United States of America et al v. GE Healthcare, Inc. et al
ORDER granting 78 GE's Unopposed Request for Judicial Notice, granting 77 GE's Motion to Dismiss the Third Amended Complaint as set forth more specifically herein, and denying GE's request for oral argument. Patel may file a Fourth Amended Complaint on or before October 26, 2017. Signed by Judge Virginia M. Hernandez Covington on 9/28/2017. (KM)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
UNITED STATES OF AMERICA,
et al., ex rel. SUNIL PATEL,
Case No. 8:14-cv-120-T-33TGW
GE HEALTHCARE, INC.,
This matter comes before the Court upon consideration of
Defendant GE Healthcare, Inc.’s (“GE”) Motion to Dismiss the
Third Amended Complaint and request for oral argument, filed
on August 25, 2017 (Doc. # 77), GE’s Unopposed Request for
Judicial Notice, also filed on August 25, 2017 (Doc. # 78),
and Relator Sunil Patel’s (“Patel”) Response in Opposition,
filed on September 6, 2017 (Doc. # 80).
The Request for
Judicial Notice and the Motion to Dismiss are GRANTED as set
forth more specifically below.
The request for oral argument
GE operates 31 nuclear pharmacies in the United States.
(Doc. # 73 at ¶ 7). Patel is a board-certified nuclear
pharmacist who worked at GE’s nuclear pharmacy in Tampa. (Id.
at ¶ 6).
In this action, Patel alleges that GE violated the
False Claims Act, 31 U.S.C. § 3729(a)(1), and parallel state
artificially inflating the price of certain drugs.
relevant facts follow.
A majority of Patel’s allegations relate to the manner in
which GE compounded and labeled radiopharmaceuticals.
practice of pharmacy, “compounding” refers to “incorporating
ingredients to create a finished product for dispensing to a
patient or for administration by a practitioner.”
(Doc. # 73
at ¶ 28 (citing Fla. Admin. Code § 64B16-27.700)).
Patel alleges that GE’s nuclear pharmacies produce the
radiopharmaceuticals at issue by “compounding an NDA reagent
kit with an NDA radionuclide or an elution from an NDA
generator.” (Id. at ¶ 27). For instance, GE manufactures the
drug Myoview by injecting radioactive Technetium 99 into cold
vials to activate the drug.
(Id. at ¶ 51).
Unit doses are
drawn from the vials, which are then sent to physicians and
hospitals for use in cardiac imaging scans.
The FDA-approved package insert for Myoview requires that
the radioactivity injected into Myoview kits be limited to “up
to 240 mCi [millicuries].”
(Id. at ¶ 52).
routinely injects radioactivity of up to and greater than 500
millicuries into Myoview kits.
(Id. at ¶ 54).
Patel raises similar allegations with respect to six
other radiopharmaceuticals that are also used as imaging
agents: Sestamibi, MAG3, MAA, MDP, Mebrofenin, and HDP.
at ¶¶ 68, 80, 88, 98, 106, 124).
Patel maintains that GE’s
motive for injecting excess radioactivity is profit; the
practice allows GE to obtain extra doses from each kit to sell
to physicians and hospitals.
(E.g., Id. at ¶ 55).
GE also routinely labels radiopharmaceuticals with an
expiration time that is well beyond the time specified by the
package insert, including the drugs Myoview, Sestamibi, MAG3,
MAA, MDP, Sulfur Colloid, and HDP.
(Id. at ¶¶ 68, 80, 88, 98,
114, 124, 143). In a similar vein, Patel alleges that GE uses
expired Iodine-131 stock solution to make diagnostic capsules
for thyroid uptake tests.
(Id. at ¶ 133).
Patel maintains that the radiopharmaceuticals subject to
the foregoing practices are not reimbursable by government
programs because the drugs are compounded in violation of GE’s
state license (Id. at ¶¶ 41-43), the drugs are not safe,
effective, or FDA-approved (Id. at ¶¶ 9, 12, 18, 46-47), and
the drugs are “misbranded” and “adulterated” in violation of
the Food, Drug and Cosmetic Act, 21 U.S.C. § 352(a) (Id. at
¶¶ 32, 34).
