United States v. Team Finance

Case: 22-40707 Document: 00516879635 Page: 1 Date Filed: 08/31/2023

United States Court of Appeals

for the Fifth Circuit United States Court of Appeals

Fifth Circuit

____________ FILED

August 31, 2023

No. 22-40707 Lyle W. Cayce

____________ Clerk

United States of America, ex rel Caleb Hernandez and

Jason Whaley, Relators, Et al.,

Plaintiff,

versus

Team Finance, L.L.C.; Team Health, Incorporated; Team

Health Holdings, Incorporated; Ameriteam Services,

L.L.C.; HCFS Health Care Financial Services, L.L.C.;

Quantum Plus, L.L.C., doing business as Teamhealth West,

Defendants—Appellees,

versus

Loren Adler,

Movant—Appellant.

______________________________

Appeal from the United States District Court

for the Eastern District of Texas

USDC No. 2:16-CV-432

______________________________

Before Wiener, Graves, and Douglas, Circuit Judges.

Jacques L. Wiener, Jr., Circuit Judge:

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Movant-Appellant Loren Adler seeks to permissively intervene in this

closed matter to challenge the sealing of records. The district court denied

Adler’s intervention on three independent grounds, each of which is a subject

of this appeal. Although courts are afforded great discretion in deciding

intervention pursuant to Federal Rule of Civil Procedure 24(b), the district

court’s reasoning was premised on several significant errors. We reverse and

remand.

I.

The underlying case against Defendants-Appellees TeamHealth—a

group of private equity-owned healthcare entities—was brought under the

qui tam provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.

Two former TeamHealth employees, Caleb Hernandez and Jason Whaley

(together, the “Relators”), alleged that TeamHealth routinely billed for non-

existent doctor examinations and critical care services. The matter was

unsealed in 2018 after federal and state governments declined to intervene.

The Relators moved forward with their case, which survived dismissal and

proceeded through extensive discovery.

The parties jointly agreed to a protective order but disputed its

contours. For example, TeamHealth fought to use a special designation of

“Highly Confidential – Attorneys’ Eyes Only” to protect “highly

competitive information.” Relators contended that this designation was

unnecessary because the case “d[id] not involve an intellectual property or

trade secret[s].” The district court ruled that TeamHealth could implement

its requested designation as necessary.

Throughout 2020, Relators proceeded to challenge the confidentiality

designations of specific swathes of documents. TeamHealth responded by

seeking additional protective orders. The district court held a hearing and

granted TeamHealth’s requests for protection with the caveat that the

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documents could be reconsidered later in the context of trial. As the case

proceeded, the district court entered orders sealing relevant documents.

Shortly before trial in July 2021, the parties settled this case. The

settlement required TeamHealth to pay a total of $48 million to the United

States and Relators. The district court entered the parties’ stipulation for

dismissal, but “retain[ed] jurisdiction for the purpose of enforcing the

settlement agreement between the parties.”

On December 14, 2021, Adler moved to intervene permissively

pursuant to Federal Rule of Civil Procedure 24(b)(1) for the limited purpose

of unsealing records. As “a health care economist who focuses his work on

health care pricing,” Adler had previously “studied and published

extensively on TeamHealth” and other private equity-owned companies.

Adler’s statements online make clear that he followed litigation related to

TeamHealth. He submitted that “the information in this case would be

highly informative to his research” and “would be instructive as to how

providers bill for services generally,” which he contends is of interest to the

general public.

The district court denied Adler’s motion to intervene on three

independent grounds: (1) lack of standing, (2) a failure to demonstrate “a

claim or defense that shares with the main action a common question of law

or fact,” and (3) untimeliness. Adler now appeals that decision.

II.

Adler moved to intervene in this matter pursuant to Rule 24(b)(1),

which states, “[o]n timely motion, the court may permit anyone to intervene

who . . . has a claim or defense that shares with the main action a common

question of law or fact.” Fed. R. Civ. P. 24(b)(1) (“PERMISSIVE

INTERVENTION . . . In General.”).

