Federal Civil Practice

Dist. Ct. erred in dismissing plaintiff’s qui tam action under False Claims Act (FCA), alleging that defendant submitted false claims for Skilled Nursing Facility (SNF) services at time when defendant was neither providing said services as required by its contract with Medicaid officials nor made said services available through any third party. While Dist. Ct. dismissed case on finding that defendant insufficiently alleged that defendant knew that SNF services were material to its contract with Medicaid program, Ct. of Appeals held that complaint adequately alleged that defendant, as sophisticated player in medical-services industry, was aware that SNF services played material role in delivery of Medicaid benefits, where: (1) complaint alleged that defendant enrolled new people in skilled nursing tier at time it was not providing SNF services, and thus said allegation was sufficient to allege direct factual falsity for purposes of FCA; (2) any promise made by defendant to provide SNF services during contract renewal process with government at time it was not providing said services was fraudulent on its face; and (3) instant complaint was sufficient to state claim for implied false certification, where defendant’s contract with government, indicating that there was large gap between defendant receiving $3,127 per month per person for SNF services and only $54 per month per person for less skilled services, supported finding of materiality with respect to false claims seeking payments for SNF services. (Dissent filed.)

Ct. of Appeals lacked jurisdiction to consider defendants-police officers’ interlocutory appeal of Dist. Ct.’s order denying their motion for summary judgment, alleging qualified immunity in plaintiff’s section 1983 action, alleging that defendant’s used excessive force in shooting him three times during their attempt to apprehend plaintiff during intense standoff that occurred after defendants received report that person matching plaintiff’s description had carried gun during fight with third-party. Appeal regarding sufficiency of evidence with respect to denial of qualified immunity is not eligible for interlocutory consideration, and record contained factual disputes as to how much threat plaintiff posed to defendants at time of shooting and how actively he was resisting. Moreover, said factual disputes could not be separated from resolution of whether constitutional right had been violated. Ct. further rejected defendants’ contention that plaintiff’s constitutional claim was not clearly established at time of plaintiff’s arrest, where existing case law allowed defendants to use deadly force only where immediate threat of serious harm to defendants was present. As such, appellate jurisdiction was not proper, where record, when viewed in light most favorable to plaintiff, indicated existence of factual dispute as to whether plaintiff posed immediate threat of serious harm. (Dissent filed.)

Dist. Ct. did not err in granting defendant-City’s motion for summary judgment in plaintiffs-jail detainees’ section 1983 claim that challenged defendant’s policy that required arrested individuals housed in Cook County Jail to retrieve within 30 days their property that had been seized upon their arrest (because said property was not allowed in jail) or else face prospect of having said property be deemed abandoned for purposes of allowing defendant to sell or destroy said property. Ct. rejected plaintiffs’ claim that instant seizure and disposal of their property violated Takings Clause, where record showed that: (1) defendants provided written notice to plaintiffs of how to retrieve their property; (2) defendant could treat as abandoned any property that was unclaimed after 30 days; and (3) because abandoned property belongs to no one, defendant could dispose of said property as it saw fit. Ct. further found that 30-day notice was adequate for purposes of due process clause, where: (1) 30-day period was reasonable based on defendant’s ability to store said property; (2) content on defendant’s webpage provided sufficient information to allow prisoner or his or her representative to retrieve prisoner’s property; (3) record showed that website was active during relevant period; and (4) record showed, as practical matter, that prisoners had access either personally or through correctional worker to defendant’s website.

