United States of America ex rel. Jolie Johnson and Debbie Helmly et al v. Bethany Hospice of Coastal Georgia, LLC et al

Filing 79

ORDER granting 54 Motion to Stay discovery; denying as moot 55 Motion for Protective Order and denying as moot 73 MOTION for reconsideration of the Scheduling Order. Signed by Magistrate Judge James E. Graham on 3/22/19. (wwp)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
UNITED STATES OF AMERICA
ex rel. JOLIE JOHNSON, et al.,
Relators,
v.
BETHANY HOSPICE AND
PALLIATIVE CARE OF COASTAL
GEORGIA, LLC, et al.,
Defendants.

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CV416-290

ORDER
Defendant in this False Claims Act case move to dismiss the Second
Amended Complaint (doc. 52) and seek an expedited ruling to stay
discovery in the meantime (docs. 54). To permit full briefing of the
various motions, the Court temporarily stayed discovery for a total of 45
days. Docs. 58 & 72. The pending matters being fully briefed, the Court
STAYS all discovery in this case pending resolution of the motion to
dismiss the Second Amended Complaint.

This matter having been

stayed, relators’ motion for reconsideration of the Scheduling Order
(doc. 73) is DENIED as moot.1

1

Relators’ motion for a protective order having been mooted by the parties’ joint

To recapitulate: this is a False Claims Act and Georgia False
Medicaid Claims Act action brought by former Bethany Hospice employees
alleging that “[t]here is a large hospice problem in Southern Georgia,”
because “hospice companies have discovered that they can manipulate the
system through kickbacks and admitting patients who do not qualify.”
Doc. 1 at ¶ 1.

Both the United States and Georgia have declined to

intervene. Docs. 10 & 14. Relators have twice amended their Complaint
to correct various deficiencies and substitute appropriate parties, and
defendants seek to dismiss because they contend the Second Amended
Complaint remains deficient. Doc. 52. More to the point, they argue that
it fatally fails to comply with Fed. R. Civ. P. 8 & 9(b)’s pleading standards,
is impermissibly “shotgun” in nature, and fails to sufficiently allege facts
against each defendant (notably referring to all defendants as “Bethany”
throughout the 23-page pleading) to support either retaliation or false
claims submitted to the Government. Id. For the purposes of this motion,
at least, they’re right.
Relators respond that, while “there is a pending Motion to Dismiss

protective order (compare doc. 55 & doc. 61, see doc. 63), that motion too is DENIED
as moot.
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that Defendant thinks is very good,” that alone cannot suffice to warrant
a stay because “What if they are wrong? What if the Motion to Dismiss
would only dismiss half the case? And what if it is a really weak motion
on the other half?” Doc. 67 at 1. But such hypotheticals cut both ways.
When a party seeks a stay pending resolution of a dismissal motion, the
court takes a “preliminary peek” at the dismissal motion to assess the
likelihood that it will be granted. McCabe v. Foley, 233 F.R.D. 683, 685
(M.D. Fla. 2006). A stay makes sense when the dismissal motion likely
will dispose of the case, thus obviating discovery, see Sams v. GA West
Gate, LLC, 2016 WL 3339764 at * 6 (S.D. Ga. June 10, 2016), or would
dispose of at least some part of the case, thus narrowing it, see United
States ex rel. Jolie Johnson v. Spanish Oaks Hospice, Inc., No. CV415-143,
doc. 47 (S.D. Ga. July 19, 2017). Based on that “preliminary peek,” the
dismissal motions seem sufficiently strong to warrant staying discovery.
The general “fraud” allegations of the Complaint don’t appear
specific enough to survive the motions to dismiss. See United States v.
Southerncare, Inc., 2015 WL 5278413 at *2 (S.D. Ga. Sept. 9, 2015) (citing
Rule 9(b), False Claims Act complaints must “state with particularity the
circumstances constituting fraud or mistake.”). They’re not specifically
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drawn to individual defendants, or individual causes of action. The Second
Amended Complaint summarized the applicable law at length and
establishes relators’ knowledge of the Medicare/Medicaid status of “all or
nearly all Bethany patients” (see, e.g., doc. 45 (Second Amended
Complaint) at ¶¶ 66- 71), but levies general False Claims Act allegations
at all “defendants” collectively.

