United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS January 9, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
02-20825
UNITED STATES OF AMERICA, EX REL, JOYCE RILEY,
Plaintiff-Appellant,
VERSUS
ST. LUKE’S EPISCOPAL HOSPITAL, ET AL
Defendants,
ST. LUKE’S EPISCOPAL HOSPITAL; BRANISLAV RADOVANCEVIC, DR.;
O. HOWARD FRAZIER, M.D.; SURGICAL ASSOCIATES OF TEXAS, P A;
BAYLOR COLLEGE OF MEDICINE; TEXAS HEART INSTITUTE;
EDWARD K. MASSIN, DR.
Defendants-Appellees.
Appeal from the United States District Court
For the Southern District of Texas
Before DAVIS, SMITH, and DUHÉ, Circuit Judges.
DUHÉ, Circuit Judge:
Plaintiff Joyce Riley, a former nurse at St. Luke’s Episcopal
Hospital, sued Defendants under the qui tam provisions of the False
Claims Act (“FCA”), 31 U.S.C. §§ 3729 & 3730(b). The district
court dismissed the complaint under Rule 12(b)(6) for failure to
state a claim. We hold that dismissal was inappropriate at this
stage of the litigation and accordingly reverse and remand for
further proceedings.
I. BACKGROUND
Riley alleges that Defendants filed false claims with Medicare
and the Civil Health and Medical Program of the Uniformed Services
(CHAMPUS) for services that were either medically unnecessary or
rendered by an unlicensed physician. Defendants Surgical Associates
of Texas, St. Luke’s Episcopal Hospital, and Drs. Edward Massin and
O. Howard Frazier allegedly sought Medicare or CHAMPUS
reimbursement for false claims. Defendant Baylor College of
Medicine allegedly trained or employed residents, students, and
fellows who worked at St. Luke’s and who aided the filing of false
claims. Defendants Dr. Branislav Radovancevic and his employer,
the Texas Heart Institute (THI), allegedly aided the filing of
false claims. THI is an organization of doctors at St. Luke’s who
specialize in treating heart conditions and performing heart
transplants. Dr. Radovancevic earned a medical degree in Belgrade,
and has not passed the medical licensing exam in Texas.1
Riley asserts essentially that Radovancevic, despite being
unlicensed, performed physician services for patients whose bills
were submitted to and paid by Medicare or CHAMPUS. Her complaint
also asserts that, in apparent pursuit of prestige by being
1
References to Defendants are as follows: collectively,
"Defendants"; Surgical Associates of Texas and Drs. Frazier and
Massin, "Physician Defendants"; St. Luke's, THI and its employee
Branislav Radovancevic, "Hospital Defendants"; and Baylor,
"Baylor."
2
industry leaders in terms of number of heart transplants performed,
Defendants performed unnecessary heart transplants paid for by
Medicare or CHAMPUS. The complaint also charges a civil conspiracy
to file false claims.
The district court dismissed Riley’s claims against all
Defendants. United States ex rel. Riley v St. Luke’s Episcopal
Hosp., 200 F. Supp. 2d 673 (S.D. Tex. Apr. 3, 2002), amended 2002
WL 32116882 (S.D. Tex. June 27, 2002). The district court wrote
that the FCA is not a vehicle for regulatory compliance, and that
materiality and a knowing falsehood are required to implicate the
FCA. Id. 200 F.Supp. 2d at 679. The court held that Medicare
payments are made according to the patient’s Diagnosis-Related
Group, regardless of who provides treatment; therefore, Dr.
Radovancevic’s participation was immaterial to billing and could
not provide the basis for an FCA claim. Id. at 680. On the
question of medical necessity, the court dismissed the claims as
challenging scientific judgment about which reasonable minds may
differ, holding that such an opinion cannot be “false” for purposes
of the FCA. Id. at 679. Finding no illegal activity, the court
found no conspiratorial conduct. Id. at 680.
