IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 15, 2008
No. 07-10760 Charles R. Fulbruge III
Clerk
TEXAS CLINICAL LABS INC, also known as Texas Clinical Labs LLC;
TEXAS CLINICAL LABS-GULF DIVISION INC, also known as Texas
Clinical Labs-Gulf Division LLC; ESTATE OF DANIEL P CAMPBELL
Plaintiffs-Appellants
v.
MIKE LEAVITT, SECRETARY, DEPARTMENT OF HEALTH & HUMAN
SERVICES and UNKNOWN EMPLOYEES AND AGENTS OF THE
DEPARTMENT OF HEALTH & HUMAN SERVICES
Defendants-Appellees
Appeal from the United States District Court
for the Northern District of Texas
Before JONES, Chief Judge, and WIENER and CLEMENT, Circuit Judges.
WIENER, Circuit Judge:
Plaintiffs-Appellants Texas Clinical Laboratories, Inc., Texas Clinical
Laboratories-Gulf Division, Inc., Texas Clinical Labs, LLC, Texas Clinical Labs-
Gulf Division, LLC, and the Estate of Daniel P. Campbell (collectively, the
“Appellants”) initiated this action against the Department of Health and Human
Services (the “DHHS”). In their original and amended complaints, the
Appellants (1) sought review of an administrative decision denying them
additional interest on the principal of a Medicare reimbursement judgment
No. 07-10760
rendered by an administrative law judge (“ALJ”) in favor of Texas Clinical
Laboratories, Inc. and Texas Clinical Laboratories-Gulf Division, Inc., and (2)
asserted that the DHHS, through repeated misrepresentations throughout the
Medicare reimbursement proceedings, deprived them of specified entitlements
due under the Social Security Act, 42 U.S.C. §§ 301-1397jj. The district court
dismissed the Appellants’ action with prejudice, ruling that none of the
Appellants was a proper plaintiff because each lacked either standing or capacity
to proceed. Convinced that the district court erred as a matter of law when it
ruled that Texas Clinical Laboratories, Inc. and Texas Clinical Laboratories-Gulf
Division, Inc. lacked capacity under Texas law, we reverse and remand to the
district court to conduct further proceedings for the purpose of determining
whether the Appellants are entitled to the additional interest they seek, and, if
so, how much. Also, we affirm the district court’s dismissal of the Appellants’
due-process claim, but we do so on different grounds.
I. FACTS AND PROCEEDINGS
A. The Appellants
The Appellants comprise (1) two defunct Texas corporations (Texas
Clinical Laboratories, Inc. (“Texas TCL”) and Texas Clinical Laboratories-Gulf
Division, Inc. (“Texas TCL-Gulf”) (collectively, the “Texas TCLs”)); (2) two
Colorado limited liability companies with names similar to those of the Texas
TCLs (Texas Clinical Labs, LLC and Texas Clinical Labs-Gulf Division, LLC
(collectively, the “Colorado TCLs”)); and (3) the Estate of Daniel P. Campbell (the
“Estate”).
Before they ceased doing business, the Texas TCLs provided clinical
laboratory services to long-term care facilities under the Medicare program,
deriving approximately 80 to 90 percent of their income from Medicare
reimbursements. The Colorado TCLs were formed in 2003, purportedly to
receive, on behalf of the Texas TCLs, payment of the Medicare reimbursement
2
No. 07-10760
judgment underlying this interest dispute. Daniel P. Campbell was the sole
shareholder of the Texas TCLs, and his estate is the sole member of each of the
Colorado TCLs.
B. Origin of the Dispute
The Texas TCLs’ dispute with the DHHS began around 1986, when Blue
Cross/Blue Shield of Texas (the “Carrier”), a private insurance carrier
administering the Medicare program in the State of Texas on behalf of the
DHHS, implemented a new formula for calculating travel allowances. The new
formula was grounded in the Carrier’s assumption that healthcare technicians
travel at an average speed of thirty-five miles per hour (“35 m.p.h.”) when
driving to and from the facilities they service. In May 1988, the Texas TCLs
objected to this new methodology and urged that a lower, more accurate m.p.h.
component be used. This would result in a higher overall reimbursement for all
healthcare providers in Texas, including the Texas TCLs. In an unrelated move
in July 1988, shortly after the Carrier rejected this request, the Texas Secretary
of State ordered that Texas TCL-Gulf be involuntarily dissolved for failure to
maintain a registered agent in the State of Texas.
