Ted Whitten v. Triad Hospital, Inc. , 210 F. App'x 878 ( 2006 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
December 13, 2006
No. 05-16422 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 02-00189-CV-2
TED WHITTEN,
United States of America, ex rel,
Plaintiff-Appellant,
versus
TRIAD HOSPITAL, INC., as
Successor to Quorum Health Group, Inc.,
QUORUM HEALTH RESOURCES, INC.,
QUORUM HEALTH RESOURCES, LLC,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(December 13, 2006)
Before BIRCH and BLACK, Circuit Judges, and PRESNELL,* District Judge.
*
Honorable Gregory A. Presnell, United States District Judge for the Middle District of
Florida, sitting by designation.
PRESNELL, District Judge:
Appellant Ted R. Whitten (“Whitten”) brought this action under the qui tam
provision of the False Claims Act (“FCA”). See 31 U.S.C. § 3730(b). Whitten
appeals the district court’s grant of summary judgment in favor of
defendant/appellee, Triad Hospitals, Inc.1 Specifically, Whitten contends the
district court erred when it held that this action is barred by the provisions of a
release (the “Release”) signed by Whitten and his former employer. In the
alternative, Whitten argues that even if Quorum is protected by the Release, such a
release would be void as against public policy. This Court finds that the district
court erred in its interpretation of the Release and, therefore, we reverse.
I. Background
Between 1980 and 2001, Whitten was employed by the Glynn Brunswick
Memorial Hospital Authority (the “Authority”) in a number of positions, including
compliance officer. The Authority owns and operates two hospitals in southeast
Georgia.2
In 1989, Quorum, began providing the Authority with management services.
1
Quorum Health Resources, Inc., a hospital management company, was reorganized into
a limited liability company in 1998 and renamed Quorum Health Resources, LLC. On April 27,
2001, Quorum Health Group, LLC, and its subsidiaries, merged with Triad Hospitals, Inc.
Collectively, these entities will be referred to hereinafter as “Quorum”.
2
Southeast Georgia Regional Medical Center, located in Brunswick, Georgia, and
Camden Medical Center, located in St. Mary’s, Georgia.
2
Quorum supplied the Authority with a Chief Executive Officer and Chief Financial
Officer to manage the hospitals’ day-to-day operations. Whitten’s complaint
alleges that Quorum, through its officers, is responsible for the presentation of
false claims for payment to the United States government under the Medicare,
CHAMPUS, and Tricare programs.3
On September 29, 2000, the Authority terminated its relationship with
Quorum. A few months later, Whitten left the Authority’s employ. On January 3,
2001, Whitten and the Authority entered into a severance agreement, which
contained the Release.
Whitten subsequently initiated this qui tam action against Quorum under the FCA.
The United States investigated Whitten’s claims but ultimately declined to
intervene in the suit. However, Whitten chose to proceed with the action on behalf
of the United States, in accordance with the provisions of the FCA. See 31 U.S.C §
3730(c)(3). Quorum filed a Motion to Dismiss, which the district court decided to
treat as a Motion for Summary Judgment, allowing the parties to present additional
evidence. Quorum asserted three arguments in support of its motion. However,
the district court only reached the first issue and granted summary judgment for
3
CHAMPUS is the Civilian Health and Medical Program of the Uniformed Services, a
benefit program for retired armed forces personnel and dependents of active and retired military
personnel. Tricare is a managed health care program that supplements CHAMPUS. See United
States v. Whiteside, 285 F.3d 1345, 1346 (11th Cir. 2002).
3
Quorum on the ground that this suit was barred by the Release.4
II. Standard of Review
We review de novo the grant of a motion for summary judgment. Anderson
v. UNUM Provident Corp., 369 F.3d 1257, 1262 (11th Cir. 2004). Federal Rule of
Civil Procedure 56(c) requires summary judgment when “there is no genuine issue
as to any material fact and . . . the moving party is entitled to judgment as a matter
of law.” In deciding a summary judgment motion, the court must view all the
evidence in the light most favorable to the nonmoving party, and resolve all
disputes and draw all inferences in the nonmovant's favor. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986); see also Burger King Corp. v. Weaver, 169
F.3d 1310, 1315 (11th Cir. 1999).
