Suppressed v. Suppressed
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 9/18/2017. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
UNITED STATES OF AMERICA
and the STATE OF ILLINOIS ex rel.
Case No. 14-cv-1098
AMERICA AT HOME HEALTHCARE
AND NURSING SERVICES, LTD.,
d/b/a ANGELS AT HOME
HEALTHCARE, et al.
Judge John Robert Blakey
MEMORANDUM OPINION AND ORDER
Relator/Plaintiff Amy O’Donnell filed this qui tam action under the False
Claims Act (FCA), 31 U.S.C. § 3729, et seq., and its Illinois counterpart, the Illinois
False Claims Act (IFCA), 740 ILCS § 175/1, et seq., on behalf of the United States
and the State of Illinois.
Relator sues corporate defendants America at Home
Healthcare and Nursing Services, Ltd. d/b/a Angels at Home Healthcare (AAH), and
AAH’s purported successor, Great Lakes Acquisition Corp. d/b/a Great Lakes
Caring. Relator also sues former AAH employees, including Kim Richards. Relator
alleges that, starting in 2006, AAH and its former employees billed Medicare and
Medicaid fraudulently, and that Great Lakes continued AAH’s fraudulent practices
after buying AAH in early 2015.
A brief procedural background follows below.
The Court presumes
familiarity with its opinion granting Richards’ prior motion to dismiss. Dkt. 94.
Relator amended her complaint for the first time in 2016.
response to Relator’s amended complaint, all defendants moved to dismiss. Dkt. 55;
Dkt. 61. Pursuant to the Court’s standing order on motions to dismiss, the Court
advised Relator that she could either amend her complaint for the second time or
respond to the motions. Dkt. 54. Relator chose to amend again, so the Court denied
the motions without prejudice. Dkt. 68. After Relator filed her second amended
complaint in early 2017, the defendants again moved to dismiss. Dkt. 69; Dkt. 76;
Dkt. 79. The Court dismissed Richards from the case, but also let Relator replead.
Dkt. 94 at 22, 40.
Relator filed her third amended complaint this July. Dkt. 99. Within days,
Richards moved to dismiss the case, arguing that Relator’s allegations failed to
satisfy Federal Rule of Civil Procedure 9(b)’s heightened requirements for pleading
fraud. Dkt. 101. AAH, Great Lakes, and the other employee defendants later filed
a motion to dismiss on similar grounds, which Richards joined. Dkt. 113.
This Memorandum Opinion and Order addresses only Richards’ motion to
dismiss, which is granted with prejudice.
Because the FCA and IFCA are anti-fraud statutes, claims under both must
meet Rule 9(b)’s heightened pleading requirements. United States ex rel. Gross v.
AIDS Research Alliance–Chi., 415 F.3d 601, 604 (7th Cir. 2005). Rule 9(b) demands
that claimants alleging fraud “state with particularity the circumstances
Particularity is analogous to a reporter’s hook: “plaintiff[s]
ordinarily must describe the who, what, when, where, and how of the fraud—the
first paragraph of any newspaper story.” Pirelli Armstrong Tire Corp. Retiree Med.
Benefits Trust v. Walgreen Co., 631 F.3d 436, 441–42 (7th Cir. 2011) (internal
quotation marks omitted). For example, if the alleged fraudulent scheme involves
misrepresentation, the plaintiff must state who made “the misrepresentation, the
time, place, and content of the misrepresentation, and [how] the misrepresentation
was communicated.” United States ex rel. Grenadyor v. Ukrainian Vill. Pharmacy,
Inc., 772 F.3d 1102, 1106 (7th Cir. 2014).
Of course, different cases require different levels of detail for a complaint to
satisfy Rule 9(b).
Pirelli, 631 F.3d at 442.
A plaintiff must, however, inject
“precision and some measure of substantiation” into fraud allegations.
States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 776 (7th
Cir. 2016) (internal quotation marks omitted). As this Court said before, Rule 9(b)
is also more significant in cases with multiple defendants.
Dkt. 94 at 9–10.
Because fair notice is perhaps the “most basic consideration underlying Rule 9(b),
the plaintiff who pleads fraud must reasonably notify the defendants of their
purported role in the scheme.” Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d
771, 777–78 (7th Cir. 1994) (citations and internal quotation marks omitted).
The Court previously dismissed Richards because Relator’s “sweeping
allegations” against her lacked Rule 9(b) particularity. Dkt. 94 at 22. Richards
argues that the third amended complaint similarly lacks Rule 9(b) particularity.
Dkt. 107. The Court agrees that Relator’s latest effort is equally deficient under
Relator added only two new allegations that specifically address Richards:
“Defendants AAH Healthcare, [Rachael] Fitzpatrick, and Richards
also provided bonuses to marketers such as Defendant [Tami]
Shemanske for each certification and recertification of patients for
home health services, for the express purpose of incentivizing illegal
certifications and recertifications of ineligible patients for medically
unnecessary services.” Dkt. 99, ¶ 136 (emphasis added).
