Hull v. Restore Management Company LLC et al

Filing 54

MEMORANDUM OPINION. Signed by Judge R David Proctor on 6/27/2017. (KAM)

FILED
2017 Jun-28 AM 11:16
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
WANDA HULL,
Plaintiff,
v.
RESTORE MANAGEMENT COMPANY
LLC, et al.,
Defendants.

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Case No.: 2:15-CV-1361-RDP

MEMORANDUM OPINION
This matter is before the court on Motions to Dismiss filed by Defendants Comfort Care
Home Health Services, LLC, Restore Management Company, LLC, and Restore Professionals
Company, LLC (Doc. # 39); Defendant Edwin Moyo (Doc. # 40); and Defendant Alan Parker
(Doc. # 42). Defendants’ Motions are fully briefed. (Docs. # 47, 49, 50, 51). For the reasons
stated below, Defendants’ Motions are due to be denied.
I.

Analysis
Plaintiff’s Second Amended Complaint states two claims for relief. Count I asserts that

Defendants violated the False Claims Act as prohibited by 31 U.S.C. § 3729(a)(1)(A) and (B).
Count II alleges that Defendant Comfort Care Home Health Services, LLC retaliated against
Plaintiff in violation of the False Claims Act. See 31 U.S.C. § 3730(h). The court will address
each of these claims for relief in turn.
A.

Plaintiff’s Second Amended Complaint Alleges a Violation of the False
Claims Act with the Requisite Particularity

Typically, the Federal Rules of Civil Procedure require only that a civil complaint state
“a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a). However, Rule 9(b) applies to actions under the False Claims Act. U.S. ex rel.

Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1308-09 (11th Cir. 2002). In averments alleging
fraud or mistake, “a party must state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b).
In Clausen, our Circuit noted that the practices of an entity that provides services to the
Government may be unwise or even improper, but unless a false claim is actually presented there
is no actionable damage as is required by the False Claims Act. Clausen. 290 F.3d at 1311.
As such, Rule 9(b)'s directive that “the circumstances constituting fraud or
mistake shall be stated with particularity” does not permit a False Claims Act
plaintiff merely to describe a private scheme in detail but then to allege simply
and without any stated reason for his belief that claims requesting illegal
payments must have been submitted, were likely submitted or should have been
submitted to the Government. As in Cooper, and as with every other facet of a
necessary False Claims Act allegation, if Rule 9(b) is to be adhered to, some
indicia of reliability must be given in the complaint to support the allegation of an
actual false claim for payment being made to the Government.
U.S. ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002). Defendants
contend that Plaintiff’s Second Amended Complaint fails to plead that any Defendant actually
submitted fraudulent reimbursement claims, and that that failure prevents Plaintiff’s Second
Amended Complaint from clearing the hurdle of Rule 9(b). (See Doc. # 39 at pp. 11-13). The
court disagrees.
Plaintiff’s Second Amended Complaint alleges four different schemes which she
contends amount to violations of the False Claims Act: (1) a scheme involving the
misrepresentation and falsification of documents, (2) a scheme involving the submission of
claims for non-qualifying, non-homebound patients and the billing of unnecessary therapy
services1, (3) a scheme involving the submission of claims for a separate group of non-

1

This scheme involved Defendants’ alleged practice of enrolling all clients with a diagnosis of depression,
dementia, behavioral issues, memory loss, or other psychiatric diagnosis into their Psychiatric Program. (Doc. # 37
at ¶ 60).

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qualifying, non-homebound patients2, and (4) a scheme involving the billing of unnecessary
therapy visits. Plaintiff’s Second Amended Complaint describes each of these schemes in detail,
but admittedly does not identify specific false claims (related to specific patients) that were
actually submitted as a result of the alleged misconduct.
However, this alone is not fatal to Plaintiff’s Second Amended Complaint. Indeed, since
Clausen, our Circuit has stated that “there is no per se rule that an FCA complaint must provide
exact billing data or attach a representative sample claim.” Mastej v. Health Management
Associates, Inc., 591 F. App’x 693, 704 (11th Cir. 2014).
Under this Court's nuanced, case-by-case approach, other means are available to
present the required indicia of reliability that a false claim was actually submitted.
Although there are no bright-line rules, our case law has indicated that a relator
with direct, first-hand knowledge of the defendants' submission of false claims
gained through her employment with the defendants may have a sufficient basis
for asserting that the defendants actually submitted false claims. See U.S. ex rel.
Walker v. R & F Properties of Lake County, Inc., 433 F.3d 1349, 1360 (11th Cir.
2005) (holding that Rule 9(b) was satisfied where the relator was a nurse
practitioner in the defendant's employ whose conversations about the defendant's
billing practices with the defendant's office manager formed the basis for the
relator's belief that claims were actually submitted to the government).
Id.