II. DISCUSSION
A. Appellate Jurisdiction
The Hospital Defendants contend that we lack jurisdiction
because Riley’s notice of appeal was untimely. When the United
3
States is not a party in an FCA suit, Rule 4(a)(1) allows sixty
days from the entry of the judgment appealed to file a notice of
appeal. United States ex rel. Russell v. EPIC Healthcare Mngt.
Group, 193 F.3d 304, 308 (5th Cir. 1999).
Riley noticed her appeal July 16, 2002. The district court
entered a “Final Judgment” on April 1, 2002, providing that
“plaintiff shall take nothing” and referencing reasons given in a
memorandum opinion which granted only St. Luke’s motion to dismiss.
An “Amended Final Judgment” entered April 3 provided that
“defendants will take nothing” and referenced reasons in an
“amended” memorandum opinion dismissing in favor of all Defendants.
On April 5 the district court vacated the April 3 defendants-take-
nothing judgment and reinstated the April 1 plaintiff-take-nothing
judgment.
Plaintiff and Defendants both filed post-judgment motions.
After rulings, the district court issued the following “Amended
Final Judgment,” entered June 26:
Pursuant to the Amended Memorandum Opinion and Order
dated April 2, 2002, as modified by this Court’s order of
June 25, 2002 [entered June 27], Plaintiff will take
nothing by this suit. This Court’s Judgments [entered
April 1 and April 3] are hereby vacated.
This is a Final Judgment.
The Hospital Defendants characterize the foregoing judgment as
a mere clerical correction that followed their post-judgment Motion
for Correction of Minor Mistakes. Thus they argue this judgment
would not interrupt or restart the time for appealing the real
4
underlying judgment, the one entered April 1, from which
Plaintiff’s appeal is untimely. They argue that Plaintiff’s post-
judgment motion was also ineffective to extend the appellate
deadline because it addressed a judgment that was vacated.
We disagree. Federal Rule of Appellate Procedure 4(a)(4)
specifies several post-judgment motions which must be disposed of
before a notice of appeal can be effective. One is a timely filed
motion to alter or amend the judgment under Rule 59. Plaintiff
moved to alter or amend judgment on April 5, which was timely and
thus effected a tolling of the time for appeal under Rule
4(a)(4)(A). Plaintiff’s post-judgment motion was timely because it
was “filed no later than 10 days after the judgment [was] entered.”
Fed. R. Civ. P. 59(b).2
Nor was Plaintiff’s post-judgment motion moot because of the
vacatur of the April 3 judgment. Because her motion (except one
part addressing the defendants-take-nothing error in the April 3
judgment) addressed the merits underlying the judgment as reflected
in the memorandum opinions, it was not mooted by the district
court’s vacatur of the April 3 judgment, which corrected only the
clerical error.
Since Plaintiff’s motion to alter or amend judgment was
timely, the time for filing an appeal ran from the entry of the
2
As the Advisory Committee's noted about Rule 59(b), "The
phrase ‘no later than' is used — rather than ‘within' — to include
post-judgment motions that sometimes are filed before actual entry
of the judgment by the clerk."
5
order denying her motion or granting or denying any of the other
motions listed in Rule 4(a)(4). Fed. R. App. P. 4(a)(4)(A). Thus
by any count,3 her notice of appeal was timely and sufficient to
confer appellate jurisdiction.
B. Legal Standards for Motion to Dismiss
A district court should dismiss for failure to state a claim
only if “it appears beyond doubt that the plaintiff can prove no
set of facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2
L.Ed.2d 80 (1957). We review such ruling de novo. United States
ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899,
901 (5th Cir. 1997). The complaint must be liberally construed in
favor of the plaintiff, and all well-pleaded facts accepted as
true. Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, Inc.,
677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105,
103 S.Ct. 729, 74 L.Ed.2d 853 (1983).
Riley urges us to reverse the district court, because it made
assumptions about “evidence” rather than accepting the well-pled
allegations as true. Indeed the district court’s opinion made
several references to the evidence and few, if any, to the
pleadings. The exhibits attached to the complaint, however, are
part of the complaint “for all purposes.” Fed. R. Civ. P. 10(c).