Because the radiopharamceuticals are not reimbursable,
Patel alleges in Count I of the Third Amended Complaint that
GE caused physicians and hospitals to submit “false claims”
for the drugs, in violation of 31 U.S.C. § 3729(a)(1)(A).
(Doc. # 73 at ¶¶ 153-255).
In Count II, Patel alleges that
GE’s labels and invoices falsely indicated that the drugs were
FDA-approved, which constitutes a “false record or statement”
(Doc. # 73 at ¶¶ 256-267).
artificially inflated the reimbursement rate for Myoview and
other drugs by providing false sales data to Medicare.
# 73 at ¶¶ 168, 183, 196, 210, 224, 235, 254).
radiopharmaceuticals “based on the lower of the billed charge
reflected in published sources (e.g., Red Book, Price Alert,
(Id. at ¶ 148).
According to Patel, GE submitted
false AWP data for Myoview to the Red Book.
(Id. at ¶¶
148-149). GE also provided false information about the number
of unit doses obtained from a Myoview kit, which is used to
calculate the per-unit reimbursement rate.
(Id. at ¶ 150).
On January 17, 2014, Patel filed this action under seal
as relator for the United States and Florida, California,
Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland,
Hampshire, New Jersey, New Mexico, New York, North Carolina,
Washington, and Wisconsin (collectively, “the States”). (Doc.
On March 23, 2017, the United States and the States
declined to intervene.
(Doc. ## 23, 25).
After the Court
lifted the seal, GE filed a Motion to Dismiss the Second
(Doc. ## 24, 49).
Before the Court ruled
on the Motion, Patel requested and was granted leave to amend.
(Doc. ## 70, 71).
Complaint (“TAC”), which is the operative pleading. (Doc.
## 71, 73).
As noted, the TAC asserts two counts, each of
which is brought pursuant to the federal False Claims Act and
the States’ parallel false claims acts. (Doc. # 73 at ¶¶ 153267).
On August 25, 2017, GE filed the instant Motion to
Dismiss with Prejudice.
(Doc. # 80).
(Doc. # 77).
Patel responds in
On September 7, 2017, the Court
denied GE’s request to file a reply.
(Doc. ## 81, 82).
Accordingly, the Motion to Dismiss is ripe for review.
III. Legal Standard
On a motion to dismiss, the Court accepts as true all
allegations in the complaint and construes the facts in the
light most favorable to the plaintiff.
Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004).
the Court favors the plaintiff with all reasonable inferences
from the allegations in the complaint.
Stephens v. Dep’t of
Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir. 1990).
However, the Supreme Court explains that:
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
A court is not “bound to accept as true
a legal conclusion couched as a factual allegation.”
v. Allain, 478 U.S. 265, 286 (1986).
Rule 9(b) of the Federal Rules of Civil Procedure imposes
more stringent pleading requirements on claims alleging fraud.
Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1305 (11th
The complaint must allege “facts as to time,
fraudulent acts, when they occurred, and who engaged in them.”
Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir.
Enacted in 1863, the False Claims Act (“FCA”), 31 U.S.C.
stopping the massive frauds perpetrated by large contractors
during the Civil War.”
Universal Health Servs., Inc. v. U.S.
ex. rel. Escobar, 136 S. Ct. 1989, 1996 (2016) (internal
repeatedly amended the Act, but its focus remains on those who
The FCA’s civil penalties are
“essentially punitive in nature” and subject defendants to
treble damages plus penalties of up to $10,000 per claim. Id.
(internal quotation marks omitted).
The FCA may be enforced by the government or by a relator
31 U.S.C. § 3730(b); Kellogg Brown & Root
Servs., Inc. v. U.S. ex rel. Carter, 135 S. Ct. 1970, 1973
If a qui tam action results in recovery for the
government, the relator shares in the award.
A relator’s ability to bring an FCA action is subject to
certain limitations, including the public-disclosure bar in 31
U.S.C. § 3730(e)(4), which endeavors “to strike a balance
between encouraging private persons to root out fraud and
stifling parasitic lawsuits.”
Schindler Elevator Corp. v.
U.S. ex rel. Kirk, 563 U.S. 401, 413 (2011).
In its current iteration, the public-disclosure bar
requires a court to dismiss an FCA action “if substantially
disclosed in a prior federal action, in the news media, or in
other specified sources.