C. First Action
In March 1989, after their initial request for adjustment was rejected, the
Texas TCLs filed suit against the Carrier and the DHHS in the federal district
court in Colorado. The Texas TCLs alleged, inter alia, that the defendants’
manner and method of determining the Medicare reimbursement travel
allowance fee, especially the m.p.h. component, violated the Administrative
Procedure Act, 5 U.S.C. § 551 et seq. The action was transferred from Colorado
to the Northern District of Texas, where, in March 1990, the district court
dismissed it without prejudice because the Texas TCLs had failed to exhaust
their administrative remedies.
D. Administrative Proceedings
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No. 07-10760
In July 1990, the Texas TCLs requested that the Carrier review its initial
determination (“Carrier Review”). Following a hearing, the hearing officer
denied additional reimbursement. The Texas TCLs then requested a hearing
before the Office of Hearings and Appeals (“OHA”) at which to dispute the
Carrier Review decision. In the meantime, on September 17, 1990, Texas TCL-
Gulf was reincorporated;1 and, on November 18, 1991, Texas TCL forfeited its
right to do business in the State of Texas by failing to pay franchise taxes.
During the OHA hearing in December 1991, the Texas TCLs presented
evidence and data to support their contention that a lower m.p.h. figure should
be used. Neither the DHHS nor the Carrier made an appearance at the hearing
or submitted evidence. In January 1992, the ALJ ruled in favor of the Texas
TCLs, finding that there was no evidence to support the use of the 35 m.p.h.
component in the travel allowance formula. The OHA Appeals Council (the
“Appeals Council”) reversed the ALJ’s decision, however, and remanded the
action so that the Carrier and the DHHS could present evidence.
In February 1993, the same ALJ issued another ruling in favor of the
Texas TCLs, again finding that the Carrier and the DHHS had failed to produce
evidence to support their travel allowance formula. The Appeals Council,
though, was persuaded by the Carrier’s and the DHHS’s conclusional
representation that evidence existed to support the 35 m.p.h. figure and once
again reversed. This time, the Appeals Council remanded the matter to a
different ALJ.
In June 1995, the successor ALJ rendered the third decision in favor of the
Texas TCLs; however, the Appeals Council reversed yet again, concluding that
1
To distinguish the two Texas TCL-Gulf entities, we hereafter refer to the original
corporation as Texas TCL-Gulf I and to its successor as Texas TCL-Gulf II. There is some
uncertainty as to whether the “Texas TCL-Gulf” that is a party to this action is Texas TCL-
Gulf I or II, but, as we explain below, this uncertainty does not affect the outcome of this
appeal.
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No. 07-10760
the Carrier and the DHHS presented sufficient evidence to support their use of
the 35 m.p.h. component.
Meanwhile, in February 1996, Texas TCL-Gulf forfeited its charter by
failing to pay franchise taxes.2
E. Second Action
That same month, the Texas TCLs re-instituted their suit against the
DHHS in the Northern District of Texas, again objecting to its methodology for
calculating travel allowances. The district court granted summary judgment to
the DHHS and dismissed the Texas TCLs’ action. On appeal, though, we
concluded that the record did not include any objective evidence to support the
DHHS’s use of the 35 m.p.h. figure. We nevertheless remanded the matter to
the administrative level based on representations made to us by the DHHS that
objective evidence did exist to support its formula.
F. Administrative Proceedings Re-opened
The administrative proceedings were re-opened in March 2002. In
September 2002, Campbell, the sole shareholder of the Texas TCLs, died. That
same month, the DHHS introduced into evidence an e-mail in which for the first
time it admitted that the 35 m.p.h. figure was based solely on the Carrier staff’s
personal belief regarding travel time in Texas, rather than being based on any
objective evidence. The following March, the ALJ ruled in favor of the Texas
TCLs for the fourth time, awarding them $581,157.00 plus accrued interest.