3
Plaintiff’s July 16 notice of appeal was filed within the
designated time after entry of the final judgment (June 26) and
within the designated time after entry of both the orders disposing
of post-judgment motions (June 17 and June 27).
6
Thus it is not error to consider the exhibits to be part of the
complaint for purposes of a Rule 12(b)(6) motion.4
To the extent that the district court held that the fraud
claims failed “as unsupported by the evidence,” and noted that
there was “no evidence” or “no credible evidence” on certain
issues, however, the court was not applying the correct standard
for a Rule 12(b)(6) motion. See Rubinstein v. Collins, 20 F.3d
160, 166 (5th Cir. 1994); Thompson, 125 F.3d at 901.
A Rule 12(b)(6) dismissal is not warranted just because the
district court “believes the plaintiff is unlikely to prevail on
the merits.” Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir.
1986). “Even if it seems ‘almost a certainty to the court that the
facts alleged cannot be proved to support the legal claim,’ the
claim may not be dismissed so long as the complaint states a
claim.” Id. (quoting Boudeloche v. Grow Chem. Coatings Corp., 728
F.2d 759, 762 (5th Cir. 1984)).
C. Stating a Claim under the FCA
4
Although the district court’s memorandum opinion initially
seemed to address only St. Luke’s Rule 12(b)(6) motion to dismiss,
upon reconsideration the district court amended its memorandum
opinion to clarify that each of the defendants was dismissed, under
each of their motions — including Baylor’s “motion to dismiss or
for summary judgment” — for the reasons stated in its memorandum
opinion of April 2. The fact that Baylor attached evidence to its
motion for summary judgment does not change our opinion. In the
context of the memorandum opinion of April 2, it is apparent that
the court granted relief to Baylor based on its motion to dismiss
and not based on its summary judgment evidence. See infra subpart
D.
7
To state a claim under the FCA, subsection (a)(1), a relator
must allege that the defendant “knowingly” made “a false or
fraudulent claim” to the United States Government. 31 U.S.C.
§ 3729(a)(1) (West 1999). Similarly, to state a claim under
subsection (a)(2), the relator must allege that the defendant
“knowingly” made or used “a false record or statement to get a
false or fraudulent claim” paid by the Government. Id.
§ 3729(a)(2). Generally Riley alleges that Defendants violated
those two subsections of the FCA by admitting and upgrading
patients unnecessarily and covering up for medical bills submitted
for services of an unlicensed doctor.5 She also alleges that
Defendants conspired to defraud the Government into paying false or
fraudulent claims (FCA subsection (a)(3)). ¶¶ 217-19.
1. Medically Unnecessary Services.
As the district court recognized, claims for medically
unnecessary treatment are actionable under the FCA.6 The district
5
Second Am. Complaint filed March 17, 1997, ¶¶ 211-13. Further
citations to the second amended complaint are by paragraph number
only.
6
Physician claim Form HCFA-1500 carries an express
certification "that the services shown on this form were medically
indicated and necessary for the health of the patient.” Similarly
if a hospital seeks CHAMPUS reimbursement, the same certification
is present (Form HCFA-1450). Peterson v. Weinberger, 508 F.2d 45,
52 (5th Cir.), cert. denied, 423 U.S. 830, 96 S.Ct. 50, 46 L.Ed.2d
47 (1975), recognized that an express false certification on a
claim form submitted to the Government for payment is actionable
under the FCA. That the services be medically necessary is a
condition for payment under the regulations. See 42 U.S.C. §
1395y(a)(1)(A) (proscribing payment under Medicare Part A or Part
B unless items or services are “reasonable and necessary”); see
8
court concluded, however, that expressions of opinion or scientific
judgments about which reasonable minds may differ cannot be
“false.” St. Luke’s, 200 F.Supp. 2d at 679. We agree in principle
with the district court and accept that the FCA requires a
statement known to be false, which means a lie is actionable but
not an error. We disagree, however, with the court’s assessment of
the sufficiency of the allegations.
