CEDARS-SINAI MEDICAL CENTER; University of California San
Francisco Medical Center; University of California Los
Angeles Medical Center; University of California San Diego
Medical Center; Adventist Health System/Sunbelt, Inc.,
d/b/a Florida Hospital Medical Center; Galen of Arizona,
Inc., D/B/A Healthwest Regional Medical Center; Holy Cross
Hospital; Johns Hopkins Hospital; et al., Plaintiffs-Appellees,
v.
Donna E. SHALALA, Secretary, Defendant,
v.
QUI TAM RELATOR, Defendant-Appellant.
CEDARS-SINAI MEDICAL CENTER; University of California San
Francisco Medical Center; University of California Los
Angeles Medical Center; University of California San Diego
Medical Center; Adventist Health System/Sunbelt, Inc., dba
Florida Hospital Medical Center; Allegheny General
Hospital; Galen Of Arizona, Inc., dba Healthwest Regional
Medical Center; Holy Cross Hospital; Johns Hopkins
Hospital; Loma Linda University Medical Center Hospital;
Medlantic Healthcare Group, Inc., a not-for-profit
corporation dba Washington Hospital Center; Miami Beach
Healthcare Group, Ltd., dba Miami Heart Institute;
Monte-Fiore Medical Center; Mount Sinai Hospital; Society
Of The New York Hospital; Northwestern Memorial Hospital;
Presbyterian University Hospital; St. Francis Hospital;
Saint Joseph'S Hospital of Atlanta, Inc.; St. Luke's
Medical Center; St. Thomas Hospital; Sinai Samaritan
Medical Center; West Florida Regional Medical Center, Inc.,
dba West Florida Regional Medical Center; University of
Maryland Medical System Corporation; Yale-New Haven
Hospital, Inc.; Regents of the University of California, a
constitutional corporation under Article 9, Section 9 of the
California Constitution, by and on behalf of the University
of California San Francisco Medical Center, the University
of California Los Angeles Medical Center, the University of
California San Diego Medical Center, Plaintiffs-Appellees,
and
Scripps Health Systems, dba Scripps Memorial Hospital-La
Jolla, dba Green Hospital of Scripps Clinic; Qui
Tam Relator, Intervenors,
v.
Donna E. SHALALA, Secretary, of the United States Department
of Health and Human Services, Defendant-Appellant.
Nos. 96-55358, 96-55892.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted May 5, 1997.
Decided Sept. 10, 1997.
Christine N. Kohl, Assistant United States Attorney, Department of Justice, Washington, DC, for the defendant-appellant.
Donald R. Warren, Monaghan & Warren, San Diego, CA, for the defendant-appellant.
Harry R. Silver, Carol M. McCarthy and Leonard C. Homer, Ober, Kaler, Grimes & Shriver, Baltimore, MD, for the plaintiffs-appellees.
Appeals from the United States District Court for the Central District of California. John G. Davies, District Judge, Presiding. D.C. No. CV-95-02902-JGD.
Before BROWNING and SCHROEDER, Circuit Judges, and RESTANI, U.S. Court of International Trade Judge.*
SCHROEDER, Circuit Judge.
The Secretary of Health and Human Services appeals the district court's summary judgment in favor of Cedars-Sinai Medical Center and twenty-four other hospitals ("the Hospitals") in the Hospitals' declaratory judgment action challenging a 1986 Health Care Financing Administration ("HCFA") policy. The challenged policy provides that Medicare will not cover investigational medical devices that have not been approved for marketing by the Food and Drug Administration. The Hospitals claim, and the district court held, that the policy is invalid because it was not issued in accordance with the rulemaking requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553.
A qui tam relator ("the Relator"), who is the plaintiff in a False Claims Act (31 U.S.C. § 3729) case in the federal district court in Seattle, appeals the district court's denial of his motion to intervene and dismiss this action. In the qui tam action, which is under seal, the Relator alleges that 130 hospitals knowingly submitted false claims for payment to Medicare and Medicaid seeking reimbursement for non-FDA-approved medical devices, which are barred from Medicare coverage under the 1986 HCFA policy. The Relator argues that this declaratory action is an attempt by the Hospitals to forum-shop, and that the validity of the 1986 amendment should be litigated in the Seattle qui tam action, which was filed first.
We have jurisdiction under 28 U.S.C. § 1291. We affirm the district court's denial of the Relator's motion to intervene and to dismiss. We remand the case to the district court for the limited purpose of considering whether the Hospitals' claim is barred by the six-year statute of limitations codified at 28 U.S.C. § 2401(a).I. The Qui Tam Relator's Motion to Intervene and to Dismiss
A. Intervention
The Relator seeks to intervene as a matter of right under Fed.R.Civ.P. 24(a)(2). The denial of a motion to intervene as a matter of right is reviewed de novo. See Waller v. Financial Corp. of Am.,
Under this court's established test, a party may intervene as a matter of right if it meets four criteria:
(1) The party's motion must be timely; (2) the party must assert an interest relating to the property or transaction which is the subject of the action; (3) the party must be so situated that without intervention the disposition of the action may as a practical matter impair or impede its ability to protect that interest; and (4) the party's interest must be inadequately represented by the other parties.
Waller,
As the district court correctly reasoned, the Relator's claim founders on the fourth prong. The only issue to be decided on the merits of this action is the validity of the 1986 HCFA policy, and on that issue the interest of the Relator is identical to that of the Secretary: that the validity of the policy be upheld. The Secretary is capable of adequately representing her interest in defending her own policy. The Relator has failed to show any interest distinct from that of the United States, that the United States will not adequately represent. See Hopwood v. Texas,
Arguing that he does have an interest distinct from the government's, the Relator cites our statement in United States ex rel. Kelly v. Boeing Co.,
Because the Relator does not assert any interest not adequately represented by the United States, the Relator had no right to intervene under Fed.R.Civ.P. 24(a).1
B. Dismissal Under the "First to File" Rule
Although the district court denied the Relator's motion to intervene in the merits of the case, it went on also to consider and deny the Relator's motion to dismiss. The district court thus effectively granted intervention for the limited purpose of considering that motion. The district court correctly denied the motion.
