United States of America Ex Rel. Saint Joseph's Hospital, Inc. and Candler Hospital, Inc. et al v. United Distributors, Inc. et al
Filing
166
ORDER granting in part and denying in part 38 Motion to Dismiss; granting in part and denying in part 39 Motion to Dismiss. Signed by Judge William T. Moore, Jr on 1/11/13. (bcw)
F1 r
U.S. DISTR Cfl
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF GEORGIA 2013 JALi I I PH,
SAVANNAH DIVISION
UNITED STATES OF AMERICA ex
rel. SAINT JOSEPH'S
HOSPITAL, INC. and ex rel.
CANDLER HOSPITAL, INC.,
fL ER
Plaintiffs,
CASE NO. CV410-096
WAS
UNITED DISTRIBUTORS, INC.,
UNITED DISTRIBUTORS, INC.
EMPLOYEE HEALTH BENEFIT
PLAN, COMMERCE BENEFITS
GROUP, INC., d/b/a Commerce
Benefits Group, THOMAS J.
PATTON, and LINNIE P.
REAVES,
Defendants.
ORDER
Before the Court are Defendants' Motions to Dismiss.
(Docs. 38, 39.) After careful consideration, Defendants'
motions are
GRANTED IN PART
and DENIED
IN
PART.
Defendants' motions are granted as to Counts Three, Four,
and Five only. The Government shall have fourteen days to
submit an amended complaint correcting the deficiencies
identified in this order. The Government is on NOTICE that
failure to do so will result in dismissal of Counts Three,
Four, and Five Defendants' motions as to Counts One and
Two are DENIED.
BACKGROUND
This case involves claims brought by the United States
under the False Claims Act ("FCA"), 31 U.S.C. § 3729, and
common law theories of unjust enrichment and payment by
mistake of fact.' Plaintiffs are two Savannah-area
hospitals—Saint Joseph's Hospital, Inc. ("St. Joseph's")
and Candler Hospital, Inc. ("Candler")—and are also
Relators in this qui tam action, in which the Government
has intervened and filed a complaint. 2
Beginning in November 2001, W.A. 3 worked as a truck
driver for Defendant United Distributors, Inc. ("United")
and received primary health insurance through United
Distributors' health plan—United Distributors, Inc.
Employee Health Benefit Plan ("United Health Plan").
(Doc. 19 ¶ 23.) While at work on March 12, 2008, W.A. lost
consciousness, fell, and injured his head. (Id. ¶ 24.)
1
For the purposes of the motions to dismiss, the
Government's allegations set forth in its complaint will be
taken as true. See Sinaltrainal v. Coca-Cola Co.,, 578 F.3d
1252, 1260 (11th Cir. 2009)
2
Previously, this Court dismissed St. Joseph and Candler's
complaint alleging non-FCA violations of ERISA (Doc. 114)
after the parties filed a stipulated dismissal as to those
claims (Doc. 112) . Because those claims have been resolved
and only the FCA claims remain, the Court will refer to the
United States' complaint (Doc. 19) as the complaint.
The parties have requested that for the purposes of
confidentiality, the Court only refer to United's employee
by his initials, W.A. The Court will refer to W.A.'s wife
as Mrs. A.
2
After being taken to the emergency room at Candler, W.A.
was transferred to St. Joseph's for diagnosis and,
ultimately, brain surgery to remove a subdural hematoma.
(Id. ¶j 24, 25.) Following the surgery, W.A. began to
complain of stomach pain. W.A's physicians determined he
was suffering from an unrelated colon rupture, for which he
underwent another surgery. (Id. ¶ 27.) Unfortunately, a
widespread infection was detected shortly after the colon
surgery and W.A.'s
(Id. ¶ 28.)
condition deteriorated rapidly.
By the end of March 2008, W.A. became
unconscious and fell into a coma. Two months later on May
27, 2008, W.A. died.
(Id. ¶ 29.)
The Government alleges that, upon his initial
hospitalization, W.A. provided documentation to both
Candler and St. Joseph's that his primary health insurance
coverage was provided by the United Health Plan.