Riley’s complaint does sufficiently allege that statements
were known to be false, rather than just erroneous, because she
asserts that Defendants ordered the services knowing they were
unnecessary. The complaint states generally that “patients were
unnecessarily admitted to St. Luke’s . . . and/or their organ
transplant status artificially upgraded,” ¶ 7, and that Defendants
“knew of, directed, and personally participated in the fraudulent
conduct and false claims described [in the complaint].” ¶¶ 42-49.
More particularly, Riley alleges a “scheme” connoting knowing
misconduct: the Physician Defendants and Hospital Defendants
“participated in a scheme that allowed for the unnecessary
admission and artificial upgrade of the status of some heart
transplant patients.” ¶ 32.
The “knowing” aspect is reiterated throughout the complaint:
[Defendants] were aware of the impropriety of their
actions.
. . .
also 42 C.F.R. § 424.32(b) (requiring the use of these forms for
claims).
9
Also, because . . . Defendants wrongly admitted and
upgraded patients, bills submitted to the federal
government were rendered false and unpayable. . . .
Defendants falsely upgraded patients and issued bills for
inappropriate care. . . . Defendants . . . violated the
FCA in rendering inordinate care in unnecessary instances
. . . .
. . .
A known and intended result of Defendants’ conspiracy was
to induce the Government to pay . . . for fraudulent
hospital services and medical care as described above.
¶¶ 33, 120, 218. These allegations satisfy the FCA’s requirement
that Defendants “know” that the record, statement, or claim is
false.
Dismissing the allegations of claims for medically unnecessary
services, the district court stated, “The evidence shows that St.
Luke’s provided medical care to patients who desperately needed
care.” This controversial finding or conclusion raises the
question of the role of the exhibits attached to the complaint.
Some of Riley’s allegations are qualified by the contents of
attached documents. For example, “The medical records of two
example patients show that admission to the hospital and/or
admission to the intensive care unit was not medically justified.”
¶ 32. If such an allegation is contradicted by the contents of an
exhibit attached to the pleading, then indeed the exhibit and not
the allegation controls. Simmons v. Peavy-Welsh Lumber Co., 113
F.2d 812, 813 (5th Cir.), cert. denied, 311 U.S. 685, 61 S. Ct. 63,
85 L. Ed. 442 (1940).
Some of Riley’s allegations, however, are not dependent on the
documents incorporated into her complaint. For example, Riley
10
claims, “The Defendants participated in a scheme that brought heart
transplant patients to the hospital and/or to ICU who were not, at
that time, truly needing hospital care.” ¶ 120. Additionally,
Riley expressly alleges that she “does not have detailed
information on all Medicare and CHAMPUS patients treated by the
Defendants.” ¶ 121. The complaint thus conveys that her
referenced exhibits are meant to provide examples only and are not
intended to signify exclusive incidents. See also ¶ 208 (“These
are only examples from five patient records . . . .”).
At this preliminary stage, the district court should dismiss
only if it appears beyond doubt that Plaintiff can prove “no set of
facts” in support of her claim. Conley v. Gibson, 355 U.S. at 45.
Even if Riley’s exhibits called into question one or more of the
examples she alleged, they did not call into question all her
allegations of false claims. The district court therefore acted
prematurely in dismissing the complaint because it precluded the
opportunity for Plaintiff by subsequent proof to establish a claim
supporting the allegations not refuted by exhibits. Compare Clark,
794 F.2d at 970 (holding dismissal under Rule 12(b)(6) improper
unless the complaint “on its face show[s] a bar to relief”), with
Simmons, 113 F.2d at 813 (holding exhibits defeat claim on contract
where letter attached shows clearly the absence of any contract,
express or implied).
