United States of America et al v. Lee Memorial Health System
Filing
117
ORDER granting 86 Lee Health's Motion to Dismiss; denying as moot 87 Lee Health's Objections to the Order Denying the Motion to Stay Discovery pending resolution of this Motion to Dismiss; denying as moot 115 Lee Health's Motion for Leave to File Reply to D'Anna's Opposition to Lee Health's Objections. SEE ORDER FOR DETAILS. Signed by Judge Sheri Polster Chappell on 3/6/2019. (LMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
UNITED STATES OF AMERICA and
ANGELA D’ANNA, ex rel
Plaintiffs,
v.
Case No: 2:14-cv-437-FtM-38CM
LEE MEMORIAL HEALTH SYSTEM,
Defendant.
/
OPINION AND ORDER 1
Before the Court is Defendant Lee Memorial Health System’s Motion to Dismiss.
(Doc. 86). Relator Angela D’Anna filed a Response in Opposition (Doc. 101), and Lee
Health filed a Reply (Doc. 104). For the following reasons, the Court grants the Motion
to Dismiss.
BACKGROUND
Lee Health is a “special purpose unit of local government created by the Florida
Legislature to operate, control and maintain a public hospital and other hospital facilities
in Lee County, Florida.” (Doc. 36 at 6). Lee Health operates several hospitals and other
1
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The Court accepts no responsibility for the availability or functionality of any hyperlink.
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not affect the opinion of the Court.
healthcare facilities around the county. (Doc. 36 at 6). As a large healthcare system, Lee
Health annually receives Medicare and Medicaid dollars. (Doc. 36 at 6). 2
Relator was the System Director of Internal Audit at Lee Health for about eleven
years until she voluntarily resigned. (Doc. 36 at 5). During her employment, D’Anna
“audited physician compensation issues” at Lee Health and allegedly “reported
compliance deficiencies of increasing severity to senior management throughout her
tenure.” (Doc. 36 at 5). D’Anna claims to have been a “corporate insider who became
aware of [Lee Health’s] fraud but did not have the authority or power to stop” it. (Doc. 36
at 5).
D’Anna filed a sealed complaint against Lee Memorial under the False Claims Act
(“FCA”). (Doc. 1). Because this is a qui tam action under the FCA, the Government
investigated the complaint for several years. During that time, D’Anna amended her
pleading to the three-count Amended Complaint challenged here. (Doc. 36). Eventually,
the Government declined to intervene (Doc. 48), allowing D’Anna to proceed in its name,
31 U.S.C. § 3730(c)(3) (2018). Then, this Court lifted the seal. (Doc. 50).
The FCA allegations are predicated upon the submission of false Medicare claims.
(Doc. 36 at 1). D’Anna alleges that Lee Health’s compensation agreements with certain
specialist doctors and a medical director violated the Stark Law, 42 U.S.C. § 1395nn
(2018). (Doc. 36 at 15, 24, 31, 36). Lee Health allegedly funneled Stark-prohibited
referral fees and financial incentives to these doctors through the compensation
agreements, which exceeded fair market value and were “commercially unreasonable in
2
For these purposes, there is no meaningful distinction between Medicare and Medicaid;
thus, Medicare is used as a shorthand here.
2
the absence of referrals.” (Doc. 36 at 2). Lee Health broke the Stark Law, according to
D’Anna, when it knowingly submitted false Medicare claims related to referrals from the
doctors in violation of the FCA. (Doc. 36 at 2-3). These alleged false claims related to
“designated health services” under the Stark Law, including facility fees for inpatient and
outpatient hospital services. (Doc. 36 at 23, 30, 36). After doing so, D’Anna asserts that
Lee Health made false statements to the Government by fraudulently certifying
compliance with the Stark Law. (Doc. 36 at 11-13). Based on those purported false
claims, Lee Health unlawfully and knowingly retained overpayments it had to return to the
Government. (Doc. 36 at 4).
The Amended Complaint details a purportedly unlawful compensation scheme
from 2005 to 2014. (Doc. 36 at 14). The doctors at issue—neurologists, cardiologists,
pulmonologists, and a medical director—were Lee Health employees. (Doc. 36 at 2-3).
