United States of America, ex rel. et al v. Golden Gate National Senior Center Care LLC et al
Filing
70
MEMORANDUM OPINION AND ORDER granting in part and denying in part 44 Motion to Dismiss. 1. The motion is granted as to the relators' claims against GGNSC Administrative Services, GPH Anoka, GGNSC Clinical Services, Golden Gate Ancillary, and GGNSC Equity Holdings. Those claims are dismissed without prejudice. 2. The motion is granted as to the relators' claims against Aegis Therapies. Claims against Aegis Therapies are dismissed with prejudice. 3. The motion is gran ted as to the relators' FCA and MFCA conspiracy claims [Count IV]. Those claims are dismissed with prejudice. 4. The motion is granted as to the relators' reverse FCA and MFCA claims [Count V]. Those claims are dismissed with prejudice . 5. The motion is granted as to the relators' FCA and MFCA retaliation claims [Counts VI and VII]. Those claims are dismissed with prejudice. 6. The motion is DENIED in all other respects.(Written Opinion) Signed by Chief Judge John R. Tunheim on September 29, 2015. (DML)(Written Opinion) Signed by Chief Judge John R. Tunheim on September 29, 2015. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
UNITED STATES OF AMERICA and
STATE OF MINNESOTA, ex rel. JULIE
SCHARBER, KIRSTEN HAHN,
BARBARA SHOEMAKER, and
MELISSA FARR,
Civil No. 12-2711 (JRT/SER)
Plaintiff,
v.
GOLDEN GATE NATIONAL SENIOR
CARE LLC, doing business as “Golden
Living Center – Twin Rivers;” GGNSC
ANOKA LLC, doing business as “Golden
Living Center – Twin Rivers;” GGNSC
ADMINISTRATIVE SERVICES, LLC;
GPH ANOKA LLC; GGNSC EQUITY
HOLDINGS, LLC, doing business as
“Golden Living Center – Twin Rivers;”
GGNSC CLINICAL SERVICES, LLC;
GOLDEN GATE ANCILLARY, LLC;
and AEGIS THERAPIES, INC.
MEMORANDUM OPINION
AND ORDER ON DEFENDANTS’
MOTION TO DISMISS
Defendants.
Ann M. Bildtsen, Assistant United States Attorney, UNITED STATES
ATTORNEY’S OFFICE, 600 United States Courthouse, 300 South
Fourth Street, Minneapolis, MN 55415, for the United States of America.
Gale D. Pearson, PEARSON, RANDALL & SCHUMACHER, PA, 100
South Fifth Street, Suite 1025, Minneapolis, MN 55402, for the State of
Minnesota.
Gale D. Pearson, PEARSON, RANDALL & SCHUMACHER, PA, 100
South Fifth Street, Suite 1025, Minneapolis, MN 55402; and Brian E.
Wojtalewicz, WOJTALEWICZ LAW FIRM, LTD, Post Office Box 123,
Appleton, MN 56208, for relators Julie Scharber, Kirsten Hahn, Barbara
Shoemaker, and Melissa Farr.
30
Robert Salcido and Annisah Um’rani, AKIN GUMP STRAUSS HAUER
& FELD LLP, 1333 New Hampshire Avenue N.W., Washington, DC
20036; and Alana K. Bassin, BOWMAN & BROOKE LLP, 150 South
Fifth Street, Suite 3000, Minneapolis, MN 55402, for defendants.
Julie Scharber, Kirsten Hahn, Barbara Shoemaker, and Melissa Farr (collectively
“relators”) brought this qui tam action pursuant to the Federal False Claims Act (“FCA”),
31 U.S.C. § 3729 et seq., and the Minnesota False Claims Act (“MFCA”), Minn. Stat.
§ 15C.01 et seq., against Defendant GGNSC Anoka LLC and the related family of
companies. They filed their original complaint in October 2012.
Defendant GGNSC Anoka LLC, a Delaware company, holds the Minnesota
assumed name “Golden LivingCenter – Twin Rivers” (“Twin Rivers”) and is the nursing
home licensee registered as a Medicare/Medicaid provider for Twin Rivers. Twin Rivers
was a nursing home facility that offered long term and temporary care. The allegations in
this case are focused on conduct at Twin Rivers. The other defendants are all Delaware
LLCs tied to the Golden Living family of companies (together, “defendants”).
The relators are all former Twin Rivers employees. They allege that since Golden
Living took over Twin Rivers in 2006, the defendants submitted false or fraudulent
Medicare and Minnesota Medicaid claims for services allegedly performed at Twin
Rivers. They allege violations of the federal and Minnesota FCAs, as well as retaliation.
In response to an initial motion to dismiss, the relators filed an amended complaint
in April 2015. The defendants then filed a second motion to dismiss, in which they argue
that the FCA and MFCA claims should be dismissed because the relators did not plead
representative examples of specific false claims. They also argue that the FCA claims
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should be dismissed because the alleged breaches constitute, at most, violations of
Medicare conditions of participation (i.e., mere regulatory violations), not conditions of
payment. The defendants also contend that the claims against Aegis are barred by the
FCA’s first-to-file rule, because a related action against Aegis is already pending in this
district. Finally, the defendants claim that the relators have failed to allege a successful
retaliation claim.
Because the relators have pled their FCA claims with sufficient particularity, the
Court will deny the defendants’ Rule 9(b) motion to dismiss. The Court will also deny in
part the defendants’ motion to dismiss based on Rule 12(b)(6) grounds, although it will
dismiss the relators’ reverse FCA and MFCA claims because they would result in
redundant penalties. The Court will also dismiss the relators’ conspiracy claims because
a parent company cannot conspire with its subsidiary.
The Court will dismiss the
relators’ FCA and MFCA retaliation claims because the relators have not shown that the
defendants knew that they were engaging in protected action. The Court will dismiss
claims against GGNSC Administrative Services, GPH Anoka, GGNSC Clinical Services,
Golden Gate Ancillary, and GGNSC Equity Holdings, because the relators do not make
plausible allegations against those defendants. Finally, the Court will dismiss claims
against Aegis, because those claims are barred by the FCA’s first-to-file rule.
BACKGROUND
I.
PARTIES AND COUNTS
Relator Julie Scharber is a Registered Nurse (“RN”) who was employed at Twin
Rivers in Anoka, Minnesota, from 2003 to 2010. (Am. Compl. ¶ 8, Apr. 3, 2015, Docket
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No. 59.) Relator Kirsten Hahn is a Licensed Practical Nurse (“LPN”) who was employed
at Twin Rivers from August 2008 to July 2010. (Id. ¶ 9.) Hahn’s duties included
responsibilities as the charge nurse/floor nurse for the Transitional Care Unit (“TCU”).
(Id.) Relator Barbara Shoemaker is a Certified Nursing Assistant (“CNA”) who was
employed at Twin Rivers from March 2001 to November 2010. (Id. ¶ 10.) Shoemaker
also worked with Twin Rivers’ Medicare and Medicaid billing, and in the Medical
Records department. (Id.) Relator Melissa Farr is also a CNA who was employed at
Twin Rivers from September 2007 to July 2010. (Id. ¶ 11.)
The eight properly served defendants can be subdivided into four categories:
(1) the five nursing home defendants; (2) one parent company; (3) one therapy company;
and (4) one related company tied to the Golden Living Family companies.1 (Id. ¶¶ 1224.) All defendants are Delaware LLCs. (Id.)