III. Analysis
The first issue before this Court is whether the Release applies to Quorum.
Therefore, the Court must interpret the Release using principles of contract law.
Weingart v. Allen & O’Hara, 654 F.2d 1096, 1103 (5th Cir. 1981). It is unclear,
however, whether federal or state law should be used to guide the contract
4
The district court further found that such an agreement was enforceable and did not
violate public policy, at least in cases in which the government declines to intervene in the
action.
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interpretation in this case.5 It seems more appropriate to apply state law to
determine whether a particular party or claim is released by a contract that purports
to release all claims (as opposed to only federal claims) because such general
issues of construction have no specific impact on federal rights or interests.
However, because the contract interpretation principles applied under Georgia law
and federal law are virtually the same, the outcome of this case will be unaffected
by the choice of law. Therefore, the Court assumes without deciding that, because
the contract was signed in Georgia, Georgia law applies to determine the scope of
the Release. See American Family Life Assurance Co. v. United States Fire
Company, 885 F.2d 826 (11th Cir. 1989).
Under Georgia contract law,
the construction of contracts involves three steps. At least initially,
construction is a matter of law for the court. First, the trial court must decide
whether the language is clear and unambiguous. If it is, the court simply
enforces the contract according to its clear terms; the contract alone is
looked to for its meaning. Next, if the contract is ambiguous in some respect,
the court must apply the rules of contract construction to resolve the
ambiguity. Finally, if the ambiguity remains after applying the rules of
5
It is clear that, in diversity cases, state law should control the interpretation of a contract.
See, e.g., Ferrero v. Associated Materials, Inc., 923 F.2d 1441, 1444 (1991). Conversely,
federal common law principles should be used to interpret a contract involving federal rights or
interests. See, e.g., Clearfield Trust Co. V. United States, 318 U.S. 363 (1943). However, neither
of these well-established principles guide this particular case, as this case comes before the
federal courts under Federal Question jurisdiction, and the contract is not one involving federal
rights and interests such as that in Clearfield Trust. In this case, the Release was executed by
private parties concerning private causes of action, and it is merely being interpreted now by a
federal court to determine which parties the contract protects. The mere fact that one of the
claims sought to be released arises under Federal law does not make this contract analogous to
the contract in Clearfield Trust.
5
construction, the issue of what the ambiguous language means and what the
parties intended must be resolved by a jury. The existence or nonexistence of
an ambiguity is a question of law for the court. If the court determines that
an ambiguity exists, however, a jury question does not automatically arise,
but rather the court must first attempt to resolve the ambiguity by applying
the rules of construction in O.C.G.A. § 13-2-2.
Woody's Steaks, LLC v. Pastoria, 261 Ga. App. 815, 817 (Ga. Ct. App. 2003)
(internal citations omitted). O.C.G.A. § 13-2-2(4) instructs courts, inter alia, to
look at the whole contract to instruct the interpretation of any part of it, thereby
giving meaningful effect to as much of the contract as possible. Furthermore, “a
limited or specific provision will prevail over one that is more broadly inclusive.”
Griffin v. Barrett, 155 Ga. App. 509, 510 (Ga. Ct. App. 1980).
This Court, finding that the language of the Release is ambiguous and thus
interpreting the contract to resolve that ambiguity, concludes that the language of
the Release does not prevent Whitten from bringing this action against Quorum.
The district court held that Quorum was protected by the first paragraph of
the Release which states that Whitten
hereby forever and finally releases and discharges Glynn-Brunswick
Memorial Hospital Authority, its officers, agents, trustees, servants and
employees (“Releasees”) and the heirs, executors, administrators, successors
and assigns or (sic) any of them, of and from any and all claims, demands,
actions and causes of action of any kind, known or unknown, arising or
existing until the date of the instrument. (emphasis added).