According to D’Anna, the financial incentives provided to the identified doctors follow: (1)
compensation for personally performed services with increasing rates based on total
annual work Relative Value Units (“wRVUs”); (2) compensation for services performed by
Lee Health’s extenders (such as nurse practitioners or physicians assistants), where
extender wRVUs were credited to the doctors without reflecting the lower rate for
extenders; (3) bonus pools for extender production not already included in the doctors’
salaries through wRVUs; (4) payment for on-call coverage on top of compensation for
services performed while on-call; and (5) payments to medical directors. (Doc. 36 at 2).
In short, D’Anna contends that the doctors earned greater compensation with each of
their referrals to Lee Health. (Doc. 36 at 3). Finally, D’Anna argues that none of the Stark
exceptions exist. (Doc. 36 at 3-4).
3
RELEVANT LAW
A. Standard of Review
Upon a motion to dismiss, the Court “accept[s] the allegations in the complaint as
true and construe[s] them along with the reasonable inferences therefrom in the relator’s
favor.” Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1050 (11th Cir. 2015).
An FCA relator must satisfy both the Rule 8 and Rule 9(b) pleading standards. Id.
at 1051. Under Rule 8, a complaint must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). “To survive a motion
to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Whereas Rule 9(b)
requires a party to “state with particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b). To satisfy this heightened FCA pleading standard, the relator generally must
“allege ‘facts as to time, place, and substance of the defendant’s alleged fraud,’
particularly, ‘the details of the defendants’ allegedly fraudulent acts, when they occurred,
and who engaged in them.’” Urquilla-Diaz, 780 F.3d at 1051 (quoting United States ex
rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1309 (11th Cir. 2002)).
B. The Stark Law
Underlying this entire FCA dispute are alleged violations of the Stark Law. See
United States ex rel. Bingham v. BayCare Health Sys., No. 8:14-cv-00073, 2016 WL
8739056, at *2 (M.D. Fla. Dec. 16, 2016) (“A violation of either the Stark Law or the AntiKickback Statute can form the basis of liability under the [FCA].”). The Stark Law does
not allow for a private cause of action. Ameritox, Ltd. v. Millennium Labs., Inc., 803 F.3d
4
518, 522 (11th Cir. 2015). So D’Anna and other relators bring qui tam actions under the
FCA based on Stark violations. See United States ex rel. Osheroff v. Tenet Healthcare
Corp. (Osheroff I), No. 9-22253-CIV, 2013 WL 1289260, at *1 (S.D. Fla. Mar. 27, 2013).
At its most basic, the Stark Law “prohibits doctors from referring Medicare patients
to a hospital if those doctors have certain specified types of ‘financial relationships’ with
that hospital.” United States ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591 F. App’x
693, 698 (11th Cir. 2014) (quoting 42 U.S.C. § 1395nn(a)(1)(A)). A “financial relationship”
under the Stark Law includes compensation arrangements between doctors and
hospitals. 42 U.S.C. § 1395nn(a)(2)(B). If a claim violates the anti-referral provision then
the hospital cannot present the claim to Medicare for reimbursement.
42 U.S.C.
§ 1395nn(a)(1)(B). Referrals are defined broadly under the Stark Law and corresponding
regulations as a doctor’s request of, or order for, designated health services payable
under Medicare.
See 42 U.S.C. § 1395nn(h)(5)(A); 42 C.F.R. § 411.351 (2018).
Designated health services include inpatient and outpatient hospital services. 42 U.S.C.
§ 1395nn(h)(6)(K). Yet certain referrals, such as those personally performed by the
referring doctor, are allowed under the Stark Law. 42 C.F.R. § 411.351.
Certain compensation arrangements are exempted from the Stark Law’s
prohibition.
For instance, bona fide employment relationships and personal service
arrangements are not financial relationships that preclude referrals.
42 U.S.C.
§ 1395nn(e)(2)-(3). To meet those exceptions, a compensation agreement must be for
“fair market value” without considering “the volume or value of any referrals,” among other
requirements. Id.