A.
Nursing Home Defendants
The nursing home defendants include: GGNSC Anoka LLC, (id. ¶ 12); GGNSC
Administrative Services LLC, (id. ¶¶ 17, 21); GPH Anoka LLC, (id. ¶ 21); GGNSC
Clinical Services LLC, (id. ¶¶ 15, 21); and Golden Gate Ancillary LLC, (id. ¶¶ 16, 21).
GGNSC Anoka LLC is the nursing home licensee registered as a
Medicare/Medicaid provider for Twin Rivers. (Id. ¶ 12.) Twin Rivers was a 56-bed
1
Defendants GGNSC Holdings, LLC and Drumm Investors, LLC were listed in the
amended complaint as defendants. (Am. Compl. ¶¶ 18-19.) However, since they were not
properly served, both parties agree they are not defendants in this case and the docket does not
list them as defendants, as a result. (See, e.g., Defs.’ Mem. in Supp. of Mot. to Dismiss (“Defs.’
Mem.”) at 10 n.1, Feb. 2, 2015, Docket No. 47.)
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skilled nursing home facility that offered long term and temporary care. (Id. ¶ 22.) It
was a certified Medicare and Medicaid provider. (Id.) GGNSC Administrative Services
LLC collects fees for Twin Rivers and Golden Living management. (Id. ¶ 21.) GPH
Anoka LLC is the land and building owner which collects mortgage payments. (Id.)
GGNSC Clinical Services LLC and Golden Gate Ancillary LLC are affiliated goods and
service providers who collect payments from Medicare and Medicaid through Twin
Rivers. (Id.)
At argument, the relators stated that they would be amendable to dismissing
claims against four of the five nursing home defendant LLCs: GGNSC Administrative
Services, GPH Anoka, GGNSC Clinical Services, and Golden Gate Ancillary. (Mot. to
Dismiss Hr’g Tr. (“Tr.”) at 30-31, Aug. 4, 2015, Docket No. 69.) As a result, the Court
will dismiss the relators’ claims against those four defendants.2
B.
Parent Company
Defendant Golden Gate National Senior Care LLC (“Golden Gate”) is the parent
company of the nursing home defendants. (Am. Compl. ¶ 14.) Golden Gate operates
approximately 333 skilled nursing centers (doing business as “Golden Living Centers”)
in Minnesota and approximately 21 other states. (Id.) One of these centers is Twin
Rivers. (Id.) Golden Gate is owned by Fillmore Strategic Investors LLC, a private real
2
Nevertheless, because the Court will find that the relators can proceed on their claims
against GGNSC Anoka and Golden Gate, the relators may need to obtain documents from these
related defendants during discovery. Given their relationship to GGNSC Anoka and Golden
Gate, the Court does not anticipate that it will be problematic for the relators to obtain documents
from these four entities. The Court finds that the relators should have access to needed
documents but should not be able to engage in a fishing expedition as to these entities.
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estate equity firm. (Id.) Golden Gate has two affiliates, GGNSC Holdings LLC, and
GGNSC Anoka LLC. (Id.)
C.
Therapy Company
Defendant Aegis Therapies Inc. (“Aegis”) provides occupational, physical, and
other therapy services at Twin Rivers. (Id. ¶ 20.) Aegis is the largest contract therapy
company in the United States, providing rehabilitation services at more than 1,000
nursing home facilities in 37 states. (Id.) Aegis is a subsidiary of Golden Gate and is
therefore ultimately owned by Filmore Strategic Investors. (Id.)
D.
Related Companies
Defendant GGNSC Equity Holdings LLC is a Delaware company whose sole
member (i.e., owner) is Golden Gate.3 (Id. ¶ 13.)
E.
Counts
The relators assert the following seven counts:
Count I: FCA and MFCA count against all defendants, due to false or
fraudulent claims submitted to Medicare and Minnesota Medicaid. (Id. ¶¶ 25258.)
Count II: FCA and MFCA count against all defendants for violating the antikickback statute. (Id. ¶¶ 259-65.)
Count III: FCA and MFCA count against all defendants for making false claim
documentation, including Minimum Data Set (“MDS”) forms and certification
forms. (Id. ¶¶ 266-70.)
Count IV: one count of conspiracy to violate the FCA and MFCA against all
defendants. (Id. ¶¶ 271-76.)
3
Because the complaint is devoid of any allegations against GGNSC Equity Holdings,
the Court will dismiss that defendant as well. (Am. Compl. ¶¶ 12-13, 215.)
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Count V: FCA and MFCA count against all defendants for reverse false claims
(i.e., keeping funds they should have returned). (Id. ¶¶ 277-88.)
Count VI: FCA retaliation count against all defendants. (Id. ¶¶ 289-93.)
Count VII: MFCA retaliation count against all defendants. (Id. ¶¶ 294-99.)
Count VIII: Minnesota statutory retaliation count against all defendants. (Id.
¶¶ 300-06.)
II.
SUMMARY OF ALLEGATIONS OF FRAUD
Before delving into the parties’ legal arguments, it is helpful to recount the
relators’ extensive allegations in this case, starting with the following summary. The
relators allege that the defendants submitted, or caused to be submitted, false or
fraudulent claims to Medicare and Medicaid for services at Twin Rivers. (Id. ¶ 25.) The
relators allege that these acts occurred in connection with:
claims for physical and occupational therapy services allegedly provided to
nursing home residents which in fact were not provided;
falsely backdated medical records for residents;
medical records which claimed care was provided when it was not;
not providing necessary services which unnecessarily prolonged a
resident’s stay to collect additional Medicare funds;
electronic Minimum Data Set (“MDS”) forms which did not accurately
report a resident’s clinical condition;
falsifying documents in anticipation of government survey to portray the
facility was in compliance with mandated regulations when it was not;
failing to provide adequate and qualified staffing to provide care to
residents;
failing to provide requisite services to prevent harm to residents;
failing to promote the maintenance or enhancement of the quality of life of
residents; and
billing for services that were otherwise not eligible for coverage under
Medicare and Medicaid’s general exclusion of services that are not
“reasonable and necessary.”
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(Id. ¶ 25.)
III.
OWNERSHIP AND MANAGEMENT PRACTICES
A.
Intentional Deception of State Surveyors
Before annual surveys, the relators allege that Golden Gate personnel would
meticulously review resident medical records. (Id. ¶ 73.) During these medical record
reviews, the relators observed that gaps in the Medical Administrative Records
(“MARs”) would be filled in with fabricated information. (Id. ¶ 74.) Undesirable entries
in the medical charting were whited out, instead of crossed out and initialed by the
original author of the entry. (Id.) Hahn was outspoken about this impropriety and
expressed her views to Twin Rivers management personnel. (Id.)
Prior to surveys by state regulators, a group of special nurses from Golden Gate,
known as the “CRC,” would arrive at the facility and conduct mock surveys. (Id. ¶ 76.)
The residents thought the mock surveyors were the actual surveyors and would disclose
problems at Twin Rivers related to substandard care and services. (Id.) Consequently,
the relators allege that when the real surveyors arrived, the residents thought the real
surveyors were merely conducting follow-up inspections and saw no need to recount the
care issues. (Id.) The CRC team stayed through the completion of the actual survey,
providing additional assistance in an attempt to artificially boost the perception of the
facility. (Id.)
