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Clark v. Unitedhealth Group, Inc.

United States District Court, D. New Mexico

March 6, 2018

KAREN CLARK, Plaintiff,
v.
UNITEDHEALTH GROUP, INC., et al., Defendants.

          PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

          THE HONORABLE CARMEN E GARZA, CHIEF UNITED STATES MAGISTRATE JUDGE.

         THIS MATTER is before the Court on Defendants UnitedHealth Group, Inc., and United Healthcare Insurance Company's Motion to Amend Judgment (the “Motion to Amend”), (Doc. 94), filed October 20, 2016; Plaintiff Karen Clark's Response to Defendant's Motion to Amend Judgment, (Doc. 96), filed October 31, 2016; the United States of America's Opposition to Defendants' Motion to Amend Judgment, (Doc. 98), filed November 3, 2016; the State of New Mexico's Joinder in United States of America's Motion in Opposition to Defendants' Motion to Amend Judgment, (Doc. 99), filed November 3, 2016; and Defendants' Reply in Support of Motion to Amend Judgment, (Doc. 102), filed November 21, 2016. United States District Judge Martha Vasquez referred this case to Chief United States Magistrate Judge Carmen E. Garza for proposed findings and a recommended disposition. (Doc. 116). Having reviewed the record, the briefing, and the relevant law, the Court RECOMMENDS that the Motion to Amend be DENIED.

         I. Background

         This case arises from the termination of Plaintiff's employment by Defendant UnitedHealth Group, Inc. (“UHG”), a healthcare services provider. From October 10, 2011, to April 9, 2012, UHG employed Plaintiff as a Senior Investigator in a subdivision of UHG dedicated to investigating allegations of fraud and abuse. (Doc. 1 at 2). In her Complaint for Damages and Penalties (the “First Complaint”), (Doc. 1), Plaintiff claimed that, while she was employed by UHG, she repeatedly uncovered evidence of fraud, abuse, and false claims, and reported her findings to relevant authorities. Id. at 10-35. Plaintiff's supervisors and other employees of Defendants allegedly reprimanded Plaintiff for doing so and instructed her to stop reporting her findings to authorities. Id. Plaintiff persisted and claims she was fired in retaliation for doing so. Id. at 48-49.

         Plaintiff's First Complaint brought three broad claims: first, violations of the False Claims Act (the “FCA”), 31 U.S.C. § 3729; second, violations of the New Mexico Fraud Against Taxpayers Act (the “FATA”), NMSA 1978, §§ 44-9-1 to -14 (2007, as amended through 2015); and finally, retaliatory discharge for whistleblowing. (Doc. 1 at 39-49). Plaintiff alleged that UHG violated the FCA and FATA by knowingly accepting, processing, and paying improper claims and falsely certifying that its subcontractors complied with federal law. Id. at 39-48. Plaintiff also alleged UHG violated the FATA by firing her in retaliation for investigating and reporting suspected fraud. Id. at 48-49.

         After the United States and New Mexico declined to intervene, Defendants moved to dismiss the First Complaint. (Doc. 32). Defendants sought dismissal because Plaintiff failed to satisfy Federal Rule of Civil Procedure 9(b), which requires a party to “state with particularity the circumstances constituting fraud or mistake.” Id. at 2-12. Because Plaintiff did not identify any specific fraudulent claim or fraud by a specific defendant, Defendants insisted the FCA and FATA claims must be dismissed. Id. at 2-9. Finally, according to Defendant, Plaintiff insufficiently pled any protected activity or retaliation under the FATA. Id. at 9-12.

         On September 22, 2016, Defendants' motion to dismiss was granted. In short, Plaintiff failed to allege violations of the FCA or FATA with sufficient particularity under Rule 9(b). (Doc. 91 at 10-16). Because Plaintiff's federal claims were dismissed, Plaintiff's state claims were also dismissed for lack of jurisdiction. Id. at 16-17. Although Defendants requested Plaintiff's First Complaint be dismissed with prejudice, Plaintiff's claims were dismissed without prejudice and Plaintiff was granted leave to amend her complaint. Id. at 1 n. 1. Accordingly, a Judgment was filed dismissing Plaintiff's claims without prejudice. (Doc. 92).

         Three weeks later, Plaintiff filed her First Amended Complaint for Violation of § 44-9-11 NMSA and Retaliatory Discharge (the “Amended Complaint”), (Doc. 93). Again, Plaintiff alleged a pattern of investigating reports of billing fraud, being told not to do so, and being terminated in retaliation. (Doc. 93 at 5-25). Notably, Plaintiff did not re-plead alleged violations of the FCA or the FATA.

         After Plaintiff filed the Amended Complaint, Defendants moved to amend the judgment under Fed. Rule Civ. P. 59(e). In particular, Defendants ask the Court to change the Judgment from “without prejudice” to “with prejudice.” (Doc. 94 at 1). Defendants argue it is well-settled that when a plaintiff's claims are dismissed without prejudice, the plaintiff is given leave to amend, and if the plaintiff does not amend or appeal, a judgment entered without prejudice becomes one entered with prejudice. Id. at 2. Because Plaintiff did not re-plead violations of the FCA and FATA, Defendants state those claims should be dismissed with prejudice.

         Plaintiff denies that grounds exist to amend the judgment. Plaintiff concedes that the judgment would have become final for purposes of appeal if she did not appeal or amend her complaint, but she disputes that the judgment should become one with prejudice. (Doc. 96 at 2). Further, Plaintiff contends that none of the three traditional grounds warranting post-judgment relief are present in this case. Id. at 1-2. Finally, Plaintiff argues dismissing her claims with prejudice would be improper without the United States' and New Mexico's consent. Id. at 2-3.

         Following Plaintiff's response, both the United States and New Mexico opposed dismissing the FCA and FATA claims with prejudice insofar as the dismissal with prejudice would apply to them. The United States argues that it is inappropriate to dismiss claims with prejudice as to the United States where, as here, dismissal was unrelated to the merits. (Doc. 98 at 3-7). Similarly, New Mexico contends a dismissal with prejudice would prevent future, potentially meritorious litigation it could bring against Defendants. (Doc. 99 at 1-2). Defendants did not reply to these responses or otherwise argue dismissal should be with prejudice as to the United States or New Mexico.

         In reply to Plaintiff's response, Defendants insist the Court has the authority to amend the judgment and should do so. First, Defendants contend that Plaintiff's choice not to re-plead her FCA and FATA constitutes new evidence warranting reconsideration of the dismissal without prejudice. (Doc. 102 at 1-2). Second, Defendants imply that not amending the judgment would work a manifest injustice. Id. at 3. Finally, Defendants point out that the United States and New Mexico do not object to dismissing Plaintiff's FCA and FATA claims with prejudice. Id.

         II. Analysis

         As discussed, Defendants argue the Court should amend the Judgment to be “with prejudice” rather than “without prejudice.” Defendants insist it is well-settled that if a plaintiff's claims are dismissed without prejudice, the plaintiff is given leave to amend the complaint, and the plaintiff does not do so, a dismissal without prejudice becomes one with prejudice. (Doc. 94 at 1-3). This is the only argument Defendants raise in the Motion to Amend. ...


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