174 F. Supp. 3d 696
E.D.N.Y2016Background
- Relators (former employees) sued Northern Adult and its owner under the federal False Claims Act (FCA) and New York False Claims Act (NYFCA), alleging Medicaid billing for substandard services and racialized mistreatment of registrants.
- The United States and New York declined to intervene; New York separately settled a civil investigation with Northern Adult.
- Relators moved to claim a share of that state settlement as an "alternate remedy" under §§ 3730(c)(5) (FCA) and § 190(5)(c) (NYFCA).
- Defendant moved to dismiss Relators’ amended qui tam complaint under Rules 9(b) and 12(b)(6); that motion was pending.
- New York moved to strike Relators’ alternate-remedy motion as premature and contrary to an earlier scheduling understanding.
- The district court denied the motion to strike (procedurally improper under Rule 12(f)) but held Relators’ alternate-remedy motion premature because a valid qui tam claim is a threshold requirement to share in an alternate remedy.
Issues
| Issue | Plaintiff's Argument | Defendant/State's Argument | Held |
|---|---|---|---|
| Motion to strike Relators’ alternate-remedy motion | Relators opposed striking and said order of resolution was not dispositive; they had no preference on sequencing. | NY moved to strike as premature given prior conference agreement that dismissal motion be resolved first. | Denied — Rule 12(f) applies only to pleadings; motion to strike was procedurally improper. |
| Entitlement to share in State settlement (alternate remedy) | Relators: filing a qui tam complaint that notifies the government is enough to seek a share of an alternate remedy even if Rule 9(b)/12(b)(6) challenges remain. | State/Defs: Relators must have a valid, particularly-pled qui tam action before claiming rights to an alternate remedy. | Denied without prejudice — court holds a valid qui tam claim is a prerequisite; Relators’ motion premature while dismissal motion is pending. |
Key Cases Cited
- U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493 (6th Cir. 2007) (relator must plead a valid qui tam claim to recover a share of an alternate remedy)
- U.S. ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d 103 (3d Cir. 2007) (relator not entitled to alternate-remedy share when qui tam action is invalid)
- U.S. ex rel. Newell v. City of St. Paul, Minn., 728 F.3d 791 (8th Cir. 2013) (no entitlement to alternate remedy when FCA claim dismissed)
- U.S. ex rel. Roberts v. Accenture, LLP, 707 F.3d 1011 (8th Cir. 2013) (Rule 9(b) inquiry differs when government intervenes; not dispositive here)
- United States ex rel. Heineman-Guta v. Guidant Corp., 718 F.3d 28 (1st Cir. 2013) (Rule 9(b) and the FCA first-to-file rule are distinct in application)
- United States ex rel. Batiste v. SLM Corp., 659 F.3d 1204 (D.C. Cir. 2011) (first-to-file rule need not satisfy Rule 9(b) to bar later suits)
- U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634 (6th Cir. 2003) (discusses standards for alternate-remedy overlap and remand for evidentiary hearing)