Higgins v. Healthsouth Corporation

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

UNITED STATES OF AMERICA,

ex rel. MELISSA HIGGINS,

Plaintiffs,

v. Case No.: 8:14-cv-2769-T-33AEP

HEALTHSOUTH CORPORATION,

Defendant.

______________________________/

ORDER

This cause comes before the Court pursuant to Defendant

HealthSouth Corporation’s Motion to Dismiss (Doc. # 104),

filed on July 30, 2019. Plaintiff Melissa Higgins filed a

response in opposition (Doc. # 113) on August 13, 2019.

HealthSouth filed a reply in support of its Motion (Doc. #

122) on August 23, 2019. For the reasons discussed below,

the Motion is granted.

I. Background

In her Amended Complaint, Higgins alleges that her

former employer, HealthSouth, defrauded the United States by

generating improper fees and fraudulent billings to Medicare,

Medicaid, and other public and private health insurers. (Doc.

# 88 at ¶¶ 2, 30, 87-164, 194). She alleges that HealthSouth

defrauded the government by knowingly admitting and

readmitting patients to its inpatient rehabilitation

facilities that did not meet certain federal criteria and

then billing the government for unnecessary services provided

to those patients. (Id. at ¶¶ 2, 13-24, 100-64).

According to the Amended Complaint, Higgins formerly

worked for HealthSouth as the local and regional Director of

Therapy Operations in Arlington, Texas. (Id. at ¶¶ 165-68).

When she raised concerns regarding the alleged fraudulent

billing practices within the corporation, she was stripped of

her responsibilities and then forced to resign in 2011. (Id.

at ¶¶ 31-34, 172-86).

In July 2012, Higgins filed the instant qui tam action

against HealthSouth, raising several claims on behalf of the

United States under the False Claims Act, 31 U.S.C. § 3729,

et seq., and a retaliation claim under the FCA pursuant to 31

U.S.C. § 3730(h). (Doc. # 2 at ¶¶ 161-75).

On April 1, 2019, the United States notified the Court

that it would not be intervening in the case at that time.

(Doc. # 73). Accordingly, the Court lifted the seal from the

Complaint and directed that it be served upon HealthSouth.

(Doc. # 74).

On June 24, 2019, the United States notified the Court

that it would intervene in this action for the purposes of

settlement. (Doc. # 81). Following the parties’ filing of a

Joint Stipulation of Dismissal, this Court dismissed

Higgins’s federal qui tam claims with prejudice, but it

retained jurisdiction to resolve Higgins’s claim for

retaliation under 31 U.S.C. § 3730(h), as well as any claims

for attorneys’ fees and costs pursuant to 31 U.S.C. § 3730(d).

(Doc. # 87).

Higgins thereafter filed her Amended Complaint, in which

she raises two claims — a retaliation claim under the FCA, 31

U.S.C. § 3730(h) (Count I), and a claim for attorneys’ fees,

expenses, and costs under 31 U.S.C. § 3730(d) and (h) (Count

II). (Doc. # 88 at ¶¶ 198-207). In addition, Higgins filed

a motion for attorneys’ fees, seeking attorneys’ fees, costs,

and expenses pursuant to 31 U.S.C. § 3730(d). (Doc. # 89).

That motion is currently pending.

HealthSouth now moves, pursuant to Federal Rule of Civil

Procedure 12(b)(6), to dismiss Count I and those portions of

Count II that relate to the retaliation claim in Count I.

(Doc. # 104 at 1). According to HealthSouth, Higgins’s claims

are barred by the waiver and release contained in the

Severance Agreement she signed in connection with the

termination of her employment. HealthSouth appended a copy

of the Severance Agreement to its Motion to Dismiss. (Doc.