31 U.S.C. § 3730(e)(4)(A) (2016).
The current version applies to FCA claims that arise from
billing on or after March 23, 2010.
U.S. ex rel. Saldivar v.
Fresenius Med. Care Holdings, Inc., 841 F.3d 927, 932 n.1
(11th Cir. 2016).
commencing as early as 2004, and therefore implicate the prior
version of the statute.
(E.g., Doc. # 73 at ¶¶ 165, 183).
That version imposes a jurisdictional bar when an FCA action
jurisdictional, the Court addresses the public-disclosure bar
at the outset of this analysis.
U.S. ex rel. Osheroff v.
Humana Inc., 776 F.3d 805, 810 (11th Cir. 2015).
To determine whether the public-disclosure bar applies
under either version of the statute, the Court considers:
(1) whether the allegations made by the relator have been
publicly disclosed; (2) if so, whether the allegations are
based on (or substantially the same as) the publicly-disclosed
“original source” of the information as that term is defined
in the FCA.
Id. at 812, 814.
GE argues that Patel’s allegations overlap with a federal
action filed by relator James Wagel in 2006.
(Doc. # 77 at
24). In the earlier action, Wagel, a sales representative for
a competing pharmaceutical company, alleged that GE encouraged
various healthcare providers to inject excess Technetium into
Myoview when the providers prepared doses on-site.
# 78-2 at ¶¶ 7, 45-47, 52, 60, 67-74).
Wagel alleged that GE
artificially inflated the reimbursement rate for Myoview by
failing to report the extra doses yielded by this practice.
(Id. at ¶¶ 59-60).
Ultimately, the United States settled Wagel’s action for
$30 million. (Doc. # 78-4 at 1). The Department of Justice
issued a press release stating that GE violated the FCA “by
causing Medicare to overpay for Myoview.”
The pleadings from Wagel’s case and the press release are
GE submits an Unopposed Request for Judicial Notice of
Wagel’s pleadings and the news articles. (Doc. # 78). GE’s
request is granted. Osheroff, 776 F.3d at 811-812.
However, the Court finds that Patel’s allegations are not
“based on” or “substantially the same as” the allegations in
the prior public disclosures.
Specifically, Wagel alleged that GE encouraged
healthcare providers to inject excess radioactivity into
By contrast, this action alleges that GE
itself injected excess radioactivity, in GE’s capacity as a
nuclear pharmacy. As a result, the public-disclosure bar does
not apply because the prior action did not allege that GE “in
its capacity as a [pharmacy] actually engaged in wrongdoing.”
Cooper v. Blue Cross & Blue Shield of Fla., Inc., 19 F.3d 562,
567 (11th Cir. 1994) (holding that action against primary
insurer was not barred by prior allegations against insurer in
its role as payment intermediary).
substantially the same as, the publicly-disclosed allegations,
the Court is not required to reach the third question of
whether Patel is an original source. U.S. ex rel. Williams v.
NEC Corp., 931 F.2d 1493, 1500 (11th Cir. 1991).
But even if
qualifies as an original source.
The prior version of the FCA defined an “original source”
as “an individual who has direct and independent knowledge of
31 U.S.C. § 3730(e)(4)(B) (2009).
The Eleventh Circuit has
interpreted the phrase “direct and independent knowledge” to
require first-hand knowledge.
Saldivar, 841 F.3d at 936.
Here, the TAC demonstrates Patel’s first-hand knowledge of
GE’s nuclear pharmacy scheme based on Patel’s first-hand
experience as a GE nuclear pharmacist.
(E.g., Doc. # 73 at
¶¶ 54, 69-73, 80, 90, 133, 142-144).
The current version of the FCA defines an original source
as someone “who has knowledge that is independent of and
materially adds to the publicly disclosed allegations or
31 U.S.C. § 3730(e)(4)(B) (2016) (emphasis
The Court finds that Patel’s allegations “materially
add” to Wagel’s action in part because Patel alleges that GE
effectively continued the fraudulent scheme — through its own
nuclear pharmacies — after settling Wagel’s action. Jacobs v.
