UNITED STATES OF AMERICA et al v. INDIANAPOLIS NEUROSURGICAL GROUP, INC. et al
ORDER - The Motions to Dismiss, [dkts. 148 ; 149 ; and 152 ], are DENIED to the extent that the Court finds the Relators have alleged their claims with sufficient particularity under Fed. R. Civ. P. 9(b), but GRANTED to the extent that the Defe ndants associated with each alleged scheme are now limited to the Relators' characterization in their response brief, [dkt. 155 at 16-17]. Additionally, the Motion to Dismiss filed by Drs. Sasso and Renkens, [dkt. 148], is GRANTED in part as t o the Relators' Indiana FCA claims (Counts IV, V, VI, and VIII) and the FCA retaliation claim (Count VII). Those claims are DISMISSED with prejudice as against Drs. Sasso and Renkens. The Motions to Dismiss filed by the remaining Defendants, [dkts. 149; 152], are also GRANTED as to Relator Herron's FCA and Indiana FCA retaliation claims (Counts VII and VIII), and those claims are DISMISSED and may only be reasserted by amendment with leave of Court. Additionally, the remaining De fendants' Motions to Dismiss, [dkts. 149; 152], are GRANTED to the extent that the Relators' Indiana FCA claims are limited to claims submitted after the Indiana FCA's enactment, and the Relators' FCA claims are limited to claim s submitted after December 14, 2000. In all other respects, the Motions to Dismiss, [dkts. 148; 149; and 152], are DENIED. Defendants shall answer the Second Amended Complaint as it has been construed by the Court in this Order within twenty-one (2 1) days. The Court requests that the Magistrate Judge hold a conference with the parties as soon as practicable, to establish a Case Management Plan and schedule for bringing the case to a conclusion. *** SEE ORDER ***. Signed by Judge Jane Magnus-Stinson on 2/21/2013. (JKS)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
UNITED STATES OF AMERICA AND THE STATE
OF INDIANA ex rel. TOM HERRON AND
INDIANAPOLIS NEUROSURGICAL GROUP, INC.,
Plaintiffs/Relators bring this lawsuit under the qui tam provisions of the federal False
Claims Act (“FCA”), 31 U.S.C. §§ 3729, 3730, and its nearly identical state counterpart, the
Indiana False Claims Act (“Indiana FCA”), Ind. Code §§ 5-11-5.5-2, 5.5-8.1 Presently pending
before the Court are: (1) a Motion to Dismiss for Failure to Specifically Plead Under the False
Claims Act, filed by Defendants Rick Sasso, M.D. and Kenneth Renkens, M.D., [dkt. 148]; (2) a
Motion to Dismiss Plaintiffs’ Second Amended Complaint, filed by Defendants Indianapolis
Neurosurgical Group, Inc. (“ING”), Michael Burt, M.D., Daniel Cooper, M.D., Andrew
DeNardo, M.D., Henry Feuer, M.D., Peter Gianaris, M.D., Terry Horner, M.D., Steven James,
M.D., Saad Khairi, M.D., Thomas Leipzig, M.D., Jean-Pierre Mobasser, M.D., Troy Payner,
M.D., Eric Potts, M.D., Carl Sartorius, M.D., John Scott, M.D., Michael Turner, M.D., Derron
Wilson, M.D., and Ronald Young II, M.D., [dkt. 149]; and (3) a Motion to Dismiss Plaintiffs’
Second Amended Complaint, filed by David Hall, M.D., [dkt. 152]. Briefing on all of the
motions was complete on December 31, 2012. For the following reasons, the Court denies
Both the United States and the State of Indiana have declined to intervene in this action. [Dkts.
Defendants’ motions in part and grants them in part.
THE SECOND AMENDED COMPLAINT
Relators Tom Herron and Melanie Anderson (collectively, “the Relators”) filed their
Second Amended Complaint, [dkt. 136], on August 23, 2012, after ING moved to dismiss the
Amended Complaint, [dkt. 107]. The Court summarizes the allegations in the Second Amended
Complaint as follows:
ING is “a nationally recognized neurosurgical practice” located in Indianapolis, Indiana.
[Dkt. 136 at 6, ¶ 16.] Drs. Burt, Cooper, Denardo, Feuer, Gianaris, Hall, Horner, James, Khairi,
Leipzig, Mobasser, Payner, Potts, Renkens, Sartorius, Sasso, Scott, Turner, Wilson, and Young
(collectively, “the Individual Defendants”) have all practiced medicine at ING at various times.
[Id. at 6, ¶ 17.]