(Id. ¶ 30.) W.A. executed an assignment of benefits form
authorizing Candler and St. Joseph's to seek and receive
payments directly from the United Health Plan. Nowhere on
these forms, however, was there an indication that the
primary health insurance coverage was through Medicare. 4
(Id. ¶ 31.)
Medicare is a program administered by the Center for
Medicare and Medicaid Services. Under Medicare, individuals
3
Defendant United initiated claims to determine whether
W.A.'s medical care would be covered through a workman's
compensation program. (Id. ¶ 33.) After the workman's
compensation claims were denied (id. ¶ 34), Defendant
Thomas J. Patton ("Patton')—President of Defendant Commerce
Benefits Group Agency, Inc. ("Commerce Benefits"), the
third-party administrator of the United Health Plan—spoke
with Defendant Linnie P. Reaves ("Reaves")—United's human
resources director—about payment policies for the medical
bills. (Id. ¶j 35, 36.) On April 4, 2008, Patton called
Mrs. A to inform her of how the medical expenses would be
reimbursed. (Id. ¶ 37.) In a letter to Mrs. A dated April
4, 2008, Patton wrote that
[ut was a pleasure to speak with you, via phone,
today. After our call, I spoke with [Reaves] and
explained that you and I agreed that the best
manner to handle the Workers' Compensation denial
is to have you submit all claims through the
Medical Plan. In the Unistan Health Plan System
we show [W.A.] 's last day on the job as his COBRA
effective date, because he chose not to take
Family Medical Leave Act. Therefore, all claims
will go first to Medicare and then to the Unistan
Health Plan. [Mrs. A], the important point is
that you will not pay anything for any medical
services.
(Doc. 19, Ex. 1 at 2.) Patton then sent an email to Reaves
with a copy of the letter and a message indicating that
who are age 65 or older, or disabled, may enroll in
Medicare to obtain health benefits in return for payments
of monthly premiums. 42 U.S.C. H 1395j, 13950, 1395r.
4
"[t]his worked out quite well, as [W.A.] is over 65 and
United will only have to pay the balance of what Medicare
does not cover." (Doc. 19, Ex. 2 at 2.) According to the
Government, after receipt of the letter, Reaves did not
notify anyone of Mrs. A's COBRA 5 election or notify United's
COBRA administrator that a qualifying event had occurred.
(Doc. 19 ¶ 40.) No COBRA election forms were ever signed
or executed. (Id. ¶ 42.) In fact, on May 14, 2008, Reaves
completed and certified an employment verification form for
W.A. that indicated his health benefits were covered by the
United Health Plan and, notably, the COBRA coverage box was
not selected. (Id. ¶J 46, 47.)
W.A.'s medical expenses totaled $1,335,458.88.
19, Ex. 4 at 1-2.)
(Doc.
On May 28, 2008, the day after W.A.
died, Commerce, at the direction of Patton, informed St.
Joseph's for the first time that the United Health Plan
The Consolidated Omnibus Budget Reconciliation Act
("COBRA") provides employees, retirees, spouses, and
dependents the right to elect temporary continuation of
health coverage at group rates when coverage is lost due to
certain qualifying life events. 29 U.S.C. §§ 1161-63.
COBRA also outlines how employees and family members may
elect continuation coverage, in which case the group health
plan and Medicare are switched—Medicare would serve as the
primary health insurance and the group health plan would
serve as secondary coverage. 29 U.S.C. § 1166; 48 C.F.R.
§ 1652.204-71; 42 C.F.R. § 411.175(a). Prior to any
election and at the time a qualifying life event occurs,
employers are required to provide notice to employees or
family members of how and when such continuation coverage
is available. 29 U.S.C. § 1166.
5
would not be serving
as
primary payer because W.A. had
elected COBRA coverage. (Doc. 19 ¶ 50.) Reaves stated
that Commerce had the required COBRA paperwork and Commerce
advised St. Joseph's that W.A or Mrs. A had signed a COBRA
election form and that all bills should be processed
through Medicare as primary payer. (Id.
¶j 51, 52.)