5
C. The FCA
At bottom, the FCA enables private individuals to sue those who filed false claims
for payment with the Government. 31 U.S.C. §§ 3729(a), 3730(b) (2018). “Liability under
the [FCA] arises from the submission of a fraudulent claim to the government, not the
disregard of government regulations or failure to maintain proper internal policies.”
Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005). It is not enough for a
relator 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.”
Clausen, 290 F.3d at 1311. Rather, “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.” Id.
D’Anna raises three FCA claims. First, D’Anna alleges an FCA presentment claim
under 31 U.S.C. § 3729(a)(1)(A), previously 31 U.S.C. § 3729(a)(1) (2008). (Doc. 36 at
39). Under a presentment claim, a person who “knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or approval” violates the FCA. 31
U.S.C. § 3729(a)(1)(A). Second, D’Anna pleads an FCA make or use claim under 31
U.S.C. § 3729(a)(1)(B), previously 31 U.S.C. § 3729(a)(2) (2008). (Doc. 36 at 40). That
provision creates FCA liability when someone “knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false or fraudulent claim.” 31
U.S.C. § 3729(a)(1)(B). Finally, D’Anna brings a reverse false claim under 31 U.S.C.
§ 3729(a)(1)(G), previously 31 U.S.C. § 3729(a)(7) (2008). (Doc. 36 at 41). A reverse
false claim occurs when a person “knowingly makes, uses, or causes to be made or used,
6
a false record or statement material to an obligation to pay or transmit money to the
Government, or knowingly conceals or knowingly and improperly avoids or decreases an
obligation to pay or transmit money or property to the Government.”
31 U.S.C.
§ 3729(a)(1)(G).
4. The 2009 FCA Amendments
In 2009, Congress amended the three relevant FCA provisions.
Fraud
Enforcement and Recovery Act, Pub. L. No. 111-21, § 4, 123 Stat. 1617, 1621-25 (2009).
The alleged conduct occurred before and after the amendment, and the Amended
Complaint cited both the pre- and post-amendment statutes.
(Doc. 36 at 39-41).
Regardless, under either version of the statutes, the submission of a false claim is the
“sine qua non of a [FCA] violation.” Clausen, 290 F.3d at 1311 (interpreting the preamendment statutes); see United States ex rel. Chase v. HPC Healthcare, Inc., 723 F.
App’x 783, 789 (11th Cir. 2018) (interpreting the post-amendment statutes). The parties
did not brief how these amendments impact the case. However, because D’Anna fails to
plead the submission of a false claim or false statement with particularity—as detailed
below—the Amended Complaint is insufficient under either statute. See, e.g., Chase,
723 F. App’x at 789 (“[U]nless a relator alleges with particularity that false claims were
actually submitted to the government, our precedent holds that dismissal is proper.”).
DISCUSSION
A. Motion to Dismiss Under Rule 12(b)(6)
The Court addresses each of the three FCA claims below. Because both the
presentment and make or use claims fail for a lack of particularity regarding the
submission of false claims and false statements, they are addressed together. See, e.g.,
7
United States ex rel. Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1328 (11th Cir. 2009)
(“Improper practices standing alone are insufficient to state a claim under either
§ 3729(a)(1)[(A)] or [(B)] absent allegations that a specific fraudulent claim was in fact
submitted to the government.”); United States ex rel. Klusmeier v. Bell Constructors, Inc.,
469 F. App’x 718, 721 n.5 (11th Cir. 2012).
1. The Presentment and Make or Use Claims
In general, D’Anna alleges that Lee Health entered into unlawful compensation
agreements with various doctors, then it submitted false Medicare claims for designated
health services referred to Lee Health by those doctors. And Lee Health allegedly made
false statements when it certified compliance with the Stark Law. Lee Health contends
that the Amended Complaint insufficiently pleads the submission of any claims for
Medicare payment based on prohibited referrals and false statements. Lee Health is
correct.
“To establish a [presentment] cause of action under § 3729(a)(1)(A), a relator must
prove three elements: (1) a false or fraudulent claim, (2) which was presented, or caused
to be presented, for payment or approval, (3) with the knowledge that the claim was false.”
United States ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148, 1154 (11th Cir.
