United States District Court, S.D. Alabama, Southern Division
UNITED STATES OF AMERICA, ex rel. LORI L. CARVER, Plaintiff,
PHYSICIANS' PAIN SPECIALISTS OF ALABAMA, P.C., et al., Defendants.
WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE
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.
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).
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).
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).
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).
its motion for JOP, Castle's motion to dismiss raises
multiple arguments, which the Court considers in turn.
Use of Publicly Disclosed Information.
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.
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).
“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.
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.
ignores the “court imposed limitation” qualifier
and therefore has failed to show that McElmurray has
been triggered. 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
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
Use of Discovery Material.
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).
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 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).
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,  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).
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). 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.
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 ...