This time, the DHHS did not appeal.
Approximately one month before the DHHS issued checks to satisfy the
judgment, the Colorado TCLs were formed, purportedly to receive payment from
the DHHS because the Texas TCLs had gone out of business. In December 2003,
2
We observe that, although the Texas TCLs were dissolved or forfeited their charters
during the course of the administrative proceedings, their capacity to sue was never challenged
until this action.
5
No. 07-10760
the DHHS issued two checks: The first, in the amount of $297,644.51, was made
payable to “Texas Clinical Laboratories & Estate of D Campbell”; the second, in
the amount of $324,617.24, was made payable to “Texas Clinical Laboratories
and Est of D P Campbell.” These checks included interest of $41,104.75, which
the DHHS had calculated only from the March 2003 date of the fourth decision
of the ALJ.
G. Administrative Proceedings Concerning Interest
The Texas TCLs objected to the DHHS’s calculation of interest, and in May
2004, requested that the ALJ rule supplementally that interest began to accrue
as of January 31, 1992, the date of the first of the four ALJ decisions rendered
in their favor. The ALJ held that he did not have the authority to rule on the
issue, so the Texas TCLs appealed. The Appeals Council ruled that (1) the ALJ
did have the authority to rule on the matter, and (2) no additional interest was
owed to the Texas TCLs.
H. This Action
The Appellants filed this action in the United States District Court for the
District of Colorado in October 2005 to (1) determine the proper amount of
accrued interest owed to them, and (2) assert a due-process claim against the
DHHS for misrepresenting, throughout the Medicare reimbursement
proceedings, that there was evidence supporting the m.p.h. component of its
travel allowance formula when in fact there was none. The caption of the
Appellants’ complaint identifies the “plaintiffs” as “Texas Clinical Labs, Inc.,
n/k/a Texas Clinical Labs, LLC; Texas Clinical Labs-Gulf Division, Inc., n/k/a
Texas Clinical Labs-Gulf Division, LLC; and the Estate of Daniel P. Campbell.”
The DHHS moved (1) to dismiss the complaint, arguing that the Colorado
TCLs and the Estate did not have standing; and (2) for change of venue.
Thereafter, the Appellants were granted permission to amend their complaint
to identify separately the plaintiffs as the Texas TCLs, the Colorado TCLs, and
6
No. 07-10760
the Estate. The DHHS then moved to dismiss the amended complaint,
reiterating its argument that the Colorado TCLs and the Estate did not have
standing, and insisting that the Texas TCLs were barred from pursuing the
action by the sixty-day limitations period specified in 42 U.S.C. § 405(g). The
DHHS also renewed its motion for a change of venue. Without ruling on the
DHHS’s motion to dismiss, the district court in Colorado transferred the case to
the district court in the Northern District of Texas.
Following this transfer, the DHHS again moved to dismiss the amended
complaint and raised additional arguments that (1) the Colorado TCLs were not
proper parties because the Texas TCLs’ claims had not been properly assigned
to them, (2) the Estate was not a proper party and no personal representative
had been appointed for the Estate, and (3) the Texas TCLs could not maintain
the action because the Appellants’ claim for additional interest did not arise
within three years following their dissolutions. In response, the Appellants
moved to correct the caption of their amended complaint to name the personal
representative of the Estate as a plaintiff. They also filed their opposition to the
DHHS’s most recent motion to dismiss.
In May 2007, the district court issued its memorandum and order, holding
that (1) the Texas TCLs lacked capacity to seek judicial review of the calculation
of interest because they had forfeited their corporate charters for failing to pay
franchise taxes, and (2) the Colorado TCLs and the Estate lacked standing to
pursue the claim for additional interest. Concluding that the Appellants lacked
the requisite standing and capacity to pursue their claim for additional interest,
the district court dismissed their due-process claim as well. The Appellants
timely filed a notice of appeal.
