SD Florida denies required-party motion in FCA case

by bvernia | August 24th, 2009

In an August 17 order, Judge Moore denied the defendants’ FRCP 19 motion to dismiss the Government’s complaint because of the failure to join a required party.

The defendants are a physician, his wife, and a company, whom the Government alleged falsely represented that beneficiaries of a now-defunct Medicare Advantage plan (America’s Health Choice, or AHC) had serious illnesses. In a non-qui tam suit, the US sued the defendants under the FCA. In separate state-court proceedings, AHC was in receivership. The defendants argued that because a state-court order prohibited suit against AHC, the case against them had to be dismissed under FRCP 12(b)(7).

The Court reasoned that because the defendants were jointly and severally liable under the FCA, complete relief could be granted even in the absence of AHC. The Court rejected both the defendants’ characterization that AHC was an “active participant,” and the premise that the active participant theory applied to joint tortfeasors to prevent the operation of FRCP 19(a)(1)(A). The Court likewise noted that AHC had neither claimed a legally protected interest in the suit, and that the insurer would not be subject to multiple or inconsistent obligations; therefore, FRCP 19(a)(1)(B) did not apply.

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