Dist. Ct. erred in granting motion for summary judgment filed by plaintiffs (individuals residing in Indiana, who were convicted of sexual offender crimes prior to passage of Indiana Sexual Offender Act (SORA), and who were required to register as sex offenders in another state), in action alleging that SORA’s requirement that they register as sex offenders after they moved to Indiana based upon out-of-state registration requirement was unconstitutional, since it violated their right to travel under Privileges or Immunities Clause, their right to equal protection under 14th Amendment, and Article I’s prohibition on ex post facto laws. While plaintiffs argued that SORA violated their right to travel by treating them differently based on their length of residency in Indiana, Ct. of Appeals found that SORA does not discriminate based on residency where SORA obligated all sex offenders, both old and new residents, to register based on their prior convictions. Fact that registration obligation came from different state did not require different result. Ct. also found that SORA did not violate federal Ex Post Facto Clause because SORA is not punitive in nature, where: (1) SORA does not actually inflict what is historically and traditionally considered as punishment; (2) restrictions/restraints on plaintiffs residing in certain areas under SORA was not tantamount to banishment; and (3) aim of SORA of advancing public safety has rational connection to non-punitive purpose. Ct. remanded matter back to Dist. Ct. for reconsideration of plaintiff’s equal protection claim under rational basis standard, where Dist. Ct.’s strict scrutiny standard did not apply, since SORA did not violate any fundamental right such as right to travel. (Dissent filed.)

Dist. Ct. erred in dismissing plaintiffs’ lawsuit seeking to enforce $156 million judgment in action under federal Anti-Terrorism Act, alleging that several American nonprofit organizations aided Hamas, who killed plaintiff’s son while son was studying abroad in Israel. Instant lawsuit sought recovery against two different American entities and three individuals who, according to plaintiffs, were alter egos of now defunct original defendants, and thus were liable for remainder of $156 million judgment. Dist. Ct., though, after allowing only limited discovery, found that new defendants were not alter egos of original defendants and then dismissed instant action for lack of subject matter jurisdiction. Ct. of Appeals, however, in remanding matter to Dist. Ct., held that: (1) Dist. Ct’s finding on alter ego question constituted improper merits determination that went beyond proper jurisdictional inquiry; and (2) because instant action arises under section 2333(a) of Anti-Terrorism Act, where plaintiff had alleged that new entity merely operated under new name of one original defendant, Dist. Ct. had jurisdiction over matter and should have allowed case to proceed on its merits that was consistent with ordinary course of civil litigation. Ct. further noted that Dist. Ct., when resolving jurisdictional issue, improperly failed to presume truth of plaintiffs’ allegations or take facts in light most favorable to plaintiffs.

Dist. Ct. did not err in entering judgment for defendant in plaintiffs’ False Claims Act (FCA) claim, alleging that defendant knowingly filed false reports of its pharmacies’ “usual and customary" (U&C) drug prices when it sought reimbursement under Medicare and Medicaid. Specifically, defendant listed its higher cash prices as its U&C drug prices, rather than lower price-matched amount that it charged to qualifying customers under its discount program. Medicaid regulations, though, defined “usual and customary” as prices charged to general public, and although Dist. Ct. found that defendant should have reported its discount prices, it properly found that plaintiffs did not establish scienter prong of FCA that included reckless disregard and other scienter terms, where: (1) objective scienter standard established in Safeco, 551 U.S. 47, applied to claims made under FCA; (2) defendant’s understanding of definition of U&C was not made with reckless disregard, but rather was objectively reasonable, where state and federal regulations defining U&C price did not preclude defendant’s interpretation, and relevant manuals were silent about appropriate treatment for price-matching programs used by defendant so as to give warning to defendant that its price-matching program fell within definition of U&C prices; and (3) plaintiffs’ failure to establish objective scienter standard precluded finding that defendant acted “knowingly” in submitting any wrong reports. (Dissent filed.)