2017). “To prove a [make or use] claim under § 3729(a)(1)(B), a relator must show that:
(1) the defendant made (or caused to be made) a false statement, (2) the defendant knew
it to be false, and (3) the statement was material to a false claim.” Id. “Because the
submission of an actual claim to the government for payment is ‘the sine qua non’ of an
FCA violation, Clausen, 290 F.3d at 1311, a plaintiff-relator must ‘plead the submission
of a false claim with particularity,’ United States ex rel. Matheny v. Medco Health [Sols.]
8
Inc., 671 F.3d 1217, 1225 (11th Cir. 2012).” Mastej, 591 F. App’x at 703. “To do so, ‘a
relator must identify the particular document and statement alleged to be false, who made
or used it, when the statement was made, how the statement was false, and what the
defendants obtained as a result.’” Id. at 703-04 (quoting Matheny, 671 F.3d at 1225).
“The key inquiry is whether the complaint includes ‘some indicia of reliability’ to support
the allegation that an actual false claim was submitted.” Chase, 723 F. App’x at 789
(quoting Clausen, 290 F.3d at 1311). “One way to satisfy this requirement is by alleging
the details of false claims by providing specific billing information—such as dates, times,
and amounts of actual false claims or copies of bills.” Id. (citing Hopper, 588 F.3d at
1326).
Here, the Amended Complaint details the compensation arrangements: it identifies
several doctors by name along with their compensation scheme and wRVUs; it provides
internal and external audit reports indicating that the doctors compensation exceeded fair
market value; it alleges that extenders wRVUs were added to the doctors’ compensation
at inflated rates; it avers that doctors billed for services performed solely by extenders; it
notes that Lee Health provided one extender to the cardiologists at no cost to the doctors;
it explains that on-call doctors were paid for coverage and the services performed while
on-call; it contends that doctors received improper compensation for extender supervision
and medical directorships; and it asserts that D’Anna communicated these compensation
issues to senior management at Lee Health. (Doc. 36). But in all its pleading, the
Amended Complaint never identifies any submitted Medicare claims. See, e.g., Clausen,
290 F.3d at 1312 (“[A relator’s] failure to allege with any specificity if—or when—any
actual improper claims were submitted to the Government is indeed fatal to his
9
complaints.”). Most of D’Anna’s assertions boil down to conclusory allegations that Lee
Health must be engaging in an unlawful referral scheme and, therefore, submitting false
claims because the doctors’ compensation “is commercially unreasonable in the absence
of referrals.” (Doc. 36 at 23, 30, 36). Without more, however, the Court can only
speculate that unlawful referrals occurred, Lee Health submitted corresponding Medicare
claims to the Government, and Lee Health made false statements through compliance
certifications. But this Court cannot engage in that conjectural endeavor. E.g., Clausen,
290 F.3d at 1311 (“[An FCA] plaintiff [cannot simply allege that false claims] must have
been submitted, were likely submitted or should have been submitted to the
Government.”); Hopper, 588 F.3d at 1326-27; United States ex rel. Atkins v. McInteer,
470 F.3d 1350, 1359-60 (11th Cir. 2006) (“The particularity requirement of Rule 9 is a
nullity if [relator] gets a ticket to the discovery process without identifying a single claim.”
(citation omitted)); Chase, 723 F. App’x at 790; Mastej, 591 F. App’x at 706. By failing to
plead the submission of false Medicare claims and false compliance certification beyond
conclusory allegations, the Amended Complaint fails to plead FCA claims with the
particularity required by Rule 9(b). See Chase, 723 F. App’x at 789 (“[Relator] failed to
satisfy Rule 9(b) with her conclusory allegations that false claims were submitted as a
result of th[e] scheme.”); cf. Matheny, 671 F.3d at 1224-26 (holding that relator plead
compliance certification with particularity by identifying the specific documents and
statements alleged to be false, along with who made them, how they were used, and
when they were submitted).
In two instances, D’Anna tries to detail the submission of false claims. But both
efforts fall short of the particularized pleading required for an FCA claim.