Medicare paid Candler $556.46 and St. Joseph's
$318,423.97. (Id.
¶IJ 54, 55.) Additionally, Commerce
instructed physicians to submit claims to Medicare as
primary payer. Nearly two hundred claims for various
physicians services were submitted to Medicare, for which
Medicare paid $22,821.66. (Id. ¶ 58.) The total amount
paid by Medicare was $341,802.09.
(Id. ¶ 59.)
The United States brought this suit to recover monies
paid for alleged false claims presented to the Medicare
program. The Government's complaint asserts five causes of
action: Count One alleges violations of the FCA under 31
U.S.C. § 3729(a) (1); Count Two alleges violations of the
FCA under 31 U.S.C. § 3729 (a) (2); Count Three alleges
violations of the FCA under 31 U.S.C. § 3729(a) (3); Count
Four presents a claim for unjust enrichment; and Count Five
alleges payment by mistake of fact. Defendants Commerce
and Patton have moved to dismiss on the grounds that the
complaint fails to state a claim upon which relief can be
granted because the claims to Medicare were not false as a
matter of law and the complaint fails to plead FCA
violations with particularity as required by Fed. R. Civ.
P. 9(b). (Doc. 38 at 4.) Defendants United, United Health
Plan, and Reaves ("United Defendants") have also moved to
dismiss, arguing that the complaint fails to identify
specific acts that caused the submission of false claims or
a conspiracy to defraud Medicare and that the claims
submitted to Medicare were not false as a matter of law.
(Doc. 39. at 2-3.) The Government has responded in
opposition to both motions, arguing that it has pled with
sufficient particularity the necessary elements for a cause
of action and has stated claims upon which relief can be
granted. (Doc. 49 at 7-8.)
ANALYSIS
I.
RULE 9(B) PARTICULARITY STANDARD
The heightened pleading standard of Federal Rule of
Civil Procedure 9(b) applies to causes of actions brought
under the FCA.
Hopper v. Solvay Pharm., Inc., 588 F.3d
Rule 9(b) states that "in
1318, 1324 (11th Cir. 2009).
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions
of a person's mind may be alleged generally." A complaint
'I
alleging fraud must provide the defendant with "enough
information to formulate a defense to the charges." United
States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d
1301, 1313 n.24 (11th dr. 2002)
An FCA complaint must plead not only the "who, what,
where, when, and how of improper practices," but also the
"who, what, where, when, and how of fraudulent submissions
to the government."
Corsello v. Lincare, Inc., 428 F.3d
1008, 1014 (11th Cir. 2005) (citation omitted) .
Rule 9(b)
serves to ensure that a FCA claim has "some 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. Rule 9(b)'s standard "should
not be conflated with that used on a summary judgment
motion." United States ex rel. Rogers v. Azmat, CV507-092,
at 7 (S.D. Ga. May 17, 2011) (unpublished).
The Government's complaint satisfies Rule 9(b)'s
requirements. For example, the complaint alleges the who—
United, the United Health Plan, Commerce, Patton, and
Reaves (Doc. 19
¶j 1, 8-12) ; the what—false claims for
payment from Medicare for hospital and medical services
provided to W.A. (Id. ¶j 34-41); the when—from W.A.'s first
hospitalization on or about March 12, 2008 up to February
2009 when the final claims were billed to Medicare (id.
F;]
If 24, 50, 54-55, 58-59); the where—Savannah and Smyrna,
Georgia and Avon Lake, Ohio (Id.
If 6, 8, 10); and the how—
by conspiring to conduct a sham COBRA election for W.A.
that would result in Medicare as the primary payer and
United as the secondary payer (Id.
If 30-32, 49, 54, 55,
58, 59) . Specifically, the Government has alleged that
Patton and Reaves presented a sham COBRA election to St.
Joseph's and Candler, as well as to other physicians and
medical providers. Both Reaves and Patton continued to
inform health care providers that W.A. elected COBRA
coverage and instructed providers to submit claims to
Medicare as primary payer.