Relator Herron is a medical coding expert “with over 30 years of clinical health care
experience and over 15 years of experience in health information management coding.” [Id. at 5,
¶ 13.] He worked as a Senior Coding Specialist for ING for seven and a half years. [Id.]
Relator Anderson is also a medical coding expert, “with over 25 years of experience in the
medical field and more than 15 years of coding experience.” [Id. at 5, ¶ 14.] She worked as a
Senior Coding Specialist for ING from 2001 through 2006. [Id.] The Relators “were principally
responsible for reviewing, confirming, and posting all claims submitted by ING for
reimbursement, including those claims presented to” Medicare, Medicaid, and other government
insurers. [Id. at 5-6, ¶ 15.]
The Relators allege that Defendants engaged in the following three types of fraud:
For Evaluation and Management Services, which include “physician/patient
encounters for assessment, counseling, and other services provided to a patient
and reported through CPT codes,” [id. at 14, ¶ 44], all of the Individual
Defendants: (1) “deliberately billed E&M visits at higher intensity levels than
justified based on the actual visit,” thereby “boost[ing] reimbursements from
the Government Insurers by 50% or more,” [id. at 17, ¶¶ 57-58]; and (2) billed
using higher reimbursed visit types, [id. at 21, ¶¶ 64-81] (“the E&M Services
For Non-Physician Services, all of the Individual Defendants
“routinely billed as ‘incident to’ for services where the physician did not
participate at all (i.e., the non-physician did not merely assist in the
procedure), and where there was no ING doctor present to provide direct
personal supervision[; r]ather, the non-physician performed the entire
procedure without a supervising physician’s involvement,” [id. at 27, ¶ 89]
(“the Incident To Billing Scheme”); and
For certain specific procedures, the Individual Defendants billed for
procedures they did not perform “in lieu of the less lucrative procedures that
they actually performed,” including: (1) the transcatheter permanent occlusion
or embolization procedure; (2) the stereotactic radiosurgery procedure; (3)
Baclofen pump installation; (4) the ventricular catheter procedure; and (5) the
shunt tubing procedure, [id. at 30-36, ¶¶ 102-138] (“the Procedures Scheme”).
The Relators assert claims for: (1) violation of the FCA for presenting false claims under
31 U.S.C. § 3729(a)(1), [id. at 38-39, ¶¶ 150-152]; (2) violation of the FCA for making or using
a false record or statement under 31 U.S.C. § 3729(a)(2), [id. at 39, ¶¶ 153-155]; (3) violation of
the FCA for using a false record to avoid an obligation to refund under 31 U.S.C. § 3729(a)(7),
[id. at 39, ¶¶ 156-158]; (4) violation of the Indiana FCA for presentation of false claims under
Ind. Code § 5-11-5.5-2(1), [id. at 40, ¶¶ 159-161]; (5) violation of the Indiana FCA for making
or using a false record or statement under Ind. Code § 5-11-5.5-2(2), [id. at 40, ¶¶ 162-164]; (6)
violation of the Indiana FCA for using a false record to avoid an obligation to refund under Ind.
Code § 5-11-5.5-2(6), [id. at 40-41, ¶¶ 165-167]; (7) violation of the FCA for retaliation under
31 U.S.C. § 3730(h), [id. at 41, ¶¶ 168-170]; and (8) violation of the Indiana FCA for retaliation
under Ind. Code § 5-11-5.5-8, [id. at 41-42, ¶¶ 171-173].
PLEADING REQUIREMENTS IN QUI TAM ACTIONS
The Federal Rules of Civil Procedure require that a complaint provide the defendant with
“fair notice of what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus,
551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544 (2007)). In reviewing
the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all
permissible inferences in favor of the plaintiff. Active Disposal Inc. v. City of Darien, 635 F.3d
883, 886 (7th Cir. 2011). A motion to dismiss asks whether the complaint “contain[s] sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. 544). The Court will not
accept legal conclusions or conclusory allegations as sufficient to state a claim for relief.
McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011) (citing Iqbal, 129 S.Ct. at 1951).
Factual allegations must plausibly state an entitlement to relief “to a degree that rises above the
speculative level.” Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012). This plausibility
determination is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. (citing Iqbal, 129 S.Ct. at 1950).
The FCA and the Indiana FCA are anti-fraud statutes; therefore, the Relators’ claims are
subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See
United States ex rel. Gross v. Aids Research Alliance-Chicago, 415 F.3d 601, 604 (7th Cir.