II. ANALYSIS
A. Standard of Review
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No. 07-10760
We review de novo the district court’s legal conclusions,3 including its
determination that the Texas TCLs lacked capacity under Texas law.4
B. The Texas TCLs’ Capacity
The Appellants insist that any one or more among the Texas TCLs, the
Colorado TCLs, the Estate, or the Estate’s personal representative may maintain
this action to recover additional interest under the Medicare reimbursement
judgment rendered in favor of the Texas TCLs. As we hold that the Texas TCLs
have capacity and that the district court erred in concluding otherwise, we do not
address that court’s rulings with respect to the standing of the Colorado TCLs
or the Estate.
The capacity of a corporation to bring suit is determined by the law of the
state where it is organized.5 In this case, therefore, we look to Texas law to
determine whether the Texas TCLs have capacity to maintain this suit. In
concluding that the Texas TCLs lacked capacity, the district court cited §§
171.251 and 171.252 of the Texas Tax Code, which specify that a corporation
forfeits its right to sue if it fails to pay its franchise taxes.6 Texas TCL failed to
pay its franchise taxes no later than November 18, 1991, and Texas TCL-Gulf
failed to pay its franchise taxes no later than February 13, 1996. The district
3
Texas v. United States, 497 F.3d 491, 495 (5th Cir. 2007).
4
Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991) (“We conclude that a court of
appeals should review de novo a district court’s determination of state law.”).
5
FED. R .CIV. P. 17(b)(2).
6
Section 171.251 of the Texas Tax Code states that “[t]he comptroller shall forfeit the
corporate privileges of a corporation on which the franchise tax is imposed if the corporation
. . . does not pay, within 45 days after the date notice of forfeiture is mailed, a tax imposed by
this chapter or does not pay, within those 45 days, a penalty imposed by this chapter relating
to that tax . . . .” TEX. TAX CODE ANN. § 171.251(2). Section 171.252 of the Texas Tax Code
states that “[i]f the corporate privileges of a corporation are forfeited under this subchapter .
. . the corporation shall be denied the right to sue or defend in a court of this state . . . .” TEX.
TAX CODE ANN. § 171.252(1).
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No. 07-10760
court reasoned therefore that neither Texas corporation had capacity under
Texas law to proceed with this action for additional interest. The district court’s
reasoning is flawed, however, because § 171.252 bars corporations from filing
suit only after they have forfeited their right to do business.7 The Texas TCLs
commenced their action to obtain Medicare reimbursement while they were
authorized to do business under Texas law.
In Rushing v. International Aviation Underwriters, Inc., a Texas appeals
court analyzed an earlier version of § 171.252 and allowed an insurance
company to maintain its claim as a subrogee of a defunct corporation, reasoning
that the claim accrued and the insurance company initiated the action prior to
the forfeiture of the corporation’s charter.8 In so ruling, the court stated:
[T]he payment which is the basis of the subrogation action was
made, and suit was filed, almost a year before the forfeiture of [the
corporation’s] charter. Consequently, the insurance company’s right
to sue was fixed prior to the forfeiture of [the corporation’s] charter.9
The attempt of the DHHS to dismiss Rushing as inapplicable because it concerns
subrogation is unavailing: The Rushing court plainly stated that “[i]ndeed, under
Deveny, even [the corporation that forfeited its charter] could have maintained
this suit against [the defendant] under these facts.”10 In Deveny v. Success Co.,
the Texas Supreme Court held that, under an earlier version of the Texas Tax
7
See Rushing v. Int’l Aviation Underwriters, Inc., 604 S.W.2d 239, 241-42 (Tex. Civ.
App.—Dallas 1980); Deveny v. Success Co., 228 S.W. 295, 296 (Tex. Civ. App.—San Antonio
1921, writ ref’d).
8
Rushing, 604 S.W.2d at 241-43.
9
Id. at 242.
10
Id.
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No. 07-10760
Code, the forfeiture of a foreign corporation’s permit for failing to pay franchise
taxes did not prevent its recovery in an action initiated before forfeiture.11
The Texas TCLs initiated their Medicare reimbursement action on July
12, 1990, when they requested Carrier Review.12 Texas TCL did not forfeit its
right to do business in the State of Texas for failing to pay franchise taxes until
November 1991. Accordingly, Texas TCL had capacity at the time the Medicare
reimbursement action was commenced, and, under Rushing and Deveny, it
retained capacity and will continue to do so until the suit’s conclusion. The
district court’s ruling to the contrary was erroneous.
