United States v. Arriva Medical, LLC

United States District Court

for the

Southern District of Florida

United States ex rel. Troy )

Olhausen, Plaintiff, )

)

v. ) Civil Action No. 21-23916-Civ-Scola

)

Arriva Medical, LLC, and others, )

Defendants. )

Omnibus Order Granting Motion to Dismiss

and to Show Cause

This cause comes before the Court upon the Defendants’ motion to

dismiss with prejudice the complaint (ECF No. 50). The Plaintiff has filed a

response (ECF No. 55), and the Defendants have filed a reply (ECF No. 56). The

Court has considered the briefing, the record, the relevant legal authorities,

and is otherwise fully advised. For the reasons that follow, the Court grants

the Defendants’ motion to dismiss (ECF No. 50). Counts I and II are dismissed

with prejudice, while the Court will determine whether Count III is dismissed

with or without prejudice following the parties’ response to the Court’s order to

show cause.

1. Background

On January 14, 2019, the Plaintiff, Troy Olhausen, filed a separate qui

tam action based on the same conduct. (See generally Compl., United States ex

rel. Troy Olhausen, Case No. 1:19-cv-20190-RNS (S.D. Fla.) (“Olhausen I”), ECF

No. 1.) In that case, Olhausen alleges that the Defendants engaged in a

“fraudulent course of conduct connected to Medicare billing in violation of the

federal False Claims Act, 31 U.S.C. § 3729 et seq.” (Olhausen I, Third Am.

Compl., ECF No. 58 ¶ 1.) In the operative complaint in that case, Olhausen

brought six causes of action: (1) false claims for invalid prescriptions (Count I);

(2) false claims for failure to obtain authorizations of benefits (Count II); (3)

false claims for submitting claims for medical unnecessary medical items

(Count III); (4) false claims submitted by undisclosed, unaccredited locations

(Count IV); (5) unsolicited contacts (Count V); and conspiracy (Count VI). (See

id. at 68-79.)

On August 26, 2020, the Court granted the Defendants’ motion to

dismiss all claims in Olhausen I. (Olhausen I, ECF No. 74.) The Court dismissed

Counts I, III, and V with prejudice, and Counts II, IV, and VI without prejudice

and without leave to amend. (Id. at 14.) The Court subsequently denied

Olhausen’s motion for reconsideration of the Court’s order denying leave to

amend. (Olhausen I, Order Denying Mot. for Reconsideration and for Leave to

Amend, ECF No. 82.) Olhausen then appealed, but only with respect to the

Court’s dismissal of Counts II, Count IV and VI. (Olhausen I, Defs.’ Mot. to

Dismiss Ex. A., Pl.’s Appellate Brief, ECF No. 109-1.) Olhausen did not appeal

(1) the Court’s dismissal of Counts I and III nor, notably, (2) the Court’s denial

of his attempt to amend his complaint.

On January 21, 2025, the Eleventh Circuit issued its mandate in

Olhausen I, in which it vacated the Court’s dismissal of Counts II and VI but

affirmed this Court’s dismissal of Count IV “in its entirety.” (Mandate of

Eleventh Circuit, ECF No. 92 at 39.) Thus, Counts II and VI remain active in

Olhausen I, pending a motion to dismiss in that case, while Count IV has been

dismissed.

On November 7, 2021, while that appeal was pending, Olhausen filed

this suit against the Defendants based on the same conduct (“Olhausen II”).

Here, Olhausen brings three causes of action for violations of 31 U.S.C. §§ of

3729(a)(1)(A) and B: (1) false claims submitted pursuant to fraudulently

induced and obtained contracts (Count I); (2) using false statements in false

claims from undisclosed, unaccredited locations (Count II); and (3) failure to

obtain assignments of benefits (Count III). Olhausen does not dispute that

Counts I and II in Olhausen II allege the same underlying conduct as Count IV

in Olhausen II, albeit with additional factual allegations. (See generally Pl.’s

Resp.) Moreover, Count III here is the same cause of action as Count II in

Olhausen I, again albeit with additional factual allegations. (Compare Olhausen

I, Third Am. Compl. at ¶¶ 371-82 with Olhausen I, Compl. ¶¶ 304-20.) So, in

sum, Olhausen (1) appealed the Court’s decision in Olhausen I with respect to

the Court’s dismissal of Counts II, IV, and VI; (2) opted not to appeal the

Court’s denial of his attempt to amend his complaint in Olhausen I; and (3)

filed a new complaint (Olhausen II), in which Counts I and II are purportedly

new and improved versions of Count IV in Olhausen I, and Count III a new and

improved version of Count II in Olhausen I.