“Defendant Richards also instructed Steve O’Donnell to track
referrals and recertifications for one of Richard’s [sic] marketers in
Massachusetts to facilitate payment to this marketer of a $100 bonus
for Medicare recertifications and referrals.” Id. ¶ 195 (emphasis
Like the deficient allegations from the second amended complaint, the new
and amended allegations include Richards’ name, but otherwise fail to provide the
“first paragraph” details that Rule 9(b) demands. The first allegation above alludes
to a broad time period “without listing any representative examples or specifics.”
Dkt. 94 at 22.
Setting aside whether the mere act of tracking referrals and
recertifications could alone constitute fraud under the FCA, the second allegation
says nothing about the relevant period, requisite mental state, or even if O’Donnell
actually followed Richards’ purported instructions. 1
Given this Court’s prior
rulings, there is no need to delve into detail on the allegations that remained the
same between the second and third amended complaints. Those allegations were
not enough to satisfy Rule 9(b) then; they are not enough to satisfy Rule 9(b) now.
The third amended complaint says “referrals were systematically tracked” without explaining
whether O’Donnell did the tracking. Dkt. 99, ¶ 198.
Relator argues that the Court should relax Rule 9(b)’s standard because she
alleged new information about being fired from AAH, thus satisfying Rule 9(b) by
“showing that further particulars of the alleged fraud could not have been obtained
without discovery.” Dkt. 106 at 11–12 (quoting Emery v. Am. Gen. Fin., Inc., 134
F.3d 1321, 1323 (7th Cir. 1998)). To her prior allegations about being fired, Relator
added that her termination was “abrupt” and happened “without advance
warning.” Dkt. 99, ¶ 258. Relator also alleged that she was “immediately deprived
of her access to medical records, her work email account, and other documentation
that she had had [sic] access to as an AAH Healthcare employee.” Id. ¶ 259.
Relator is correct that a court lowers Rule 9(b)’s initial requirements when a
plaintiff shows that she cannot obtain essential information without pretrial
discovery, Emery, 134 F.3d at 1323, but Relator “did not make that showing” here.
Id. The Court did not task Relator with producing precise details about patient
medical records or the exact wording of Richards’ communications. Rather, the
Court required, as it must, something more precise than vague allegations that
Richards repeated a fraudulent activity over a four-year period. Notably, the new
termination allegations fail to explain how Relator would expect discovery of her
work email account to remedy the deficiencies in her latest complaint.
Even without access to her AAH email account and AAH documents, Relator
could have pleaded representative instances in which she or other employees
observed Richards engaging in fraudulent conduct. For example, Relator described
a December 2008 incident during which a different defendant ordered her to
recertify 14 patients as needing skilled nursing care, regardless of whether the
patients met the medical standards for that care; Relator concluded that she could
not recertify nine of the patients because they did not qualify for the care. Dkt. 99,
¶¶ 111–13. Also, Relator explained that “[w]ithout review of each of the patient
records,” she could not state “which of the 9/14 patients were not eligible for home
health services.” Id. ¶ 113.
That example contrasts sharply with Relator’s allegations against Richards.
The Court would not expect Relator to recall the names of nine patients whose
records she reviewed in 2008, but Relator still gave the requisite details of the
alleged fraud, including an approximate date and the number of patients involved.
As the Seventh Circuit has explained, “flexibility in the face of information
asymmetries should not be conflated with whistling past the rules of civil
procedure.” Pirelli, 631 F.3d at 446. Here, Relator has effectively asked this Court
to forego the requirements of Rule 9(b) as to her allegations about Richards; the
Court is unwilling to do so. Richards’ motion to dismiss is granted.
Leave to Replead
All told, Relator had four chances to plead particularized fraud claims
against Richards. After finding Relator’s third attempt deficient under Rule 9(b),
the Court warned Relator that not fixing the deficiencies would “result in serious
consequences for her case.” Dkt. 94 at 40. Based upon the record here, and because
Relator once again failed to correct the deficiencies after the Court’s warning, the
Court does not grant leave to replead.
Even though Rule 15(a)(2) instructs courts to freely give leave to amend
“when justice so requires,” that standard does not require this Court to give Relator
a fifth bite at the apple in this case. See, e.g., Emery, 134 F.3d at 1322–23 (“[W]hile
it is possible that the deficiencies of the complaint could be cured by further
pleading, the plaintiff has had three chances over the course of three years to state
a claim and the district judge was not required to give her another chance.”).
Richards’ motion to dismiss  is granted with prejudice.
Date: September 18, 2017
John Robert Blakey
United States District Judge
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