10
First, the Amended Complaint pleaded that a neurologist made two referrals to Lee
Health, resulting in the submission of false claims. (Doc. 36 at 23). An attached exhibit
purported to show these false claims. (Doc. 36-11). However, the exhibit merely lists two
redacted Medicare patients, the date of the surgery, the neurologist as their surgeon, his
surgical assistant, and billing codes for the procedures. (Doc. 36-11). The document
appears to be a billing spreadsheet, but the Amended Complaint provides no description
except calling it a “sample of actual Medicare claims made by Lee [Health] on prohibited
referrals from the Neurosurgeons.” (Doc. 36 at 23). In her Response, D’Anna clarified
that this exhibit is “an excerpt of a spreadsheet prepared by a consultant that Internal
Audit Services engaged to examine inpatient and outpatient medical records coding for
Neurosurgery patients at Lee [Health].” (Doc. 101 at 11). Regardless of the document’s
true nature, this exhibit is neither a Medicare interim claim form (UB-04 or UB-92 forms)
nor a Medicare hospital cost report (CMS-2552 or CMS-1500 forms), which are the forms
used by hospitals to submit Medicare claims and certify compliance with the Stark Law.
See Mastej, 591 F. App’x at 708 (noting that claim forms are crucial to certain FCA claims,
but at least some identifying information is required in others). And there is nothing to
suggest that the claims identified in the spreadsheet were submitted to Medicare for
reimbursement. Quite simply, the exhibit does not reveal the actual submission of claims
or false certifications to the Government. See Clausen, 290 F.3d at 1312 (rejecting an
FCA complaint for failing to identify the submission of a false claim).
At best, the
document may demonstrate that a neurologist unlawfully referred two patients to Lee
Health in violation of the Stark Law; yet this alone would not create FCA liability. Corsello,
428 F.3d at 1012 (“Liability under the [FCA] arises from the submission of a fraudulent
11
claim to the government, not the disregard of government regulations or failure to
maintain proper internal policies.”); see also Atkins, 470 F.3d at 1359; Mastej, 591 F.
App’x at 706; Klusmeier, 469 F. App’x at 721. As Lee Health contends, this exhibit does
not plead the submission of false claims with particularity. Thus, it is not a particular
pleading of an FCA violation. 3
Second, D’Anna attached several exhibits to the Amended Complaint that reflected
Lee Health’s total facility fee billing to Medicare for certain surgeries or procedures. (Doc.
36-10, 36-23, 36-39). Yet there is no identifying claim information in those exhibits that
satisfies the particularity requirement of Rule 9(b). The exhibits simply reflect the raw
number of specific procedures performed at Lee Health hospitals in certain years for
which Medicare made a payment.
Nothing indicates which doctors performed the
surgeries, who the patients were, what doctor made the referral, when the false claims
and procedures occurred, or how many of the total claims were false. Simply put, these
exhibits fail to demonstrate “the who, what, where, when, and how of fraudulent
submissions to the government.” Corsello, 428 F.3d at 1014 (internal quotation marks
omitted) (affirming the dismissal of an FCA complaint because the relator “provided the
who, what, where, and how of improper practices,” but not of false claims (internal
quotation marks omitted)). Perhaps a false claim is among that raw data; but this Court
cannot assume that essential fact given the particularity required under Rule 9(b). See
3
D’Anna argues that the Court must accept as true the allegation that this exhibit
demonstrates false Medicare claims. (Doc. 101 at 17). But she is mistaken. It is well
established that “when the exhibits contradict the general and conclusory allegations of
the pleading, the exhibits govern.” Griffin Indus., Inc. v. Irvin, 496 F.3d 1189, 1206 (11th
Cir. 2007); e.g., Michel v. NYP Holdings, Inc., 816 F.3d 686, 707 (11th Cir. 2016). On its
face, the exhibit does not show that Lee Health actually submitted false Medicare claims.
12
Clausen, 290 F.3d at 1312 n.21 (“We cannot make assumptions about a [FCA]
defendant’s submission of actual claims to the Government without stripping all meaning
from Rule 9(b).”). Thus, these exhibits do not plead an FCA violation with particularity.
