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United States ex rel. Carver v. Physicians' Pain Specialists of Alabama, P.C.

United States District Court, S.D. Alabama, Southern Division

June 26, 2018




         This matter is before the Court on the motion of defendant Castle Medical, LLC (“Castle”) to dismiss the third amended complaint as to Castle. (Doc. 184). The interested parties have filed briefs and evidentiary materials in support of their respective positions, (Docs. 184, 190, 194), and the motion is ripe for resolution. After careful consideration, the Court concludes the motion is due to be granted in part and denied in part.


         The Court set forth much of the relevant background in its order granting Castle's motion for judgment on the pleadings (“JOP”). (Doc. 146). The relator in this False Claims Act (“FCA”) case was employed by defendant Physicians Pain Specialists of Alabama, P.C. (“Pain”). In August 2013, she filed this action against Pain and against the two doctors (“Ruan” and “Couch”) who owned Pain. (Doc. 1). In August 2014, she filed a first amended complaint that added another defendant. (Doc. 8). In October 2016, the government filed its notice of nonintervention. (Doc. 24). The relator then filed a second amended complaint that added four more defendants, including Castle. (Doc. 29). In December 2016, the government gave notice of non-intervention as to this pleading. (Doc. 30).

         Of the eight defendants named in the second amended complaint, only Castle continues the fight. The three defendants added along with Castle were dismissed without prejudice on the relator's unopposed request, and the other defendants have suffered entry of default. (Docs. 93, 99-100, 122-23).

         The second amended complaint alleged nine different schemes against varying sets of defendants, only one of which implicated Castle, on which the relator based three FCA causes of action. The Court granted Castle's motion for JOP because the second amended complaint failed to plead, with the particularity required by Rule 9(b) and Eleventh Circuit precedent, the actual submission of false claims to the government. (Doc. 146). Following dismissal of her claims against Castle, the relator sought leave to file a third amended complaint, which leave the Court granted over objection. (Doc. 175).

         The third amended complaint, (Doc. 178), is, as to Castle, substantially similar to its predecessor. Its purposes are to plead presentment with particularity and to provide supplemental allegations regarding the allegedly fraudulent scheme. (Doc. 158 at 3, 5). The additional information in the third amended complaint to accomplish these purposes derives from Castle's responses to the relator's discovery requests. (Id. at 16; Doc. 168 at 7).


         As with its motion for JOP, Castle's motion to dismiss raises multiple arguments, which the Court considers in turn.

         I. Use of Publicly Disclosed Information.

         “The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed … in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party … unless … the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A). Castle asserts that its discovery responses constitute public disclosures that are substantially the same as allegations or transactions alleged in the third amended complaint and as to which the relator is not an original source.[1]

         “[D]iscovery material disclosed ‘to a party who is not under any court imposed limitation as to its use' is a public disclosure” under the FCA. McElmurray v. Consolidated Government of Augusta-Richmond County, 501 F.3d 1244, 1253 n.19 (11th Cir. 2007) (quoting United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Insurance Co., 944 F.2d 1149, 1158 (3rdCir. 1991) (“Stinson”)). Castle relies on McElmurray for the proposition that the discovery responses supporting the third amended complaint “were publicly disclosed” for purposes of Section 3730(e)(4)(A). (Doc. 184 at 6).

         A “court imposed limitation” includes a protective order. Stinson, 944 F.2d at 1158. “We must assume from the absence of a protective order that the information disclosed in discovery is potentially accessible to the public.” Id. When, as in Stinson, no protective order is in place, discovery materials become “publicly disclosed” once they are produced, whether to the relator or to another. Id.[2]

         The relator relies on a handful of documents drawn from Castle's discovery responses. Castle concurs that these are the only discovery responses at issue. (Doc. 184 at 5-6). All of these documents were produced pursuant to an agreed protective order, (Doc. 132), which is confirmed both by the exhibits' “confidential” stamp, (Docs. 158-4 to -8), as per the protective order, (Doc. 132 at 1), and by Castle's explicit insistence that they were so produced. (Doc. 171 at 2). That protective order forbids the parties to communicate the produced information and documents: to any person other than the parties, their counsel and staff, experts (once bound to confidentiality) and the Court; or for any purpose other than prosecuting or defending this litigation. (Doc. 132 at 3-4). Castle makes no suggestion that the relator has violated the protective order.

