Vacatur-and-Replacement Judgments Reset the Appeal Clock (Not a Rule 60(a) Correction) — Frey v. Health Mgmt Systems

I. Introduction

Court: United States Court of Appeals for the Fifth Circuit
Date: January 5, 2026
Parties: United States ex rel. Christopher Frey (Relator/Plaintiff–Appellant) v. Health Management Systems, Incorporated (Defendant–Appellee)

This consolidated qui tam appeal arose from allegations that Health Management Systems, Inc. (“HMS”), a contractor assisting state Medicaid agencies with third-party liability (“TPL”) recoveries, violated the False Claims Act (“FCA”) and multiple state analogues by allegedly failing to pursue or timely submit TPL claims, thereby reducing money owed to government payors (“reverse false claims” theories).

The appeal presented two central issues: (1) appellate jurisdiction—whether Frey’s notice of appeal was timely after the district court entered a second “vacating and replacing” order and final judgment; and (2) merits—whether the summary-judgment record raised a genuine dispute that HMS failed to bill claims or acted with the FCA’s required scienter.

II. Summary of the Opinion

The Fifth Circuit affirmed. It held:

• Timeliness/Jurisdiction: Frey’s appeal was timely because the district court’s October 18 order and final judgment expressly vacated the October 7 order and final judgment and replaced them. That vacatur “swept away” the prior judgment and with it any appeal deadline tied to that vacated judgment; thus, the 30-day clock ran from October 18.
• Summary Judgment: Frey failed to show a genuine dispute of material fact that HMS failed to bill even a single claim under its contracts with state Medicaid agencies, or that HMS acted with the requisite scienter (actual knowledge, deliberate ignorance, or reckless disregard).

III. Analysis

A. Precedents Cited

1. In re Cobb, 750 F.2d 477 (5th Cir. 1985)

HMS argued the district court’s October 18 re-entry was merely a clerical correction governed by Rule 60(a), relying on In re Cobb for the proposition that Rule 60(a) corrections “do not affect the underlying judgment” and therefore “do not affect the time for filing a notice of appeal.”

The Fifth Circuit distinguished the situation: the district court did not label its action as a Rule 60(a) correction; instead, it explicitly vacated the prior order and judgment and replaced them. The panel treated that procedural choice as dispositive for the appeal deadline.

2. Northshore Dev., Inc. v. Lee, 835 F.2d 580 (5th Cir. 1988)

Although a motions panel had already denied HMS’s motion to dismiss the appeal as untimely, the merits panel noted under Northshore Dev., Inc. v. Lee that such a denial “is not binding precedent.” This allowed the court to revisit jurisdiction independently.

3. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998)

Citing Steel Co. v. Citizens for a Better Env't, the panel emphasized its “special obligation” to assure jurisdiction, reinforcing that appellate timeliness is not a mere technicality but a gatekeeping requirement.

4. Falcon v. Gen. Tel. Co., 815 F.2d 317 (5th Cir. 1987)

Falcon v. Gen. Tel. Co. supplied the controlling conceptual move: “when a judgment is vacated, all is effectually extinguished,” and vacatur “swept away all that was tied to that judgment.” The court applied this to the appellate clock: a notice-of-appeal deadline tethered to a vacated judgment cannot persist because the judgment itself has been nullified.

The opinion bolstered this point by comparing the text of the two “Final Judgment[s]” and observing the October 18 judgment read “as if” the October 7 judgment “never existed,” underscoring that the district court did more than correct typos—it procedurally reset the case’s final judgment.

5. Batyukova v. Doege, 994 F.3d 717 (5th Cir. 2021)

Batyukova v. Doege provided the standard of review for the merits—summary judgment is reviewed de novo under the same Rule 56 framework applied by the district court.

6. United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023)

On scienter, the panel cited United States ex rel. Schutte v. SuperValu Inc. for the FCA’s subjective-belief standard—focusing on what the defendant actually believed regarding falsity/obligation, not merely what an objectively reasonable interpretation might be.

B. Legal Reasoning

1. Jurisdiction: Vacatur vs. clerical correction

The pivotal legal distinction was between:

• Rule 60(a) correction (clerical/oversight fixes that leave the judgment intact and typically do not restart the appeal period), and
• Vacatur and replacement (the court nullifies the prior judgment and enters a new one, thereby anchoring appellate deadlines to the new judgment).