During the real survey, the residents’ MARs and treatment records were made
inaccessible. (Id. ¶ 75.) Twin Rivers employees were instructed that if a surveyor
requested a resident’s medical record, the staff person should turn that request over to the
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upper management team responsible for medical records. (Id.) When a request for a
record was received, the upper management team would take the medical record into a
closed room, where they would remain for an extended period of time before inviting the
surveyors in for a supervised review of the record. (Id.)
B.
Insufficient Funding and Staffing
The relators also allege that Golden Gate established the overarching budgets for
Twin Rivers, including its labor budget. (Id. ¶ 78.) Golden Gate determined staffing
levels by preset budgets, rather than the residents’ actual needs. (Id.) As a result, Twin
Rivers consistently did not have enough staff working to provide the required level of
care to Twin Rivers residents. (Id. ¶ 79.)
In addition, the relators allege that staffing would decrease significantly in the
weeks following a regulatory survey. (Id. ¶ 80.) As noted above, during surveys, the
relators contend that staffing at Twin Rivers was artificially increased to “put on a good
show” for regulators. (Id.) Golden Gate increased staffing by bringing in extra nurses,
scheduling existing staff to work additional shifts, and assigning some of the relators to
work the unit being closely observed by the surveyors. (Id.) Due to the increased costs
associated with this extra staffing, Golden Gate would decrease the post-survey staff to
below pre-survey levels. (Id.) For example, Scharber alleges that, post-survey, she
would often be on duty with only one nurse. (Id.)
Furthermore, Golden Gate magnified funding issues by using funding cuts as a
punitive measure. For example, the relators alleged that Golden Gate would cut the
facility’s budget when staff reported certain issues such as pressure sores that were Stage
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II or higher. (Id. ¶ 81.) They made these cuts despite the fact that such reports were
required under Golden Gate’s rules. (Id.)
More specifically, Hahn documented instances where there were not enough staff
persons on duty to care properly for all residents. (Id. ¶ 82.) As an LPN, Hahn’s regular
duties included checking vitals, charting, performing injections and treatments,
communicating with doctors, entering orders, discharging patients, conducting labs, and
dealing with other issues as they arose, such as admitting new patients. (Id. ¶ 83.) The
systemic understaffing at Twin Rivers resulted in Hahn taking on additional
responsibilities. (Id. ¶ 84.) In one instance, in January 2009, there were no Trained
Medical Aides (“TMAs”) on duty and only three nursing aides working. (Id. ¶ 85.) As a
result, in addition to her normal duties, Hahn passed out medication and effectively acted
as the floor nurse. (Id.) Due to the absence of TMAs, Hahn had to perform these floor
duties at least three other times in February and March 2009. (Id.) In another instance, in
April 2010, Hahn had to perform all her regular duties and pass out medication to all
twenty residents in the TCU due to an inadequate number of nurses’ aides. (Id. ¶ 86.)
Finally, paperwork was frequently not completed during the night shift. (Id. ¶ 87.) The
day shift nurses were forced to complete all paperwork, resulting in rushed orders. (Id.)
In March 2009, Hahn alleges that she had to rush to complete “multiple new admit
packets and . . . orders,” and she consequently complained to her superiors that it was
unsafe to fill out paperwork in such a rushed manner. (Id. ¶ 87.)
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C.
Extended Stays Designed to Advance Golden Gate’s Revenue Goals
The relators allege that Twin Rivers encouraged longer stays to meet revenue
targets. They allege that Twin Rivers’ administrator, Dana Johnson, explicitly stated that
one of the facility’s business objectives was to increase the length of resident stays in
order to meet Golden Gate’s occupancy quotas. (Id. ¶ 89.) Other Twin Rivers managers
stated that another business objective was to increase the number of long-term patients at
the facility receiving therapy. (Id.) Indeed, the relators allege that Twin Rivers would
even let temporary residents decline in health in order to move them to long-term care
beds and avoid losing revenue. (Id. ¶¶ 95-96.)
One example of how these business objectives affected Twin Rivers’ care is the
TCU. Occupational and physical therapists worked on-site at the TCU. (Id. ¶ 90.) They
helped TCU residents with Activities of Daily Living (“ADLs”), so that residents could
learn the skills needed to return home. (Id.) While a standard therapist in this role might
observe a resident’s limitations and develop and implement a plan to manage those
limitations, therapists at the Twin Rivers TCU rarely performed those services.
Further compounding these issues and extending resident stays, therapists at Twin
Rivers did not provide services on weekends. (Id. ¶ 91.) Scharber even witnessed
therapy charting and documenting done in advance, especially as to services that should
have been provided on weekends. (Id. ¶ 92.) In addition, insufficient staffing meant
Twin Rivers CNAs rarely had the time or staff power to assist TCU residents with relearning to walk and regaining muscle strength. (Id. ¶ 94.)
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D.
False Billing for Services and Otherwise Modified Records
The relators allege that many residents never received any physical therapy from
Aegis or received less therapy than was actually billed for Aegis’s services. (Id. ¶ 97.)
The relators even observed billing for therapy services that residents had refused. (Id.)
In still other examples of therapy-related fraud, Twin Rivers would submit claims for
therapy services performed by certified therapists, even though the services were actually
performed by non-therapist Twin Rivers staff.
(Id.)
The relators observed an
overarching push within Twin Rivers to keep people in therapy for as long as possible in
order to generate additional revenue, even if therapy services were barely performed or
not performed at all. (Id. ¶ 101.) Indeed, the relators repeatedly witnessed Twin Rivers
management and/or Golden Gate personnel discussing changing dates on MDS forms in
order to improperly obtain additional funds from the government.
(Id. ¶ 102.)
Shoemaker alleges that she observed a written communication stating that changes to the
MDS forms resulted in an additional $34,000 in revenue for a single month. (Id.)
Hahn makes specific therapy-related allegations. Hahn regularly worked morning
shifts between 2008 and 2010 and, during those shifts, rarely observed therapists in the
TCU. (Id. ¶ 98.) Although Hahn knew that there were certain daily therapy exercises,
ambulation, and assistance with ADLs that were ordered for residents and within the
patient charts, Hahn observed nursing aides, not therapists, perform these activities. (Id.)
In addition, Aegis therapists would post above resident beds that certain therapies were to
be performed and would subsequently ask Twin Rivers staff to “sign off” that they
understood what therapies to perform. (Id. ¶ 99.) Hahn alleges that Aegis therapists
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failed to perform evaluations, witness resident treatment, monitor progress, or facilitate
rehabilitation. (Id. ¶ 100.) Instead, therapists would make conclusory diagnoses or
recommendations, such as that “additional treatment was needed.” (Id.) This method
ensured that billing for therapy services could continue. (Id.)
E.
Kickbacks
The relators also make allegations regarding illegal kickbacks.
The relators
observed an inappropriate relationship between Twin Rivers and Dr. Robert Sonntag, the
Medical Director employed by Twin Rivers and responsible for certain oversight duties.
(Id. ¶ 107.) The relators allege that Twin Rivers steered residents and their families to
use Dr. Sonntag as their attending physician under the guise of receiving better and
timelier care, in part because he was at the facility two to three times a week. (Id. ¶ 108.)