2. Legal Standard

A court considering a motion to dismiss, filed under Federal Rule of Civil

Procedure 12(b)(6), must accept all of the complaint's allegations as true,

construing them in the light most favorable to the plaintiff. Pielage v.

McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). Although a pleading need

only contain a short and plain statement of the claim showing that the pleader

is entitled to relief, a plaintiff must nevertheless articulate “enough facts to

state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007). “But where the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct, the complaint has

alleged—but it has not shown—that the pleader is entitled to relief.” Ashcroft v.

Iqbal, 556 U.S. 662, 679 (2009) (quoting Fed. R. Civ. P. 8(a)(2)) (cleaned up). A

court must dismiss a plaintiff’s claims if she fails to nudge her “claims across

the line from conceivable to plausible.” Twombly, 550 U.S. at 570.

3. Discussion

The Defendants argue that “[t]he Court should dismiss for five reasons,

four of which require dismissal of this entire case.” (Defs.’ Mot., at 5.) The

Defendants specifically believe that the case should be dismissed because: (1)

the FCA’s first-to-file bar prohibits Olhausen II; (2) Counts I and II are

prohibited by res judicata; (3) the Court should exercise its discretion “to

protect judicial resources and rebuke the use of duplicative litigation as a

coercive tool;” (4) Olhausen does not adequately plead falsity, materiality or

scienter, and particularity with respect to Counts I and II; and (5) FCA qui tam

actions are unconstitutional. (Id.)

The Court need not reach issues (4) and (5), because this complaint is

prohibited by the FCA’s first-to-file rule and Counts I and II are prohibited by

res judicata. Therefore, Counts I and II are dismissed with prejudice. The Court

will determine whether Count III is dismissed with or without prejudice

following the parties’ response to the Court’s order to show cause.

A. First-to-File Rule

The FCA’s “first-to-file” rule provides that “[w]hen a person brings an

action [alleging a violation of section 3729], no person other than the

Government may intervene or bring a related action based on the facts

underlying the pending action.” 31 U.S.C. § 3730(b)(5). Thus, “the first-to-file

bar [] precludes a qui tam suit based on the facts underlying a pending action.”

Kellogg Brown & Root Srvs., Inc. v. United States ex. rel. Carter, 575 U.S. 650,

654 (2015) (cleaned up).

The Defendants’ argument is simple: “[b]ecause Olhausen filed [Olhausen

II] while Olhausen I was pending on appeal, the Court must dismiss it under

the FCA’s first-to-file bar.” (Def.’s Mot., at 5.) Olhausen does not dispute that

Olhausen II is “related” to the conduct alleged in Olhausen I. Instead, Olhausen

believes that because Olhausen I was dismissed without prejudice by this

Court, it was no longer “pending” and Olhausen II does not violate the FCA’s

first-to-file bar. (Pl.’s Resp., at 3-4.)

As support for his argument that Olhausen I is no longer “pending” for

purposes of the FCA’s first-to-file bar, Olhausen relies on Kellogg, in which the

Supreme Court held that “a qui tam suit under the FCA ceases to be ‘pending’

once it is dismissed.” 575 U.S. at 664. Kellogg is, of course, binding authority

on this Court. But Kellogg does not mean that the FCA’s first-to-file bar is

inapplicable here. The issue in Kellogg was whether the first-to-file bar “keeps

new claims out of court only while related claims are still alive or whether it

may bar those claims in perpetuity.” Id. at 653. It answered that question in

the affirmative. See id. at 664. It did not answer the question before this Court,

which is whether a case is considered “pending” when the case is dismissed by

the district court but the plaintiff decides to appeal that dismissal. The Court

answers that question in the affirmative and concludes that Olhausen II

violates the FCA’s first-to-file bar.

