Forfeiting the War to Win the Battle: Drakeford v. Tuomey Highlights How Filing a Partial Motion Under Rule 59 Might Backfire
By Jeffrey J. Lauderdale and Molly A. Drake, Calfee, Halter & Griswold LLP, Cleveland, OH
The Fourth Circuit’s recent decision in U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.1 has generated a great amount of interest among healthcare lawyers and legal scholars. Particularly, the decision’s focus on whether Tuomey’s actions constituted “referrals” and whether Tuomey’s contracts implicated the Stark Law’s “volume or value” standard have stirred debate on the proper application of Stark to the referral system that Tuomey created. Lost in the shuffle of the Stark Law analysis, is the District Court’s treatment of some of the procedural issues before it — most notably, its decision on the government’s motion under Federal Rule of Civil Procedure 59.
The Stark Law has no private right of action. Accordingly — although the issue of whether Tuomey violated Stark lay at the heart of the case— the case was a qui tam action brought primarily under the False Claims Act (“FCA”). In answering a special interrogatory, the jury found that Tuomey’s referral system violated the Stark Law, but it could not find a subsequent violation of the FCA. The government, left with what seemed like only a pyrrhic victory, filed a motion under Rule 59 seeking a new trial on one particular issue of its FCA claim — whether the District Court had erroneously excluded certain evidence that tended to prove Tuomey’s knowledge of a Stark Law violation.
The Tuomey Court Disregards the Request for a Partial New Trial and Takes Away the Government’s Victory
Rule 59 allows federal courts to grant new trials and, indeed, “partial” new trials, “for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.” 2 Courts (and relevant to Tuomey, the Fourth Circuit) have held that a partial new trial may be ordered under Rule 59 where the issue to be retried is distinct and separable from the other issues.3
Despite the government’s request, the Tuomey District Court declined to grant a new trial solely “on the limited question of knowledge,” but instead granted a new trial “on the whole issue of the [FCA],” including whether Tuomey violated the Stark Law at all.4 In other words, the Court took away from the government the victory the jury had given it, ordering the government to re-litigate not only the issue it had lost concerning knowledge, but the issue it had won concerning Tuomey’s alleged violation of Stark.
Tuomey, therefore, raised various procedural issues concerning the meaning of “distinct and separable” for purposes of Rule 59. As Tuomey exemplifies, the court enjoys a greater degree of discretion when ruling on a motion for a new trial. A party filing a motion under Rule 59(a) risks losing any favorable aspects of a verdict if a court finds that the issues in a case are inextricably interwoven. As the government witnessed first-hand in Tuomey, a trial court may grant a new trial on all issues before it and not let a party pick and choose among the issues it lost. Regardless of what a party may request, courts like that in Tuomey have held that w hen issues subject to retrial are so interwoven with other issues in the case that they cannot be submitted to a jury independently without confusion and uncertainty, then it is proper to grant new trial on all issues in the case.5 Once a court grants a new trial under Rule 59, all findings by the jury, such as those made by the jury in Tuomey, are vacated and become “legal nullit[ies].”6
In Tuomey, it may be a case of little harm, little foul. A finding that Tuomey violated the Stark Law was itself a necessary prerequisite to a finding that Tuomey violated the FCA. Hence, the jury’s decision that Tuomey had not violated the FCA left the government with only a hollow victory— at least with respect to the civil case immediately at issue in Tuomey. Digging deeper, however, the risks associated with a party’s decision to file a “partial” Rule 59 Motion in the face of a favorable ruling on certain issues can hardly be ignored. The government had a bird in the hand, so to speak— a decision from a federal court that Tuomey had, indeed, violated the Stark Law. Although that decision by itself entitled the government to no monetary compensation in this particular piece of civil litigation, the decision could have been used in other proceedings against Tuomey that, unlike in the qui tam and FCA context, did not require a showing of knowledge. Stark, after all, is a strict liability statute that itself entitles the imposition of various sanctions and penalties for violations.
The Fourth Circuit’s decision to disregard the request for a partial new trial in favor of a new trial on all issues did not necessarily break any new ground or signify a trend among the courts. Federal courts have always held such discretion under the Federal Rules.7 The decision, however, serves as a stark reminder to all litigants that such motions may carry unintended consequences.
In Tuomey, it is unclear whether the government calculated the risks and found no value in the finding that Tuomey had violated the Stark law (or whether it thought that the potential rewards outweighed the risks) . Nonetheless,Tuomey reminds litigants of the very real danger associated with bringing a “partial” motion under Rule 59 — if a party finds some value in certain aspects of the jury’s decision, he may be better served to keep it than to gamble on the trial court’s willingness to segregate issues pursuant to a Rule 59 motion.
675 F.3d 394 (4th Cir. 2012).
|2||Fed. R. Civ. P. 59 [http://www.law.cornell.edu/rules/frcp/rule_59].|
|3||In re Lone Star Industries, Inc. Concrete R.R. Cross Ties Litigation, 19 F.3d 1429 (table), at 9 (4th Cir. 1994) (finding that issues of liability and damages were intertwined to the point that they should not be severed and that remanding for less than a full trial would be unjust); see also Atlantic Coast Line R.R. Co. v. Bennett , 251 F.2d 934, 938 (4th Cir. 1958).|
Colonial Leasing of New England, Inc. v. Logistics Control Intern. , 770 F.2d 479, 481 (5th Cir. 1985).
Tuomey , 675 F.3d at 405.
Tuomey was not the first instance in which a federal court granted a complete new trial despite one party’s preference for only a partial new trial. See U.S. ex rel. Miller v. Bill Harbert Intern. Const., Inc. , No. 95–cv–1231, 2011 WL 3796135 (D.D.C. Aug. 29, 2011) (finding that issue of whether defendants joined conspiracy could not be separated from questions of whether a conspiracy existed and what damages were suffered); Anderson v. Siemens Corp., 335 F.3d 466 (5th Cir. 2003) (finding that partial retrial on the issue of damages associated with decedent’s death would cause considerable confusion and uncertainty necessitating remand to district court for complete new trial); Nissho-Iwai Co. v. Occidental Crude Sales, 729 F.2d 1530 (5th Cir. 1984) (ordering complete new trial, rather than partial retrial, of fraud claim because claim arose out of acts surrounding contract breach and understanding of fraud required understanding of contract claim).
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