have

prompted

a

reasonably diligent plaintiff to begin investigating.” 559 U.S. at
653.
In this case, the Court finds that a reasonable person in Dr.
McCune’s position should have inquired into how the government
obtained

his

financial

records

once

he

determined

government in fact had his financial records.

25

that

the

Had the plaintiff

begun that investigation, or made that inquiry, he would have
learned

in

administrative

short

order

that

subpoenas.

the

government

Furthermore,

the

had

issued

plaintiff

was

represented by counsel, and could have easily learned the source of
the bank records with one simple inquiry, or if need be, a motion
before the court. Thus, the plaintiff’s cause of action accrued no
later than January of 2003 (or shortly thereafter) when he received
the Superseding Indictment.
The

plaintiff

argues

that

his

financial

records

could

conceivably have been obtained by grand jury proceedings.

While

this statement is true, it is nevertheless pure supposition and
speculation.

The

fact

that

the

grand

jury

existed

did

not

alleviate the plaintiff of his obligation of diligence. Certainly,
had the plaintiff made the inquiry, the existence of the grand jury
proceedings would not have shielded the use of administrative
subpoenas in obtaining his financial records.

In other words, the

existence of grand jury proceedings would not have prevented the
plaintiff from learning how the government obtained records not
secured through the grand jury process. Furthermore, to the extent
that the plaintiff contends his records were secured through the
grand jury process and used therein, grand jury subpoenas are
exempt from the RFPA.

See 12 U.S.C. § 3413(i).

The plaintiff also contends, without pointing to any specific
facts, that there are genuine issues of material fact as to whether

26

the statute of limitations has run.

However, the plaintiff cannot

simply make a blanket assertion that issues of material facts
exist; he must actually point to those material facts.

He appears

to argue that the DOJ must come forward with affidavits and
evidence demonstrating that no material fact exists as to the
statute of limitations issue.

In this case, however, the statute

of limitations is a jurisdictional prerequisite; therefore, the
plaintiff, who has invoked the jurisdiction of this Court, bears
the burden of establishing that his claim is timely.

See, e.g.,

Ramos v. United States, 112 Fed.Cl. 79, 83 (Fed.Cl. 2013)(“When the
government has asserted that a claim is barred by a jurisdictional
statute of limitations, the plaintiff bears the burden of proving
the timeliness of his suit.”). The plaintiff has put forth nothing
but mere speculation.

He attempts to distinguish Giannone and

Raikos by contending that those cases did not involve grand jury
proceedings;

however,

both

cases

involved

an

indictment,

and

therefore grand jury proceedings.
The undisputed facts show that Dr. McCune had constructive
notice of his claims by January of 2003.

His receipt from the DOJ

of copies of his bank records, and the superseding indictment
listing his bank account information were “red flags” which should
have excited his suspicion and put him on notice of his claims.
Furthermore, as an indicted defendant Dr. McCune had the ability to
use the criminal discovery process to discover certain information

27

surrounding the DOJ’s receipt of his financial records.

At that

time, the plaintiff fully knew of his alleged injury.

He also

should have discovered the factual basis for his cause of action,
inasmuch

as

it

was

capable

reasonable diligence.
with

any

evidence

of

detection

by

the

exercise

of

Because the plaintiff has not come forward

of

an

attempt

to

determine

the

readily-

discoverable details of his claim, his action is barred by the
statute of limitations.
The Court finds that the three-year statute of limitations
under the RFPA bars the plaintiff’s claims.

The Court further

finds that it is unnecessary to reach the defendant’s claim that
the plaintiff cannot establish a causal connection between any
alleged disclosure and the harm he claims, and the defendant’s
claim that the plaintiff is not entitled to punitive damages.

See

Giannone, 812 F.Supp.2d at 228 n.10 (finding it unnecessary to
reach arguments that the complaint was insufficiently pled, and
that the complaint did not allege legally cognizable damages,
because the plaintiff’s claims were barred by the statute of
limitations).

It also follows that the plaintiff’s motion for

summary judgment should be denied.
The Court therefore finds that the defendant’s motion for
summary judgment is well-taken.

Accordingly,

IT IS HEREBY ORDERED that the Motion for Summary Judgment
(docket entry 313) filed by the defendants United States Department

28

of Justice and Office of the United States Attorney General for the
Southern District of Mississippi is GRANTED;
FURTHER ORDERED that the plaintiff Frank B. McCune, Jr.’s
Motion for Partial Summary Judgment (docket entry 317) is DENIED.
A final judgment dismissing all claims with prejudice shall
follow.
SO ORDERED, this the 5th day of February, 2014.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

29