In re: CIDs Issued by USA
Filing
13
ORDER DENYING 2 Petition to Set Aside Civil Investigative Demands. Signed by Chief Judge Nancy J. Rosenstengel on 12/7/2020. (mlp)
Case 3:20-mc-00053-NJR Document 13 Filed 12/07/20 Page 1 of 11 Page ID #533
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
GENERAL MEDICINE, PC,
Petitioner,
v.
Case No. 3:20-MC-53-NJR
UNITED STATES OF AMERICA,
Respondent.
MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
Pending before the Court is a Petition filed by General Medicine, PC, to set aside
certain Civil Investigative Demands (CIDs) served upon nursing facilities for which
General Medicine provides healthcare services (Doc. 2). The CIDs were issued by
Respondent United States of America pursuant to the False Claims Act, 31 U.S.C. §§ 37293733 (FCA), in the course of an FCA investigation (Id.). For the following reasons, the
petition is denied.
BACKGROUND
General Medicine, a Michigan-based company, employs physicians and nurse
practitioners that specialize in the near-daily monitoring and care of post-acute patients
(Doc. 2 at ¶ 1; Doc. 4). These medical professionals provide care exclusively for patients
in nursing homes, skilled nursing, rehabilitation, assisted living, and other long-term care
facilities (Id.). According to General Medicine, the U.S. Attorney’s Office for the Southern
District of Illinois (“the Government”) has been investigating General Medicine for
possible violations of the False Claims Act since at least 2015 (Id. at ¶ 2).
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The Government seeks to determine whether General Medicine submitted false
claims for payment to Medicare based on excessive, inflated, and medically unnecessary
services provided to nursing facility residents (Doc. 4). Specifically, the investigation
seeks to determine “whether federal insurers have paid General Medicine millions of
dollars for false claims arising from excessive, medically unnecessary visits to nursing
home residents.” (Docs. 4; 4-1). Also being investigated is whether General Medicine
knowingly upcoded claims for payment to obtain higher reimbursement, performed
cursory visits with residents that did not provide any benefit or meet reimbursement
requirements, and unbundled related services into multiple visits to artificially generate
additional claims and revenue (Id.). The Government has focused its inquiry on General
Medicine’s Care Plan Reviews (CPRs) and Monthly Medication Reconciliations/Reviews
(MMRs), which General Medicine requires its clinicians to conduct every month with
every Medicare patient, regardless of the patient’s need for the services (Id.). General
Medicine also apparently bills these CPRs and MMRs at the highest reimbursement code
available, which should only be used for comprehensive, complex visits (Id.).
During its investigation, the Government learned that “certain nursing facilities
had relevant concerns about General Medicine’s services, including the frequency and
medical necessity of some visits” (Id.). The Government points to a letter from one
nursing facility, in which the facility noted that it terminated its contract with General
Medicine because management and the Medical Director “felt that too many unnecessary
orders were being written. There would be 2 people at the facility five days a week; we
felt it was too excessive.” (Doc. 4-2). Based on this information, the Government issued
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CIDs containing the six interrogatories to select nursing facilities likely to have recent and
relevant knowledge about General Medicine’s services” pursuant to 31 U.S.C. § 3733
(Doc. 4).
On July 28, 2020, General Medicine initiated this action to set aside the CIDs issued
by the Government to North Carolina State Veterans Home and an unknown number of
other facilities as part of its investigation (Doc. 2 at ¶ 3). The CIDs consist of six
interrogatories (Id. at ¶ 4). Specifically, the CIDs ask the facilities to indicate: (1) the
General Medicine practitioners who have provided services at the facility within the last
12 months; (2) whether the facility has received any complaints about General Medicine
or a General Medicine practitioner during the past 12 months and details about the
complaint(s); (3) whether resident medications are regularly reviewed for dosage,
discontinuation, and/or contraindication and details about that review including
General Medicine’s involvement; (4) whether resident care plans are regularly reviewed
and details about that review, including General Medicine’s involvement; (5) whether the
facility has any concern regarding General Medicine or its practitioners, including the
frequency of visits, quality of care, time spent with residents, or any other concerns; and
(6) the name of the person who prepared the responses or is knowledgeable about the
responses (Doc. 2-2).