As the Supreme Court explained in Kellogg, “pending” under the FCA

should be interpreted “in accordance with its ordinary meaning.” Kellogg, 575

U.S. at 662. “The term pending means remaining undecided, awaiting

decision.” Id. (citing Black’s 1314 (11th ed. 2014) (cleaned up).) In other words,

“pending” means “not yet decided: in continuance: in suspense.” Id. (citing

Webster’s Third 1669 (1976).)

Because Olhausen I was on appeal when Olhausen II was filed, it

“remain[ed] undecided, waiting decision,” was “in continuance” and “in

suspense.” Id. (citations omitted). Olhausen argues that this “interpretation of

the word ‘pending’ . . . is at odds with the plain meaning of the term utilized by

Congress.” (Pl.’s Resp., at 6.) But he does not explain how that is so, and it is

his interpretation that is at odds with the term’s plain meaning. To hold

otherwise would provide an anomalous result: the appeal in Olhausen I was

partially successful and that case is indisputably pending before this Court

today. So, allowing a second related action to be filed while the first is pending

on appeal could eventually “result in two pending suits on the same subject

matter—the scenario that the FCA seeks to avoid.” (Order Granting Stay in

Discovery, ECF No. 54 at 2.); see also United States ex rel. Carter v. Halliburton

Co., 19 F. Supp.3d 655 (2014) (“Carter II”) (“Applying the first-to-file bar while a

related case remains on direct review forecloses the possibility of duplicative

lawsuits in the event of a remand, which, as noted above, is exactly what

[C]ongress hoped to avoid through this statute.” (citation omitted)); United

States ex rel. Carter v. Halliburton Co., No. 1:10cv864 (JCC/TCB), 2011 WL

2118227, at *5 (E.D. Va. May 24, 2011 (“Carter I”) (“[W]hile on appeal that case

is a pending action for purposes of the first-to-file bar.”).

Olhausen argues Carter I “preceded” Kellogg, implying that it is no

longer good law. (See Pl.’s Resp., at 6.) But as the Court explained above,

Kellogg answered a different question than the one presented here (and by

extension, in Carter I). In fact, Carter I is one of the related cases discussed in

Kellogg, in which the Supreme Court noted that the district court “dismissed

this second complaint under the first-to file rule because respondent’s own

earlier case was still pending on appeal.” Kellogg, 575 U.S. at 655. The

Supreme Court left that decision undisturbed because it was not at issue in

the Kellogg appeal. See generally id. Notably, the language used by the

Supreme Court in explaining Carter I supports this Court’s application of the

word “pending” here to include those cases still pending on appeal. See id. at

655 (noting that the district court dismissed the complaint in Carter I “because

respondent’s own earlier case was still pending on appeal” (emphasis added)).1

Other courts agree that Kellogg does not warrant a different outcome. For

example, in United States of America ex. rel. VIB Partners, et al. v. LHC Group,

Inc., Case No. 3:22-cv-415, 2024 WL 5651594 (E.D. Tenn. March 29, 2024), the

district court cited Kellogg and the two Carter cases in concluding that a case is

“pending” for purposes of the FCA’s first-to-file bar while it is on appeal. See

VIB Partners, 2024 WL 5651594, at *7-8.

The Court’s conclusion is also supported by the definition of “pending”

that is applied to the discretionary “first-to-file” rule. See Miccosukee Tribe of

Indians of Fl. v. United States Dept. of Treasury, Case No. 20-cv-23182-KMW,

2020 WL 9720369, at *3 (S.D. Fla. Oct. 1, 2020) (Williams, J.) (“Courts have

routinely applied the first-filed rule when the dismissal of the earlier-filed case

is pending on appeal.” (collecting cases)). Olhausen argues that the principles

behind the discretionary “first-to-file” rule are not the same as those behind the

FCA first-to-file rule. (Pl.’s Resp., at 6.) But even if that were true, that is not a

reason for the Court, absent a different indication from Congress, to apply a

definition of “pending” contrary both to its ordinary meaning and the way in

which the term is applied by courts in different contexts, absent a different

indication from Congress.