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Adler raises three issues on appeal related to each of the district

court’s reasons for denying his motion: (1) standing, which is required to

intervene in a closed case; (2) adherence to Rule 24(b)(1), which requires that

Adler have a “claim or defense that shares with the main action a common

question of law or fact”; and (3) timeliness, which considers delay in filing

for intervention and any related prejudice to the litigants. 1 These issues were

sufficiently raised and argued below in Adler’s motion to intervene. While

the district court is afforded great discretion in deciding permissive

intervention, its reasons for denial were premised on erroneous statements

of law which warrant reversal. See United States v. Chambliss, 948 F.3d 691,

693 (5th Cir. 2020) (A district court abuses its discretion when it “bases its

decision on an error of law or a clearly erroneous assessment of the

evidence.” (quoting United States v. Chapple, 847 F.3d 227, 229 (5th Cir.

2017))).

A.

We first examine standing. Clear precedent dictates that, “[i]n the

absence of a live controversy in a pending case, an intervenor would need

standing to intervene.” Newby v. Enron Corp., 443 F.3d 416, 422 (5th Cir.

2006) (discussing that principle as set forth in Deus v. Allstate Insurance Co.,

15 F.3d 506, 526 (5th Cir. 1994)); accord Bond v. Utreras, 585 F.3d 1061, 1072

(7th Cir. 2009) (“[T]he Fifth Circuit has concluded that a third party seeking

to intervene to challenge a protective order after the main controversy has

been disposed of must demonstrate standing.”). Adler contends that the

_____________________

1

TeamHealth also contends that Adler failed to file a pleading in accordance with

Rule 24(c). We observe no such deficiency in Adler’s motion to intervene, proposed

motion to unseal, and supporting declaration. See In re Beef Indus. Antitrust Litig., 589 F.2d

786, 789 (5th Cir. 1979); see also Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 475 (9th

Cir. 1992) (Movants must “describe[] the basis for intervention with sufficient specificity

to allow the district court to rule.”).

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court’s inherent “supervisory power over its own records and files” means

that no standing is required to intervene for the limited purpose of unsealing

records. SEC v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993)

(quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)).

However, Deus contradicts Adler’s position and remains good law. See Allen-

Pieroni v. White, 694 F. App’x 339, 340 (5th Cir. 2017) (recently applying

Deus). Deus’s reasoning—although related to intervention as of right—

naturally flows to all attempts to intervene in a closed case for the purpose of

unsealing records. See Newby, 443 F.3d at 422 (“Article III does not require

intervenors to independently possess standing where the intervention is into

a subsisting and continuing Article III case or controversy.”). We thus affirm

the district court’s reasoning that Adler must satisfy standing to intervene in

this matter.

That said, we disagree with the notion that Deus completely forecloses

standing to intervene when a movant seeks only to unseal records. Standing

here is assessed through the ordinary lens of Article III: a “plaintiff must have

suffered an injury in fact” that is “fairly traceable to the challenged action”

and that likely “will be redressed by a favorable decision.” Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560–61 (1992). As a matter of subject matter

jurisdiction, we review for standing de novo. Moss v. Princip, 913 F.3d 508, 513

(5th Cir. 2019).

The court in Deus concluded that its movants lacked standing because

“[t]he desire to intervene to pursue the vacating of the protective order

and/or the unsealing of the record is not a justiciable controversy or claim, .

. . .” 15 F.3d at 525. The district court here relied on this language to conclude

that Adler had no standing, but that sentence continues with an important

caveat: “. . . absent some underlying right creating standing for the movants.” Id.

(emphasis added). We conclude that Adler presents one such “underlying

right”—he seeks to vindicate the public’s right to access court documents.

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In Deus, the movants sought to intervene solely for their own private

benefit in separate litigation. 15 F.3d at 526 (“[H]e can protect any interest

he has in these materials by filing a discovery request in that case.”). Allen-

Pieroni, which our district court also relied on, similarly concerns a movant

seeking documents for separate litigation. 694 F. App’x at 340 (“Although

White argues . . . that allowing access to the discovery would reduce the

burden on the respective parties in her case, she has not demonstrated that

she has standing in this case.”). Adler, on the other hand, seeks to represent

an important public interest not implicated in Deus or Allen-Pieroni. He

makes clear in his declaration that “the information [he seeks to unseal] is

also highly likely to be of public interest because the cost of medical care in

the United States is of high public interest.”

