US ex rel. Patrick Carson v. Manor Care, Incorporated
16-1035
| 4th Cir. | Mar 16, 2017Background
- Relator Christine Ribik filed a qui tam FCA suit in Jan 2009 alleging Manor Care systematically overbilled Medicare by classifying patients in higher RUGs, double‑billing therapy minutes, billing for unnecessary/non‑skilled therapy, delaying discharges, and incentivizing utilization.
- Patrick Carson filed a later qui tam suit (Sept 2011) alleging materially similar overbilling practices while working as a physical‑therapy assistant; he also alleged he was terminated in Nov 2009 in retaliation for reporting fraud.
- The Ribik and Carson actions were consolidated; the United States later intervened in the consolidated matter.
- Manor Care moved to dismiss Carson’s amended complaint, invoking the FCA’s first‑to‑file rule and other pleading deficiencies; the district court dismissed Carson’s entire complaint as barred by the first‑to‑file rule for lack of subject‑matter jurisdiction.
- On appeal, the Fourth Circuit affirmed dismissal of Carson’s substantive qui tam FCA claims as barred by the first‑to‑file rule, vacated dismissal of his statutory retaliation claim (31 U.S.C. § 3730(h)), and vacated dismissal of state‑law claims to permit further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carson’s later‑filed FCA qui tam claims are barred by the FCA first‑to‑file rule | Carson: his allegations add materially different facts (additional modalities, Pennsylvania facilities) and thus are not based on Ribik’s earlier complaint | Manor Care: Carson’s claims are based on the same material elements of fraud alleged by Ribik and therefore barred by § 3730(b)(5) | Held: Barred — Carson’s qui tam claims dismissed for lack of jurisdiction (material elements test) |
| Whether consolidation of suits nullifies the first‑to‑file bar | Carson: consolidation with Ribik’s case means his claims should survive despite being later filed | Manor Care: FCA contains no consolidation exception; consolidation does not cure first‑to‑file bar | Held: Consolidation does not overcome § 3730(b)(5); no exception for consolidated complaints |
| Whether the FCA first‑to‑file rule bars a relator’s separate § 3730(h) retaliation claim | Carson: first‑to‑file should not bar his retaliation claim (argued on appeal after district court dismissed entire complaint) | Manor Care: urged alternative defenses (not relied upon below) | Held: First‑to‑file does not apply to § 3730(h) retaliation claims; dismissal of retaliation claim vacated and remanded for further proceedings |
| Whether federal first‑to‑file rule supports dismissal of state FCA‑equivalent claims | Carson: state claims should proceed or be considered separately | Manor Care: argued some states (e.g., Michigan) have analogous bars or alternative defenses | Held: District court erred to dismiss state claims under federal first‑to‑file rule without analysis; vacated and remanded for further consideration |
Key Cases Cited
- United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) (articulates and applies the material elements test for the FCA first‑to‑file rule)
- United States ex rel. Branch Consultants v. Allstate Ins. Co., 560 F.3d 371 (5th Cir. 2009) (explains that additional details in a later complaint cannot circumvent the first‑to‑file bar)
- Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276 (10th Cir. 2004) (first‑to‑file applies when later action relies on the same core facts or conduct)
- United States ex rel. LaCorte v. Wagner, 185 F.3d 188 (4th Cir. 1999) (discusses balance between encouraging whistleblowers and barring parasitic suits under FCA)
- Brooks v. United States, 383 F.3d 521 (6th Cir. 2004) (characterizes § 3730(h) retaliation claims as personal to the relator and distinct from government‑owned FCA claims)