Innovative Medical Systems, Inc. v. Augustine Medical

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 05-4261
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Innovative Medical Systems, Inc., *
a Missouri corporation; Genesis *
Medical, Inc., an Indiana *
corporation; SC Medical, LLC, *
a Louisiana corporation; Associated *
Provider Services, Inc., a Georgia *
corporation, *
*
Appellants, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
Augustine Medical, a subsidiary of *
Arizant, Inc., also known as AMI; * [UNPUBLISHED]
Arizant, Inc., *
*
Appellees. *
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Submitted: September 25, 2006
Filed: October 4, 2006
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Before ARNOLD, BYE, and MELLOY, Circuit Judges.
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PER CURIAM.

Innovative Medical Systems, Inc., Genesis Medical, Inc., SC Medical, LLC,
and Associated Provider Services, Inc. (collectively the distributors) appeal the denial
of their motion for relief from judgment brought under Fed. R. Civ. P. 60(b). The
district court1 determined the distributors had not shown exceptional circumstances
warranting relief from judgment. We affirm.

Between 1997 and 2001, each of the distributors purchased the right to market
and distribute a medical device manufactured by Augustine Medical. After
Augustine pleaded guilty to federal fraud charges arising out of a Medicare
reimbursement scheme involving the device, the distributors filed this action alleging
Augustine violated provisions of the Racketeer Influenced and Corrupt Organizations
(RICO) Act, 18 U.S.C. §§ 1961-1968, by conspiring to defraud the distributors
through the reimbursement scheme.

The district court granted a motion for judgment on the pleadings brought by
Augustine, concluding the distributors failed to plead their RICO claims with the
particularity required by Fed. R. Civ. P. 9(b). In doing so, the district court rejected
the distributors’ contention that they could not plead their RICO claims with more
specificity because their records had been seized by the Federal Bureau of
Investigation (FBI) as part of its investigation against Augustine, stating: "As the
alleged misrepresentations were made to [the distributors], however, it stands to
reason that [the distributors] would be able to provide the specifics noted above."
J.A. at 157.

The distributors filed a motion for relief under Rule 60(b), as well as a motion
to amend the complaint by adding factual allegations they concede were derived from
the criminal indictment against Augustine or the subsequent plea agreements. The
district court denied the motion because the distributors did not specify under which
prong of Rule 60(b) they sought relief, or explain why they failed to "to plead
information that has been within [their] knowledge at all times." Id. at 277. The

1
The Honorable Michael J. Davis, United States District Judge, District of
Minnesota.

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district court determined the distributors had "not plead[ed] any exceptional
circumstances sufficient to trigger the extreme relief that Rule 60(b) provides." Id.
The distributors filed a timely appeal.

The only issue properly before us is whether the distributors presented
evidence of exceptional circumstances such that the district court's denial of Rule
60(b) relief constituted an abuse of discretion, because "[a]n appeal from the denial
of a Rule 60(b) motion does not raise the underlying judgment for our review but only
the question of whether the district court abused its discretion in ruling on the Rule
60(b) motion." Noah v. Bond Cold Storage, 408 F.3d 1043, 1045 (8th Cir. 2005).
"We will find an abuse of discretion only when the district court's judgment was
based on clearly erroneous fact-findings or erroneous conclusions of law." Id.

The record shows the distributors sought to reopen the district court's judgment
by repleading their fraud claims to include information available to them prior to the
filing of their federal lawsuit. Under these circumstances, the district court did not
abuse its discretion in determining the distributors had not demonstrated the
exceptional circumstances requisite to reopening a judgment under Rule 60(b).

Accordingly, we affirm the district court’s judgment.
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