Because neither exhibit supports D’Anna’s general allegations of the submission
of false claims or false statements, the Amended Complaint is left with bare assertions
that Lee Health submitted false Medicare claims and statements. In short, the Amended
Complaint “does little more than hazard a guess” that Lee Health submitted false
Medicare claims and made false statements. Hopper, 588 F.3d at 1326. And that is not
enough to satisfy the particularity required by Rule 9(b). E.g., Corsello, 428 F.3d at 1013
(“[W]e decline to make inferences about the submission of fraudulent claims because
such an assumption would ‘strip[ ] all meaning from Rule 9(b)’s requirements of
specificity.’” (quoting Clausen, 290 F.3d at 1312 n. 21)); Carrel v. AIDS Healthcare
Found., Inc., 898 F.3d 1267, 1275 (11th Cir. 2018); Atkins, 470 F.3d at 1358. 4
Not only has D’Anna failed to allege the submission of false claims—the sine qua
non of an FCA claim—the Amended Complaint fails to identify referrals. To prove the
underlying violations of the Stark Law, a relator must demonstrate unlawful referrals. 42
U.S.C. § 1395nn(a)(1); United States ex rel. Bingham v. BayCare Health Sys., No. 8:14cv-00073, 2015 WL 4878456, at *5 (M.D. Fla. Aug. 14, 2015). D’Anna almost exclusively
relies on conclusory allegations that Lee Health received referrals from the doctors and
submitted false claims for those referrals. Yet the unsupported assertion that “Lee
4
It is worth noting that the allegations get more attenuated as the Amended Complaint
wears on. For example, the claims and assertions against the neurologists are simply
insufficient (Doc. 36 at 15-24); whereas the allegations against the medical director are
factually devoid of support (Doc. 36 at 36-39).
13
[Health] billed Medicare and Medicaid tens of millions of dollars for designated health
services . . . referred by the [doctors],” (Doc. 36 at 23, 30, 36), cannot establish that
unlawful referrals occurred. Mastej provided helpful guidance:
It is the submission and payment of a false Medicare claim
and false certification of compliance with the law that creates
FCA liability. And the [d]efendants’ interim claims were not
false unless those claims submitted or presented were for
Medicare patients who had been (1) referred by one of the ten
doctors and (2) treated by the [d]efendants.
591 F. App’x at 706 (emphasis in original). Although D’Anna argues that the neurologist
referral exhibit addressed above identifies two referrals, she fails to explain how listing a
surgeon here automatically makes that doctor the referring doctor for the purposes of
Stark. Aside from the lack of particularity in billing to establish an FCA claim, D’Anna also
fails to allege the Stark violations with any particularity. See id.; United States ex rel.
Osheroff v. Tenet Healthcare Corp. (Osheroff II), No. 09-22253-CIV, 2012 WL 2871264,
at *7 (S.D. Fla. July 12, 2012) (“Relator, in any event, will still be required to plead facts
with particularity showing a violation of Stark.”).
Concluding that D’Anna failed to plead specific billing or claim detail with
particularity does not end the Court’s inquiry. E.g., Mastej, 591 F. App’x at 707. “[T]here
is no per se rule that an FCA complaint must provide exact billing data or attach a
representative sample claim.” Id. at 704 (citing Clausen, 290 F.3d at 1312 & n.21). Other
means are available for relators to demonstrate indicia of reliability, such as “direct, firsthand knowledge of the defendants’ submission of false claims.” Id. (citing United States
ex rel. Walker v. R&F Props. of Lake Cty., Inc., 433 F.3d 1349, 1360 (11th Cir. 2005));
see Chase, 723 F. App’x at 789. In such cases, courts apply a “nuanced, case-by-case
approach” to determine whether a relator knew about a defendant’s billing practices or
14
the submission of fraudulent claims. Mastej, 591 F. App’x at 704. To make the requisite
indicia of reliability showing, a relator may demonstrate that “he personally was in a
position to know that actual false claims were submitted to the government and had a
factual basis for his alleged personal knowledge.” Id. at 707. There is no bright-line rule
for courts to apply. Id. at 708. But “[a]t a minimum, a plaintiff-relator must explain the
basis for her assertion that fraudulent claims were actually submitted.” Id. at 704 (citing
Corsello, 428 F.3d at 1013-14). “[T]he basis of this direct knowledge must be plead with
particularity.” Chase, 723 F. App’x at 789 (citing United States ex rel. Sanchez v.