See, e.g., id. at ¶ 72 (“each of the

defendants is a party to a kickback and that is obviously wrong”), ¶ 74
(“Defendants . . . knowingly presented, or caused to be presented to the
[Government] numerous false or fraudulent claims for payment or
approval”), ¶ 80 (“Defendants . . . knowingly made, used, or caused to be
made or used, a false record or statement material to a false or fraudulent
claim”), & ¶¶ 75, 81 (“Due to Defendants’ conduct, the [Government] ha[s]
suffered substantial damages”). Only the retaliation claim is specifically
pled against defendant Bethany Coastal. Id., ¶ 86.
“Defendants” allegedly committed “fraud,” but it is not clear from
even repeated readings of the Complaint which defendants did what and
when — only that many of defendants’ practices were suspect.

See

Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir. 2005) (the
complaint must plead not only the “who, what, where, when, and how of
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improper practices,” but also the “who, what, where, when, and how of
fraudulent submissions to the government.”); United States v. Choudry,
2016 WL 7228760 at *3 (M.D. Fla. Oct. 11, 2016) (complaints that refer to
defendants collectively “fail[ ] to distinguish between the defendants and
therefore fail[ ] to meet the particularity requirements of pleading a False
Acts Claim.”). General allegations about “defendants” appear insufficient
to survive a Fed. R. Civ. P. 12(b)(6) motion, see United States ex rel.
Creighton v. Beauty Basics Inc., 2016 WL 2642740 at *2 (N.D. Ala. May
10, 2016) (Relators “make[ ] no effort to explain how [their] ‘facts
applicable to all counts’ satisfy the elements of [their] alternative theories;
instead, [they] offer[ ] a series of legal conclusions — which do nothing to
fortify a complaint against dismissal.”), and discovery should not go
forward to give them a free ticket to fish around for something substantial,
see United States ex rel. Atkins v. McInteer, 345 F. Supp. 2d 1302, 1305
(N.D. Ala. 2004) (where complaint failed to meet the requirements of Rule
9(b), relators should not be given “a ticket to the discovery process without
identifying a single claim.”), United States ex rel. Brodsky v. Capital Grp.
Health Servs. of Fla., Inc., 2005 WL 1364619 at *7 (N.D. Fla. June 7, 2005)
(the Rule 9(b) standard “serves an important purpose: it prevents relators
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from filing suit based on a mere hunch and using discovery in the hope of
finding support for the claim.”).
The dismissal motion also focuses on the alleged “kickback scheme”
that relators claim Ava Best spearheaded. If that goes away, so too does
the heft of alleged fraud in the Complaint. Put differently, if granted, the
motion to dismiss will obviate a significant portion of the pending
discovery. The Court concedes that it may not terminate the entire case
(indeed, at the very least relators’ retaliation claim will survive) and it may
indeed be granted with leave to amend to remedy the identified
deficiencies. Doc. 67 at 8. But that does not warrant forcing defendants
and nonparties to expend significant resources responding to pending
discovery2 — that may be obviated (or significantly narrowed by the

Relators served two sets of discovery requests on defendants and appear geared to
serve discovery on at least 27 non-parties, having sent “litigation hold/preservation
letters” asking for those parties to preserve ten years of electronic data. All of that
may be mooted by the pending motion to dismiss.

2

Defendants ask that they be spared the “unnecessary cost” of responding until the
scope of the claims against them are clarified and narrowed. Doc. 54 at 3, 7-8. They
also convincingly note that, regardless, a stay will not prejudice the relators because it
is not necessary to their response to the motion to dismiss. Id. at 8; see also
Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir. 1997) (since “the
allegations in the [complaint] are presumed to be true,” the resolution of a motion to
dismiss for failure to state a claim “always presents a purely legal question” that does
not involve issues of fact, and therefore, “neither the parties nor the court have any
need for discovery before the court rules on [it].”).
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Court’s decision on the motion to dismiss) — in the meantime. The Court
GRANTS the stay motion. Doc. 54. All discovery deadlines are, therefore,
STAYED. Within 14 days of the District Judge’s ruling on the pending
motion to dismiss, the parties shall confer and file a joint status report
including a proposed schedule for all further deadlines in this case.
SO ORDERED, this 22nd day of March, 2019.

The Court credits relators’ concerns that this case is aging rapidly and has been
stayed for long swaths of time. Doc. 67 at 3. Memories are short, and documents get
lost. But the litigation hold notices have put non-parties on notice that their
documents should not get shredded, and defendants certainly would be put in a
sanctionable position if — given three years’ notice that litigation is afoot — their
documents and witnesses now go missing. The very real burden of going forward with
expansive discovery outweighs what worries there may be if discovery is stayed
pending resolution of the motion to dismiss.
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