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United States ex rel. Presser v. Acacia Mental Health Clinic, LLC

United States District Court, E.D. Wisconsin

March 2, 2017

UNITED STATES OF AMERICA and the STATE OF WISCONSIN, ex rel. ROSE PRESSER, Plaintiffs,
v.
ACACIA MENTAL HEALTH CLINIC, LLC and ABE FREUND, Defendants.

          ORDER

          J.P. Stadtmueller U.S. District Judge

         Relator Rose Presser (“Presser”) initiated this qui tam action against Defendants on January 18, 2013, alleging violations of the federal False Claims Act (“FCA”), 31 U.S.C. § 3730, and its Wisconsin counterpart. (Docket #1). After an appeal to the Seventh Circuit, on remand she sought and was granted leave to file a second amended complaint. (Docket #58). She filed her second amended complaint on December 14, 2016, which Defendants answered on December 28, 2016. (Docket #59 and #60).

         Also on December 28, 2016, the government filed its own civil action under the FCA, raising largely the same claims as Presser asserts here. (Docket #61 at 2). Because the government did not identify this action as related, the government's suit was assigned to District Judge Lynn Adelman and is pending in Case No. 16-CV-1718. Currently before the Court is Presser's motion for voluntary dismissal without prejudice, which she filed on February 3, 2017. Id. She seeks dismissal on the ground that the government's FCA action prevents her from maintaining this one. See Id. at 3. Additionally, she notes that under the FCA she has the same rights to a share in the government's recovery in its case as she does here. Id.; see 31 U.S.C. § 3730(c)(5). Defendants oppose the motion, arguing that while they agree the case should be dismissed, any dismissal should be with prejudice. (Docket #65). Presser filed a reply in support of her motion on February 27, 2017. (Docket #69). The motion is fully briefed and, for the reasons stated below, it will be granted.[1]

         Federal Rule of Civil Procedure 41 governs Presser's motion for voluntary dismissal. Because Defendants have answered the second amended complaint, and because Defendants would not consent to the dismissal, Rule 41 provides that Presser can only obtain voluntary dismissal by court order and “on terms that the court considers proper.” Fed.R.Civ.P. 41(a)(2). In considering whether to grant a motion under Rule 41(a)(2), a court must examine whether the defendant will suffer unfair prejudice from the dismissal. Marlow v. Winston & Strawn, 19 F.3d 300, 304 (7th Cir. 1994). Several factors guide this analysis, including “‘the defendant's effort and expense of preparation for trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, insufficient explanation for the need to take a dismissal, and the fact that a motion for summary judgment has been filed by the defendant.'” Kunz v. DeFelice, 538 F.3d 667, 677 (7th Cir. 2008) (quoting Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir. 1969)).

         Under Rule 41(a)(2), a court can, in its discretion, impose conditions on dismissal that are necessary to offset possible prejudice to the defendant. Marlow, 19 F.3d at 303; McCall-Bey v. Franzen, 777 F.2d 1178, 1184 (7th Cir. 1985). One common condition is requiring the plaintiff to pay the defendant's reasonable attorney's fees and costs. Marlow, 19 F.3d at 305. Another permissible condition is dismissing the matter with prejudice, although dismissals under Rule 41(a)(2) are normally made without prejudice. See Fed. R. Civ. P. 41(a)(2); Marlow, 19 F.3d at 305. The Seventh Circuit has instructed that the plaintiff must be given a reasonable opportunity to withdraw the motion for voluntary dismissal if the court indicates that it will grant the requested dismissal but only with conditions the plaintiff has not previously agreed to. Marlow, 19 F.3d at 305.

         Defendants raise several concerns about Presser's proposed dismissal. At the outset, however, it should be noted that the Defendants seem more focused on obtaining dismissal of the government's related case. Defendants apparently believe that if they can achieve a dismissal of Presser's case with prejudice, they can take that dismissal to Judge Adelman and obtain dismissal of the government's action on res judicata grounds. Viewed from that perspective, it is easier to understand the parties' positions.