(R7 at Ex. 2, Para 1). The district court reasoned that this paragraph released
Quorum from any actions Whitten might have against it because, even though
6
Quorum was not an agent of the Authority at the time the contract was signed, it
had been an agent at the time of the alleged fraud. However, this Court finds that
the reach of this general paragraph is limited by other specific language in the
Release.
For example, twice within the contract Quorum is referred to specifically, as
distinct from the Releasees.
In the event the undersigned pursues any claim against Quorum Health
Resources, LLC or any of its affiliates or successors and in the event Glynn-
Brunswick Memorial Hospital Authority or Kings Bay Community Hospital,
Inc. is caused to be held liable for such claims because of legal or
contractual indemnity, then the undersigned agrees to hold Releasees
harmless from any such claim.
(R7 at Ex. 2, Para. 3).
The parties hereto acknowledge and agree that Ted R. Whitten is
contemplating initiating an action for damages or other claim or claims
against Quorum Health Resources, LLC, or its proper affiliate, regarding
matters arising out of his employment by Releasees and nothing herein is
intended to or shall be construed to release Quorum, et al, from any such
claims or liabilities.
(R7 at Ex. 2, Para 5). Since Quorum is clearly referred to as a separate entity from
the Releasees, the plain language of these two paragraphs indicates that Quorum is
not intended to be one of the Releasees. Also, the language from the third
paragraph quoted above implies that if Whitten sues Quorum and there is no
liability through indemnification for the Authority, Whitten has no obligation. The
only sensible reading of this paragraph is that Quorum is not one of the Releasees,
7
otherwise indemnification would be irrelevant. Additionally, the fifth paragraph
quoted above refers to Whitten’s employment by the Releasees and it is undisputed
that Whitten was never employed by Quorum.
Finally, the language in the fifth paragraph preserves a claim against
Quorum “arising out of [Whitten’s] employment” by the Releasees. Quorum
argues that this paragraph preserves only claims involving typical employment law
issues, such as discrimination. However, other language contained in the third
paragraph of the Release suggests that this FCA claim was in fact contemplated by
the parties at the time, and there is no indication that Whitten was contemplating
any other type of suit.6
Simply because the drafters characterized the contemplated suit as “arising
from his employment” does not mean that Whitten is limited to suits involving
employment law issues.7 Whitten worked as a compliance officer, and his
knowledge of Triad’s alleged fraud came to him by way of his employment. It is
6
The second sentence in the third paragraph of the Release reads:
The undersigned agrees not to file any complaint against Glynn-Brunswick Memorial
Hospital Authority, trading as Southeast Georgia Regional Medical Center, or Kings Bay
Community Hospital Inc., trading as Southeast Georgia Regional Medical Center,
relating to any alleged improper billing practices or any other Federal or State violation
of any law or regulation nor to give such information to any other person.
(R7 at Ex. 2, Para 2). This covenant not to sue runs only to the Authority, not the Releasees.
Had the parties intended to include Triad, they would have done so.
7
Indeed, employment law claims are rarely brought against a non-employer.
8
easy to see how this suit can be characterized as arising from Whitten’s
employment, despite the fact that it does not involve traditional employment law
claims. Therefore, even if Quorum was intended to be included as a Releasee, the
Court finds that the fifth and final paragraph of the Release preserved Whitten’s
qui tam claim against it.
IV. Conclusion
This Court finds that the Release, taken as a whole, does not prevent Whitten
from bringing a qui tam action against Quorum. However, Quorum sought
summary judgment in the district court on the basis of three arguments, only one of
which was actually reached by the district court. Therefore, this case will be
remanded so that the district court may address Quorum’s other two arguments.
REVERSED and REMANDED.
9