“At a minimum, a plaintiff-relator must explain the basis for her assertion that fraudulent

claims were actually submitted.” Id.
Here, Plaintiff has not pled any details as to specific patients for whom false claims were
submitted, or any specifics related to any false claims actually submitted. However, the court’s
analysis does not end there. Rather, the court has looked carefully at Plaintiff’s averments and
finds that her allegations have a sufficient “indicia of reliability” which supports the allegation of
an actual false claim (or claims) even absent detailed information about a representative claim.
See Clausen, 290 F.3d at 1311; Mastej, 591 Fed. App’x at 707. Plaintiff has pled a detailed

2

This scheme involved the Defendants’ alleged submission of claims for reimbursement for patients who
were not “homebound” as defined by Medicare. (Doc. # 37 at ¶¶ 76, 78).

3

factual basis which supports her knowledge of the submission of false claims. Plaintiff’s Second
Amended Complaint alleges that Plaintiff (1) had personal knowledge of Defendants’ (allegedly
fraudulent) billing practices, (2) derived that knowledge based on the nature of her employment
and communications with other employees, (3) and sought to investigate Defendants’ allegedly
unlawful billing practices. (Doc. # 37 at ¶¶ 41, 52, 59, 77). Not only is Plaintiff a former officer
of Comfort Care Home Health, but she alleges that she personally observed Defendants engage
in unlawful conduct. (See Doc. # 37 at ¶ 59). Moreover, Plaintiff has identified specific
categories of patients for whom Defendants allegedly submitted fraudulent documents and
reimbursement claims.3 (Doc. # 37 at ¶¶ 57-68, 74, 76). Here, Plaintiff has not merely alleged
that Defendants submitted false claims “without any stated reason for h[er] belief that claims
requesting illegal payments must have been submitted.” Clausen, 290 F.3d at 1311. Instead, she
alleged the basis for her belief that Defendants submitted false claims, and she has pled this basis
with the requisite particularity.
B.

Plaintiff’s Second Amended Complaint Adequately Alleges a Retaliation
Claim

The False Claims Act entitles an employee to relief if that employee is discharged
because of her lawful acts in furtherance of an action under the False Claims Act or due to her
other efforts to stop a violation of the False Claims Act. 31 U.S.C. §3730(h). Section 3730(h)
protects an employee from retaliation when there is a “distinct possibility” of litigation under the
False Claims Act at the time of the employee’s actions. U.S. ex rel. Sanchez v. Lymphatx, Inc.,
596 F.3d 1300, 1303 (11th Cir. 2010) (citing Childree v. UAP/GA AG Chem., Inc., 92 F.3d 1140,
1146 (11th Cir. 1996)). “If an employee's actions, as alleged in the complaint, are sufficient to

3

While this detailed description of the categories of patients for who Defendants allegedly submitted false
claims alone may not be sufficient in and of itself to survive Defendants’ Motions to Dismiss, such level of detail
obviates concerns that this action is merely a “fishing expedition.”

4

support a reasonable conclusion that the employer could have feared being reported to the
government for fraud or sued in a qui tam action by the employee, then the complaint states a
claim for retaliatory discharge under § 3730(h).” Id. at 1304. Because Plaintiff’s False Claims
Act retaliation does not depend on allegations of fraud, her allegations regarding her retaliation
count need not be pled with Rule 9 particularity, and instead must only provide “a short and plain
statement of the claim showing that [she] is entitled to relief.” Id. (citing Fed. R. Civ. P. 8(a)).
Here, Plaintiff alleges that she complained to Defendants both orally and in writing about
the allegedly unlawful schemes identified in her complaint. (Doc. # 37 at ¶¶ 57, 63, 83).
Further, Plaintiff alleges that she convened a quality assurance team to investigate Defendants’
practices related to recertifying patients for additional services. (Id. at ¶¶ 77, 101). When the
quality assurance team identified instances of patients receiving improper services, which in turn
resulted in a decline in Defendants’ recertification rate, Plaintiff alleges that Defendant Parker
halted the activity of the quality assurance team and directed Plaintiff to terminate the employees
who comprised the team. (Id. at ¶ 101). Moreover, Plaintiff alleges that Defendant Parker
demanded that she delete (and “re-delete”) e-mails detailing Defendants’ recertification
requirements. (Id. at ¶ 104). Plaintiff contends that she was terminated as a result of her
investigation of Defendants’ practices and her internal reporting of Defendants’ purported
misconduct.

(Id. at ¶ 110). Taken together, these allegations plausibly plead a claim that

Defendants feared being sued in a qui tam action by Plaintiff, and discharged her as a result.
Accordingly, Defendants’ Motions to Dismiss are due to be denied as to Plaintiff’s retaliation
claim.

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II.

Conclusion
For the reasons stated above, Defendants’ Motions to Dismiss are due to be denied. A

separate order will be entered.
DONE and ORDERED this June 27, 2017.

_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE

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