General Medicine argues the CIDs should be set aside because they fail to comply
with the specificity requirements of 31 U.S.C § 3733, do not seek information reasonably
relevant to an investigation and/or seek information already in possession of the
Government, are overbroad and harassing, and were issued in bad faith. General
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Medicine also asserts it would be an abuse of process to enforce the CIDs.
In response, the United States argues General Medicine has no right to set aside
the CIDs under the FCA, as the statute permits only the recipient of a CID to move to set
it aside (Doc. 4). Further, even if General Medicine could challenge CIDs it did not receive,
the CIDs were issued in good faith, serve a legitimate purpose, and request specific
information that is directly relevant and material to the investigation (Id.).
General Medicine asserts in reply that it has standing to challenge the CIDS. And,
furthermore, the CIDs could not have been issued in good faith, considering the alleged
impetus for the CIDs occurred more than a year before the CIDs were issued (Doc. 12).
General Medicine also contends the Government is no longer “investigating” but
conducting one-sided discovery through the irrelevant CIDs (Id).
In essence, General Medicine seeks to compel the Government to decide either file
a False Claims Act case against it—or leave it alone. General Medicine asserts that, since
the investigation began in 2015, it has lost approximately 83 percent of the facilities it
served and over 70 percent of its staff (Doc. 12). Prior to the investigation, General
Medicine had a less than 6 percent attrition rate per year (Id.). Thus, the Government
continues to inflict harm on General Medicine and the patients it serves, while at the same
time failing to “diligently” investigate whether a violation of the False Claims Act has
occurred, as required by 31 U.S.C § 3730(a).
LEGAL STANDARD
Under the False Claims Act, before commencing a civil proceeding under section
3730(a), the Attorney General or a designee may issue a CID to any person believed to be
in possession, custody, or control of any documentary material or information relevant
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to a false claims law investigation. 31 U.S.C. § 3733(a)(1). The purpose of the CID, which
serves as an administrative subpoena, is to “enable the Government to determine
whether enough evidence exist[s] to warrant the expense of filing [a civil] suit, as well as
to prevent the potential Defendant from being dragged into court unnecessarily.” United
States v. Witmer, 835 F. Supp. 208, 211 (M.D. Pa. 1993), aff'd, 30 F.3d 1489 (3d Cir. 1994)
(quoting H.R.Rep. 660, 99th Cong., 2d Sess. 26 (1986); United States v. Markwood, 48 F.3d
969, 975–76 (6th Cir. 1995). “Although Congress has chosen to call this subpoena by
another name, a false claims CID is, at its essence, a subpoena issued by an administrative
agency.” Markwood, 48 F.3d at 796.
“[A] district court’s role in the enforcement of an administrative subpoena is a
limited one.” Id. A court’s “inquiry is appropriate only into whether the evidence sought
is material and relevant to a lawful purpose of the agency.” E.E.O.C. v. Kloster Cruise Ltd.,
939 F.2d 920, 922 (11th Cir. 1991).
DISCUSSION
I.
Standing
Before addressing whether the CIDs comply with the requirements set forth by 31
U.S.C. § 3733, the Court must determine whether General Medicine has standing to bring
this action to set aside the CIDs.
The False Claims Act provides that “[a]ny person who has received a civil
investigative demand . . . may file, in the district court of the United States for the judicial
district within which such person resides, is found, or transacts business . . . a petition for
an order of the court to modify or set aside such demand.” Id. § 3733(j)(2). The
Government argues that, because General Medicine was not the recipient of the CIDs,
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under the statute it has no right to bring this action to set the CIDs aside. General
Medicine disagrees, arguing that the target of an investigation has standing to challenge
the validity of a subpoena on the ground that it is in excess of the terms of the applicable
statute. Moreover, it argues, federal courts have inherent federal question jurisdiction to
grant equitable relief against actions that exceed statutory authority.
In order to have Article III standing, a “plaintiff must have suffered or be
imminently threatened with a concrete and particularized ‘injury in fact’ that is fairly
traceable to the challenged action of the defendant and likely to be redressed by a
favorable judicial decision.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S.