The Government has also sufficiently pled the time of
the Defendants' fraud—after denial of the workman's
compensation claim until February 2009 (Doc. 19
IT
50, 55-
58); the place of the fraud—Savannah and Smyrna, Georgia
and Avon Lake, Ohio (id.
If 4, 8-12, 35-47) ; the substance
of the fraud—providing the specific entities involved (id.
If 8-12, 35-40, 42, 46, 47, 50-53, 57) and the date and
billing information of the alleged false claims that were
made and submitted for payment (Id.
If 54, 55, 58, 59); and
the details of Defendants' misconduct—that there was no
signed COBRA election form by Mrs. A, United and Reaves
never notified its COBRA administrator of a qualifying life
event, and a May 2, 2008 employment verification form
completed by Reaves indicated that W.A. was covered by the
United Health Plan (id.
¶j 42-47). The complaint alleges
that these false claims ultimately led the Government to
pay money it did not owe. The Government's twenty-page,
eighty-one paragraph complaint provides all of the
necessary indicia of reliability, and provides allegations
sufficiently detailed to satisfy Rule 9(b).
II. RULE 12(B) (6)
A.
Standard
Federal Rule of Civil Procedure 8(a) (2) requires a
complaint to contain "a short and plain statement of the
claim showing that the pleader is entitled to relief."
"[T]he pleading standard Rule 8 announces does not require
'detailed factual allegations,' but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation."
Aschroft v. Igbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
) 6
"A
pleading that offers labels and conclusions or a formulaic
6
Iqbal makes clear that Twombly has been the controlling
standard on the interpretation of Federal Rule of Civil
Procedure 8 in all cases since it was decided. Iqbal, 556
U.S. at 684 ("Though Twombly determined the sufficiency of
a complaint sounding in antitrust, the decision was based
on our interpretation and application of Rule 8 . .
[that] in turn governs the pleading standard in all civil
actions and proceedings in the United States district
courts." (internal quotations and citations omitted)).
10
recitation of the elements of a cause of action will not
do." Iqbal, 556 U.S. at 678 (internal quotations omitted).
"Nor does a complaint suffice if it tenders naked
assertions devoid of further factual enhancement." Id.
When the Court considers a motion to dismiss, it
accepts the well-pleaded facts in the complaint as true.
Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th
Cir. 2009) . However, this Court is "not bound to accept as
true a legal conclusion couched as a factual allegation."
Iqbal, 556 U.S. at 678. Moreover, "unwarranted deductions
of fact in a complaint are not admitted as true for the
purpose of testing the sufficiency of plaintiff's
allegations." Sinaltrainal, 578 F.3d at 1268. That is,
"[t]he rule 'does not impose a probability requirement at
the pleading stage,' but instead simply calls for enough
facts to raise a reasonable expectation that discovery will
reveal evidence of the necessary element." Watts v. Fla.
Int'l Univ., 495 F.3d 1289, 1295-96
(quoting Twombly, 550 U.S. at 545).
(11th Cir. 2007)
"Factual allegations
must be enough to raise a right to relief above the
speculative level." Twombly, 550 U.S. at 555. As such, a
district court may "insist upon some specificity in [the]
pleading before allowing a potentially massive factual
controversy to proceed." Id. at 558.
11
B.
Analysis
1.
Count One
In Count One, the Government alleges that Defendants
violated 31 U.S.C. § 3729(a) (i), which creates liability
under the FCA for any person who "knowingly presents, or
causes to be presented, a false or fraudulent claim for
payment or approval." To establish a cause of action, the
United States "must prove three elements: (1) a false or
fraudulent claim; (2) which was presented, or caused to be
presented, by the defendant to the United States for
payment or approval; (3) with the knowledge that the claim
was false." United States ex rel. Walker v. R&F Props, of
Lake Cnty., Inc., 433 F.3d 1349, 1355 (11th Cir. 2005)
Defendants have moved to dismiss Count One because the
complaint does not show how the alleged conduct caused or
influenced Medicare's payment as primary insurer. (Doc. 38
at 4, Doc. 39 at 14-17.)