Bank of Am. Corp., No. 1:15-CV-24585-UU, 2017 WL 2361943, at
*7 (S.D. Fla. Mar. 21, 2017) (holding that allegations of
continuing violations following a consent judgment materially
includes extensive allegations relating to GE’s sale and use
of expired radiopharmaceuticals, which is a separate pharmacy
scheme that was not at issue Wagel’s case.
Based on the foregoing, the Court holds that the instant
action is not subject to the public-disclosure bar.
Statute of limitations
GE alternatively moves to dismiss a portion of the TAC as
Because this action was not filed until January
17, 2014, GE argues that claims prior to January 17, 2008 are
barred pursuant to the FCA’s six-year statute of limitations.
(Doc. # 77 at 7-8); see 31 U.S.C. § 3731(b)(1) (stating that
an FCA action may not be brought “more than 6 years after the
date on which the violation of section 3729 is committed.”).
In response, Patel contends that the FCA’s ten-year
tolling provision governs. (Doc. # 80 at 18-20). Pursuant to
31 U.S.C. § 3731(b)(2), an FCA action may be brought within:
3 years after the date when facts material to the
right of action are known or reasonably should have
been known by the official of the United States
charged with responsibility to act in the
circumstances, but in no event more than 10 years
after the date on which the violation is
31 U.S.C. § 3731(b)(2).
Courts are split as to whether the tolling provision
applies to cases in which the government has declined to
intervene, such as the instant case. United States v. Cochise
Consultancy, Inc., No. 5:13-CV-02168-RDP, 2016 WL 1698248, at
*2-3 (N.D. Ala. Apr. 28, 2016) (identifying a three-way split
in authority); U.S. ex rel. Wood v. Allergan, Inc., No.
10-CV-5645 (JMF), 2017 WL 1233991, at *16-18 (S.D.N.Y. Mar.
31, 2017) (same); see also Stephen S. Stallings, Laura E.
Caravello, Wait Not, Want Not: The Importance of the Statute
of Limitations in Qui Tam False Claims Act Cases, 7 Pitt. J.
Envtl. Pub. Health L. 245, 259-272 (2013).
Circuit has not issued a published decision addressing the
GE fails to acknowledge, let alone address, the tolling
GE also concedes that some of the State’s false
claims acts include at least a ten-year limitations period.
(Doc. # 77 at 8 n.10).
Accordingly, absent a more focused
challenge, the Court declines to dismiss at this juncture.
Presentment of a false claim (Count I)
GE next moves to dismiss Count I for failure to state a
In Count I, Patel alleges that GE violated 31 U.S.C.
§ 3729(a)(1)(A), which creates a right of action against any
person who “knowingly presents, or causes to be presented, a
false or fraudulent claim for payment or approval.”
establish a violation of § 3729(a)(1)(A), Patel 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.”
U.S. ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148,
1154 (11th Cir. 2017).
The key issue under § 3729(a)(1)(A) is whether the
defendant “presented or caused to be presented” a false claim.
Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1052 (11th Cir.
2015) (quoting Hopper, 588 F.3d at 1325-26).
particularity, meaning particular facts about the ‘who,’
‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions
to the government.”
Id. at 1052 (internal quotation marks
“Providing exact billing data — name, date, amount, and
services rendered — or attaching a representative sample claim
is one way a complaint can establish” presentment of a false
claim. U.S. ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591
F. App’x 693, 704 (11th Cir. 2014). “However, there is no per
se rule that an FCA complaint must provide exact billing data
Clausen, 290 F.3d at 1312 & n.21).
Rather, a complaint must
contain “some indicia of reliability” that a false claim was
actually submitted. Clausen, 290 F.3d at 1311. For instance,
a relator with first-hand knowledge of the defendant’s billing
practices may possess a sufficient basis for alleging that the
defendant submitted false claims.
Mastej, 591 F. App’x at
At its most detailed, the TAC alleges that Patel spoke
with two nuclear technicians who worked for two of GE’s
technician, Renee, worked for Dr. Ramulu Eligetti in Ocala.
(Id. at ¶ 60). Renee told Patel that approximately 85% of Dr.
Eligetti’s patients were comprised of Medicare and Medicaid
Another technician, Toni, who worked
for Dr. Sami Elchahal in North Tampa, told Patel that a
Medicare and Medicaid beneficiaries.