         Defendants open with a description of what they view as a history of delay and obfuscation by Presser and the government. Defendants suggest that the government has waived its ability to bring its own FCA suit by choosing not to intervene in this case during its four-year life span. (Docket #65 at 1). In Defendants' view, the government's newly filed case comes as Presser finally realizes that she will have to litigate this case in a meaningful way. Id. at 1-2. Defendants state that Presser has not provided dates for her own deposition and has not responded to Defendants' discovery requests, which were served on December 28, 2016. Id. at 2. Nor has she propounded her own discovery requests although the case is fully entered into the discovery phase. See Id. at 3. Indeed, according to Defendants, even the government is dragging its feet. The United States filed its separate action on December 28, 2016 and only obtained a waiver of service from Defendants' counsel in early February 2017. Id. at 2.

         Defendants tie this theory of dilatoriness into the Pace factors and ask for dismissal with prejudice.[2] First, they claim that they have expended significant amounts of time and money litigating two motions to dismiss, an appeal, and other trial preparation in this case, including serving their recent discovery requests. Id. at 2-3. Second, Defendants contend that Presser has not been diligent in her prosecution of this case, since she failed to plead actionable claims twice and is now refusing to participate in discovery. Id. at 3.

         Third, and most critical to Defendants, they believe that Presser's explanation of her need for dismissal falls short. Id. According to Defendants, Presser does not adequately explain how the government can now bring its own FCA suit despite failing to intervene in this action. Id. at 4. Defendants say that this is not permitted, arguing that the government must intervene in a relator's FCA suit or be bound to the result reached in its absence. Id. (citing U.S. ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009)). It cannot simply file its own duplicative lawsuit. Id.

         By contrast, Presser believes that the FCA permits just what occurred here. She points to language in the statute which allows the government to pursue “any alternate remedy” instead of intervening in Presser's lawsuit, id. § 3730(c)(5), which has been interpreted as allowing the government to bring its own FCA action. (Docket #61 at 2) (citing U.S. ex rel. Bledsoe v. Cmty. Health Sys., 342 F.3d 634, 647 (6th Cir. 2003)); (Docket #69 at 4). Additionally, Presser contends that because there has been no determination on the merits in this action, Defendants' reliance on principles of claim preclusion is misplaced. (Docket #69 at 7).

         Defendants disagree. They argue that since the government needs to show “good cause” to intervene late in private citizen's FCA action, 31 U.S.C. § 3730(b)(3), it cannot be that instead of showing good cause the government can decide to file its own case. (Docket #65 at 5). This would, in Defendants' view, render the requirement “toothless.” Id. Defendants emphasize that allowing the government to bypass the “good cause” requirement for intervening in Presser's suit after four years of silence would work substantial prejudice against them. Id. at 5-6.

         In reply, Presser seeks to justify the government's failure to intervene in her case, claiming that the government initially failed to intervene after the Court did not give it enough extensions of time to complete its investigation. (Docket #69 at 2). After the government completed its investigation, it decided to pursue its own FCA action. Id. Presser argues that this is not an end-run around the “good cause” standard, but instead represents the government's strategic choice among the options available to it under the FCA. Id.

         She also challenges the notion that the government has not participated in this case. Id. She states that when the Seventh Circuit referred the case to mediation, the government “took the lead, seeking a global settlement of all potential claims involving defendants' conduct offending the False Claims Act.” Id. Presser further contends that Defendants have always known that the government has been “aggressively pursuing its own investigation of them, ” including acquiring documents from Defendants and conducting witness interviews, suggesting that the government's new case comes as no surprise to them. Id. at 3.

         Presser next defends her own litigation conduct. She states that because the government has filed an FCA action based on similar facts, she is not permitted to pursue her claims independently. Id. at 3-4 (citing U.S. ex rel. LaCorte v. Wagner, 185 F.3d 188, 191 (4th Cir. 1999)). Thus, when Defendants served discovery requests on her ...


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