Dist. Ct. did not err in denying defendant’s motion to compel arbitration of plaintiff’s action under Illinois Biometric Information Privacy Act that alleged that defendant’s technology contained in TruYou feature in marketplace application OfferUp improperly used facial recognition technology to collect plaintiff’s biometric identifiers without his consent. Instant arbitration clause was contained in Terms of Service contract between plaintiff and OfferUP to which defendant was not signatory, and plaintiff failed to establish any exception to general rule that non-signatory to contract containing arbitration clause cannot enforce said clause. Moreover, Dist. Ct. properly used Illinois law to resolve instant dispute, even though Terms of Sale contract contained choice of law provision naming State of Washington as applicable law to be enforced, since defendant was unable to identify any outcome determinative difference between Washington and Illinois law, and thus Dist. Ct. was required to use Illinois law as law of forum state. Also, Ct. rejected defendant’s contention that even though it was not signatory to Terms of Service contract, it could nevertheless enforce arbitration clause, where, according to defendant: (1) it was third-party beneficiary of Terms of Service contract; or (2) it could enforce arbitration provision either as agent of OfferUp or on equitable estoppel grounds.

Dist. Ct. erred in dismissing plaintiff’s action under Telephone Consumer Protection Act, alleging vicarious liability theory that defendants’ agents generated unauthorized robocalls, under circumstances, where one defendant contracted with second defendant to sell first defendant’s insurance products, and where: (1) second defendant hired lead generators to effectuate telemarketing; and (3) lead generators made instant unauthorized robocalls. While Dist. Ct. found that plaintiff failed to plausibly allege agency relationship, Ct. of Appeals found that plaintiff adequately pleaded that lead generators acted with first and second defendants’ actual authority, where plaintiff alleged that: (1) first defendant gave second defendant and its lead generators authority to use its trade name, approved scripts and proprietary pricing and product information; (2) second defendant then provided said scripts to lead generators and participated in calls directly by pairing lead generators with customers and emailing insurance quotes to call recipients; and (3) both first and second defendants accepted benefits from lead generators’ calls. Ct. rejected defendants’ contention that plaintiff failed to meet pleading standards, where complaint lacked allegations that defendants controlled timing, quantity and geographic location of lead generators’ robocalls. Ct. also found that actions of agents may be attributable to second defendant for purposes of establishing personal jurisdiction over second defendant.

Dist. Ct. did not err in granting summary judgment motion filed by defendants-prison social worker and correctional officer, as well as entity that supplied mental health services to inmates, where plaintiff-deceased prisoner alleged that defendants were deliberately indifferent to his mental health needs, that entity failed to provide continuity of care during plaintiff’s transfer between prison facilities, and that defendants’ actions resulted in plaintiff’s suicide. While plaintiff’s representative argued that defendant social worker exhibited deliberate indifference when she failed to contact appropriate medical staff after she read two letters written by plaintiff, record showed that social worker construed both letters in positive way as examples of plaintiff’s successful articulation of anger and desire for advocacy, as well as plaintiff’s statement about efficacy of his medications. As such, plaintiff failed to show that social worker, which was not otherwise responsible for plaintiff’s mental health treatment, thought that plaintiff was at risk of suicide, Also, plaintiff did not show that defendant-correctional officer was aware that plaintiff was experiencing mental distress on night of his death. As to defendant-entity, plaintiff could not establish viable 8th Amendment claim, where plaintiff failed to present evidence that there were systemic and gross deficiencies in entity’s transfer procedures or lack thereof.

Dist. Ct. erred in denying defendants-correctional officers' motion to dismiss as untimely plaintiff-prisoner’s section 1983 action under circumstances, where plaintiff timely filed original complaint that named each defendant as “John Doe” as nominal placeholder, but filed amended complaint with actual named defendants outside applicable two-year limitations period. While Dist. Ct. found that suing “John Doe” defendants constituted “mistake” under Rule 15(c)(1)(C)(ii) that allowed plaintiff to relate his amended complaint back to date of original complaint, Ct. of Appeals found that naming “John Doe” defendants was not mistake under Rule 15(c)(1)(C)(ii), where plaintiff simply lacked knowledge of proper names of instant defendants. Moreover, Ct. of Appeals further noted that naming defendants as “John Doe” was not based on error, misconception, misunderstanding or erroneous belief, but rather was conscious choice by plaintiff. Also, Ct. of Appeals remanded matter back to Dist. Ct. for consideration of plaintiff’s equitable tolling claim.