Defendants next argue that not all Defendants are implicated
by the allegations regarding ICU upgrades and hospital admissions.
11
The Physician Defendants argue that they could not have filed
claims for hospitalization or ICU upgrades because such costs are
billed by the hospital, not the physicians. Hospital Defendants
contend that they do not bill for physician services and had no
part in the admission or upgrade of patients to ICU — matters
accomplished only by doctor’s orders.
The FCA applies to anyone who “‘knowingly assist[s] in
causing’” the government to pay claims grounded in fraud, “‘without
regard to whether that person ha[s] direct contractual relations
with the government.’” Peterson v. Weinberger, 508 F.2d 45, 52-53
(5th Cir.) (quoting United States ex rel. Marcus v. Hess, 317 U.S.
537, 544-45, 63 S.Ct. 379, 87 L.Ed. 443 (1943)), cert. denied, 423
U.S. 830, 96 S.Ct. 50, 46 L.Ed.2d 47 (1975). “Thus, a person need
not be the one who actually submitted the claim forms in order to
be liable.” United States v. Mackby, 261 F.3d 821, 827 (9th Cir.
2001). Riley does allege that the defendants assisted one another
and cooperated in a scheme or pattern of billing for and covering
up these allegedly false-claim items. See ¶¶ 27, 30, 32, 42-49,
120, 213, 217. Under the “knowing assistance” standard of Hess and
Peterson, these allegations suffice to implicate all Defendants.
2. Services by an Unlicensed Physician.
Riley alleges that Defendants cooperated in billing for
services rendered by an unlicensed physician, Branislav
Radovancevic, who could not lawfully bill Medicare or CHAMPUS
himself.
12
The Physician Defendants argue that while Riley might have
alleged unauthorized practice of medicine, she did not allege a
false or fraudulent claim from Dr. Radovancevic’s alleged
unauthorized practice. We disagree. The complaint alleges that
when the Hospital Defendants or Physician Defendants submitted
their claims, “they warranted and represented that the services in
such statements were rendered by duly licensed physicians or
persons who are otherwise qualified under the various regulations,
codes, and standards. Many of the professional services rendered,
in part or in whole to those patients, were nevertheless those of
Dr. Radovancevic,” ¶ 28, whom she alleges was neither authorized
nor supervised. ¶ 30.
The Physician Defendants point out that their claim forms are
expressly designed to include services furnished “by my employee
under my immediate personal supervision.” The allegations of the
complaint, however, are that Dr. Radovancevic provided the services
“without authority or supervision.” ¶ 30. We accept these
allegations as true at this stage of the proceedings. A certifying
doctor who is not the doctor who rendered or personally supervised
the services is subject to liability for a false claim. See
Peterson, 508 F.2d at 52.
The Hospital Defendants argue that Riley never alleged that
they submitted false claims for Dr. Radovancevic’s services.
Because there is no false-claims liability for an inadvertent
error, they argue that they should not be liable either for a
13
regulatory misstep or for services that were immaterial to the
hospital billings. Arguing against implied-certification
liability, St. Luke’s maintains that it cannot be deemed to have
“knowingly” submitted a false claim based on a regulatory misstep,
where it has actually rendered the services billed. THI and Dr.
Radovancevic contend that, because they did not submit claims at
all, they are not implicated by the allegations.
St. Luke’s arguments fail, because Riley has not alleged
simple inadvertence. Taking Riley’s allegations as true, St.
Luke’s knew full well that Dr. Radovancevic could not practice
medicine, yet provided him the means to do so regardless,7
instructed nurses to conceal the impropriety,8 and hid his services
in false billings to Medicare and CHAMPUS, trying to keep Dr.
Radovancevic’s name out of their records.9
7
She alleges that the Physicians Defendants and St. Luke’s were
aware of the impropriety of their actions and willingly gave Dr.
Radovancevic a place and method to practice “rather than showing
[him] the door.” ¶¶ 33, 110.