This arrangement was lucrative for Sonntag, however, since he billed for his services
separately under Medicare Part B. (Id. ¶¶ 108-09.) The relators claim that Sonntag, in
return, would prescribe therapy and hospice services from Aegis and other Golden Living
companies. (Id. ¶ 110.)
Relators also allege that Sonntag frequently “snowed” or overmedicated residents.
(Id. ¶ 111.) This overmedication led to sleeping and eating issues, along with weight loss
and dehydration. (Id.) While several nurses complained about this practice, Sonntag
continued to overmedicate, in large part due to the financial benefit Golden Gate would
incur due to medication-related billing. (Id. ¶ 112.) He would also prescribe lucrative
therapies to address issues related to the overmedication. (Id.) Specifically, the relators
allege that one resident was “snowed” in 2008 and 2009 and suffered frequent choking
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episodes as a result. (Id. ¶ 113.) Despite complaints from the relators and others,
Sonntag did not alter the resident’s diet and instead only prescribed therapy.
(Id.)
However, the relators claim that the prescribed therapy was charted but never actually
provided. (Id.)
IV.
HARM PREVENTION AND SUBSTANDARD SERVICES
The relators identified numerous instances of poor treatment and subpar operating
procedures by the defendants. These failures either failed to prevent harm or placed
residents at great risk of harm. (Id. ¶¶ 115-97.) Rather than recount each specific
allegation in detail, the Court will briefly summarize the allegations here. The relators’
allegations of failure to prevent harm and substandard services include: (1) improper
administration of drugs4; (2) failure to prevent accidents5; (3) failure to prevent pressure
sores6; (4) failure to prevent infection7; and (5) failure to prevent mistreatment.8 The
relators also allege that the defendants did not provide physician-prescribed treatments to
4
(Am. Compl. ¶¶ 115-19.)
5
(Am. Compl. ¶¶ 120-23.)
6
(Am. Compl. ¶¶ 124-61.)
7
(Am. Compl. ¶¶ 162-76.)
8
(Am. Compl. ¶¶ 177-78.)
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Twin Rivers residents at the proper times or with the proper frequency9; did not properly
complete clinical health status forms10; and did not properly complete 24 hour charting.11
V.
UNNECESSARY TREATMENTS
The relators also alleged that the defendants provided unnecessary treatments to
inflate billing. Specifically, on May 6, 2010, a physician ordered that one resident have
his tube feedings discontinued, but Twin Rivers ignored the order and continued to
administer medications through the tube until about May 23, 2010. (Id.) As a result,
Twin Rivers fraudulently received more funds due to the unnecessary use of the tube.
(Id.) On June 15, 2010, Scharber and Hahn complained to management concerning that
resident. (Id.)
VI.
FALSELY RECORDED AND REPORTED INFORMATION
The relators also allege a systemic process of falsely recording and reporting
information to Medicare and Medicaid. In September 2009, Shoemaker was told by the
Twin Rivers administrator – Dana Johnson – to start collecting time cards from providers
visiting Twin Rivers for clinical consults. (Id. ¶ 200.) Johnson hoped to use this
information to increase the amount of RN hours Twin Rivers would report. (Id.)
Shoemaker also alleges that she saw nurse consultants from Golden Gate alter
medical records during state surveys and complaint surveys.
9
(Am. Compl. ¶¶ 179-90.)
10
(Am. Compl. ¶¶ 191-95.)
11
(Am. Compl. ¶¶ 196-97.)
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(Id. ¶ 201.)
These
consultants quickly altered faulty records at the time of surveys to ensure that a resident’s
chart looked complete and captured all of the services the resident had received. (Id.)
Additionally, in a separate incident in 2010, Hahn and Scharber submitted a formal
complaint to the Minnesota Department of Health regarding the treatment of residents.
(Id. ¶ 202.) When Department of Health official Kim Johnson arrived for an on-site
investigation, Scharber witnessed several Twin Rivers and Golden Gate employees
taking the relevant records into the nursing office before giving them to Johnson. (Id.)
Scharber heard one employee tell another that the records had been “fixed.” (Id.)
Shoemaker makes other specific allegations. For example, after an annual survey
in January 2010, Twin Rivers was required to provide training to staff. Although the
facility failed to provide one aspect of the training, Shoemaker nevertheless saw Dana
Johnson altering records to indicate that the missing part of the training had been
covered. (Id. ¶ 203.) In March 2010, Shoemaker discovered that pharmacy billing logs
for PharMerica had not been reviewed for error in over a year. (Id. ¶ 204.) This meant
that many important errors had not been fixed. (Id.) In May 2010, Shoemaker saw a
Golden Gate employee, Marilyn Hoffer, tell an occupational therapist at Twin Rivers to
change the dates on two residents’ MDS forms so the defendants could collect more
revenue for those residents. (Id. ¶ 206.) Hoffer even memorialized this request in a
July 6, 2010 email. (Id.) Shoemaker also overheard Hoffer tell the Interim Administrator
that Twin Rivers would generate significant revenue by re-working MDS forms. (Id.) In
still other instances, Shoemaker witnesses errors in activities documentation. (Id. ¶ 207.)
The relators also witnessed discrepancies between various patient forms, and a failure to
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enter a treatment plan into the facility’s computer system that led to residents not
receiving needed care. (Id. ¶¶ 208-09.)
VII.
CLAIMS BILLING
Due to her position as a backup employee in the business office at Twin Rivers
from 2008 through 2010, Shoemaker “personally witnessed hundreds of Medicare and
Medicaid billings being submitted by Defendants to the federal Medicare program and to
the Medicaid program administered by the Minnesota Department of Human Services.”
(Id. ¶ 221.) Shoemaker also witnessed Twin Rivers management urgently encouraging
and seeking out more therapy and other treatments for residents, which would result in
revenue. (Id.)
The relators provide a representative sample of false or fraudulent billings at
Exhibit 5: a Medicare Summary Notice for Resident 18. The relators claim that the
summary notice shows an attempt to illegally obtain reimbursement for “wheelchair
management training,” even through Resident 18 had come to Twin Rivers with her
wheelchair and was already accustomed to using it. (Id. ¶ 222; see also Original Filing of
Am. Compl., Ex. 5, Jan. 15, 2015, Docket No. 41.) The relators also include copies of
Medicaid Cost Reports at Exhibits 6 and 7. Shoemaker alleges that Freddia Sullivent,
who prepared the cost reports, was actually a Golden Gate and not a Twin Rivers
employee. (Id. ¶¶ 223-26.)
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VIII. GOLDEN GATE’S INVOLVEMENT
The relators make a number of allegations regarding Golden Gate’s involvement
in and relationship to fraudulent practices at Twin Rivers. For example, while working as
a backup employee in Twin Rivers’ business office, Shoemaker attended many of the
weekly telephone meetings with Twin Rivers administrator Dana Johnson. (Id. ¶ 213)
Shoemaker witnessed Golden Gate executives give direct orders to Johnson concerning
spending, staffing levels, patient care quality control, and government survey issues.
(Id.) Shoemaker specifically recalls Golden Gate executives stating that Twin Rivers was
spending too much money and telling Johnson where to make cuts. (Id.) She also recalls
them directing her as to labor costs and staffing issues, and grilling her on patient care
issues. (Id.) Additionally, as noted above, Golden Gate sent in staff to assist in advance
of and during state surveys. (Id. ¶¶ 213-16.) The relators allege that Golden Gate had
knowledge of, or should have known of, the substandard care provided at and fraudulent
claims submitted by Twin Rivers. (Id. ¶ 219.)