Similarly, Olhausen believes that dismissing his complaint would not

further the goals of the FCA as “this case does not present a scenario involving

an opportunist trying to piggyback on another whistleblower’s case. Rather, as

1 Likewise, the respondent in Kellogg filed a fourth complaint, Carter IV, “but the District

Court [in Carter II] dismissed Carter IV on the ground that the petition for a writ of

certiorari in Carter III [the case before the Supreme Court in Kellogg] was still pending.”

Kellogg, 575 U.S. at 656 (emphasis added). Carter II was likewise left untouched by the

Supreme Court in Kellogg.

Mr. Olhausen has made clear, he would dismiss Olhausen I if this case were

permitted to proceed.” (Id. at 7.) But the FCA does not provide a carveout from

the first-to-file bar for the same plaintiff bringing two related actions. This

Court will not create one.

Therefore, Olhausen’s case is dismissed because it violates the FCA’s

first-to-file bar. Whether the complaint is dismissed with or without prejudice

is discussed below.

B. Whether Res Judicata Applies to Counts I and II

Normally, a suit is dismissed without prejudice when it runs afoul of the

FCA’s first-to-file bar. See Cho on behalf of States v. Surgery Partners, Inc., 30

F.4th 1035, 1045 (11th Cir. 2022). However, the Defendants believe res

judicata applies to Counts I and II—and therefore they should be dismissed

with prejudice—because the Eleventh Circuit affirmed this Court’s dismissal of

Count IV in Olhausen I, which alleged the same misconduct as Counts I and II

in Olhausen II. See Olhausen, 124 F.4th at 869; Defs.’ Mot., at 7-9. The Court

agrees.

Res judicata prohibits “claims which were raised or could have been

raised in an earlier proceeding.” Christman v. St. Lucie Cnty., Fla., 509 F.App’x

878, 878 (11th Cir. 2013). Whether res judicata applies is determined by a

four-part test: “(1) there must be a final judgment on the merits; (2) the

decision must be rendered by a court of competent jurisdiction; (3) the parties

must be identical in both suits; and (4) the same causes of action must be

involved in both cases.” Id. at 878-79. Olhausen only disputes the first

element, arguing that there was not a final judgment on the merits because

claims I and II in Olhausen I were dismissed without prejudice. (Pl.’s Resp., at

7.)

In a vacuum, a dismissal without prejudice “does not constitute a ‘final

judgment on the merits’ and thus has no res judicata effect.” Smith v. Mercer,

266 F. App’x 906, 908 (11th Cir. 2008) (citation omitted). But Olhausen does

not tell the whole story. Here, the Court denied Olhausen’s leave to amend, and

Olhausen did not appeal that denial. Therefore, when the Eleventh Circuit

affirmed this Court’s dismissal of Count IV, it was a final adjudication on the

merits of that claim and had res judicata effect.

In Christman, the district court found that there was a final judgment on

the merits and res judicata applied when (1) the Plaintiffs’ previous claim was

dismissed without prejudice; (2) the Plaintiffs’ motion to amend the complaint

was denied; and (3) the Eleventh Circuit affirmed that decision. Christman v.

St. Lucie Cnty., Fla., CASE NO. 12-14130-CIV, 2012 WL 12894795, at *2 (S.D.

Fla. July 2, 2012) (Graham, J.) The district court there explained that “[a]

decision on direct appeal constitutes an adjudication on the merits” and

“[t]hus, Plaintiffs’ previous claim was adjudicated on the merits by the Eleventh

Circuit Court of Appeals[.]” Id. (citation omitted).

The Eleventh Circuit then affirmed the district court’s finding of res

judicata, concluding that “[t]he denial of leave to amend the Christmans’ prior

complaint was an adjudication on the merits as to the proposed claims.”