The Government alleges that Defendants "falsely
represented to the hospitals and various physicians that
W.A. [or Mrs. A on his behalf] elected COBRA and directed
' The complaint asserts claims under an older version of
the FCA, 31 U.S.C. § 3729 (2009) . The section has been
renumbered and amended by the Fraud Enforcement and
Recovery Act of 2009 ("FERA"), Pub. L. No. 111-21, § 4(a),
However, as to Count One, the former
123 Stat. 1617.
See 31
language is identical to the amended language.
U.S.C. § 3729(a) (1) (A).
12
that all claims for W.A.'s medical care should be processed
through Medicare as primary payer" and that the claims were
false because "[tihere was never an election of COBRA by
either W.A. or Mrs. A." (Doc. 19 ¶ 62.) Second, the
Government contends that these false claims were presented
to the Medicare program for payment. (Id.
¶j 58, 61.)
According to the Government, an employee of Commerce, at
the direction of Patton, informed St. Joseph's that a COBRA
election form had been signed, and instructed the hospital
to submit claims to Medicare as primary payer. (Id. ¶ 52,
53.) Reaves also informed St. Joseph's of the purported
COBRA election and that Commerce had all the necessary
documents. (Id. ¶ 51.) Lastly, the complaint adequately
provides that Defendants—including United, the United
Health Plan, and Reaves—were either deliberately ignorant
of the truth or falsity of the information or had actual
knowledge of its falsity. See 31 U.S.C. § 3729(b) (1) (A)
Defendants argue that the Government has failed to
state a claim because it has not alleged a false claim.
(Doc. 38 at 7-8, Doc. 39 at 21-22.) Defendants assert that
the claims made to Medicare were not false as a matter of
law because the United Health Care Plan denied coverage
and, as a result, St. Joseph's and Candler were authorized
to present their claims to Medicare. (Doc. 38 at 7, Doc.
13
21-22.)
Defendants also assert that the claims made to
Medicare were not false as a matter of law because Medicare
was authorized to pay the claims for W.A's care due to the
expectation that the primary payer has not made or would
not reasonably be expected to make payment promptly. (Doc.
39 at 21-22.) The Court is not persuaded by Defendants'
argument because the basis of United Health Plan's coverage
denial was based on what the Government alleges was a
"fabricated COBRA election." (Doc. 49 at 28 (citing Doc.
19
11 50, 52, 87).) At this stage in the proceedings, and
taking the Government's allegations as true, Sinaltrainal,
579 F.3d at 1260, the Government has satisfied the pleading
standard required by Rule 12 (b) (6).
The United Defendants argue that under the Medicare
Secondary Payer Statute ("MSP"), 42 U.S.C. § 1395y,
Medicare should pay for the medical expenses because there
was no reasonable expectation of the United Health Plan to
pay the claims promptly as a matter of law, thus allowing
Medicare to pay the claims pursuant to 42 U.S.C.
§ 1395y(b) (2) (B) (i) . (Doc. 39 at 22.) The United
Defendants' argument, while novel, would incentivize a
group health plan to avoid its legal obligation as the
primary payer by simply asserting that a Medicare-eligible
employee in need of medical care simply elected COBRA, deny
14
coverage, and then submit the claims to Medicare. The MSP
"makes Medicare the secondary payer for medical services
provided to Medicare beneficiaries whenever payment is
available from another primary payer." Glover v. Ligget
Group, Inc., 459 F.3d 1304, 1306 (11th Cir. 2006) (citing
Cochran v. United States Health Care Fin. Admin., 291 F.3d
775, 777 (11th Cir. 2002)) . By purportedly fabricating
W.A.'s COBRA election, Defendants could deny coverage
through the United Health Plan and instead submit these
false claims to Medicare. For these reasons, the
Government's allegations in Count One state a claim for
relief under the FCA.
2.
Count Two
Count Two alleges that Defendants violated 31 U.S.C.
3729(a)(2), 8 which imposes liability for 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." United, the United Health Plan, and Reaves move to
dismiss on the grounds that they did not cause others to
make false statements such that Medicare paid false claims.
8
Former 31 U.S.C. § 3729 (a) (2) was amended by FERA, making
it retroactive to all claims pending on or after June 7,
Pub. L. No. 1112008, and codifying it at §3729(a) (1) (B) .