IX.
RETALIATION AGAINST THE RELATORS
Finally, the relators allege that the defendants unlawfully retaliated against them
for privately, and later openly, voicing their concerns about Twin Rivers. (Id. ¶ 228.) All
four faced criticism and rebuke for complaining about conduct at Twin Rivers and all
four were eventually terminated. (Id. ¶¶ 228-51.)
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X.
THIS PROCEEDING
The relators filed their initial complaint on October 24, 2012. (Compl., Oct. 24,
2012, Docket No. 1.)
The defendants then filed an initial motion to dismiss on
December 8, 2014. (Mot. to Dismiss, Dec. 8, 2014, Docket No. 22.) The relators filed a
motion to file an amended complaint. (Mot. for Leave to Amend Compl., Jan. 15, 2015),
which United States Magistrate Judge Steven E. Rau granted, (Order, Jan. 16, 2015,
Docket No. 43). The relators then filed an amended complaint on April 3, 2015. (Am.
Compl.)
The defendants filed the present motion to dismiss on February 2, 2015. (Mot. to
Dismiss, Feb. 2, 2015, Docket No. 44.). The United States declined to intervene in this
case. (Notice of Election to Decline Intervention by United States, July 11, 2014, Docket
No. 15). It did file a statement of interest, opposing some of the arguments in the
defendants’ motion to dismiss, specifically some of the defendants’ Rule 12(b)(6)
arguments. (United States Statement of Interest, Apr. 3, 2015, Docket No. 60).
DISCUSSION
I.
FCA AND MFCA GOVERNING LAW
A.
False Claims Act
The FCA includes a qui tam provision to encourage whistleblowers to report
fraud. 31 U.S.C. § 3730. In a qui tam action, a plaintiff may bring a private civil action
on behalf of herself and on behalf of the United States government against a defendant
who, in violation of 31 U.S.C. § 3729, has submitted false claims to the United States for
payment.
The government may choose to intervene in the action, 31 U.S.C.
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§ 3730(b)(4)(A), or it may decline to join the action, leaving the qui tam plaintiff as the
plaintiff. 31 U.S.C. § 3730(b)(4)(B).
The FCA imposes liability if a defendant (1) “knowingly presents, or causes to be
presented, [to a federal official] a false or fraudulent claim for payment or approval,” or
(2) “knowingly makes . . . a false record or statement material to a false or fraudulent
claim.” 31 U.S.C. § 3729(a)(1)(A)-(B). The FCA also proscribes conspiring to violate
its provisions.
Id. § 3729(a)(1)(C).
Liability under the FCA attaches “not to the
underlying fraudulent activity, but to the claim for payment.”
Costner v. URS
Consultants, Inc., 153 F.3d 667, 677 (8th Cir. 1998) (internal quotation marks omitted).
The Eighth Circuit has stated that, to establish a prima facie FCA violation, a
relator must show “that (1) the defendant made a claim against the United States; (2) the
claim was false or fraudulent; and (3) the defendant knew the claim was false or
fraudulent.” United States ex rel. Raynor v. Nat’l Rural Utils. Co-op Fin., Corp., 690
F.3d 951, 955 (8th Cir. 2012) (internal quotation marks omitted).
B.
Minnesota False Claims Act
The relators also bring claims under the MFCA, which makes a “person . . . liable
to the state or the political subdivision” if the person, among other things, “knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or approval,”
or if the person “knowingly makes or uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim.” Minn. Stat. §§ 15C.02(a)(1)-(2). The
MFCA also proscribes conspiring to violate its provisions. Id. § 15C.02(a)(3).
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II.
RULE 9(B) MOTION TO DISMISS
A.
Standard of Review
The defendants argue that the relators have not stated a claim for fraud with
sufficient particularity. Rule 9(b) requires that “[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting fraud or mistake.” Fed. R.
Civ. P. 9(b). The Eighth Circuit has interpreted the term “circumstances” of fraud to
include the “time, place and contents of false representations, as well as the identity of
the person making the false representation and what was obtained or given up thereby.”
Commercial Prop. v. Quality Inns, 61 F.3d 639, 644 (8th Cir. 1995) (quoting Bennett v.
Berg, 685 F.2d 1053, 1062 (8th Cir. 1982), adhered to on reh’g, 710 F.2d 1361 (8th Cir.
1983) (en banc)). The complaint must read like the opening paragraph of a newspaper
article: it must contain the “who, what, when, where and how” of the alleged fraud.
Parnes v. Gateway 2000, Inc., 122 F.3d 539, 549-50 (8th Cir. 1997) (quoting DiLeo v.
Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)). One of the primary purposes of the
rule is to ensure that a defendant can adequately respond and prepare a defense to charges
of fraud. Greenwood v. Dittmer, 776 F.2d 785, 789 (8th Cir. 1985).
As a result,
“conclusory allegations that a defendant’s conduct was fraudulent and deceptive are not
sufficient to satisfy the rule.” Commercial Prop., 61 F.3d at 644; Parnes, 122 F.3d at
549.
The FCA is “[g]rounded in fraud,” so claims under it “must satisfy Rule 9(b)’s
heightened pleading requirement” that parties “‘must state with particularity the
circumstances constituting fraud or mistake.’” United States ex rel. Roop v. Hypoguard
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USA, Inc., 559 F.3d 818, 822 (8th Cir. 2009) (quoting Fed. R. Civ. P. 9(b)). Just like a
complaint making a traditional fraud claim, a complaint alleging claims under the FCA
must also “identify who, what, where, when, and how.” United States ex rel. Costner v.
United States, 317 F.3d 883, 888 (8th Cir. 2003).
However, “[t]he level of particularity depends on . . . the nature of the case and the
relationship between the parties.” BJC Health System v. Columbia Cas. Co., 478 F.3d
908, 917 (8th Cir. 2007). “[A]n FCA complaint need not include the ‘specific details of
every alleged fraudulent claim’ when a relator alleges that a defendant engaged in a
systematic practice or scheme of submitting fraudulent claims.” United States ex rel.
Thayer v. Planned Parenthood of the Heartland, 765 F.3d 914, 917 (8th Cir. 2014)
(quoting United States ex rel. Joshi v. St. Luke’s Hospital, Inc., 441 F.3d 552, 557
(8th Cir. 2006)).
When, as here, relators allege such systemic fraud, the complaint need only
“provide some representative examples of [the defendants’] alleged fraudulent conduct,
specifying the time, place, and content of [the defendants’] acts and the identity of the
actions.” Id. (quoting Joshi¸ 441 F.3d at 557). In fact, in some instances, depending on
the allegations contained in the complaint, the relators may not even need to plead “some
representative examples” of the systemic fraud.
Id. (agreeing that “Joshi’s
representative-examples requirement need not be satisfied with respect to some portions
of the complaint”).
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B.