(Id. at ¶ 62).
Both Dr. Eligetti and Dr. Elchahal purchased Myoview from
GE’s Tampa pharmacy, and Patel alleges that the Myoview
compounded with excess radioactivity.
(Id. at ¶¶ 61, 63).
Because Dr. Eligetti and Dr. Elchahal purchased Myoview for
patients, and because a substantial number of their patients
were Medicare or Medicaid beneficiaries, Patel argues that
Medicare and Medicaid.
(Doc. # 80 at 8-9).
These allegations fall well short of alleging “exact
billing data.” Mastej, 591 F. App’x at 704. Patel identifies
no “particular facts about the ‘who,’ ‘what,’ ‘where,’ ‘when,’
Urquilla-Diaz, 780 F.3d at 1052 (quoting Hopper, 588 F.3d at
Instead, Patel contends that his allegations possess
participated in GE’s fraudulent scheme.
(Doc. # 80 at 9).
Yet, the Eleventh Circuit has repeatedly held that knowledge
of an underlying scheme – even detailed knowledge — is not
sufficient to allege presentment.
E.g., U.S. ex rel. Atkins
v. McInteer, 470 F.3d 1350, 1358-59 (11th Cir. 2006); Clausen,
290 F.3d at 1311-12.
Patel relies on two other Eleventh Circuit cases, but
each is readily distinguishable.
In Matheny, the Eleventh
“personally participated in the manipulation” of account data
“detailed allegations of the accounting records . . . and his
involvement with the patient accounts.”
U.S. ex rel. Matheny
v. Medco Health Sols., Inc., 671 F.3d 1217, 1221, 1230 (11th
Cir. 2012). Likewise, in Walker, the relator alleged that she
received direct instructions about how to bill services and
defendant’s billing practices with an office manager. U.S. ex
rel. Walker v. R&F Props. of Lake Cty., Inc., 433 F.3d 1349,
1360 (11th Cir. 2005).
But in this case, the TAC pleads no
similar facts demonstrating that Patel is familiar with the
claims and billing process.
Perhaps recognizing the deficiency of his allegations
under Eleventh Circuit precedent, Patel suggests that a “more
flexible” pleading standard should apply when a qui tam
defendant causes a third party to file false claims, as GE
allegedly did in this case.
(Doc. # 80 at 8).
on cases from the First Circuit holding that a relator can
U.S. ex rel. Duxbury v. Ortho Biotech Prods.,
579 F.3d 13, 29 (1st Cir. 2009) (internal quotation marks
Patel fails to acknowledge that the Eleventh Circuit has
rejected this approach.
In Hopper, the relators alleged that
Marinol induced physicians to write off-label prescriptions,
which in turn caused pharmacies to submit false claims for
588 F.3d at 1326.
Although the relators
possessed no billing or claims data, they presented what they
described as a “highly-compelling statistical analysis [that]
renders inescapable the conclusion that a huge number of
claims for ineffective off-label uses of Marinol resulted”
from the illegal marketing campaign.
Circuit acknowledged the First Circuit line of cases, but held
that the relators’ failure to identify a single prescription
or claim with particularity was fatal to their cause of
Id. at 1326-27; accord U.S. ex rel. Keeler v. Eisai,
Inc., 568 F. App’x 783, 796-798 (11th Cir. 2014).
Patel identifies no basis for this Court to depart from
Hopper by applying a more lenient standard.2
under the First Circuit’s more flexible pleading standard,
Patel’s allegations are insufficient.
In a recent case, the
First Circuit emphasized that a relator must generally plead
“specific medical providers who allegedly submitted false
claims, the rough time periods, locations, and amounts of the
claims, and the specific government programs to which the
claims were made.”
U.S. ex. rel. Kelly v. Novartis Pharm.
Corp., 827 F.3d 5, 13 (1st Cir. 2016).
The First Circuit
rejected as speculative a claim which – similar to Count I in
this case — was premised on the bare facts that certain
doctors received services from the defendants, the doctors
were enrolled in federal reimbursement programs, and the
doctors prescribed the drug at issue.
Id. at 15.