# 104-1). Higgins responded, and HealthSouth replied. (Doc.

## 113, 122). The Motion is now ripe for review.

II. Legal Standard

When considering a motion to dismiss brought under Rule

12(b)(6), this Court accepts as true all the allegations in

the complaint and construes them in the light most favorable

to the plaintiff. Jackson v. Bellsouth Telecomms., 372 F.3d

1250, 1262 (11th Cir. 2004). Further, this Court favors the

plaintiff with all reasonable inferences from the allegations

in the complaint. Stephens v. Dep’t of Health & Human Servs.,

901 F.2d 1571, 1573 (11th Cir. 1990). However, the Supreme

Court explains that:

While a complaint attacked by a Rule 12(b)(6)

motion to dismiss does not need detailed factual

allegations, a plaintiff’s obligation to provide

the grounds of his entitlement to relief requires

more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action

will not do. Factual allegations must be enough to

raise a right to relief above the speculative

level.

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal

citations omitted). In addition, courts are not “bound to

accept as true a legal conclusion couched as a factual

allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986).

Furthermore, “[t]hreadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do

not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Generally, if matters outside the pleadings are

presented as part of a motion to dismiss under Rule 12(b)(6),

the motion must be treated as one for summary judgment under

Rule 56. Fed. R. Civ. P. 12(d). There is, however, an

exception to this rule. “In ruling upon a motion to dismiss,

the district court may consider an extrinsic document if it

is (1) central to the plaintiff’s claim, and (2) its

authenticity is not challenged.” SFM Holdings, Ltd. v. Banc

of Am. Sec., LLC, 600 F.3d 1334, 1337 (11th Cir. 2010); see

also Harris v. Ivax Corp., 182 F.3d 799, 802 n.2 (11th Cir.

1999) (“[A] document central to the complaint that the defense

appends to its motion to dismiss is also properly considered,

provided that its contents are not in dispute.”).

Similarly, although the existence of an affirmative

defense usually will not support a Rule 12(b)(6) motion, a

district court may dismiss a complaint when the complaint’s

“own allegations indicate the existence of an affirmative

defense, so long as the defense clearly appears on the face

of the complaint.” Fortner v. Thomas, 983 F.2d 1024, 1028

(11th Cir. 1993) (quoting Quiller v. Barclays Am./Credit,

Inc., 727 F.2d 1067, 1069 (11th Cir. 1984)); see also Banco

Popular N. Am. v. M/V Triple Play, No. 12-20188-CIV-GRAHAM,

2012 WL 12885237, at 82 (S.D. Fla. Apr. 11, 2012) (explaining

that waiver is typically an affirmative defense that may be

raised in a motion to dismiss only if it is apparent on the

face of the complaint).

III. Analysis

As a preliminary matter, the parties do not dispute that

the Severance Agreement is central to the plaintiff’s claim

and is authentic. See SFM Holdings, 600 F.3d at 1337.

Accordingly, the Court will consider the Severance Agreement

in ruling upon HealthSouth’s Motion.

A. The Terms of the Severance Agreement

The Severance Agreement entered into between Higgins and

her former employer provides that the company would pay

Higgins the following: (1) two months’ salary, (2) a lump sum

payment equal to all unused paid time off that Higgins had

accrued, and (3) a two-month continuation of Higgins’s

vision, health care, medical, and dental insurance benefits

with the company. (Doc. # 104-1 at 1-2). In exchange, Higgins

agreed to:

irrevocably and unconditionally release[] the

Company and its parents (including, but not limited

to, . . . HealthSouth Corporation) . . . from any

and all complaints, claims, liabilities,

obligations, promises, agreements, causes of

action, rights, costs, losses, debts and expenses

of any nature whatsoever, known or unknown, which

Ms. Higgins . . . ever had, now have, or hereafter

can, will or may have . . . by reason of any matter,

fact or cause whatsoever against the Company or any

of the other Company Releasees from the beginning

of time to the date upon which Ms. Higgins signs

this Agreement.