Rule 9(b) and the Relators’ Allegations
The defendants contend that the relators’ FCA claims – specifically Counts I
through V – should be dismissed under Rule 9(b) because they lack the specificity
required under that rule for fraud claims. Specifically, the defendants argue that the
relators have failed to identify “a single false claim that was actually presented to
Medicare or Medicaid” for Twin Rivers residents. (See, e.g., Defs.’ Mem. in Supp. of
Mot. to Dismiss (“Defs.’ Mem.”) at 10, Feb. 2, 2015, Docket No. 47.) To the extent the
relators now attach in their amended complaint a Medicare Summary Notice, the
defendants contend that the notice is irrelevant because it is not specific enough, is not
actually a claim, and is too different from the other allegedly fraudulent claims in the
case. In re Baycol Prods. Litig., 732 F.3d 869, 878 (8th Cir. 2013) (concluding that a
complaint was “inadequate to state a cause of action under the FCA because [it] did not
include at least some representative examples of false claims”).
The defendants also claim that the relators’ complaint lacks sufficient indicia of
reliability because the relators make no allegation that they had any responsibility over
the billing and claims submission process at Twin Rivers. See United States ex rel.
Klusmeier v. Bell Constructors, Inc., 469 F. App’x 718, 721-22 (11th Cir. 2012) (finding
that although relator asserted that he witnessed some contractual violations, his
knowledge of those violations was not enough to demonstrate that the company
submitted fraudulent claims based on those contract violations); see also Thayer, 765
F.3d at 917-18 (noting that one of the reasons a relator was not required to cite
representative examples of false claims is that she managed a facility, oversaw its billings
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systems, and was able to plead first-hand knowledge regarding the submission of false
claims).
The Court concludes that the relators have met their burden under Rule 9(b). The
relators rely on the exhibits to their amended complaint: both the Medicare Summary
Notice and the Medicaid cost reports at Exhibits 5-7. The defendants are correct, of
course, that those examples are not actual false claims, like a false MDS would be. But
they also offer additional, specific detail about the relators’ claims that helps to
distinguish this case from one in which a relator simply makes a “broad allegation that
every claim submitted [from the start of the scheme] until the present is false in order to
satisfy the particularity requirement.” United States ex rel. Dunn v. N. Mem’l Health
Care, 739 F.3d 417, 420 (8th Cir. 2014).
In any event, the Court concludes that the relators have met their burden under
Rule 9(b) without providing a representative sample of a false claim because they have
pled “particular details of a scheme to submit false claims paired with reliable indicia that
lead to a strong inference that claims were actually submitted.” Thayer, 765 F.3d at 918
(internal quotation marks omitted). In Thayer, the relator was in charge of two Planned
Parenthood clinics in Iowa. Id. at 915-16. The relator was able to identify the “who,
what, when, where, why, and how” of at least some of the alleged fraud, but did not
include any representative samples of fraudulent claims. Id. at 916-19. Nevertheless, the
Court concluded that, where there is reason to believe the relator would know about
systemic fraudulent claims, and where the allegations have sufficient indicia of
reliability, a relator making an FCA claim need not include a specific example of a
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fraudulent claim. Id. at 918 (“Accordingly, we conclude that a relator can satisfy Rule
9(b) without pleading representative examples of false claims if the relator can otherwise
plead the particular details of a scheme to submit false claims paired with reliable indicia
that lead to a strong inference that claims were actually submitted.” (internal quotation
marks omitted)).
The court found that the relator had met her burden under Rule 9(b) as to
allegations that Planned Parenthood had filed claims for unnecessary quantities of
prescription medications that were prescribed but not received by patients and that
Planned Parenthood had filed claims for the full amount of services that had already been
paid by donations coerced from patients. Id. at 919. Specifically, the Court noted that as
to those claims, the relator had adequately alleged
the particular details of these schemes, such as the names of the individuals
that instructed her to carry out these schemes, the two-year time period in
which these schemes took place, the clinics that participated in these
schemes, and the methods by which these schemes were perpetrated.
Moreover, she alleges that her position as center manager gave her access
to Planned Parenthood’s centralized billing system, pleads specific details
about Planned Parenthood’s billing systems and practices, and alleges that
she had personal knowledge of Planned Parenthood’s submission of false
claims. Thayer’s claims thus have sufficient indicia of reliability because
she provided the underlying factual bases for her allegations.
Id.
As to two other claims, the court found that the relator had not met her burden. As
to the allegation that Planned Parenthood was causing other hospitals to submit false
claims, the court concluded that her allegations did not carry sufficient indicia of
reliability because she did “not allege that she had access to the billing systems of the
unidentified local hospitals.” Id. As to the claim that Planned Parenthood engaged in
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“upcoding,” the court found that the relator had made only “conclusory and generalized
allegations.” Id. She had “failed to allege when or how often upcoding took place at the
various clinics, who or how many physicians engaged in upcoding, or what types of
services were involved in the upcoding scheme.” Id.
As for the specific details of the alleged scheme, the relators provide the detail
required in Thayer. Specifically, as to their allegations in Counts I and III-V of filing
fraudulent claims for reimbursement of wasteful, substandard, or non-delivered care; for
making false documentation; for conspiracy; and for reverse false claims, the relators
have alleged the names of individuals who carried out or directed these schemes, the time
period during which they took place, and participating institutions, and the methods by
which the schemes were carried out. Id. at 919. Most obviously, relator Shoemaker
alleges that Twin Rivers Administrator Johnson effectively directed Twin Rivers
employees to order unnecessary therapy and treatment for the purpose of driving up
revenue; that this strategy came from the parent company, Golden Gate, and Golden Gate
executive Tim Bush; and that pursuant to this culture (which is represented by many
other examples of named defendants falsifying records or otherwise attempting to cut
costs, drive up revenue, and avoid regulators), specific residents received substandard or
non-existent care and Twin Rivers then fraudulently submitted bills for each of these
specific instances of substandard care. (Am. Compl. ¶¶ 115-78, 212, 221); see also
United States ex rel. Cairns v. D.S. Med. LLC, No. 12-4, 2015 WL 630992, at *4
(E.D. Mo. Feb. 12, 2015) (“Here, the . . . complaint includes exhibits which detail
specific surgeries for specific Medicare and Medicaid patients in which allegedly false
- 26 -
claims were submitted. This is more than enough to enable Defendants to prepare an
adequate defense.”).
The relators make these detailed claims most clearly against GGNSC Anoka, but
also clearly tie Golden Gate to this fraudulent scheme, even in one case specifically
alleging that a Golden Gate employee, Marilyn Hoffer, fraudulently modified an MDS to
increase revenue. (Id. ¶ 206, 212-20.) The relators make similarly detailed allegations
against Aegis. (Id. ¶ 97-102.) Finally, the relators make sufficiently detailed allegations
regarding violation of the FCA’s anti-kickback provisions. (Am. Compl. ¶¶ 103-14.)
While these allegations could be even more detailed, for instance by including the
names of more defendant employees responsible for submitting false claims, the relators
have nevertheless specifically accused some specific individuals of being liable. In
addition, the relators have made specific and detailed allegations against corporate
defendants that can also meet the requirements of Rule 9(b). See United States ex rel.
Heath v. AT&T, Inc., 791 F.3d 112, 125 (D.C. Cir. 2015) (“The complaint makes
clear . . . that corporate levers were pulled; identifying precisely who pulled them is not
an inexorable requirement of Rule 9(b) in all cases.”); see also United States ex rel.