The complaint alleges
21, §4(f) (1), 123 Stat. 1617, 1621.
Medicare claims for W.A. were pending on or after June 7,
2008. Thus, the FERA amendments are controlling as to
Count Two.
15
(Doc. 39 at 14-16.)
Considering the well-pleaded facts as
true, see Sinaltrainal, 578 F.3d at 1260, the Government's
complaint is sufficiently specific and detailed to state a
claim for relief.
According to the Government, Reaves' false statements
to St. Joseph's and a physician's office that W.A. elected
coverage under COBRA directly led to Medicare paying these
false claims. (Doc. 19 ¶ 51.) The complaint alleges how
Reaves submitted a May 14, 2008 employment verification for
W.A. that did not indicate COBRA coverage despite Reaves
having communicated with Patton about the COBRA election.
(Id. ¶j 46, 47.) The Government further contends that
Reaves did not initiate any paperwork as part of the COBRA
election (id.
¶IJ 42-45) or notify United's COBRA
administrator (Id. ¶ 44).
The United Defendants assert that they are not liable
because any falsity was not material to establish
liability. (Doc. 39 at 13-14, 17.) However, under both
Eleventh Circuit precedent, see Hopper v. Solvay Pharm.,
Inc., 588 F.3d 1318, 1328 (11th Cir. 2009), and the amended
language of 31 U.S.C. § 3729 (a) (1) (B)—made retroactive to
claims pending on June 7, 2008, such as this one—
materiality is established where false statements caused
the Government to pay amounts it does not owe. Hopper, 588
16
F.3d at 1328.
The amended language defines materiality
similarly as "having a natural tendency to influence, or be
capable of influencing, the payment or receipt of money or
property." 31 U.S.C. § 3729(b) (4) . The complaint contends
that the false statements were material to the claims
submitted to Medicare because the supposed COBRA election
transferred primary coverage, and a significant amount of
the medical expenses, from the United Health Plan to
Medicare. Taken together, these allegations are sufficient
to state a claim that Defendants, including Reaves and her
employer United, acted with the necessary knowledge to
make, use, or cause to be made or used a false record
material to a false or fraudulent claim. As a result, this
count is not subject to dismissal under Rule 12(b)(6).
3.
Count Three
Count Three alleges that Defendants violated the FCA.
by "enter[ing] into a conspiracy among themselves to
defraud the United States by getting false claims paid."
(Doc. 19 ¶ 71.) According to the Government, Reaves and
Patton conspired to have the United Health Plan avoid
paying the majority of W.A's medical expenses by falsely
asserting that W.A. or Mrs. A had elected COBRA coverage.
(Id. ¶ 72.) A conspiracy claim under the FCA must allege a
factual basis to show
17
(1) that the defendant conspired with one or more
persons to get a false or fraudulent claim paid
by the United States; (2) that one or more of the
conspirators performed any act to effect the
object of the conspiracy; and (3) that the United
States suffered damages as a result of the false
or fraudulent claim
Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir.
2005) (citation omitted) . In fraud cases involving
multiple defendants, the Eleventh Circuit has held that the
complaint " 'should inform each defendant of the nature of
his alleged participation in the fraud.' " Ambrosia Coal &
Constr. Co. v. Pages Morales, 482 F.3d 1309, 1317 (11th
Cir. 2007) (citing Brooks v. Blue Cross & Blue Shield of
Fla., Inc., 116 F.3d 1364, 1381 (11th Cir. 2007))
The Government alleges that after learning of the
denial of workman's compensation, Reaves contacted Patton
about a concern over the United Health Plan having to pay a
large amount for W.A.'s medical care. (Doc. 19 ¶J 33, 35.)
However, nothing in the complaint specifically alleges that
this conversation involved conspiring to change W.A.'s
primary coverage to COBRA. Simply, the Government must
provide factual allegations concerning statements or
specific conduct made as part of the conspiracy. The
Government has failed to do so, and thus dismissal as to
Count Three is warranted.