(Id. at 2-3). The release explicitly includes “all claims

arising out of, or relating to, Ms. Higgins’ employment with

the Company and the termination of Ms. Higgins’ employment

with the Company, including . . . all claims arising under

any foreign, federal, state and local laws including, without

limitation . . . the False Claims Act.” (Id. at 3). The

Severance Agreement provided Higgins with at least 21 days to

consider the terms of the Agreement and seven days to revoke

her consent after signing, and further advised Higgins of her

right to consult with an attorney prior to signing the

Agreement. (Id. at 1, 7). The Agreement also contained, in

bold, all-capital letters just above the signature lines, the

following:

THE UNDERSIGNED HAVE CAREFULLY READ THIS SEVERANCE

AGREEMENT AND HAVE NOT BEEN COERCED INTO SIGNING

IT; THEY UNDERSTAND ITS CONTENTS AND THEY FREELY

AND VOLUNTARILY AGREE TO ABIDE BY ITS TERMS.

(Id. at 7). Higgins signed the Severance Agreement on July

15, 2011 — 22 days after her resignation. (Id.; Doc. # 88 at

¶ 183).

B. Whether the Severance Agreement is Void as Against

Public Policy

Higgins first attacks the Severance Agreement as against

public policy and, therefore, legally unenforceable. (Doc.

# 113 at 8). Higgins claims that the language of the waiver

and release contained in the Severance Agreement seeks to

extinguish her right to bring a case under the FCA, and “it

is in the public interest that fraud against the Government

be exposed and prosecuted by the Department of Justice.”

(Id.).

Although the Eleventh Circuit has not had cause to

consider this question, the Tenth Circuit has rejected the

argument that “the policy of the FCA to protect an employee

from retaliation for bringing forward information about fraud

against the government outweighs a private release.”

VanLandingham v. Grand Junction Reg’l Airport Auth., 603 F.

App’x 657, 661 (10th Cir. 2015). The Tenth Circuit drew a

distinction between qui tam actions brought by a private

person on behalf of the government, which under 31 U.S.C. §

3730(b)(1) “may be dismissed only if the court and the

Attorney General give written consent to the dismissal and

their reasons for consenting,” and the retaliation provision

of the FCA, which “does not have a similar requirement.” Id.

Based on this difference, the Tenth Circuit upheld the

district court’s ruling that the FCA “does not preclude [the

plaintiff’s] waiver of her private retaliation claim.” Id.;

see also Brown v. City of S. Burlington, 393 F.3d 337, 346

(2d Cir. 2004) (drawing a distinction between the public-

benefit provisions of the FCA and the retaliation provision).

Another Florida district court reached a similar

conclusion where a release discharged “any and all” claims

the plaintiff might have arising out of his employment with

the defendant. United States ex rel. Keeler v. Eisai, Inc.,

Case No. 09-22302-CIV-UNGARO, 2011 WL 13099033, at *3 (S.D.

Fla. June 21, 2011). In that case, the court held that the

plaintiff was barred from bringing his FCA retaliation claim,

but the release did not bar the plaintiff’s FCA qui tam

claims. Id.; see also United States ex rel. Davis v. Lockheed

Martin Corp., No. 4:09-CV-645-Y, 2010 WL 3239228, at *3-4

(N.D. Tex. Aug. 16, 2010) (holding that a written release

could not be enforced to dismiss plaintiff’s qui tam claims

under the FCA without the consent of the Attorney General and

the court but that the release did bar plaintiff’s retaliation

claims).

The cases Higgins relies on to support her argument are

inapposite. In United States v. Northrop Corp., the Ninth

Circuit only considered the public policy implications of the

release of qui tam claims and expressly refused to consider

the FCA’s anti-retaliation provision. See 59 F.3d 953, 963-

65, 968 n.12 (9th Cir. 1995). Furthermore, in United States

ex rel. Dillion v. St. Elizabeth Med. Ctr., Inc., No. 2:15-

cv-13 (WOB-JGW), 2017 WL 3000662, at *4 (E.D. Ky. July 13,

2017), that court specifically found that the separation

agreement entered into by the plaintiff barred her

retaliation claim under the FCA and granted the defendant’s

motion to dismiss with respect to that claim.

The Court finds the reasoning of these cases persuasive.