2005). Rule 9(b) states:
(b) Fraud or Mistake; Condition of Mind. In 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
To plead fraud with particularity, a relator must allege “the who, what, when, where, and
how: the first paragraph of any newspaper story.” United States ex rel. Garst v. LockheedMartin Corp., 328 F.3d 374, 376 (7th Cir. 2003) (citation omitted) (addressing sufficiency of
allegations in qui tam action); United States ex rel. Gross, 415 F.3d at 605 (same).
A. Failure to Plead With Sufficient Particularity
Defendants’ primary argument is that the Relators failed to plead the claims against them
with sufficient particularity – both by “improperly ‘lump[ing]’ the Individual Defendants
together as one homogeneous unit,” [dkts. 150 at 15-16; 151 at 4-5], and by simply not providing
enough detail regarding the three fraud schemes to satisfy Fed. R. Civ. P. 9(b)’s heightened
pleading requirements, [dkts. 150 at 12-15; 151 at 10-13, 17-25].2 The Relators respond that
they have satisfied Rule 9(b) by “set[ting] forth each of the fraudulent schemes in detail.” [Dkt.
155 at 15.] Specifically, they argue that their allegations relating to the E&M Services Scheme
and the Incident To Billing Scheme are adequate to allege claims against all of the Defendants –
even though they only provide specific examples for certain Individual Defendants – because
they allege that “the scheme was widespread across the entire practice, so a greater number of
individual defendants are therefore named.” [Id. at 17.] Further, they claim that they adequately
allege claims against certain Individual Defendants in connection with the Procedures Scheme
because they have specifically identified the doctors that engaged in that practice. [Id. at 17-18.]
Finally, the Relators assert that they have adequately alleged claims against ING because it “can
Drs. Sasso and Renkens make the additional argument that the Relators have not adequately
alleged claims against them because all of the specific examples they cite of allegedly fraudulent
billing took place after their departure from ING. [Dkt. 151 at 3-7.] The Relators have asserted
that the allegedly fraudulent schemes were ongoing and widespread, and have specifically
alleged that Drs. Sasso and Renkens received binders containing the 2002 audit results. [See,
e.g., dkt. 136 at 4, ¶ 10 and 37, ¶ 142.] These allegations are sufficient to state claims against
Drs. Sasso and Renkens at this stage of the litigation.
be liable through the actions of its principals and high-level managers; and the allegations against
all of the Individual Defendant Doctors and ING management, taken together, are more than
enough to establish ING’s involvement.” [Id. at 15-16.]
While Rule 9(b) requires the plaintiff to set forth the “who, what, when, where, and how”
of the alleged fraud, United States ex rel. Gross, 415 F.3d at 605, the Relators need not provide a
specific example for each Individual Defendant named. Cf. United States ex rel. Crews Ill. v.
NCS Healthcare of Ill. Inc., 460 F.3d 853, 856 (7th Cir. 2006) (at summary judgment stage,
relator must provide at least one false claim that was actually submitted). This case is at the
pleadings stage, not summary judgment, and the Court will not conflate the proof requirements
on summary judgment with the requirements at the pleadings stage of a qui tam action. United
States ex rel. Gross, 415 F.3d at 604 (distinguishing between summary judgment requirements
and pleadings requirements in a qui tam action).
Instead, the Relators’ allegations regarding the Individual Defendants’ participation in the
three schemes, coupled with numerous specific examples of how those schemes were carried out,
are sufficient to satisfy Rule 9(b)’s pleading requirements. For example, in connection with the
first two alleged schemes – the E&M Services Scheme and the Incident To Billing Scheme – the
Relators allege that all of the Individual Defendants participated in the schemes, but only cite
specific examples involving certain Individual Defendants. Specifically:
For the E&M Services Scheme, the Relators allege that “Defendants,
including every Individual Defendant Doctor, deliberately billed E&M
visits at higher intensity levels than justified based on the actual visit,” and
provide specific examples involving Drs. Turner, Mobasser, Connolly,
Wilson, and James, [dkt. 136 at 17-21, ¶¶ 57-63]. The Relators further
allege that “Defendants also coded E&M services using the CPT codes for
the wrong, but more highly reimbursed, visit types,” and provide specific
examples for Drs. Goodman, Sartorius, Mobasser, Wilson, and Turner, [id.
at 21-25, ¶¶ 64-81].