Johnson v. Golden Gate Nat’l Senior Care, LLC, No. 08-1194, 2012 WL 465676, at *4*5 (D. Minn. Feb. 13, 2012) (noting, in denying a Rule 9(b) motion to dismiss, that the
relator had made specific allegations about who was to blame for the fraudulent claims by
including in their complaint that instructions had been given to her by a corporate
defendant, Aegis). At a minimum, the relators have certainly provided more in their
complaint than an FCA complaint that merely makes generalized or conclusory
- 27 -
allegations. See, e.g., United States ex rel. Alsaker v. CentraCare Health Sys, Inc.,
No. 99-106, 2002 WL 1285089, at *3 (D. Minn. June 5, 2002).
Assuming that the relators have not provided at Exhibits 5-7 representative
samples of fraudulently filed claims, the other question is whether the relators’
allegations have sufficient indicia of reliability that lead to a strong inference that claims
were actually submitted. Thayer, 765 F.3d at 918. Here, the relators do not have the
same level of inside knowledge as the relator in Thayer. That relator oversaw Planned
Parenthood’s claims and billing process, whereas the relators here did not.12 Id. at 917.
Nevertheless, relator Shoemaker in this case did work in the billing and business office of
Twin Rivers and demonstrates significant knowledge of the inner workings of the nursing
home. (Am. Compl. ¶¶ 212-27.) She alleges not just generalized allegations, but also
that she knows, based on her experience in the office, that “all the residents identified by
number [in the complaint] who suffered substandard/deficient care and services never
provided, had their billings submitted by Defendants to Medicare or Medicaid programs,
or both.” (Id. ¶ 221.) It is also true that Shoemaker does not provide as much detail on
the defendants’ billing systems and practices as in Thayer. Nevertheless, despite the
defendants’ attempts to draw one, the court in Thayer did not craft a hard line for what
constitutes sufficient indicia of reliability. Indeed, in distinguishing Thayer from other
similar cases, the court said simply that those cases were distinguishable “because the
12
Of course, although the defendants distinguish Thayer by painting the relator in that
case as being the senior player in the defendant entity (Planned Parenthood in Iowa), it is
important to note that she ran only two of seventeen Planned Parenthood clinics in Iowa.
Thayer, 765 F.3d at 915, 917.
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relators did not have access to the defendants’ billing systems and were not able to plead
personal knowledge of the defendants’ submission of false claims.” Thayer, 765 F.3d at
917 n.2. Here, Shoemaker did have access to the defendants’ billing systems and has
pled personal knowledge of the defendants’ submission of false claims.13
In sum,
combining Shoemaker’s indicia of reliability with the relators’ specific allegations of
fraud, the Court concludes that the relators have met their burden under Rule 9(b) and
will deny the defendants’ motion to dismiss on those grounds.
III.
RULE 12(B)(6) MOTION TO DISMISS
A.
Standard of Review
In reviewing a motion to dismiss brought under Federal Rule of Civil Procedure
12(b)(6), the Court considers all facts alleged in the complaint as true to determine if the
complaint states a “‘claim to relief that is plausible on its face.’” Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)). To survive a motion to dismiss, a complaint must provide more than
“‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’”
Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Although the Court accepts the complaint’s factual allegations as true, it is “not bound to
13
The defendants argue Shoemaker did not allege personal, first-hand knowledge of the
submission of false claims. However, she claims that based on her experience working in the
billing office, she “knows” that the residents identified in the complaint had fraudulent bills
submitted on their behalf. (Am. Compl. ¶ 221.) That is enough to demonstrate personal, firsthand knowledge of the submission of false claims.
- 29 -
accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555 (internal quotation marks omitted).
“A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. “Where a complaint pleads facts that are
merely consistent with a defendant’s liability, it stops short of the line between possibility
and plausibility,” and therefore must be dismissed.
Id. (internal quotation marks
omitted).
B.
The Relators’ Claims
1.
Conditions of Payment Versus Conditions of Participation
The defendants move to dismiss the FCA claims in the complaint under Rule
12(b)(6) for a variety of reasons.
First and foremost, they argue that any alleged
misconduct amounts, at most, to violations of Medicare and Medicaid regulations (i.e.,
conditions of participation) and not violations of the conditions a provider must meet to
receive payment under these programs (i.e., conditions of payment). The defendants note
that the FCA was not established to merely police regulatory violations, Dunn, 739 F.3d
at 419, and that the real question is whether the alleged regulatory violation caused the
government to pay funds it would not have paid but for the violation, United States ex rel.
Vigil v. Nelnet, Inc., 639 F.3d 791, 795-96 (8th Cir. 2011) (stating that the FCA is not
concerned with mere regulatory noncompliance and instead “serves a more specific
function, protecting the federal fisc by imposing severe penalties on those whose false or
fraudulent claims cause the government to pay money”). Indeed, the Supreme Court has
- 30 -
repeatedly linked FCA violations to unjustified payment by the government and noted
that the law is concerned with conduct that “induces the government to disburse funds or
otherwise suffer immediate financial detriment.” Costner, 153 F.3d at 677 (internal
quotation marks omitted).
According to the defendants, none of the misconduct alleged by the relators –
including failing to monitor a patient’s pain levels, failing to administer topical powder or
provide proper skin care, and setting fixed budgets that led to substandard care and
unnecessarily high Medicare reimbursements – amounts to the sort of “immediate
financial detriment” that means the government would not have paid the defendants but
for the defendants’ fraudulent actions. While these actions on the part of a Skilled
Nursing Facility (“SNF”) participating in Medicare or Medicaid, like Twin Rivers, 42
C.F.R. §§ 483.13-483.70, might constitute violations of the Nursing Home Reform Act
(“NHRA”), a NHRA violation is not necessarily a false claim justifying FCA liability.
To the large extent that the relators’ allegations consist of NHRA violations, the
defendants cite United States ex rel. Atkins v. McInteer:
Relator is, in reality, cloaking alleged violations of the Nursing Home
Reform (“NHRA”) (42 U.S.C. § 1396r) with the hopeful FCA mantle. The
essence of this case is a complaint that defendants failed to provide the
adequate patient care that is required of them by the NHRA. But, this is not
and cannot be an action to enforce the NHRA. . . . Assuming that these
defendants, or any of them, failed to comply with the standards set forth in
the NHRA and implicitly certified to the Alabama Medicaid Agency that
they were in compliance when they were not in compliance when they
sought reimbursement for their inadequate nursing care, they did not
expose themselves to liability under the FCA, that is, unless they certified
that specific services had been performed when those services had not,
in fact, been performed.
- 31 -
345 F. Supp. 2d 1302, 1305-06 (N.D. Ala. 2004). The defendants go on to contend that
because SNFs like Twin Rivers are paid on a “per patient day” basis, they receive a flat
per diem and would not be paid for specific services provided, such that the deficiencies
the relators highlight would have resulted in unjustified payments. See United States
ex rel. Absher v. Momence Meadows Nursing Ctr., Inc., 764 F.3d 699, 703 (7th Cir.
2014).
The Court is unpersuaded by the defendants’ arguments. The defendants use the
terms “conditions of payment” and “conditions of participation” to draw an unnecessarily
sharp line between different types of problematic behavior.