Here, Higgins has already settled her qui tam claims, and

only her retaliation claim remains. Accordingly, the waiver

and release contained in Higgins’s Severance Agreement, if

valid and enforceable, will serve to bar her retaliation claim

under the FCA.1

1 Higgins also argues that other provisions of the Severance

Agreement, including the “Non-disparagement” and “Testimony”

provisions, serve to render the Severance Agreement void and

unenforceable. (Doc. # 113 at 8-9). But Higgins cannot

credibly claim that these provisions stopped her from filing

a qui tam action under the FCA because Higgins filed such an

action, leading to a settlement between HealthSouth and the

United States Department of Justice. (Id. at 6). Moreover,

these provisions do not bear on Higgins’s release of her

private retaliation claim against HealthSouth.

C. Whether the Release is Valid and Enforceable

Higgins alleges in her Amended Complaint that she raised

concerns about HealthSouth’s fraudulent billing practices

within the company, and she was forced to resign because of

those complaints. (Doc. # 88 at ¶¶ 165-87). Higgins

therefore clearly knew of the existence of a potential

retaliation claim at the time she signed the waiver. However,

in both her Amended Complaint and her response in opposition

to the Motion to Dismiss, Higgins argues that she was coerced

or forced into signing the Severance Agreement. (Id. at ¶¶

183-86; Doc. # 113 at 1, 5).

A waiver of remedial statutory rights must be

scrutinized under the “totality of the circumstances” to

ensure that the release was knowing and voluntary. Myricks

v. Fed. Reserve Bank of Atlanta, 480 F.3d 1036, 1040 (11th

Cir. 2007) (involving employment discrimination suit under

Title VII). This Court’s review of the totality of the

circumstances involves several objective factors, including:

the plaintiff’s education and business experience;

the amount of time the plaintiff considered the

agreement before signing it; the clarity of the

agreement; the plaintiff’s opportunity to consult

with an attorney; the employer’s encouragement or

discouragement of consultation with an attorney;

and the consideration given in exchange for the

waiver when compared with the benefits to which the

employee was already entitled.

Id. (quoting Puentes v. United Parcel Serv. Inc., 86 F.3d

196, 198 (11th Cir. 1996)); see also VanLandingham, 603 F.

App’x at 660 (applying similar factors to an individual FCA

retaliation claim).

Applying these factors to the instant case, the Court

finds that: (1) Higgins was educated, as she alleges that she

has a Bachelor of Science degree and was a Director of Therapy

Operations during her employment with HealthSouth (Doc. # 88

at ¶ 42); (2) the Severance Agreement gave Higgins 21 days to

consider the Agreement before signing it and an additional

seven days to revoke her consent (Doc. 104-1 at 1); (3) as

will be more fully discussed below, the Severance Agreement

plainly and clearly included all claims arising from

Higgins’s employment and her subsequent termination,

including claims under the FCA (Id. at 3); (4) the Agreement

advised Higgins of her right to consult with an attorney

before executing the Agreement, which Higgins had time to do

because she did not sign the Agreement until July 15, 2011,

22 days after her termination date of June 23, 2011 (Id. at

7; Doc. # 88 at ¶ 183); and (5) Higgins was given an additional

two months of salary and insurance benefits and a lump sum

payment for paid time off to which she would not otherwise

have been entitled (Doc. # 104-1 at 1-2). Here, the totality

of the circumstances indicates that Higgins accepted valuable

consideration in exchange for her knowing and voluntary

relinquishment of the claims described in the Severance

Agreement.

D. Whether the Terms of the Severance Agreement are

Ambiguous

Higgins argues that the Severance Agreement’s language

is ambiguous and must be construed against HealthSouth as the

Agreement’s drafter. (Doc. # 113 at 9-11). Specifically,

she claims that the Agreement is ambiguous because it does

not articulate whether the release of claims under the “False

Claims Act” pertains to the federal FCA, the Texas False

Claims Act, or both. (Id. at 10). Higgins argues that, given

this ambiguity, the Court should find the invocation of the

“False Claims Act” invalid or read the terms of the release

to include only the Texas False Claims Act, thus putting her

federal retaliation claim outside of the Agreement’s terms.

(Id. at 11).