         Castle ignores the “court imposed limitation” qualifier and therefore has failed to show that McElmurray has been triggered.[3] Instead, Castle suggests that the discovery responses were publicly disclosed by being “filed with the Court and described in detail in [the relator's] Complaint.” (Doc. 184 at 6). The documents were filed by the relator in support of her post-JOP motions to reconsider and to amend, but they were filed under seal. Castle offers no explanation how discovery materials, subject to protective order and filed only under seal, could by such filing become “publicly disclosed” in any legally meaningful sense. Nor does Castle explain its facially implausible position that the filing of an FCA complaint relying on publicly undisclosed material itself works a public disclosure of those materials so as to compel dismissal of the action - a position that seemingly would render every FCA action ever filed subject to immediate dismissal.[4]

         Because Castle has failed to show that the discovery responses on which the third amended complaint relies “were publicly disclosed” within the contemplation of Section 3730(e)(4)(A), its motion to dismiss on this ground must fail.

         II. Use of Discovery Material.

         As noted, the additional allegations of the third amended complaint are based on information in several documents produced by Castle in response to the relator's discovery requests. Castle argues that the relator “is not entitled to cure her deficient complaint using discovery produced by Castle.” (Doc. 184 at 8).

         The history of discovery in this action has been set forth in previous orders, (Docs. 139, 143, 175), but the Court rehearses it here (all dates are from 2017). Castle was served with process on March 20. (Doc. 40). Castle did not file a motion for JOP but instead filed an answer on April 10. (Doc. 51). The parties filed their Rule 26(f) report on June 2, in which Castle did not propose a stay of discovery or a phasing of discovery[5] but instead jointly proposed a discovery plan with no delay in commencement. (Doc. 102 at 4-6). The Magistrate Judge entered a scheduling order consistent with the report. (Doc. 106).

         By conferring on June 1, (Doc. 102 at 1), the parties opened the door to discovery. Fed.R.Civ.P. 26(d)(1). On June 13, the relator properly served interrogatories, requests for production and requests for admission on Castle. (Doc. 108). As the parties requested, (Doc. 102 at 6), Castle's responses were due 30 days later, on July 13. (Doc. 106 at 5-6). Castle timely responded to the requests for admission without objection. (Doc. 120; Doc. 194 at 8). Castle timely objected to many (though not all) of the interrogatories and requests for production, [6] but not on the grounds that discovery was premature. (Doc. 127 at 1-8; Doc. 134 at 2). Castle did not produce responses to the discovery requests as to which it had not objected, (Doc. 127 at 8), but, on July 26, counsel for Castle advised the relator's counsel that she was endeavoring to obtain such responsive information and documents from her client. (Doc. 134 at 2).

         In late July, Castle decided to file a motion for JOP. (Doc. 134 at 2). On August 1, counsel so advised her counterpart. (Id.). On August 2, after another conversation between counsel regarding the outstanding discovery requests, the relator filed a motion to compel. (Doc. 124). Two hours later, Castle filed its motion for JOP. (Doc. 125).[7] On August 3, the relator filed an amended motion to compel, this time setting forth the specific requests and responses at issue. (Doc. 127). On August 17, as its response to the motion to compel, Castle filed a motion to stay discovery pending resolution of its motion for JOP. (Doc. 134). In this document, Castle for the first time asserted on the record that discovery should be delayed.

         After full briefing, the Magistrate Judge resolved both motions. (Doc. 139). The Magistrate Judge noted Castle's argument that challenges to the facial sufficiency of a complaint usually should be resolved before discovery begins, but she further noted that Castle had filed no such challenge until after discovery had begun and until after Castle had fallen into default of its discovery obligations - obligations it had freely taken on without murmur of protest that such discovery was premature. Exercising the discretion ...

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