Alleged violations of the public right to access judicial records and

proceedings and to gather news are cognizable injuries-in-fact sufficient to

establish standing. See United States v. Aldawsari, 683 F.3d 660, 665 (5th Cir.

2012) (finding standing when a “gag order affected [a journalist’s] right to

gather news”); Davis v. E. Baton Rouge Par. Sch. Bd., 78 F.3d 920, 926 (5th

Cir. 1996) (“Several courts have held that news agencies have standing to

challenge confidentiality orders in an effort to obtain information or access to

judicial proceedings, although they are neither parties to the litigation nor

restrained directly by the orders.”). Adler also alleges an individualized harm

from “being deprived of information that he is uniquely well-qualified to

study and publicize in his academic work, and which information he can get

nowhere else.” Such injuries are fairly traceable to this action and can be

remedied through the unsealing of appropriate records. See id. Reviewed de

novo, Adler has satisfied standing to bring his motion to intervene in this

otherwise closed matter.

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B.

We next examine the district court’s reasoning that Adler has failed

to satisfy the requirements of Rule 24(b)(1). Although permissive

intervention is “committed to the discretion of the court,” the district court

abused its discretion in concluding that Adler has not brought a “claim or

defense” in his motion to intervene. Cameron v. EMW Women’s Surgical Ctr.,

P.S.C., 142 S. Ct. 1002, 1011-12 (2022) (“[A] court fails to exercise its

discretion soundly when it base[s] its ruling on an erroneous view of the law.”

(internal quotation marks omitted)). The district court relied again on Deus:

“The desire to intervene to pursue the vacating of the protective

order and/or the unsealing of the record is not a justiciable

controversy or claim . . . .” Deus, 15 F.3d at 525. Thus, Adler’s request

to unseal documents is not a “claim” under Rule 24(b)(1)(B). Adler

has alleged no other “claim or defense” that provides a basis for

permissive intervention under Rule 24(b). Whether or not Adler’s

alleged “interest” shares a nexus with the main action a common

question of law or fact is beside the point.

United States ex rel. Caleb Hernandez & Jason Whaley v. Team Fin., L.L.C.,

No. 2:16-CV-00432-JRG, 2022 WL 16550318, at *5 (E.D. Tex. Sept. 28,

2022).

Deus’s strong statement regarding “justiciable controversary or

claim” was made in the limited context of standing. See Newby, 443 F.3d at

421-23. Reading this passage more expansively would categorically bar all

nonparty record-related challenges in federal court made with public access

in mind. This outcome is untenable when intervention is “the procedurally

correct course” for the public to challenge such restrictions. In re Beef Indus.

Antitrust Litig., 589 F.2d at 789. It would also fly in the face of precedent.

Our circuit has accepted that “[t]he ‘claim or defense’ portion of Rule

24(b) . . . [is to be] construed liberally.” Newby, 443 F.3d at 422 (citing In re

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Estelle, 516 F.2d 480, 485 (5th Cir. 1975)). Adler’s challenge falls squarely

within the legal definition of “claim”—an “interest or remedy recognized at

law.” Claim, Black’s Law Dictionary (11th ed. 2019). We have long

recognized the public’s “common law right to inspect and copy judicial

records.” See Bradley ex rel. AJW v. Ackal, 954 F.3d 216, 224 (5th Cir. 2020)

(quoting United States v. Sealed Search Warrants, 868 F.3d 385, 395 (5th Cir.

2017)) (observing that this right “promotes the trustworthiness of the

judicial process, curbs judicial abuses, and provides the public with a better

understanding of the judicial process, including its fairness”).

We have accordingly permitted intervention by nonparties who seek

only to challenge record-related restrictions. See In re Beef Indus. Antitrust

Litig., 589 F.2d at 789 (permitting nonparty intervenors to challenge a

protective order). So have all other circuits. See EEOC v. Nat’l Children’s

Ctr., 146 F.3d 1042, 1045 (D.C. Cir. 1998) (observing that “every circuit

court that has considered the question has come to the conclusion that

nonparties may permissively intervene for the purpose of challenging

confidentiality orders” and compiling cases).