The Severance Agreement indicates that Texas law governs

the Agreement (Doc. # 104-1 at 6), and, accordingly, the Court

will look to Texas law to construe the contract. See Vinnett

v. Gen. Elec. Co., 271 F. App’x 908, 912 (11th Cir. 2008)

(explaining that federal courts “use the applicable state’s

contract law to construe and enforce settlement agreements”).

Under Texas law, an unambiguous contract will be enforced as

written, and ordinarily the writing alone will be deemed to

express the parties’ intentions. Sun Oil Co. (Del.) v.

Madeley, 626 S.W.2d 726, 728 (Tex. 1981). Whether a contract

is ambiguous is a question of law that must be decided by

examining the contract as a whole in light of the

circumstances present when the contract was entered into.

Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940

S.W.2d 587, 589 (Tex. 1996).

A contract is not ambiguous if it can be given a certain

or definite legal meaning or interpretation. Id. Ambiguity

does not arise simply because the parties advance conflicting

interpretations of the contract; rather, for an ambiguity to

exist, both interpretations must be reasonable. Id.

While Texas law requires that a release must mention the

claim to be effective, it does not require “that the parties

anticipate and identify each potential cause of action

relating to the release’s subject matter.” Chaplin v.

NationsCredit Corp., 307 F.3d 368, 376 (5th Cir. 2002)

(quoting Keck v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692,

698 (Tex. 2000)).

Here, examining the Severance Agreement as a whole in

light of the circumstances present when the contract was

entered into, the Agreement plainly includes: “all claims

arising out of, or relating to, Ms. Higgins’ employment with

the Company and the termination of Ms. Higgins’ employment

with the Company, including . . . all claims arising under

any foreign, federal, state and local laws including, without

limitation . . . the False Claims Act.” (Doc. # 104-1 at 3

(emphasis added)). Thus, the Severance Agreement can be given

a definite legal meaning and interpretation: by its plain

terms, the Severance Agreement encompasses all claims arising

under both state and federal law that are related to Higgins’s

employment with HealthSouth and her termination. Such broad

language would encompass both the federal False Claims Act

and the Texas False Claims Act. Accordingly, Higgins’s

retaliation claim under the FCA falls within the Agreement’s

unambiguous terms.

E. Whether this Court Should Grant Higgins Leave to

Further Amend Her Complaint

Finally, Higgins requests leave to file a second amended

complaint in order to add a claim under the Texas False Claims

Act. (Doc. # 113 at 11-12). Yet the Court fails to see how

Higgins can amend her complaint to overcome the hurdle imposed

by the broad terms of the Severance Agreement. Any amendment

would necessarily be futile and, thus, Higgins’s claim for

retaliation must be dismissed with prejudice and without

leave to amend. See Silberman v. Miami Dade Transit, 927

F.3d 1123, 1133 (11th Cir. 2019) (“Leave to amend a complaint

is futile when the complaint as amended would still be

properly dismissed.”) (quotation marks omitted); see also

Zuluaga v. Bank of Am., N.A., No. 8:17-cv-2543-T-33TGW, 2018

WL 2215606, at *1 (M.D. Fla. May 15, 2018) (denying plaintiff

the opportunity to file a second amended complaint because

“leave to amend at this juncture would be futile”).

F. Attorneys’ Fees and Costs under 31 U.S.C. § 3730(h)

As part of its Motion, HealthSouth also seeks to dismiss

“those portions of Count II requesting attorneys’ fees

related to the [retaliation] claims made in Count I.” (Doc.

# 104 at 1). Count II of Higgins’s Amended Complaint consists

only of a demand for attorneys’ fees and costs under 31 U.S.C.

§§ 3730(d) and (h). (Doc. # 88 at ¶¶ 202-07).

In cases where the government does not proceed with an

action, the FCA provides for awards to qui tam plaintiffs

that include “an amount for reasonable expenses which the

court finds to have been necessarily incurred, plus

reasonable attorneys’ fees and costs.” 31 U.S.C. §

3730(d)(2). The retaliation provision of the FCA also

provides for relief in the form of “litigation costs and

reasonable attorneys’ fees.” 31 U.S.C. § 3730(h)(2).