18
However, the Government has requested leave to amend
its complaint upon the finding of any deficiency. (Doc. 49
at 31.) In light of this request and the facts of this
case, the Government's request is granted. The Government
shall have fourteen days to submit an amended complaint
correcting the deficiencies as to Count Three. 9
4.
Counts Four and Five
In Counts Four and Five, the Government alleges that
Defendants have been unjustly enriched by their actions
with respect to W.A.'s sham COBRA election (Doc. 19
¶j 74-
77) and that the Government made payments by mistake of
fact (id.
¶j 78-81).
The United Defendants have moved to
dismiss these for failure to state a claim.
22-24.)
(Doc. 39 at
In response, the Government argues that it has
stated a claim under Georgia law.
(Doc. 49 at 30-31.) The
United Defendants' reply indicates that "for the first time
[the Government has indicated] that these are Georgia
common law causes of action, rather than federal common law
claims." (Doc. 59 at 16.)
Both parties should also be aware that the Court will not
accept any filing—whether an amended complaint, an answer,
motion, brief, response, or reply—that incorporates by
reference any factual allegation or argument contained in
any documents already filed before this Court. Any further
filings must be stand-alone that independently contain all
the factual allegations and arguments that the filing party
wishes the Court to consider.
19
Because it is unclear from the complaint whether the
Government's claims of unjust enrichment and payment by
mistake were pled under federal common or Georgia state
law, the United Defendants' motion to dismiss as to Counts
Four and Five are granted. However, the Government's
request for leave to amend its complaint is granted. The
Government shall have fourteen days to submit an amended
complaint that specifically refers to whether the cause of
action for unjust enrichment and mistake of fact are based
on federal common law or Georgia state law.' °
10
The Court notes, however, that this case is atypical from
a more conventional FCA case where the Government also
alleges unjust enrichment and payment by mistake of fact.
In many cases, for example, there are express contracts
between the Government and a party that precludes
alternative theories of recovery other than the FCA. See
United States v. First Choice Armor & Equip., Inc., 808 F.
Supp. 2d 68, 78 (D.D.C. 2011). In others, under federal
common law claims, the benefits conferred exist because the
Government had a reasonable expectation to be paid by the
defendant and the defendant should reasonably have been
expected to pay the Government. United States v. Rogan,
429 F. Supp. 2d 692, 728 (N.D. Ill. 2006) aff'd, 517 F.3d
449 (7th Cir. 2008) . Even under Georgia state law, unjust
enrichment is premised upon the notion that a party cannot
"induce, accept, or encourage another to furnish or render
something of value to such party and avoid payment for the
Morris v. Britt, 275 Ga. App. 293, 294,
value received."
Here,
620 S.E. 2d 422, 424 (2005) (citations omitted) .
while the Government contends the Defendants were unjustly
enriched by decreasing their monetary payment obligations
as to the medical expenses, under either federal common law
or Georgia state law, simply because the Defendants
supposedly avoided payment of their obligations does not
mean that a benefit from the Government was otherwise
conferred upon them. In other words, the Defendants did
20
CONCLUSION
For the foregoing reasons, Defendants' motions to
dismiss are GRANTED IN PART and DENIED IN PART.
Defendants' motions are granted as to Counts Three, Four,
and Five only. The Government shall have fourteen days to
submit an amended complaint correcting the deficiencies
identified in this order. The Government is on NOTICE that
failure to do so will result in dismissal of Counts Three,
Four, and Five. Defendants' motions as to Counts One and
Two are DENIED.
SO ORDERED this
1,
day of January 2013.
4g:~~
e -70~
WILLIAIVI T. MOORE, Jr
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
not receive something of value rendered by the Government
with the change in primary or secondary payer designation
for which they ought to have compensated the Government.
In short, any claim for unjust enrichment in this case is
doubtful because there was nothing Defendants could provide
to the Government in exchange for secondary payer
designation. Thus, while the Court will allow the
Government an opportunity to amend its complaint as to
unjust enrichment and payment by mistake, it expresses
hesitation that a valid unjust enrichment claim could, in
fact, even exist.
21
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