118, 125, 134 S. Ct. 1377, 1386, 188 L. Ed. 2d 392 (2014). The Supreme Court also has
recognized prudential limits on the parties that may invoke the courts’ powers.
Prudential standing encompasses “at least three broad principles: the general prohibition
on a litigant’s raising another person’s legal rights, the rule barring adjudication of
generalized grievances more appropriately addressed in the representative branches, and
the requirement that a plaintiff’s complaint fall within the zone of interests protected by
the law invoked.” Id. (quotations and citations omitted).
The Government argues General Medicine is not within the zone of interests
created by § 3733(j) of the FCA because it states that any person who has “received” a
CID may move to have it set aside. But the statute does not prohibit a third party from
challenging a CID, and the United States has pointed to no statute or rule that divests the
Court of its authority to hear a third-party’s objections to a subpoena. See Noble Roman’s,
Inc. v. Hattenhauer Distrib. Co., 314 F.R.D. 304, 305 (S.D. Ind. 2016). Indeed, as noted in
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Noble Roman’s, the only Seventh Circuit case to discuss a party’s “standing” to challenge
a non-party subpoena found that “[a] party has standing to move to quash a subpoena
addressed to another if the subpoena infringes upon the movant’s legitimate interests.”
Id. (quoting United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982)).
Here, General Medicine has shown that it is imminently threatened with a concrete
and particularized injury in fact. It states that it has lost approximately 83 percent of the
facilities it served and over 70 percent of its staff since the investigation began, and one
facility terminated its business relationship with General Medicine after being served
with a similar CID, citing “ongoing legal proceedings” as the reason. Additionally,
General Medicine notes that much of the information requested in the CIDs will have to
be obtained from General Medicine and its employees. Thus, General Medicine has
shown that the CIDs infringe upon its legitimate business interests such that it has
standing to raise its objection in this Court.
II.
Compliance with FCA Requirements
A district court should enforce an administrative subpoena as long as (1) the
inquiry is within the authority of the agency; (2) the demand is not too indefinite; and
(3) the information sought is reasonably relevant. E.E.O.C. v. Aerotek, Inc., 815 F.3d 328,
333 (7th Cir. 2016). “Under this familiar formulation, known as the Morton Salt test,
disclosure may be restricted where it would impose an unreasonable or undue burden
on the party from whom production is sought.” Id.; see United States v. Morton Salt Co.,
338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950).
General Medicine does not assert the Government’s inquiry is outside its
authority, but argues the CIDs are overbroad, irrelevant, and unnecessary given that it
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has provided the Government with the identity of all practitioners who perform CPRs
and MMRs, numerous documents explaining the services and why they are performed,
and thousands of Medicare audit and Administrative Law Judge decisions. Thus, there
is no need to seek the same information from the nursing facilities. General Medicine also
contends the Government, rather than narrowing its years-long investigation, is now
embarking on a fishing expedition by asking the facilities if they have received “any
complaints” or have “any concerns” about General Medicine. See Blue Cross, Blue Shield
of Ohio v. Klein, 117 F.3d 1420 (6th Cir. 1997) (“[W]hile substantial deference is given to
CIDs and subpoenas, the government cannot merely engage in ‘arbitrary fishing
expeditions.”). General Medicine argues these inquiries, in addition to being overbroad,
are irrelevant to the Government’s investigation, which is focused on CPRs and MMRs.
Finally, General Medicine asserts the CIDs were issued in bad faith, considering the
Government waited a year after obtaining certain information to send the CIDs.
In response, the Government argues that General Medicine’s claim that it has acted
in bad faith is unsupported and nothing more than speculation. Furthermore, it has a
valid purpose for issuing the CIDs: to assess whether General Medicine submitted false,
inflated claims to government insurers for medically unnecessary and excessive visits to
nursing home patients. The Government further asserts that each interrogatory requests
specific information that is that is relevant and material to the Government’s
investigation.
After reviewing the interrogatories and the scope of the Government’s inquiry, the
Court finds that the CIDs seek information reasonably relevant to the United States’
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pending FCA investigation, are not unduly burdensome or overbroad, and do not seek
information already in the Government’s possession.
Interrogatory No. 1 simply asks for the names of General Medicine practitioners
who have provided medical services to residents in the facility in the past 12 months. This
request is limited in time and is reasonably related to the Government’s investigation.