Christman, 509 F. App’x at 879 (citation omitted). The Court noted that “[o]ther

circuits have held that the denial of leave to amend constitutes res judicata on

the merits of the claims ‘which were the subject of the proposed amended

pleading.’” Id. (citations omitted).

The Eleventh Circuit cited with approval the First Circuit’s opinion in

Hatch v. Trail King Indus., Inc., 699 F.3d 38 (1st Cir. 2012). See Christman, 509

F. App’x at 879. In Hatch, the plaintiffs “made a strategic choice not to appeal

the district court’s denial of their motion for leave to amend, even though they

could have. Hatch, 699 F.3d at 46. In finding that res judicata applied, the First

Circuit explained that the plaintiffs “must live with” the strategic choices they

make.” Id. The First Circuit explained that “[i]t is axiomatic that the [res

judicata] doctrine requires a party to live with its strategic choices.” Id. at 45.

“Those strategic choices include whether to attempt to amend a complaint and

whether to appeal a denial of such an attempt.” Id. And, “[w]hen a party

chooses to move for leave to amend its complaint and then not to appeal denial

of that motion, the party is not entitled to a second opportunity in a later

action to litigate the claim . . . .” Id. (cleaned up). This is so because “the party’s

recourse is to appeal, not to start a new action.”

Here, res judicata applies to Counts I and II. In Olhausen I, the Court

dismissed Counts II, IV, and VI without prejudice and without leave to amend.

(Olhausen I, Order on Mot. to Dismiss, at 74.) The Court then denied

Olhausen’s attempt to amend his complaint, noting that “[f]our weeks after the

dismissal order and two months after the amendment deadline, Olhausen”

tried to amend his complaint. (Olhausen I, Order Denying Mot. for Recon., at

3.) When the Defendants filed their motion to dismiss, “Olhausen had a choice:

stand on his pleading and oppose the motion to dismiss or request leave to

amend in order to address his pleading’s flaws.” (Id.) “As a tactical decision,

Olhausen chose to oppose the motion and lost.” (Id.)

Olhausen did not appeal the Court’s decision to deny him leave to amend

when he appealed the Court’s dismissal of Counts II, IV and VI in Olhausen I,

to the Eleventh Circuit, “even though [he] could have.” Hatch, 699 F.3d at 46.

This was another strategic decision Olhausen made. Thus, when the Eleventh

Circuit affirmed this Court’s decision to dismiss (even without prejudice) the

non-Florida location count in Olhausen I (Counts I and II here, and Count IV in

Olhausen I), that was a final adjudication on the merits of that claim—and

proposed amendments to that claim. See Christman, 2012 WL 12894795, at *2;

Christman, 509 F.App’x at 879; see also McMillan v. Fulton Cnty., GA, 352 F.

App’x 329, 331 (11th Cir. 2009) (“McMillan did not challenge the denial of her

motion to amend her complaint in her appeal. This court has since affirmed the

district court’s summary judgment order in McMillan I. Therefore, there is a

final decision on the merits, and the court properly applied res judicata to the

instant complaint.” (citation omitted)). He is thus “not entitled to a second

opportunity in a later action to litigate the claim.” Hatch, 699 F.3d at 45.

Olhausen does not really attempt to distinguish Christman. He only

states that “[n]one of the cases Defendants rely on involved dismissal without

prejudice.” (Pl.’s Resp., at 7.) That argument is unavailing, for two primary

reasons. First, the argument is not accurate. As the Court explained above, the

district court in the Christman case found that res judicata applied to its

dismissal of the plaintiffs’ claims without prejudice and without leave to amend

after the Eleventh Circuit affirmed the dismissal. See Christman, 2012 WL

12894795, at *2. The Eleventh Circuit then affirmed the district court’s finding

of res judicata. See Christman, 509 F. App’x at 879. In other words, the

Eleventh Circuit affirmed the district court’s finding of res judicata even though

the dismissal was without prejudice.