The district court also erred when it ruled that Texas TCL-Gulf lacked
capacity to pursue the claim for additional interest. Texas TCL-Gulf I was
involuntarily dissolved in July1988, for failing to maintain a registered agent in
Texas. It was reincorporated (as Texas TCL-Gulf II) in September 1990 and did
not forfeit its charter until September 1996, after failing to pay franchise taxes.
As mentioned supra in note 1, there is some uncertainty as to whether the
“Texas TCL-Gulf” that is a party to this suit is Texas TCL-Gulf I or II: The
district court apparently treated the party as Texas TCL-Gulf II and ruled that
the corporation lacked capacity to sue because it had forfeited its charter in
1996. Again, though, the district court’s ruling is erroneous. It fails to
appreciate that the Texas TCLs’ Medicare reimbursement action was
commenced prior to Texas TCL-Gulf II’s forfeiture of its charter.
Moreover, even if we treat the original corporation as the party to this
suit—which we believe is proper because the Texas TCLs requested Carrier
Review before Texas TCL-Gulf II was incorporated—Texas TCL-Gulf I has
11
228 S.W. at 296.
12
See Reveille Tool & Supply, Inc. v. Texas, 756 S.W.2d 102, 103 (Tex. App.—Austin
1988) (holding that administrative proceedings qualify as an “action or other proceeding” for
purposes of article 7.12 of the Texas Business Corporation Act).
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No. 07-10760
capacity to pursue its claim for additional interest. Texas TCL-Gulf I was
involuntarily dissolved in July 1988, as opposed to forfeiting its charter for
failing to pay franchise taxes.13 Therefore, under article 7.12 of the Texas
Business Corporation Act, Texas TCL-Gulf I had three years in which to bring
an action on an existing claim.14 The Texas TCLs’ Medicare reimbursement
claim arose in May 1988, before Texas TCL-Gulf I was involuntarily dissolved;
and the Texas TCLs initiated the reimbursement action within three years of
Texas TCL-Gulf I’s dissolution when Carrier Review was requested in July 1990.
Irrespective of whether the “Texas TCL-Gulf” that is a party to this suit
is Texas TCL-Gulf I or II, it has capacity to proceed. Contrary to the district
court’s holding, each Texas corporation has the right to prosecute to conclusion
the proceedings begun while it was still authorized under Texas law.
i. The DHHS’s Argument That Interest Claim is Separate
Our holding that the Texas TCLs have capacity to pursue their claim for
additional interest is based on the fact that the Medicare reimbursement action
13
Emphasis added. Before 1993, forfeited corporations were not considered to be
dissolved corporations. Therefore, a corporation that forfeited its charter because it failed to
pay franchise taxes was not entitled to the benefit of the three-year survival statute, discussed
infra note 14. In 1993, however, the Texas Legislature amended the definition of “dissolved
corporation” to include “a corporation . . . whose charter was forfeited pursuant to the Tax
Code.” TEX. BUS. CORP. ACT ANN. art. 7.12F(1).
14
See TEX. BUS. CORP. ACT ANN. art. 7.12A(1)-(2), C (Vernon 1987) (“A corporation
dissolved (1) by the issuance of a certificate of dissolution or other action by the Secretary of
State, (2) by a decree of a court when the court has not liquidated all the assets and business
of the corporation as provided in this Act, or (3) by expiration of its period of duration, shall
continue its corporate existence for a period of three (3) years from the date of dissolution, for
the following purposes: (1) prosecuting or defending in its corporate name any action or
proceeding by or against the corporation; (2) permitting the survival of any remedy not
otherwise barred by limitations available to or against the corporation, its officers, directors,
members, or creditors, for any right or claim existing, or any liability incurred, before the
dissolution . . . . C. If after the expiration of the three-year period there still remains
unresolved any action or proceeding not otherwise barred by limitations begun by or against
the corporation before its dissolution or within three (3) years after the date of its dissolution,
the corporation shall continue to survive only for the purpose of that action or proceeding, until
any judgment, order, or decree in the action or proceeding is fully executed.”).