For the Incident To Billing Scheme, the Relators allege that “Defendants,
including but not limited to every Individual Defendant Doctor, filed false
claims for payment by knowingly and systematically billing for services or
treatment performed by non-physicians, utilizing the physician’s provider
number despite the fact that the non-physician rendered the service and the
circumstances did not justify ‘incident to’ billing under Medicare and
Medicaid reimbursement regulations,” [id. at 25, ¶ 82]. They provide
specific examples for Drs. Turner, Leipzig, Mobasser, and Wilson, [id. at
28-29, ¶¶ 96-101].
Despite not providing a specific example for every single Individual Defendant, the Court
finds that the Relators have satisfied the pleading requirements of Rule 9(b).3 They allege
widespread schemes among the Defendants, and provide detailed allegations of numerous
examples for each scheme.4 The Relators need not provide a specific example of each type of
fraud for each defendant – the allegations here are enough to put all of the Defendants on notice
of what they need to defend against.5 See, e.g., United States ex rel. Leveski v. ITT Educ. Servs.,
Certain Defendants also argue, almost as a side note, that the Relators’ allegations in connection
with two parts of the Procedures Scheme – the ventricular catheter procedure and the shunt
tubing procedure – are inadequate because the Relators only allege that the Individual
Defendants did not maintain documentation regarding the procedures that they performed, and
not that they did not actually perform the procedures. [Dkt. 150 at 24.] The Court finds that
those claims are adequately alleged against certain Individual Defendants, as discussed below,
because the allegations in connection with these specific procedures, taken together with the
allegations in the remainder of the Second Amended Complaint, sufficiently allege improper
The Court rejects Defendants’ argument that the Relators do not have the requisite personal
knowledge to plead their claims with particularity because they “were not in the examination
room with the physicians and their patients….” [Dkt. 150 at 18.] If presence in the examination
room was required, then a qui tam action could never be brought in this context by anyone other
than a doctor or nurse involved in the actual examination. Plaintiffs are not required to have
personal knowledge of the facts alleged in a complaint, though their allegations must be both
supported in law and fact. See Fed. R. Civ. P. 11(b)(2), (3).
The cases relied upon by Defendants did not involve situations like the one at hand, where the
Relators have provided specific examples of each type of fraud, and do not stand for the
proposition that “[i]f a relator is seeking liability for multiple fraudulent practices, the relator
must provide at least one specific example of fraud for each claim and for each defendant,” [dkt.
158 at 7]. See, e.g., United States ex rel. Coots, 2012 U.S. Dist. LEXIS 128264, *6-7 (S.D. Ind.
2012) (certain qui tam claims dismissed for failure to satisfy Rule 9(b), in part because “the fact
2010 U.S. Dist. LEXIS 137909, *10 (S.D. Ind. 2010) (“[t]he purpose of Rule 9(b) is ‘to ensure
that the party accused of fraud, a matter implying some degree of moral turpitude and often
involving a ‘wide variety of potential conduct,’ is given adequate notice of the specific activity
that the plaintiff claims constituted the fraud so that the accused party may file an effective
responsive pleading.’… [The] Second Amended Complaint sets out the alleged fraud in a
manner that allows ITT to identify the conduct and respond”).6
The Court recognizes that the Relators attempted to provide much needed clarity and, in
some instances limits, as to their claims in their response brief as follows:
So there is no confusion, Relators’ claims against each Individual Defendant
Doctor are as follows:
1. E&M Services:…all Individual Defendant Doctors….
2. “Incident To” Billing:…all Individual Defendant Doctors….
3. Specific Procedures
a. Transcathe[te]r Permanent Occlusion: Drs. Denardo and Scott.
b. Stereotactic Radiosurgery Procedure: Drs. Cooper, Hall, Horner,
Leipzig, Mobasser, Payner, Potts, and Sartorius.
c. Baclofen Pump Installation: Dr. Turner.
that Plaintiff has set forth specific examples of Defendant’s invoices in order to detail the six
other allegedly fraudulent billing practices, does not excuse the requirement that it do the same to
support its allegations that the Defendants knowingly submitted bills that had inaccurate service
location coding”); Vicom, Inc. v. Harbridge Merchant Servs., 20 F.3d 771, 777-78 (7th Cir.
1993) (complaint alleging RICO claims failed to satisfy Rule 9(b) where “[m]any of the
allegations simply state that the misrepresentations were made ‘at the direction, under the
supervision, or with the knowledge and consent’ of all the defendants”). Here, the Relators have
set forth specific examples for each allegedly fraudulent scheme. They need not set forth a
specific example involving each Individual Defendant, especially in light of their allegations that
participation in the schemes was widespread.