Even though the October 18 changes were minor (two typographical corrections), the district court’s chosen procedural form mattered: it expressly “VACATES” and “REPLACES” the prior order and “VACATES” the prior final judgment. With no stated Rule 60(a) basis, the Fifth Circuit treated the action as true vacatur—meaning the October 7 judgment could no longer serve as the trigger for Federal Rule of Appellate Procedure 4(a)(1)(A)’s 30-day deadline.

The court’s reasoning is formal but consequential: when a district court says it vacates a judgment, appellate courts “must assume the district court knew exactly what it was doing and take it at its word.” The appeal clock therefore began on October 18, and Frey’s November 18 notice was timely.

2. Merits: Reverse false claims require proof of an unfulfilled obligation and scienter

Frey proceeded under the reverse-false-claims provision, 31 U.S.C. § 3729(a)(1)(G), mirrored by Florida, New York, Oklahoma, and Tennessee statutes. The gravamen was that HMS allegedly avoided or decreased an obligation to pay/transmit money by not billing or timely collecting TPL claims.

The court affirmed summary judgment because the record lacked evidence on two essential elements:

• Failure to bill: the “summary-judgment record … does not contain evidence that HMS failed to bill even a single claim” under its state contracts.
• Scienter: the record likewise lacked evidence that HMS acted with “actual knowledge,” “deliberate ignorance,” or “reckless disregard” (31 U.S.C. § 3729(b)(1)(A)(i)-(iii)), with SuperValu reinforcing the focus on subjective belief.

The opinion also contextualized HMS’s operations: when carriers denied TPL claims, HMS evaluated resubmission (“appeal”) eligibility and cost-effectiveness; carriers sometimes requested temporary “carrier holds,” and HMS typically granted them if the carrier agreed to accept late submissions beyond the three-year statutory window referenced at 42 U.S.C. § 1396a(a)(25)(I)(iv)(I). That backdrop helped explain why Frey’s theory required concrete evidence of non-billing (not merely delay, prioritization, or negotiated holds).

C. Impact

1. Appellate practice in the Fifth Circuit

Practically, the decision underscores a bright-line procedural lesson: if the district court expressly vacates and replaces a final judgment, the appeal deadline runs from the replacement judgment, even where changes appear clerical. Litigants should:

• read docket text carefully (vacate/replace language matters);
• compare successive judgments for “as if it never existed” signals; and
• avoid assuming Rule 60(a) treatment absent an express basis.

Although the opinion is “not designated for publication,” its reasoning may still be persuasive in motions practice where parties dispute whether an amended judgment resets appellate time.

2. FCA reverse-false-claims litigation involving contractors

On the merits, the opinion reinforces that reverse-false-claims theories premised on “failure to pursue collections” must be supported by claim-specific evidence (e.g., identifiable claims not billed) and scienter evidence tied to the defendant’s subjective awareness. General critiques of operational choices—like cost-effectiveness assessments or negotiated submission holds—will not substitute for proof that an actual billing obligation was knowingly avoided.

IV. Complex Concepts Simplified

• Qui tam / “ex rel.”: a private relator sues on the government’s behalf under the FCA and may share in any recovery; the government may intervene but did not do so here.
• Reverse false claim (31 U.S.C. § 3729(a)(1)(G)): liability for knowingly concealing or improperly avoiding an obligation to pay money to the government, as opposed to submitting a false invoice to get paid by the government.
• Scienter under the FCA: “actual knowledge,” “deliberate ignorance,” or “reckless disregard”—and after United States ex rel. Schutte v. SuperValu Inc., courts focus on what the defendant actually believed, not just what was objectively reasonable.
• TPL (Third-Party Liability) in Medicaid: states must seek reimbursement from legally responsible third parties (often insurers) for Medicaid-covered services (42 U.S.C. § 1396a(a)(25)(A)).
• Carrier holds: insurer-requested pauses in submissions, sometimes paired with an agreement to accept claims beyond statutory deadlines.
• Rule 60(a): allows correction of clerical mistakes; typically does not restart appeal deadlines because it does not change the judgment’s substantive existence.
• Vacatur: the court nullifies a prior judgment; legally, it is treated as extinguished, so deadlines tied to it generally fall away.

V. Conclusion

Frey v. Health Mgmt Systems delivers two key takeaways. First, when a district court expressly vacates and replaces a final judgment, the Fifth Circuit will treat the earlier judgment as extinguished and measure timeliness from the new judgment—distinguishing that posture from a mere Rule 60(a) clerical correction. Second, FCA reverse-false-claims theories grounded in alleged non-billing require concrete evidence of unbilled claims and proof of scienter; absent such record evidence, summary judgment is appropriate.