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No. 07-10760
was initiated in July 1990, when Carrier Review was requested. The DHHS
nevertheless insists that the Texas TCLs’ claim for additional interest is
separate and distinct from their Medicare reimbursement claim. The DHHS
further asserts that the Texas TCLs’ interest claim did not accrue until
December 2003—when the DHHS issued payment for the Medicare
reimbursement judgment—well after the Texas TCLs had ceased to exist and
any applicable survival period had expired.
The DHHS’s proposition widely misses the mark. It is pellucid that
entitlement to interest is part and parcel of the underlying debt or liability,15
especially under the Texas Business Corporation Act’s broad definition of the
term “claim” as including “a right to payment, damages, or property, whether
liquidated or unliquidated, accrued or contingent, matured or unmatured.”16
Furthermore, at the time that the instant proceedings were commenced, 42
C.F.R. § 405.378 was in effect, which regulation expressly authorizes a Medicare
provider to collect interest on an underpayment.17 We hold that the Texas TCLs’
claim for additional interest was established on the date their Medicare
reimbursement claim arose.
ii. The DHHS’s Argument That Interest Claim is Time-Barred
15
See, e.g., Bruning v. United States, 376 U.S. 358, 360 (1964) (stating that interest is
generally considered “an integral part of a continuing debt”); Yang v. City of Chicago, 137 F.3d
522, 524-25 (7th Cir. 1998) (holding that civil rights plaintiff’s garnishment action to enforce
and collect judgment was not a lawsuit separate from § 1983 action, but rather ancillary
proceeding of the same suit); Grunenthal v. Long Island R.R. Co., 418 F.2d 1234, 1236 (2d Cir.
1969) (holding that applicable interest rate determined “not [by the] date when interest began
to accrue but the date when the cause of action arose”).
16
TEX. BUS. CORP. ACT ANN. Art. 7.12F(2).
17
See, e.g., 42 C.F.R. § 405.378(a) (“(a) Basis and purpose. This section, which
implements sections 1815(d) and 1833(j) of the common law and Act, and authority granted
under the Federal Claims Collection Act, provides for the charging and payment of interest on
overpayments and underpayments to Medicare providers, suppliers, HMOs, competitive
medical plans (CMPs), and health care prepayment plans (HCPPs).”).
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No. 07-10760
In addition to challenging the Texas TCLs’ capacity to sue, the DHHS
contends that this suit is barred because the Appellants’ complaint was not
expressly amended to name the Texas TCLs as plaintiffs until after the lapse of
the sixty-day deadline for seeking judicial review of an agency decision.18
Because the district court held that the Texas TCLs lacked capacity, it did not
reach this issue.
Following the Appeals Council’s decision denying additional interest, the
Appellants had until October 31, 2005 to seek judicial review. They filed their
complaint in the district court in Colorado on October 26, 2005; however, the
complaint’s caption identifies the plaintiffs as “Texas Clinical Labs, Inc., n/k/a
Texas Clinical Labs, LLC; Texas Clinical Labs-Gulf Division, Inc., n/k/a Texas
Clinical Labs-Gulf Division, LLC; and the Estate of Daniel P. Campbell.” The
Appellants did not amend their complaint to name the Texas TLCs as plaintiffs
until March 17, 2006, well after the sixty-day review deadline had passed.
Nevertheless, we hold that, given, inter alia, (1) the procedural history of this
matter, (2) the caption of the original complaint, and (3) the allegations in the
original complaint, the Appellants’ amended complaint plainly relates back to
the filing of their original complaint under Federal Rule of Civil Procedure
15(c).19 The DHHS’s contention that the district court was without subject
18
42 U.S.C. § 405(g) states in pertinent part that “[a]ny individual, after any final
decision of the Commissioner of Social Security made after a hearing to which he was a party,
irrespective of the amount in controversy, may obtain a review of such decision by a civil action
commenced within sixty days after the mailing to him of notice of such decision or within such
further time as the Commissioner of Social Security may allow.” The final agency decision
here at issue provided that the Appellants had sixty days to file their complaint in the district
court plus five days for mailing.