While the Government may already have the names of all practitioners who perform
CPRs and MMRs, this interrogatory narrows the list to those providers who, in the last
12 months, may have been involved in the activity under investigation.
Interrogatory No. 2, which asks whether the facility has received any complaints
about General Medicine or a General Medicine practitioner during the past 12 months, is
not limited to any specific type of complaint about General Medicine or its practitioners.
As the Government explains, however, there are many different types of complaints that
could relate to the purpose of its investigation—i.e., “instances where General Medicine
was not providing the level of service that it billed to federal insurers.” (Doc. 4 at p. 12).
The Government further clarifies that Interrogatories 3 and 4 seek the nursing facilities’
perspective on resident care plans 1 and medication reviews, which clearly is relevant to
the investigation.
Finally, Interrogatory No. 5 asks for information regarding any concerns the
facility has about General Medicine or any specific General Medicine practitioners,
General Medicine argues this question, while seemingly relevant, is actually misleading because the
“resident care plans” prepared and maintained by the facility is very different from the Care Plan Reviews
conducted each month by General Medicine practitioners (Doc. 12 at p. 11). The Government, in its
response, however, notes that it is requesting information “from the nursing facility about the nursing
facility’s procedures and experiences with General Medicine.” (Doc. 4 at p. 13). Given the limited role of the
Court in this action, the undersigned cannot say with certainty that the question is immaterial and
irrelevant to a lawful purpose of the agency. See Aerotek, Inc., 815 F.3d at 333.
1
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including any concerns about the frequency of visits, the quality of care being provided,
the time spent with residents, or any other issue. Again, the Court cannot say this
information is irrelevant to the Government’s investigation. And because the
Government is seeking the perspective of the nursing facilities, this is not information
already in the Government’s possession.
The Court also cannot say the CIDs issued in bad faith or that enforcing them
would be an abuse of process. “[T]he party asserting that the agency acted in bad faith
bears a heavy burden of proof.” Markwood, 48 F.3d at 978 (citing United States v. LaSalle
Nat'l Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978)). General Medicine has not
met that burden. General Medicine claims the CIDs were issued to harass and harm it
and to cause it to settle a collateral dispute. It further argues the CIDs were issued after
years of its cooperation with the Government, and with the Government’s knowledge
that the CIDs would harm its business. But General Medicine has presented no actual
evidence that the CIDs were issued with the intent to harass, cause General Medicine
harm, or entice it to settle some unspecified collateral dispute. Furthermore, the questions
are directed to nursing facilities that have direct knowledge of General Medicine’s
practices. While General Medicine is understandably frustrated by the length of the
investigation and the effect it is having on its business, that does not mean the CIDs were
issued in bad faith.
That being said, the Court would be remiss not to express its concern regarding
the length of the Government’s investigation and the purported losses General Medicine
has incurred as a result. “Congress intended the false claims CID to provide the
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Department of Justice with a means to assess quickly, and at the least cost to the taxpayers
or to the party from whom information is requested, whether grounds exist for initiating
a false claim suit under 31 U.S.C. §§ 3729–32 . . . .” Markwood, 48 F.3d at 979. General
Medicine believes the investigation has been ongoing since 2015; the Government states
that it first “disclosed” to General Medicine that it was under investigation in November
2017. An investigation spanning at least three years is hardly a quick assessment. Yet, as
General Medicine concedes, this is not a qui tam action, and the Court, of course, has no
authority to compel the United States to file a False Claims Act case against it. Because
the CIDs were properly issued under 31 U.S.C. § 3733, the Court must deny General
Medicine’s motion to set the CIDs aside. To conclude otherwise would constitute an
overstep of this Court’s limited authority in this action.
CONCLUSION
For the reasons set forth above, the Petition filed by General Medicine, PC, to set
aside certain Civil Investigative Demands (CIDs) (Doc. 2) is DENIED, and this action is
DISMISSED. The Clerk of Court is DIRECTED to enter judgment and close this case.
IT IS SO ORDERED.
DATED: December 7, 2020
____________________________
NANCY J. ROSENSTENGEL
Chief U.S. District Judge
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