The Court is not convinced that a stand-alone request

for attorneys’ fees is a separate cause of action under the

FCA. The statute itself does not provide for a separate cause

of action for such fees. Rather, the language of Sections

3730(d) and (h) provide a remedy for plaintiffs in connection

with substantive FCA claims. See 31 U.S.C. § 3730(d)(1),

(d)(2) (entitling “qui tam plaintiffs” to an “[a]ward” and

providing guidelines for distributing relators’ share of the

proceeds or settlement of an action and additionally

providing for costs necessarily incurred and reasonable

attorneys’ fees and costs); Id. § 3730(h)(2) (setting forth

the relief available to plaintiffs in connection with a

retaliation claim). This remedy is available to Higgins

through a motion seeking such attorneys’ fees and costs, which

Higgins has filed and the Court will rule upon in due course.

Accordingly, Count II of Higgins’s Amended Complaint is

dismissed in its entirety with prejudice. This Court’s Order

will not serve to nullify or terminate Higgins’s pending

Motion for Attorneys’ Fees (Doc. # 89), and the Court

expressly reserves jurisdiction to rule on that motion.

Because it must dismiss Higgins’s retaliation claim with

prejudice, this Court further determines that she is not

entitled to relief under 31 U.S.C. § 3730(h)(2), including

her costs and attorneys’ fees incurred in litigating the

retaliation claim. While the statute does not specifically

state that its remedies are available only to prevailing

parties, the parties here have cited no case law to the

contrary. See Miniex v. Houston Hous. Auth., No. 4:17-00624,

2019 WL 1675857, at *2 (S.D. Tex. Apr. 17, 2019) (stating in

dicta that statutory remedies under Section 3730(h)(2) are

available to successful FCA retaliation claimants); Thompson

v. Quorum Health Res., LLC, No. 1:06-CV-168, 2010 WL 2044542,

at *4 (W.D. Ky. May 21, 2010) (same).

This does not, however, impact Higgins’s entitlement to

costs and fees under Section 3730(d). See United States ex

rel. Bisk v. Westchester Med. Ctr., No. 06cv15296-LAK-FM,

2016 WL 8254797, at *10 (S.D.N.Y. Aug. 5, 2016) (explaining

that an award of attorneys’ fees and costs under Section

3730(d) does not include attorneys’ fees recoverable under

Section 3730(h) because the statutory language suggests that

the two provisions constitute “separate and distinct bases

for a fee award”).

As previously explained, Higgins has filed a motion in

this Court seeking her attorneys’ fees and costs under 31

U.S.C. § 3730(d), which is currently pending before the

Honorable Anthony E. Porcelli, United States Magistrate

Judge. (Doc. # 89). Therefore, Higgins is directed to

supplement her Motion for Attorneys’ Fees within 10 days of

the date of this Order, explaining what portion of the

requested fees, if any, were incurred in the litigation of

her retaliation claim and therefore are not recoverable.

IV. Conclusion

HealthSouth’s Motion to Dismiss is granted. Higgins’s

Amended Complaint is dismissed with prejudice in its

entirety. The Court will retain jurisdiction in order to

resolve Higgins’s Motion for Attorneys’ Fees. (Doc. # 89).

Accordingly, it is now

ORDERED, ADJUDGED, and DECREED:

(1) Defendant HealthSouth Corporation’s Motion to Dismiss

(Doc. # 104) is GRANTED. The Amended Complaint is

dismissed with prejudice in its entirety.

(2) The Clerk is therefore directed to close this case.

(3) The Court will retain jurisdiction to rule on Higgins’s

pending Motion for Attorneys’ Fees (Doc. # 89). Higgins

is directed to supplement her Motion for Attorneys’ Fees

within 10 days of the date of this Order, explaining

what portion of the requested fees, if any, were incurred

in the litigation of her retaliation claim.

DONE and ORDERED in Chambers in Tampa, Florida, this

28th day of August, 2019.

tama In. Hecverby Cray

VIR IA M. HERNANDEZ’*COVINGTON

UNITED STATES DISTRICT JUDGE

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