19
See FED. R. CIV. P. 15(c)(1)(C) (“An amendment to a pleading relates back to the date
of the original pleading when . . . the amendment changes the party or the naming of the party
against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period
provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by
amendment: (i) received such notice of the action that it will not be prejudiced in defending on
the merits; and (ii) knew or should have known that the action would have been brought
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No. 07-10760
matter jurisdiction when the Appellants initiated this suit, and that there is
therefore nothing to which the amended complaint can relate back, is a non-
starter. The Appellants’ amended complaint, identifying the Texas TCLs as
proper plaintiffs, obviously relates back to their original complaint. The Texas
TCLs are thus not barred by the sixty-day limitation period within which to seek
judicial review of a final agency decision.
C. Claim for Additional Interest
Even though this matter has needlessly spanned close to twenty years
because of the DHHS’s repeated misrepresentations that there was evidence
supporting its methodology for calculating travel allowances, we cannot resolve
it at this preliminary juncture because the parties have not yet presented their
case on the merits to the district court. Therefore, we remand to the district
court to consider whether the additional interest sought is owed. If, in the end,
the district court is persuaded to find in favor of the Appellants and to award
them interest from the date of the initial ALJ decision of January 31, 1992, the
government should carefully consider the situation before filing an appeal and
thereby needlessly perpetuating this dispute that has already been prolonged by
the government’s unwarranted actions, keeping in mind Rule 38 of the Federal
Rules of Appellate Procedure.20
D. Due-Process Claim
against it, but for a mistake concerning the proper party’s identity.); Slaughter v. Southern
Talc Co., 949 F.2d 167, 173-75 (5th Cir. 1991) (applying Rule 15(c) to situation where
complaint amended to add plaintiff and stating that “the linchpin is notice, and notice within
the limitations period” (citation omitted)); Williams v. United States, 405 F.2d 234, 235-39 (5th
Cir. 1968) (holding that 1967 amended complaint adding mother of injured child as party
plaintiff related back to filing of original complaint in 1963).
20
Rule 38 of the Federal Rules of Appellate Procedure provides that “[i]f a court of
appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice
from the court and reasonable opportunity to respond, award just damages and single or
double costs to the appellee.” FED. R. APP. P. 38.
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No. 07-10760
Based on the record before us, however, we are able to address the
Appellants’ due-process claim. The Appellants contend that the DHHS deprived
them of their right to due process when it flagrantly misrepresented to them and
to the reviewing courts that objective evidence existed to support the 35 m.p.h.
component of its travel-allowance formula. The district court held that, because
the Appellants lacked standing and capacity to pursue their administrative
claim for additional interest, they also lacked standing and capacity to purse
their constitutional claim. Even though this reasoning is flawed, we
nevertheless affirm the district court’s dismissal of the Appellants’ due-process
claim because the record demonstrates that the claim is barred by the applicable
statute of limitations.
In actions brought under Bivens,21 we apply the forum state’s statute of
limitations.22 The applicable Texas statute of limitations is two years.23 The
Appellants have shown that they first became aware of the DHHS’s
misrepresentations in September 2002, when the DHHS introduced into
evidence the aforesaid e-mail in which it admitted that no objective evidence
existed to support its use of the 35 m.p.h. figure. Accordingly, the Appellants’
due-process claim accrued in 2002. They did not assert their claim, however,
until October 2005, well after the applicable two-year statute of limitations had
expired.
III. CONCLUSION
We reverse the district court’s ruling that the Texas TCLs lacked capacity
to maintain this action to recover additional interest under their Medicare
reimbursement judgment, and we remand to the district court for further
21
See Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388
(1971).
22
See Gartrell v. Gaylor, 981 F.2d 254, 256 (5th Cir. 1993).
23
See id.; see also TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a).
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No. 07-10760
proceedings consistent herewith. Also, we affirm the district court’s dismissal
of the Appellants’ due-process claim.
REVERSED and REMANDED IN PART; AFFIRMED IN PART.
16