8
The complaint asserts that “the nursing staff at St. Luke’s
[] were told to follow the orders of Branislav Radovancevic, but
directed not to sign his name on any written documentation, such as
physician orders. Instead nurses were instructed in some instances
to sign Dr. Frazier’s name . . . [or someone else’s name].” ¶ 33;
see also ¶ 34 (alleging Defendants’ “concerted effort” to keep
Radovancevic’s name from written records).
9
Riley alleges that false and unpayable hospital bills were
submitted for Dr. Radovancevic’s care specifically for Patient No.
1108146 and an order for drugs. More generally the complaint
states that Dr. Radovancevic did not himself bill for any services
but that his services nevertheless manifested themselves in false
or fraudulent billings by the Physician Defendants as well as St.
Luke’s. ¶¶ 25, 29, 117, 118, 119, 169, 207.
14
Allegations suffice under the FCA if they state that defendant
made a record or statement known to be false or fraudulent in order
to get a false claim paid. 31 U.S.C. § 3729(a)(2). “False” can
mean "deceitful,” or “tending to mislead,”10 and a “false claim” is
one “grounded in fraud which might result in financial loss to the
Government.” Peterson, 508 F.2d at 52. The FCA “reaches beyond
‘claims’ which might be legally enforced, to all fraudulent
attempts to cause the Government to pay out sums of money.” Id.
This complaint is not like the one this Court discussed in
Willard,11 wherein all the claims were indisputably valid. Here,
the allegations noted describe false records and false claims. The
scienter element is satisfied without resorting to an implied
certification theory of liability. Cf. Willard, 336 F.3d at 381
(“Because Willard does not allege that any of the claims were false
in the sense that they contained false statements or were for
services not performed or the like, Willard must resort to either
Riley alleges that a patient would receive “care, treatment, and
professional service which justified the hospital billing to the
government. Many of these services . . . could be carried out only
on the order of a license physician. Some . . . charges . . . were
directly or in part based on hospital services ordered by Branislav
Radovancevic, an unlicensed physician.” ¶ 31. She also alleges
that “false claims were submitted, and the Government defrauded by
virtue of the facts that [Defendants] . . . participated in a
scheme that allowed Radovancevic, without authority or supervision,
to care for Medicare and CHAMPUS heart transplant patients in
direct violation of federal and state law.” ¶ 30.
10
Webster's Third New International Dictionary 819 (1981).
11
United States ex rel. Willard v. Humana Health Plan, 336 F.3d
375, 380-81 (5th Cir. 2003).
15
the ‘implied certification’ or ‘fraud in the inducement’ theories
of liability through which it may be possible to demonstrate that
otherwise valid claims are actionable under the FCA.”).
As for THI, Dr. Radovancevic, and Baylor, any stipulation that
they did not file claims does not exonerate them. As discussed
above, anyone who “knowingly assist[s] in causing” the government
to pay claims grounded in fraud can be liable under the FCA.
Peterson, 508 F.2d at 52.
We find Defendants’ assertion that financial injury to the
Government was not sufficiently alleged to be without merit.12 The
Hospital Defendants’ argument that the FCA is inequitable in the
healthcare industry is one more properly addressed to Congress than
a court.
4. Conspiracy.
Defendants argue that Riley’s conspiracy allegations are
conclusory and that she fails to allege an identifiable act in
furtherance of the conspiracy. Riley alleged that the acts
12
The complaint sufficiently alleges financial injury to the
Government. ¶ 32 (“[Defendants] participated in a scheme that
allowed for the unnecessary admission and artificial upgrade of the
status of some heart transplant patients. . . . This medical care
and treatment falsely and fraudulently manifested itself into bills
submitted to the federal government that were paid.”); ¶ 180 (“The
bills establish Defendant Radovancevic is making decisions that
affect the amount the U.S. Government [sic], rendering the above
bills false and unpayable.”); ¶ 208 (“Because Defendants falsely
admitted and upgraded patients . . . the bills submitted to the
federal government were false and unpayable.”); ¶ 219 (“The United
States Government, unaware of the falsity . . . paid the full
amount . . . .”).