We also conclude that Adler’s claim shares a common question of law

with the district court’s decisions related to sealing records: Whether there

are compelling reasons for sealing that outweigh the public’s right of access.

We reverse the district court’s determination that Adler has failed to satisfy

the requirements of Rule 24(b)(1). That said, we remain in the realm of

permissive intervention. The next issue allows us to explore the discretion

afforded to the district court on remand.

C.

Rule 24(b)(1) makes clear reference to timeliness, which this circuit

assesses through the factors set forth in Stallworth v. Monsanto Co.: (1) the

length of time the movant waited to file, (2) the prejudice to the existing

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parties from any delay, (3) the prejudice to the movant if the intervention is

denied, and (4) any unusual circumstances. 558 F.2d 257 (5th Cir. 1977); see

also St. Bernard Par. v. Lafarge N. Am., Inc., 914 F.3d 969, 976 (5th Cir. 2019)

(applying Stallworth in the context of permissive intervention). “[W]hether .

. . intervention is timely is largely committed to the discretion of the district

court, and its determination will not be overturned on appeal unless an abuse

of discretion is shown.” Stallworth, 558 F.2d at 263.

Unfortunately, the district court strikes out with its last independent

reason for denying Adler’s intervention. That court abused its discretion

when assessing Stallworth’s first factor. See Cameron, 142 S. Ct. at 1012. It is

well established that the length of time to file is measured from the moment

that the prospective intervenor knew that his interests would “no longer be

protected.” Stallworth, 558 F.2d at 264. Yet, the district court instead

considered Adler’s delay from the time of the case’s unsealing and Adler’s

general awareness of the case based on his activity online, placing Adler’s

delay at “approximately 1.5 to 2.5 years.” Stallworth expressly rejected such

measurement. Id. at 264. Indeed, the need for intervention is not immediately

apparent at the onset of litigation, and encouraging premature action is not

in the parties’, or the court’s, interest. See id. at 264-65 (“[A] rule making

knowledge of the pendency of the litigation the critical event . . . would

encourage individuals to seek intervention at a time . . . when the probability

that they will misjudge the need for intervention is correspondingly high.”).

A nonparty movant’s awareness of a case’s existence says little about

whether their interests are protected. A court must also look to the actions of

the litigants. For example, it would be error to measure the length of delay

solely from the parties’ motions regarding sealing—a court would need to

observe that the parties were complacent or non-adversarial as to not protect

the interests of potential intervenors. In this case, Adler’s interests were

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protected by the Relators’ litigation of the protective orders and

confidentiality designations.

The district court gave great weight to the fact that Adler had an

“unexplained delay of anywhere from 1.5 to 2.5 years (after when he should

have known of his interest in the case until attempting to intervene).” That

length of delay is in stark difference from the months implicated by the

settlement of the case or the time it took for Adler to realize that the

documents would not be unsealed after the case’s close. Although this error

relates to only one Stallworth factor, it was a significant one.

We reverse the district court’s decision on Adler’s motion to

intervene and remand it for reconsideration of timeliness and other

unexplored reasons for denial, if any. Although we firmly hold that Adler has

satisfied standing and the requirements of Rule 24(b)(1), we reiterate the

district court’s discretion in ultimately deciding Adler’s motion. The district

court is better situated to assess the exact length of Adler’s delay, any

explanations for such delay, and prejudice to the parties—along with

ancillary considerations such as the contents of the sealed documents, prior

consideration by the court and litigants, and the tentative nature of the

court’s evidentiary rulings in light of an upcoming, but ultimately averted,

trial. These considerations do not serve as an exhaustive list, but as aspects

of the matter we observe relevant. The decision to grant or deny Adler’s

intervention is firmly in the district court’s hands. See Turner v. Cincinnati

Ins. Co., 9 F.4th 300, 317 (5th Cir. 2021).

III.

The district court’s denial of Adler’s motion to intervene is

REVERSED and REMANDED in accordance with the foregoing.

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