The Court’s finding that the Relators have adequately alleged their claims under Rule 9(b)
applies equally to allegations against ING. Respondeat superior concepts have been applied in
the FCA context, and the Court will not dismiss claims against ING at this stage in the litigation.
See, e.g., United States v. Dolphin Mortg. Corp., 2009 U.S. Dist. LEXIS 4295, *36 (N.D. Ill.
2009) (denying employer’s motion for summary judgment on FCA claims, and noting that the
Seventh Circuit Court of Appeals relies upon the Restatement of Agency “as a valuable source
for…general agency principles,” including an employer’s vicarious liability for its employee’s
d. Ventricular Catheter Procedure: Drs. Burt, Gianaris, Hall, Horner,
James, Khairi, Leipzig, Mobasser, Payner, Potts, Sartorius, Turner, and
e. Shunt Tubing Procedure: Drs. Horner, Khairi, Leipzig, Payner, Potts,
Sartorius, Turner, and Young.
[Dkt. 155 at 16-17.]
Despite the Court’s finding that the Relators have met Rule 9(b)’s pleading requirements,
it finds that the Second Amended Complaint, as drafted, is far less cogent than the Relators’
characterization of their claims in their response brief. The Court also notes that the Second
Amended Complaint at times reads more like a press release than a complaint, and contains legal
argument, rhetoric, and superfluous information.7 See Fed. R. Civ. P. 8(d)(1) (“Each allegation
must be simple, concise, and direct”). Accordingly, going forward, the Court limits the Relators’
claims to their characterization in their response brief at pages 12-13, [dkt. 155 at 16-17].8
The Relators should be mindful that “the mere filing of a civil lawsuit can have
significant effects on a defendant, [and] [t]he public charges made in a civil lawsuit can cast a
shadow over a defendant’s reputation until the case is resolved.” Doe v. Indiana Black Expo,
923 F.Supp. 137, 141 (S.D. Ind. 1996). Being named as a defendant in a lawsuit is a serious
matter, and the Relators should take extra care to ensure they are only pursuing claims against
the Individual Defendants against whom they can adequately allege and prove claims.
The Court notes that the Second Amended Complaint contains examples of allegedly fraudulent
billing by Drs. Goodman and Connolly – both of whom are not named as defendants. [See, e.g.,
dkt. 136 at 20, ¶ 63 and 23, ¶ 71.]
For example, while the Second Amended Complaint alleges that “Defendants also routinely
billed for a shunt tubing procedure without maintaining supporting documentation of performing
the procedure,” [dkt. 136 at 35, ¶ 134], the Relators limit their claims relating to the shunt tubing
procedure to Drs. Horner, Khairi, Leipzig, Payner, Potts, Sartorius, Turner, and Young in their
response, [dkt. 155 at 17]. Accordingly, the Court finds that the Relators only assert claims
relating to the shunt tubing procedure against Drs. Horner, Khairi, Leipzig, Payner, Potts,
Sartorius, Turner, and Young.
Additionally, the Relators should not assume that “naturally” certain claims are not asserted
against certain Individual Defendants when those claims are not set forth clearly. [See Dkt. 155
at 6 (“And naturally, because the fraudulent billing of Doctors Sasso and Renkens pre-date the
enactment of the Indiana FCA, Relators’ only claims against them are under the federal FCA,
and do not include Relator Herron’s retaliation claim”).]
Consistent with clarified and limited claims outlined in their response brief, Relators are
ORDERED to prepare a Claim Table as part of the Case Management Plan. The Claim Table
shall be organized by each alleged scheme, with the Procedures Scheme separated into five parts
(one for each procedure), and shall indicate which statutes the Relators allege each scheme
violates, and which specific Defendants are implicated for each. The Claim Table shall serve as
a benchmark for future discovery, motion practice, and potentially jury instructions. The Court’s
quest for clarity should NOT be read by the Relators as a license to add claims or to accuse any
Individual Defendant of any practice not specified in the above quote from the Relators’
B. Indiana FCA Claims for Activities Occurring Before 2005
Defendants argue that the Relators cannot assert claims for violation of the Indiana FCA
relating to activities which occurred before 2005, when the Indiana FCA was enacted. [Dkts.
150 at 28; 151 at 13-14.] As to the Indiana FCA claims against Drs. Sasso and Renkens, the
Relators concede that “because the fraudulent billing of Drs. Sasso and Renkens pre-date the
enactment of the Indiana FCA, Relators readily admit that their only claims against them are
under the federal [FCA].” [Dkt. 155 at 29.] Accordingly, the Court finds that dismissal of the
Indiana FCA claims against Drs. Sasso and Renkens is appropriate.