Second, the rationale in Christman is arguably stronger here. In

Christman, the plaintiffs appealed the district court’s denial of its motion to

amend. See id. Here, as the Court has stated ad nauseum, Olhausen opted to

not take such an appeal. Olhausen must live with that decision. See Hatch,

699 F.3d at 46. He—and other plaintiffs in the future—cannot get around the

holding in Christman by opting not to appeal the denial of the motion to amend

in the first place.2 See id. (explaining that a “party’s recourse is to appeal, not

to start a new action”). Doing so would contravene the protections afforded to

litigants by res judicata, which was “founded on the principle that a prior

opportunity to litigate protects a party’s adversaries from the vexation

attending multiple lawsuits, conserves judicial resources, and fosters reliance

on judicial action by minimizing the possibility of inconsistent decisions.”

Christman, 509 F.App’x at 878 (cleaned up).

Thus, when Olhausen did not appeal this Court’s denial of his leave to

amend and the Eleventh Circuit affirmed this Court’s dismissal of Count IV in

2 The Court’s holding is narrow. The Court only holds that res judicata applies when a

plaintiff appeals a dismissal (whether it be with or without prejudice), opts not to appeal

the leave to amend, and that dismissal is subsequently affirmed on appeal.

Olhausen I, see Olhausen, 124 F.4th at 869, there was “[a] decision on direct

appeal [that] constitutes an adjudication on the merits” of Olhausen’s non-

Florida location claims and amendments thereto. See Christman, 2012 WL

12894795, at *2.

Therefore, Counts I and II are dismissed with prejudice.

C. Whether Count III Should Be Dismissed With or Without Prejudice

The Defendants also seek dismissal with prejudice on the grounds that

“Olhausen has not just abused the judicial process with duplicative litigation,

but explicitly used his duplicative litigation to circumvent the judicial process

when he does not get his way.” (Defs.’ Mot., at 9-10.)

“District courts possess the inherent power to police their dockets,

including “dismissing [an] action with or without prejudice.” Nurse v. Sheraton

Atlanta Hotel, 618 F. App’x 987, 989 (11th Cir. 2015). While Olhausen has

shown, time and again, that he makes strategic decisions with the (mistaken)

belief that they have no repercussions, the Court cannot yet determine that his

actions rise to the level of frivolity that would make this Court dismiss the

remaining claim in this action—Count III (assignments of benefits)—with

prejudice solely on the Court’s inherent ability to police its own docket.

However, the Court is concerned with the propriety of Count III. Count III

in Olhausen II—Olhausen’s assignment of benefits claim—seems to be the

same claim as Count II in Olhausen I. (Compare Olhausen I, Third Am. Compl.

at ¶¶ 371-82 with Olhausen I, Compl. ¶¶ 304-20.) And Count II in Olhausen I

remains pending due to the Eleventh Circuit’s vacatur of the Court’s dismissal

of that count. The Court is thus concerned with the procedural propriety of

Count III. See, e.g., Daker v. Ward, NO. 7:20-CV-89-HL-TQL, 2022 WL

1233208, at *2 (M.D. Ga. April 26, 2022) (dismissing, albeit without prejudice,

a plaintiff’s claims where the “Plaintiff chose to appeal [the decisions dismissing

his claims] rather than refile those claims, and those appeals were pending at

the time he filed the Amended Complaint in this action); Jones v. District of

Columbia, Civil Action No. 1:21-cv-01696 (UNA), 2021 WL 5564631, at *1

(D.D.C. Nov. 23, 2021) (dismissing case where the “case [was] substantially

similar to other matters that plaintiff has already filed in this District,” one of

which was dismissed and “currently pending on appeal”).

Therefore, the parties are directed to show cause by May 16, 2025, why

Count III is or is not procedurally proper. The Court will then enter a separate

order explaining whether Count III is dismissed with or without prejudice.

4. Conclusion

For the foregoing reasons, the Court grants the Defendants’ motion to

dismiss (ECF No. 50). Counts I and II are dismissed with prejudice, while the

Court will determine whether Count III is dismissed with or without prejudice

following the parties’ response to the Court’s order to show cause.

Done and ordered in Miami, Florida, on May 6, 2025.

Robert N. Scola, Jr.

United States District Judge