Patel attempts to buttress his claim by alleging that two
of the drugs at issue, Myoview and Sestamibi, are used for
cardiac tests and “heart disease is the leading cause of death
for Americans over the age of 65, the point at which Medicare
(Doc. # 73 at ¶ 64).
Patel also submits a
report from the U.S. Government Accountability Office, which
reliance on a Fifth Circuit case, U.S. ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 192 (5th Cir. 2009), which also
announced a more lenient pleading standard. See Keeler, 568
F. App’x at 797 n.19 (“Although the Fifth Circuit in Grubbs
criticized the stringent requirements of Clausen, subsequent
cases decided by the Eleventh Circuit emphatically reaffirms
the holding as binding precedent.”)
radiopharmaceuticals that Medicare spent the most money on
between 2003 and 2004.
(Doc. # 80 at 10 n.5; Doc. # 80-1 at
Based on these facts, Patel argues that “many, if not
most,” of the Myoview and Sestamibi doses sold to Dr. Eligetti
and Dr. Elchahal “likely were for Medicare beneficiaries and
were billed to the Medicare program.”
(Doc. # 80 at 10).
To state a plausible claim under § 3729(a)(1)(A), Patel
must do more than allege that it is “likely” that false claims
were submitted to the government.
Clausen, 290 F.3d at 1313.
Once again, Patel’s argument rests on “mere conjecture” and is
not sufficient to allege presentment under Rule 9(b) pleading
Based on the foregoing, Count I is due to be dismissed.
Because Patel fails to allege the presentment of any claim
address whether Patel adequately alleges that such a claim was
“false” under the Ninth Circuit’s recent decision in United
States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890
(9th Cir. 2017), or based on another theory of falsity.
Court therefore declines to reach GE’s alternative arguments
regarding the element of falsity.
(See Doc. # 77 at 12-16).
GE requests that Count I be dismissed with prejudice.
(Doc. # 55 at 17-18).
In response, Patel requests leave to
(Doc. # 80 at 6 n.3).
Pursuant to Fed. R. Civ. P. 15(a)(2), “[t]he court should
freely give leave [to amend] when justice so requires.”
light of the liberal policy favoring amendment, and because
this Court has not previously issued any substantive ruling in
this action, the Court will grant Patel one – and very likely
only one – opportunity to amend.
However, Patel is cautioned
that he may only amend Count I if he is able to allege
presentment of actual claims in good faith under Eleventh
Circuit pleading standards.
False statement material to a false claim (Count II)
In Count II, Patel alleges a violation of 31 U.S.C.
§ 3729(a)(1)(B), which was formerly codified at 31 U.S.C.
§ 3729(a)(2). The prior version applies to claims for payment
submitted before June 7, 2008, and therefore covers a portion
of Patel’s claim. Hopper, 588 F.3d at 1327 n.3. That version
creates a cause of action against any person who “knowingly
makes, uses, or causes to be made or used, a false record or
statement to get a false or fraudulent claim paid or approved
by the Government.”
31 U.S.C. § 3729(a)(2) (2008).
Under this version of the statute, a relator is not
required to allege presentment because the statutory language
includes no express presentment requirement. Hopper, 588 F.3d
But a relator is required to allege that (1) the
defendant intended that the government pay a false claim, and
(2) the government actually paid a false claim.
Id. at 1327-
GE argues that Patel fails to allege with particularity
either intent or actual payment of a false claim.
(Doc. # 77
On the element of payment, Patel correctly points
out that in Hopper, the Eleventh Circuit suggested that the
First Circuit’s more lenient pleading standard could apply to
allegations of payment.
588 F.3d at 1329 (holding that
Clausen and its progeny “do not necessarily foreclose the
possibility that, for claims under subsection (a)(2), general
allegations of improper government payments to third parties,
supported by factual or statistical evidence to strengthen the
inference of fraud . . . could satisfy the particularity
requirements of Rule 9(b)”).
But here, similar to Hopper, the Court need not resolve
this issue because Patel fails to allege any facts sufficient
to support the element of intent.
Id. at 1329-30.
includes no allegations relevant to intent within Count II.
(Doc. # 73 at ¶¶ 256-267).
And in response to the Motion to
Dismiss, Patel identifies no such allegations within the TAC.