As to the Indiana FCA claims against the remaining Defendants, because the Court has
already found that the Relators have pled their claims with the specificity required by Rule 9(b),
it also finds that – at the motion to dismiss stage – the Relators have sufficiently pled Indiana
FCA claims despite the fact that some of the examples of misconduct they cite to occurred prior
to the Indiana FCA’s enactment in 2005. Indeed, they also cite examples from after 2005, and
generally allege a continuing course of conduct. [See, e.g., dkt. 136 at 20, ¶ 63 (Dr. Turner
“[b]illed using CPT codes 99214, a level 4 established patient visit, on…5/17/06, and 9/26/06”
and Dr. Wilson “[b]illed using CTP code 99213, a level 3 established patient visit, on 9/26/06”),
29, ¶ 100 (Dr. Turner engaged in improper incident to billing relating to a Baclofen pump on
6/7/06), 33, ¶ 124 (ING improperly billed for the stereotactic frame procedure from 2004 through
September 2006), and 36, ¶ 137 (Dr. Turner improperly billed for a shunt tubing procedure on
9/12/06).] As discussed above, the Relators need not allege every instance of improper billing,
and need not list specific examples for each Defendant. The numerous examples the Relators
provide, combined with their allegations of a widespread and continuing scheme, are enough to
allege Indiana FCA claims against all of the Defendants – except Drs. Sasso and Renkens,
against whom the Relators have abandoned their Indiana FCA claims.
The Court notes, however, that the Indiana FCA does not contain a retroactivity
provision, nor does it appear to apply retroactively. United States ex rel. McCoy v. Madison Ctr.,
2011 U.S. Dist. LEXIS 49917, *8 (N.D. Ind. 2011). Accordingly, to succeed on the merits, the
Relators will need to present specific evidence of Indiana FCA violations which occurred after
2005, when the Indiana FCA was enacted. To the extent the Second Amended Complaint could
be read to plead any claim under the Indiana FCA prior to its enactment date, such claims are
dismissed. The Relators must observe the enactment date of the Indiana FCA in connection with
those claims, and should be especially mindful of that date in light of Fed. R. Civ. P. 11 and 28
U.S.C. § 1927.
C. Statute of Limitations
Defendants argue that the Relators are barred from recovering for claims submitted
before December 14, 2000 – six years before the Relators filed their original Complaint – based
on the FCA’s and the Indiana FCA’s statutes of limitation. [Dkt. 150 at 27-28.] A motion to
dismiss based on the statute of limitations may be granted when “the relevant dates are set forth
unambiguously in the complaint.” Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009). The Court
has already dismissed the Relators’ Indiana FCA claims to the extent they relate to claims
submitted prior to that statute’s enactment in 2005, so those claims, as limited, will comply with
the statute of limitations. To the extent the Second Amended Complaint could be read to plead
any claims under the FCA relating to claims submitted before December 14, 2000, such claims
are dismissed. However, FCA claims (as previously clarified and limited) relating to claims
submitted after that date stand.
D. Relator Herron’s Retaliation Claim
Drs. Sasso and Renkens argue that Relator Herron’s retaliation claim against them should
be dismissed because “[n]either…practiced at ING close to the time [Relator] Herron was fired.”
[Dkt. 151 at 14.] The remaining Defendants argue that Relator Herron fails to plead the required
elements for a retaliation claim under the FCA or the Indiana FCA because he does not allege
that ING or any of the Individual Defendants “actually knew that he was preparing for a qui tam
action.” [Dkt. 150 at 26.] Relator Herron responds that he was engaged in protected activity, but
does not specifically address whether he adequately alleged that Defendants received the proper
level of notice of his actions. [Dkt. 155 at 28.]
First, the Court dismisses Relator Herron’s retaliation claims against Drs. Sasso and
Renkens because Relator Herron stated in his response that “because Drs. Sasso and Renkens left
ING before Relator Herron was fired, [Relator Herron] does not allege retaliation claims against
them.” [Id. at 29.]
Second, as to the remaining Defendants, the Court finds that Relator Herron has not
adequately stated retaliation claims under the FCA or the Indiana FCA.9 In order to state a claim
for retaliatory discharge under § 3730(h), Relator Herron must allege: (1) that he acted in
furtherance of a FCA enforcement action: (2) that the defendants knew he was engaged in this
protected conduct; and (3) that the defendants were motivated, at least in part, to terminate him
because of the protected conduct. See Brandon v. Anesthesia & Pain Mgmt. Assocs., 277 F.3d
936, 944 (7th Cir. 2002). Defendants focus on the second element, arguing that Relator Herron
has not alleged that they knew he was preparing for a qui tam action.