16
described in the complaint constituted one or more conspiracies “to
defraud the United States Government by getting false, fraudulent
claims approved or paid,” and that Defendants “took substantial
steps in furtherance of those conspiracies, inter alia, by
preparing false records and claims and submitting such documents to
the Government via the Medicare and/or CHAMPUS system for payment
and approval.” ¶ 217. Whether this general allegation of
conspiracy survives will depend largely on whether the underlying
allegations of false statements and false claims survive the
specificity challenge under Rule 9(b), a matter we leave to the
district court in the first instance, as discussed next.
D. Matters Not Decided by the District Court
Defendants ask that we affirm dismissal because the complaint
did not meet the specificity requirement of Fed. R. Civ. P. 9(b).
The district court did not address whether Riley’s complaint
complied with Rule 9(b) because it held that the dismissal for
failure to state a claim rendered the inquiry moot.13 Riley and
Baylor also ask us to determine whether Baylor is entitled to
relief on its motion for summary judgment — another matter not
decided by the district court.14
13
200 F. Supp. 2d 673, 675 n. 1.
14
While the district court declared that it was granting
Baylor’s “motion to dismiss or for summary judgment,” we readily
see from the court’s reasons for ruling that the court granted only
the motion to dismiss and did not act upon the alternative motion
for summary judgment. See, e.g., 200 F. Supp. 2d 673, 675
17
Although we may consider alternative grounds for upholding the
district court's decision, Flournoy v. Century Fin. Co., Inc. (In
re Henderson), 577 F.2d 997, 1002 n. 5 (5th Cir. 1978), we decline
to do so in this case. Thus the particularity requirements of Rule
9(b) and the merits of Baylor’s motion for summary judgment can be
addressed as necessary in the first instance by the district court
upon remand. See Youmans v. Simon, 791 F.2d 341, 348 (5th Cir.
1986) (declining to consider Rule 9(b) challenges not been passed
upon by the district court).
We remind the district court, however, of the central
importance of rule 9(b) in regard to allegations of fraud:
[T]he reference [in rule 9(b)] to “circum-
stances constituting fraud” usually requires
the claimant to allege at a minimum the iden-
tity of the person who made the fraudulent
statement, the time, place, and content of the
misrepresentation, the resulting injury; and
the method by which the misrepresentation was
communicated . . . .
In cases concerning fraudulent misrep-
resentation and omission of facts, Rule 9(b)
typically requires the claimant to plead the
type of facts omitted, the place in which the
omissions should have appeared, and the way in
which the omitted facts made the represen-
tations misleading.
2 JAMES W. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 9.03[1][b], at 9-
(determination that Court “should GRANT the defendant’s 12(b)(6)
motion to dismiss”); id. n. 2 (amendment to original memorandum
opinion, adding that dismissal is against all defendants – not just
St. Luke’s, whose motion to dismiss is the subject of the
memorandum opinion); id. at 677-79 (discussing Rule 12(b)(6)); id.
at 680 (concluding that motion to dismiss should be granted).
18
18 through 9-19 (3d ed. 2003) (footnotes omitted); accord Tuchman
v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994).
III. CONCLUSION
After de novo review of the motions and second amended
complaint, we hold that the district court misapplied the Rule
12(b)(6) standards in dismissing this matter. As the district
court has not assessed the sufficiency of the complaint under Rule
9(b) or the merits of Baylor’s motion for summary judgment, we
remand to the district court for consideration of those matters in
due course and for further proceedings consistent herewith.
“Nothing in this opinion is to be construed as indicating the view
of this court regarding the ultimate merits of any of the
allegations.”
REVERSED AND REMANDED.
19
United States Ex Rel. Riley v. St. Luke's Episcopal Hospital
Court: Court of Appeals for the Fifth Circuit
Date filed: 2004-01-09
Citations: 355 F.3d 370
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