Lymphatx, Inc., 596 F.3d 1300, 1302-03 & n.4 (11th Cir. 2010)).
Yet—even under this relaxed FCA pleading standard—D’Anna fails to provide
sufficient indicia to demonstrate reliability. In the Amended Complaint, D’Anna asserted
that she was the “System Director of Internal Audit” at Lee Health for over ten years.
(Doc. 36 at 5). Her responsibilities in that position included auditing doctor compensation
and reporting compliance deficiencies to Lee Health management.
(Doc. 36 at 5).
Through her work, D’Anna alleged that she uncovered Lee Health’s unlawful pay-for-play
referral scheme. Without more, however, the Amended Complaint fails to provide indicia
of reliability “to support the allegation of an actual false claim for payment being made to
the Government.” Clausen, 290 F.3d at 1311. There is no indication in the Amended
Complaint that D’Anna knew of Lee Health’s billing or referral practices. Cf. Walker, 433
F.3d at 1360 (holding that relator showed indicia of reliability because she spoke with the
billing department about submitting false billing codes for services). Nowhere in the
Amended Complaint is there even an attempt to explain how an auditor of “physician
compensation issues” knew about Lee Health’s billing department.
15
(Doc. 36 at 5).
Likewise, nothing in the Amended Complaint suggests that D’Anna ever had access to
billing documents or Medicare claims. See Jallali v. Sun Healthcare Grp., 667 F. App’x
745, 746 (11th Cir. 2016) (holding that even pleading to be “privy to the internal billing
practices” and having “a reliable indication that claims were fraudulently submitted” did
not plead FCA claims with particularity). Instead, much of the Amended Complaint relies
on D’Anna’s conclusion that the compensation agreements were “not commercially
reasonable in the absence of referrals.”
Leaving aside the fact that the Amended
Complaint never tries to support that conclusion, D’Anna does not explain how this
purported finding ameliorates her lack of pleading the actual submission of false claims
and false statements. Put another way, even if D’Anna’s assertions about commercial
reasonableness are correct, she identifies no “basis of her knowledge of [Lee Health’s]
fraudulent billing practices,” Chase, 723 F. App’x at 790, or false statements.
In other cases, courts excused the lack of pleading specific billing details. But the
relators there pleaded sufficient facts for courts to conclude that they were “in a position
to know that actual false claims were submitted to the government and had a factual basis
for [their] alleged personal knowledge.” Mastej, 591 F. App’x at 707. For instance, in
Mastej, the relator was a hospital’s former senior manager and CEO who pleaded that he
sat in on meetings where Medicare patients and billing were discussed. Id. And the
relator alleged access to billing data during his employment, including familiarity with the
hospital’s revenue and payor mix.
Id. at 707-08. Importantly, as CEO, the relator
specifically alleged to speaking with another executive about engaging in the unlawful
compensation scheme in exchange for doctor referrals. Id. at 707. None of those facts
are present here. Contrary to her argument, D’Anna pleaded nothing that the Court could
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rely on to conclude that she knew anything about the submission of false claims or
statements. The other cases to which D’Anna directs the Court are non-binding and
similarly distinguishable. United States ex rel. Bingham v. HCA, Inc., No. 13-23671-Civ,
2016 WL 344887 (S.D. Fla. Jan. 28, 2016) (pleading the specific number of each doctor’s
Medicare referrals along with a detailed scheme where a defendant shared profits and
leased space to doctors at a discount based on those referrals); Osheroff II, 2012 WL
2871264 (noting that relator provided an exhibit with thousands of sample claims).
For those reasons, the Amended Complaint fails to plead the presentment and
make or use claims with particularity as required by Rule 9(b). And those claims are
dismissed without prejudice.
2. The Reverse False Claim
D’Anna’s final assertion is a reverse false claim. “[T]o establish a reverse false
claim cause of action, a relator must show that the defendant owed a definite and clear
‘obligation to pay money to the United States at the time of the allegedly false
statements.’” United States ex rel. Parker v. Space Coast Med. Assocs., LLP, 94 F. Supp.