The FCA’s anti-retaliation provision “protects employees supplying information that
could prompt an investigation or conducting their own internal investigation even where an
action is never filed, at least so long as the employee does not make deliberately false or baseless
accusations of fraud.” Abner v. Jewish Hosp. Health Care Servs., 2008 U.S. Dist. LEXIS 61985,
*27 (S.D. Ind. 2008). In determining whether an employee’s actions are protected under § 3730,
a court will consider whether: “‘(1) the employee in good faith believes, and (2) a reasonable
employee in the same or similar circumstances might believe, that the employer is committing
fraud against the government.’” Fanslow v. Chi. Mfg. Ctr., Inc., 384 F.3d 469, 480 (7th Cir.
2004) (quoting Moore v. Cal. Inst. of Tech. Jet Propulsion Lab., 275 F.3d 838, 845 (9th Cir.
Because the Indiana FCA “mirrors the Federal FCA in all material respects,” Kuhn v. LaPorte
County Comprehensive Mental Health Council, 2008 U.S. Dist. LEXIS 68737, *8 (N.D. Ind.
2008), the Court’s discussion of the FCA retaliation claim applies with equal force to Relator
Herron’s Indiana FCA retaliation claim.
Here, Relator Herron alleges sufficient facts to show that he believed ING and the
Individual Defendants were engaging in improper and illegal billing practices, and that
Defendants were aware he believed this. For example, he alleges that he “advised Defendants on
multiple occasions [of certain details of the Procedures Scheme…and] that such violations
resulted in an overcharge to the Government Insurers, which Defendants were obligated to
refund under Medicare and Medicaid regulations.” [Dkt. 136 at 31, ¶¶ 113-114.] Relator Herron
further alleges that he “informed Defendants that the schemes detailed above violated Medicare
and Medicaid reimbursement rules…[and] both Relators Herron and Anderson personally
warned Defendants through face-to-face interactions, written memorandums and ‘Coding
Updates.’” [Id. at 36, ¶ 139.] Relator Herron alleges that less than a year before he was fired, a
letter was placed in his personnel file “instructing him to stop communicating information to the
ING physicians about improper billing.”
[Id. at 37, ¶ 145.]
Relator Herron asserts that
“[b]ecause of his lawful acts to stop Defendants from defrauding the government as alleged
herein, Defendants retaliated against Relator Herron in the terms and conditions of his
employment by firing him.” [Id. at 41, ¶ 169.] He alleges that his lawful acts included
“objecting to fraudulent acts and omissions” by Defendants. [Id. at 41, ¶ 172.]
While Relator Herron may have sufficiently alleged that the Defendants knew he did not
agree with their billing practices and believed they were improper and illegal, he must go a step
further. Because of his position at ING, in order to sustain a retaliation claim under the FCA or
the Indiana FCA, Relator Herron must also show that the Defendants were aware he was
pursuing a qui tam action, or that he had reported the Defendants’ conduct to the government.
The Seventh Circuit Court of Appeals has instructed that the scope of notice a relator
must supply to his employer in order to sustain a retaliation claim depends upon whether the
employee is “charged with discovering fraud in the normal course of their job duties.” Fanslow,
384 F.3d at 483. If so, an employee must establish that his employer was aware his actions were
in furtherance of a qui tam action. See Brandon, 277 F.3d at 944-45 (FCA does not protect
employees who simply “raise their concerns privately within their firm or company, rather than
publicly,” and telling an employer that actions do not comply with Medicare billing regulations
is not enough to invoke FCA’s protection – an employer must be on notice that the employee
believes the employer is violating FCA and is acting in furtherance of qui tam action).
Specifically, “[e]mployees charged with discovering fraud in the normal course of their job
duties are obligated to a heightened notice requirement, necessitating that the employee indicate
an explicit intention to bring a qui tam action or otherwise report the fraudulent conduct to the
government.” Kuhn, 2008 U.S. Dist. LEXIS 68737 at *13.