(Doc. # 80 at 11-12).
GE appears to suggest that the same elements of intent
and payment are required under the current version of the
statute, § 3729(a)(1)(B), which creates a cause of action
against any person who “knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false
or fraudulent claim.”
(Doc. # 77 at 18 n.18).
In contrast to
§ 3729(a)(2), the current version omits any reference to
payment or intent.
In Hopper, the Eleventh Circuit declined to address the
elements of a claim under the current version.
588 F.3d at
declining to address the issue).
But in a recent published
decision, the Eleventh Circuit held that “[t]o prove a 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
Consistent with the revised statutory language, the Eleventh
Accordingly, absent some contrary authority, the Court is not
applicable to the portion of Patel’s claims brought under
GE alternatively argues that Patel fails to allege that
the false statements or records were “material” to a false
claim. (Doc. # 77 at 21-22). In particular, GE contends that
a heightened materiality standard applies under Escobar, a
2016 Supreme Court decision.
(Id. at 22).
In Escobar, the Supreme Court addressed the viability of
liability under § 3729(a)(1)(A) – not § 3729(a)(1)(B), which
is the subsection at issue in Count II.3
136 S. Ct. at 1999.
The Supreme Court first confirmed the prevailing view among
the Circuits that a plaintiff could establish a “false claim”
under § 3729(a)(1)(A) by showing that a defendant omitted
information material to a claim.
Resolving a Circuit
assessed under a “demanding” and “rigorous” standard.
2003-2004 & n.6.
certification case under
§ 3729(a)(1)(A), the materiality requirement is a judiciallyimposed doctrine, which is designed to ensure that only
Notably, for this provision, the FCA specifically defines
“material” as “having a natural tendency to influence, or be
capable of influencing, the payment or receipt of money or
In connection with the instant Motion, neither side
addresses the viability of an implied-certification theory
under § 3729(a)(1)(B), likely because GE does not directly
challenge Patel’s pleading of the “falsity” element for this
31 U.S.C. § 3729(b)(4); Rutledge v. Aveda, No.
2:14-CV-00145-AKK, 2015 WL 2238786, at *5 (N.D. Ala. May 12,
2015); U.S. ex rel. St. Joseph’s Hosp., Inc. v. United
Distributors, Inc., 918 F. Supp. 2d 1306, 1315 (S.D. Ga.
Indeed, the Fourth Circuit has declined to
alter its analysis under § 3729(a)(1)(B) following Escobar.
United States v. Triple Canopy, Inc., 857 F.3d 174, 179 (4th
Cir. 2017) (holding that the court’s prior opinion, which
applied § 3729(b)(4)’s materiality standard to a claim under
§ 3729(a)(1)(B), was not impacted by Escobar).
For the present, the Court reserves ruling on this
unbriefed issue in light of a more fundamental problem with
As discussed, Count II implicates two versions of
the statute, which in turn possess separate elements of proof.
Accordingly, the Court dismisses Count II sua sponte in order
for Patel to re-plead his claim in separate counts and to
otherwise cure the deficiencies identified above. See U.S. ex
rel. Graves v. Plaza Med. Ctrs. Corp., No. 10-23382-CIV, 2014
WL 5040284, at *4 (S.D. Fla. Oct. 8, 2014) (ordering relator
to plead separate counts for each version of the statute). GE
authority, on a subsequent motion.
In addition to alleged violations of the FCA, Patel
alleges parallel violations of the States’ false claims laws.
identified above, and Patel offers no opposition.
(Doc. # 77
Accordingly, the state-law claims in Counts I and II
are dismissed without prejudice. Keeler, 568 F. App’x at 803.
Based on the foregoing, it is ORDERED, ADJUDGED, and
GE’s Unopposed Request for Judicial Notice (Doc.
# 78) is GRANTED;
(2) GE’s Request for Oral Argument (Doc. # 77 at 28) is
GE’s Motion to Dismiss the Third Amended Complaint
(Doc. # 77) is GRANTED as set forth more specifically herein.
Counts I and II are dismissed without prejudice.
file a Fourth Amended Complaint on or before October 26, 2017.
DONE and ORDERED in Chambers in Tampa, Florida, this 28th
day of September, 2017.
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