3d 1250, 1263 (M.D. Fla. Feb. 6, 2015) (quoting Matheny, 671 F.3d at 1223); see 31
U.S.C. § 3729(a)(1)(G). According to D’Anna, this claim is in the alternative to the other
FCA claims, but both turn on the same allegedly false claims. (Doc. 101 at 25). In part,
Lee Health contends that the Amended Complaint failed to allege an obligation to repay
the Government. (Doc. 86 at 21-22). D’Anna disagrees, contending that her audit reports
and the Government’s investigation put Lee Health on notice of its obligation to repay the
Government for the false claims. (Doc. 101 at 24-25). Yet Lee Health only had an
obligation to repay the Government if Lee Health submitted and received payment for
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false claims. See Mastej, 591 F. App’x at 706 n.20 (“Unless [relator] sufficiently pleads
submission and payment claims in Counts I and II, his Count III [reverse false claim] fails
because it is based on false claims having been paid that Defendants failed to repay.”).
As shown above, D’Anna failed to demonstrate that Lee Health submitted and received
payment for false claims. Therefore, this reverse false claim must also fail because the
Amended Complaint cannot establish that Lee Health had an obligation to repay the
Government. See Matheny, 671 F.3d at 1223 (“[R]elators must show that the defendants
owed an obligation to pay money to the United States.”); Mastej, 591 F. App’x at 706 n.20;
Space Coast, 94 F. Supp. 3d at 1263-64 (dismissing a reverse false claim that depended
on dismissed presentment and make or use claims to establish an obligation to repay the
Government). Thus, D’Anna’s reverse false claim is dismissed without prejudice.
B. Motions to Dismiss Under Rule 12(b)(2), (4)-(5)
Lee Health argues for dismissal of Cape Coral Hospital as a party for the failure of
process, failure of service of process, and lack of personal jurisdiction. (Doc. 86 at 2 n.2).
According to Lee Health, Cape Coral Hospital is a separate legal entity even though it is
within Lee Health’s system. (Doc. 86 at 2 n.2). D’Anna disputes whether Cape Coral
Hospital is separate from Lee Health. (Doc. 101 at 29-30). Based on the briefing, Cape
Coral Hospital may be a separate entity, requiring separate service. At the same time, it
is unclear whether any claims even exist against Cape Coral Hospital. D’Anna states that
Lee Health is the “appropriate defendant” and there is “no need to add the cashless
subsidiary” Cape Coral Hospital. (Doc. 101 at 30). Rule 4(m) states that “[i]f a defendant
is not served within 90 days after the complaint is filed, the court . . . must dismiss the
action without prejudice against that defendant or order that service be made within a
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specified time.” Fed. R. Civ. P. 4(m). Given the uncertainty over the status of Cape Coral
Hospital and the fact that the Amended Complaint is being dismissing without prejudice,
the Court denies these motions without prejudice. But D’Anna must either serve Cape
Coral Hospital with an amended complaint if it is a separate legal entity or notify the Court
that she does not intend to pursue claims against Cape Coral Hospital. See id.
In conclusion, the Court grants Lee Health’s Motion to Dismiss and dismisses the
Amended Complaint without prejudice. But the Court grants D’Anna’s request for leave
to amend. Fed. R. Civ. P. 15(a)(2).
Accordingly, it is now ORDERED:
1. Lee Health’s Motion to Dismiss (Doc. 86) is GRANTED.
a. The Amended Complaint (Doc. 36) is DISMISSED without prejudice.
b. Relator Angela D’Anna may file a second amended complaint on or
before March 20, 2019. Failure to do so will result in this case be
dismissed without further notice.
2. Lee Health’s Request for Oral Argument (Doc. 87) is DENIED as moot.
3. Lee Health’s Objections to the Order Denying the Motion to Stay Discovery
pending resolution of this Motion to Dismiss (Doc. 111) is DENIED as moot.
4. Lee Health’s Motion for Leave to File Reply to D’Anna’s Opposition to Lee
Health’s Objections (Doc. 115) is DENIED as moot.
DONE and ORDERED in Fort Myers, Florida this 6th day of March 2019.
Copies: All Parties of Record
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