Relator Herron alleges that his job responsibilities included “reviewing, confirming, and
posting all claims submitted by ING for reimbursement,” [dkt. 136 at 5, ¶ 15], participating in
Billing Committee meetings where he had “an opportunity…to raise general and specific billing
concerns,” [id. at 11, ¶ 35], and conducting “comprehensive audits” of the doctors’ billing, [id. at
12-13, ¶ 39]. Based on his own characterization of his position at ING, Relator Herron would be
considered a “fraud-alert” employee subject to the heightened notice requirement outlined in
See also Kuhn, 2008 U.S. Dist. LEXIS 68737 at *14-15 (employee who “was
explicitly hired for the purpose of conducting an internal audit of [the employer’s] records” was
held to heightened notice requirement in order to invoke protection of FCA’s retaliation
provision); United States ex rel. Wildhirt v. AARS Forever, Inc., 2011 U.S. Dist. LEXIS 37122,
*17 (N.D. Ill. 2011) (“simply informing an employer that certain actions were ‘illegal,’
‘improper,’ or ‘fraudulent,’ without any explicit mention of the possibility that the employee
would sue, does not suffice”). Accordingly, because the Second Amended Complaint is devoid
of any allegations that Defendants had notice that Relator Herron was acting in furtherance of
bringing a qui tam action, his retaliation claims cannot survive as pled.
Should Relator Herron wish to amend his retaliation claims to include the necessary
allegations – of course, subject to Rule 11 – he must move the Court to do so and demonstrate
good cause for the Court to allow such an amendment. See Fed. R. Civ. P. 15(a) (“A party may
amend its pleading once as a matter of course within…21 days after service of a responsive
pleading or 21 days after service of a motion under Rule 12(b)…, whichever is earlier….In all
other cases, a party may amend its pleading only with the opposing party’s written consent or the
court’s leave”). Rule 15(a) “force[s] the pleader to consider carefully and promptly the wisdom
of amending to meet the arguments in the motion. A responsive amendment may avoid the need
to decide the motion or reduce the number of issues to be decided, and will expedite
determination of issues that otherwise might be raised seriatim. It also should advance other
pretrial proceedings….The responsive pleading may point out issues that the original pleader had
not considered and persuade the pleader that amendment is wise.” Notes of Advisory Committee
on 2009 amendments to Fed. R. Civ. P. 15. Because Relator Herron chose not to amend his
retaliation claim to address the issues raised in Defendants’ Motions to Dismiss,10 he must now
seek the Court’s permission to do so.
Defendants also raised this issue in their first Motion to Dismiss, filed in June 2012. [Dkt. 108
at 13-14.] The Relators filed the Second Amended Complaint in response to the first Motion to
Dismiss, but Relator Herron did not amend his retaliation claims to address the issue.
For the foregoing reasons, the Motions to Dismiss, [dkts. 148; 149; and 152], are
DENIED to the extent that the Court finds the Relators have alleged their claims with sufficient
particularity under Fed. R. Civ. P. 9(b), but GRANTED to the extent that the Defendants
associated with each alleged scheme are now limited to the Relators’ characterization in their
response brief, [dkt. 155 at 16-17]. Additionally, the Motion to Dismiss filed by Drs. Sasso and
Renkens, [dkt. 148], is GRANTED in part as to the Relators’ Indiana FCA claims (Counts IV,
V, VI, and VIII) and the FCA retaliation claim (Count VII). Those claims are DISMISSED with
prejudice as against Drs. Sasso and Renkens. The Motions to Dismiss filed by the remaining
Defendants, [dkts. 149; 152], are also GRANTED as to Relator Herron’s FCA and Indiana FCA
retaliation claims (Counts VII and VIII), and those claims are DISMISSED and may only be
reasserted by amendment with leave of Court. Additionally, the remaining Defendants’ Motions
to Dismiss, [dkts. 149; 152], are GRANTED to the extent that the Relators’ Indiana FCA claims
are limited to claims submitted after the Indiana FCA’s enactment, and the Relators’ FCA claims
are limited to claims submitted after December 14, 2000. In all other respects, the Motions to
Dismiss, [dkts. 148; 149; and 152], are DENIED. Defendants shall answer the Second Amended
Complaint as it has been construed by the Court in this Order within twenty-one (21) days.
The Court requests that the Magistrate Judge hold a conference with the parties as soon
as practicable, to establish a Case Management Plan and schedule for bringing the case to a
Hon. Jane Magnus-Stinson, Judge
United States District Court
Southern District of Indiana
Distribution via ECF only:
Jill Z. Julian
Mary Jane Lapointe
Shelese M. Woods
Roberta B. Hirsch
Bryan S. Strawbridge
Marc T. Quigley
Mark W. Bina
Randall R. Fearnow
Matthew B. Barr
Robert D. MacGill
Brianna J. Schroeder
Frederick D. Emhardt
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?