Michael R. Lied

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Recent Cases Provide Guidance on Motions to Dismiss (Tuesday, November 25, 2014)

A dermatologist, Robert V. Kolbusz, M.D., was indicted for Medicare fraud.

When this happened, the Secretary for the Department of Health and Human Services thereafter ceased automatically processing his claims for Medicare reimbursement.

Dr. Kolbusz brought a mandamus action on behalf of himself, his medical corporation, and three patients, seeking to compel the Secretary to process claims submitted for reimbursement.

The Secretary filed a motion to dismiss for lack of subject-matter jurisdiction, arguing that Dr. Kolbusz failed to exhaust his administrative remedies before proceeding with his mandamus action. The district court agreed with the Secretary and dismissed the case for lack of subject-matter jurisdiction.

The court of appeals said:

Motions to dismiss under Rule 12(b)(1) are meant to test the sufficiency of the complaint, not to decide the merits of the case. See Weiler v. Household Fin. Corp., 101 F. 3d 519, 524 n, 1 (7th Cir. 1996). “In the context of a motion to dismiss for lack of subject matter jurisdiction, we accept as true the well pleaded factual allegations, drawing all reasonable inferences in favor of the plaintiff,” Iddir v. INS, 301 F.3d 492, 496 (7th Cir.2002), but a plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met. See Kontos v. U.S. Dep’t Labor, 826 F.2d 573, 576 (7th Cir. 1987). Although “[w]e review a dismissal for lack of subject matter jurisdiction de novo, “ Doctors Nursing & Rehab. Ctr. v. Sebelius, 613 F.3d 672, 676 (7th Cir.20I0), “we review the district court’s resolution of jurisdictional factual issues for abuse of discretion.” Sapperstein v. Hager, 188 F.3d 852, 856 (7th Cir. 1999).

Here, the Secretary had implemented a four-step administrative process to review and adjudicate challenges to determinations rendered on claims for Medicare reimbursement.

Critically, Dr. Kolbusz’s amended complaint conceded that the furthest step his claims had proceeded to was the third level of administrative review. Thus, he did not exhaust the administrative appeals process before he sought mandamus, and the dismissal was affirmed.

Center for Dermatology and Skin Cancer, Ltd., et al. v. Burwell, ___ F.3d ___, 2014 WL 5336497 (7th Cir. 2014).

Chicago Building Design, P.C. (“CBD”) designed the interior of a restaurant called Plan B for a company called Mongolian House.

In June 2006, CBD filed blueprints for the Plan B renovation with the City in order to obtain a “repair and replace” building permit for the project.

CBD’s complaint later alleged that sometime in 2008, defendants Golden and Perres, Mongolian House’s owners, copied CBD’s blueprints and distributed them to an architect named Wilson, who placed his name on the copies and filed them with the City with the intention of passing the blueprints off as his own.

CBD alleged various forms of copyright infringement and state-law claims based on Mongolian House’s failure to pay what it owed CBD for design and construction work.

The defendants moved to dismiss the federal claims as time-barred under the Copyright Act’s three-year statute of limitations. The district court granted the motion, holding that CBD was on “inquiry notice” of a possible copyright violation when its employee happened upon the 2008 blueprints at the City’s offices,

On appeal, the appellate court noted that when a defendant charges noncompliance with the statute of limitations, dismissal under Rule 12(b)(6) is irregular, for the statute of limitations is an affirmative defense. United States v. N. Trust Co., 372 F.3d 886, 888 (7th Cir.2004). Because complaints need not anticipate and attempt to plead around defenses, a motion to dismiss based on failure to comply with the statute of limitations should be granted only where the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense. United States v. Lewis, 411 F.3d 838, 842 (7th Cir.2005). In other words, the plaintiff must affirmatively plead himself out of court; the complaint must plainly reveal that the action is untimely under the governing statute of limitations. Id. The court of appeals reviews de novo a district court’s decision to dismiss a complaint on statute-of-limitations grounds. In-dep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 934 (7th Cir.2012).

The Seventh Circuit reversed, noting that the Supreme Court had recently clarified the statute of limitations for copyright claims.

Chicago Building Design, P.C. v. Mongolian House, Inc., ___ F.3d ___, 2014 WL 5368839 (7th Cir. 2014).

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com

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