Indiana's claims dismissed from qui tam suit

by Ben Vernia | May 24th, 2011

On May 9, Judge Robert L. Miller of the Northern District of Indiana dismissed the State of Indiana’s claims in U.S. ex rel. McCoy v. Madison Center, a qui tam suit in which the federal government had declined to intervene. Judge Miller also dismissed the relators’ claims brought under the Indiana False Claims and Whistleblower Protection Act on the grounds that they predated the Act’s passage.

The relators filed their case in 2005, and the government declined to intervene in January 2009. In June of 2010 (a year after the court’s deadline), the State of Indiana filed a notice of intervention, and filed a complaint in its own name asserting Medicaid fraud.

Judge Miller agreed with the defendant that the whistleblower’s state-law claims were meritless because Indiana did not enact its law until two years after the relators’ specific allegations ended. He refused their argument that the fraud was continuing, stating that this was not alleged with sufficient particularity.

As for the State, Judge Miller concluded that the court had jurisdiction under the False Claims Act, 31 USC 3730(b)(5), which he reasoned was intended to permit states to join federal False Claims Act suits if their state-law allegations arise out of the same transactions or occurrences. He agreed with the defendants, however, that the State’s intervention was untimely exercised under Fed. R. Civ. P. 24.

He also concluded that the State’s complaint did not relate back to the filing of the relator’s qui tam complaint. The State was not entitled to the benefit of the FCA’s relation back provision (31 USC 3731(c)), Judge Miller found, because the “government” the Act referred to was the federal, and not a state, government. Under Fed. R. Civ. P. 15(c)(1)(B), the State’s complaint did not relate back because it alleged different fraudulent conduct from the relator’s complaint. As with the relators’ complaint, Judge Miller concluded that the State had insufficiently pleaded continuing misconduct, and so its claims were barred by the six-year statute of limitations.

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