The Relator argues the district court should have dismissed the Hospitals' declaratory action under the "first to file" rule. Under that rule, when cases involving the same parties and issues have been filed in two different districts, the second district court has discretion to transfer, stay, or dismiss the second case in the interest of efficiency and judicial economy. See Alltrade, Inc. v. Uniweld Products,
The district court correctly decided that the issues in this case and the Seattle qui tam case are different. The issue in this declaratory action is whether the HCFA's 1986 rule was validly promulgated. The issue in the Seattle qui tam case is whether any of the Hospitals knowingly submitted false claims for payment. Because these issues are distinct, the requirement of identity of the issues is not met, and the first-to-file rule is inapplicable.
The Relator complains that the Hospitals are merely forum-shopping. He argues that the Hospitals are trying to preempt the qui tam action by seeking invalidation of the 1986 rule in a favorable forum, and that they intend to use the invalidation of the rule as a defense in the False Claims Act case. The Relator cites an Eighth Circuit case for the proposition that a district court exercising its discretion under the Declaratory Judgment Act should dismiss a declaratory judgment action when it has been brought only for the purpose of establishing an affirmative defense in an action pending elsewhere. See BASF Corp. v. Symington,
Even if the Hospitals succeed in having the rule declared invalid, however, that will be no defense to the Relator's claims under the False Claims Act. See United States v. Weiss,
Because the issues in the two actions are distinct, the district court did not abuse its discretion in refusing to dismiss the declaratory action.
II. Statute of Limitations
The Secretary contends that the Hospitals' claim is barred by the six-year statute of limitations codified at 28 U.S.C. § 2401(a). See Wind River Min. Corp. v. United States,
The Hospitals make two responses. First, they argue that the Secretary waived the statute of limitations argument in the district court. In the alternative, they argue that their cause of action did not accrue until 1994, and that accordingly they filed within the six-year limitations period. The district court did not address any statute of limitations issue.
A. Waiver
The Secretary did not rely on the statute of limitations in her opposition to the Hospitals' motion for summary judgment or in her motion to dismiss or its supporting memorandum. The Secretary presented her statute of limitations argument to the district court only in her reply memorandum in support of her motion to dismiss. The Hospitals argue that by not raising this affirmative defense in a responsive pleading, in her response to the Hospitals' motion for summary judgment, or when she filed her motion to dismiss, the Secretary has waived the issue.
The Secretary responds that the limitations period is jurisdictional, and cannot be waived. The Secretary relies on Nesovic v. United States,
Waiver, however, was not an issue in Nesovic, because in that case the government had successfully asserted the limitations defense in the district court. See id. at 777. The court's discussion of the waivability of the defense was therefore not addressed to any issue similar to the one before us. Moreover, in Nesovic the court recognized that the limitations bar was not absolute, but rather had limited, recognized exceptions. See id. at 778 (citing Irwin v. Department of Veterans Affs.,
That holding is in accord with other Ninth Circuit opinions, issued after the Supreme Court's decision in Irwin, in which we recognized that limitations periods for suing the federal government are not strictly jurisdictional. See Fadem v. United States,
The decisions in Irwin, Washington, and Fadem do not mean that no limitations period on suing the federal government may ever be jurisdictional. Congress can create a strictly jurisdictional limitations period if it wishes. See Irwin,
Although the statute of limitations may be waived by the Secretary, whether it was waived in this case is a different issue. Because the district court was silent on the statute of limitations, we cannot tell whether the district court rejected the Secretary's defense, viewed it as waived, or overlooked it. Accordingly, we remand to the district court to decide whether the Secretary has waived the limitations defense.
B. Whether the Action is Barred
If the district court decides the defense was not waived, it must decide whether the action is barred. With respect to this issue, the Hospitals claim on appeal that the 1986 Medicare Manual amendment lacked the requisite finality for a cause of action to accrue, because the amendment was not published in the Federal Register. Furthermore, they claim that the 1986 rule was ambiguous, because it was not clear that "approved for marketing," as used in the Manual provision, meant FDA pre-marketing approval, see 21 U.S.C. §§ 360c(a)(1)(C), 360e, & 360j(a), as opposed to limited approval for shipment under the Investigational Device Exemption, 21 U.S.C. § 360j(g); 21 C.F.R. § 812.1(a). Because Medicare continued to pay for investigational medical devices after the issuance of the 1986 provision, the Hospitals argue that they were justified in thinking either that the rule had the latter meaning, or that the rule was only tentative and not finally enforceable. The Hospitals contend it was not until 1994, when the Secretary began to enforce the 1986 provision, that their cause of action accrued.
We are not certain that the record supporting the parties' positions regarding the 1986 policy and the parties' understandings of its meaning and finality were fully developed in the district court. The district court should on remand afford the parties the opportunity to file supplemental memoranda and supporting documentation on the limitations issue if it determines that issue is properly before the court.
Conclusion
The district court's order in No. 96-55358 is AFFIRMED. The case in No. 96-55892 is REMANDED to the district court for the limited purpose of ruling on the statute of limitations issues. The parties are directed to report on the status of those proceedings within 60 days after the issuance of our limited remand mandate. This panel retains jurisdiction over the appeal.
No. 96-55358 AFFIRMED.
No. 96-55892 REMANDED.