Whatever label the
defendants wish to apply to the conduct at issue, the relators have properly alleged an
FCA violation if they have described deficient conduct that would have been material to
the government’s decision to provide payment. See Hendow v. Univ. of Phx., 461 F.3d
1166, 1176 (9th Cir. 2006) (labeling the condition of participation versus condition of
payment distinction nothing more than “a distinction without a difference”); see also
United States ex rel. Miller v. Weston Educ., Inc., 784 F.3d 1198, 1207-08 (8th Cir. 2015)
(in a case arising in the fraudulent inducement context, citing Hendow favorably and
noting Hendow’s rejection of the distinction between conditions of participation and
payment).
Moreover, even accepting the defendants’ distinction, the NHRA and many of the
documents Twin Rivers submitted to the government contained language that effectively
tied payment to Twin Rivers to regulatory compliance (i.e., a condition of participation
became a condition of payment). For example, the relators allege that Twin Rivers
- 32 -
submitted fraudulent annual cost reports and MDS forms that, to some extent, bind Twin
Rivers to meeting Medicare or Medicaid conditions of participation. To the extent
signing such forms and making such authorizations is a prerequisite to receiving
payment, the forms indicate that Twin Rivers’ violations of conditions of participation
bleeds into the defendants’ definition of conditions of payment.
Additionally, the
language of the NHRA itself shows the difficulty of trying to draw a sharp line between
conditions of payment and conditions of participation. The NHRA allows the Secretary
of Health and Human Services (“HHS”) to deny payments to an SNF if the SNF fails to
abide by the Medicare and Medicaid conditions of participation – effectively making
them conditions of payment. 42 U.S.C. § 1395i-3(h)(2)(B)(i). Indeed, denial of payment
is required by the NHRA if a facility is out of compliance for three months. Id. § 1395i3(h)(2)(D).
Eighth Circuit case law does not require a different result. The Eighth Circuit has
brushed aside the sharp line drawn by the defendants, looking instead to whether the
relator has alleged wrongdoing that was material to payment. The court labels the
condition of payment versus conditions of participation distinction as a potentially
relevant, but not dispositive, factor in that inquiry. It also notes that fleshing out whether
a violation is a condition of payment requires an exhaustive examination of the record:
The FCA is not concerned with regulatory noncompliance. The FCA
attaches liability, not to the underlying fraudulent activity, but to the claim
for payment. The scope of regulatory requirements and sanctions may
affect the fact-intensive issue of whether a specific type of regulatory noncompliance resulted in a materially false claim for a specific government
payment. The issue is often complex and may require inquiry into whether
a regulatory requirement was a precondition to the government payment or
merely a condition of continuing participation in a government program.
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United States ex rel. Onnen v. Sioux Falls Indep. Sch. Dist. No. 49-5, 688 F.3d 410, 41415 (8th Cir. 2012) (emphasis added) (internal citations and quotation marks omitted).
The fact-intensive question before the Court, then, is whether Twin Rivers’
communication with the government, whether describing compliance with conditions of
participation or not, falsely expressed a quality of care and service that, if the government
had known the truth, would have led it to stop paying Twin Rivers. The Court cannot
reach a definitive conclusion on that question now, with the record as it stands. Denying
the motion to dismiss, however, will not lead to endless and unbounded FCA challenges.
The defendants claim that finding for the relators on this issue will mean that even the
slightest violation of the NHRA’s regulations – including regulations that govern how
attractive and palatable food served at a nursing home is – would lead to FCA liability.
The Eighth Circuit’s decision in Onnen implicitly recognizes that such an argument is
unavailing. First, the relators allege serious misconduct that goes to the heart of Twin
Rivers’ bargain with the government.
Comparing them to violations of regulations
governing the look of food is unpersuasive. Moreover, the fact that this determination is
a fact-intensive ones means that, with time and a well-developed record, courts can
determine with greater certainty whether regulatory violations amount to conditions of
payment in a given case. Courts can then more easily weed out claims that do not hold
water, versus those that do.
In sum, at this early stage, without the benefit of the record needed to perform the
fact-intensive inquiry called for in Onnen, the Court finds that the best course of action is
to deny the motion to dismiss as to this argument and let the relators proceed to
- 34 -
discovery.14 See United States ex rel. Johnson v. Golden Gate Nat. Senior Care, LLC,
No. 08-1194, 2015 WL 1040535, at *6-*7 (D. Minn. Mar. 10, 2015) (concluding that the
issue of whether regulatory compliance is material to the government’s decision to pay a
provider is fact-intensive, thereby refusing to dismiss allegations that the defendants
violated the FCA by failing to properly document therapy services).
2.
Worthless Services
The defendants also contend that the relators’ allegation that the defendants’
services “were wholly or partially worthless,” (Am. Compl. ¶ 57), fails because worthless
services claims require service that “is so deficient that for all practical purposes it is the
equivalent of no performance at all,” United States ex rel. Roop v. Hypoguard USA, Inc.,
559 F.3d 818, 824 (8th Cir. 2009); see also Absher, 764 F.3d at 710 (noting that a
“diminished value” theory does not satisfy the worthless services standard and stating
that “[s]ervices that are ‘worth less’ are not ‘worthless’”).
The Court rejects this argument as well and finds no deficiency in the relators
claims based on whole or partially worthless services. See, e.g., United States ex rel.
14
The parties and the United States also dispute whether the existence of a robust
administrative regime for nursing homes (i.e., the NHRA and its survey process that sends
Centers for Medicare & Medicaid Services (“CMS”) regulators into nursing homes) forecloses
FCA liability. The Court finds that, to the extent the defendants claim that a regulatory scheme
creates a per se bar on FCA liability, they are wrong. See Onnen, 688 F.3d at 415 (“But none of
these cases has held that a complex regime of regulatory sanctions precludes the Attorney
General from suing under the FCA when the government has been damaged by a materially false
or fraudulent claim for payment or by use of a record or statement in a materially false claim.
We agree with the government that Congress intended to allow the government to choose among
a variety of remedies, both statutory and administrative, to combat fraud.” (internal quotation
marks omitted)). To the extent this argument is simply another iteration of the defendants’
contention that the relators are only alleging non-actionable violations of conditions of
participation, the Court, as already noted, rejects that argument.
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Academy Health Ctr. v. Hyperion Found., Inc., No. 10-552, 2014 WL 3385189, at *42*43 (S.D. Miss. 2014) (“[C]ourts have recognized that worthless services claims under
the FCA are not, as a legal matter, limited to instances where no services at all are
provided. A service can be worthless because of its deficient nature even if the service
was provided.”). Given the underlying purpose of the FCA to protect the federal fisc, it
makes good sense that the statute would protect the government from paying for
significantly deficient, even if not entirely non-existent, services. Id. at *44 (“As the
Government has indicated compellingly, taken to its extreme, defendants’ argument is
that a nursing home is entitled to payment for doing nothing more than housing an elderly
person and providing her with just enough bread and water for short-term survival, even
in conditions of filth, mold and insect infestation; and even if it consistently provides her
too little medication, or too much, or the wrong medication, contrary to her physician’s
orders; and even if it allows her to develop horrific pressure ulcers infected by feces and
urine to the point that amputations are required; and even if it permits her to suffers falls
and fractures; and even it allows her to asphyxiate on her own fluids due to inadequate
resources to properly attend to her worsening condition. This cannot be the case and it is
not the law.”). To the extent that an out-of-circuit case like Absher reaches the opposite
determination, the Court finds its reasoning and conclusion unpersuasive.
It is true that that Roop states a stringent “worthless services” standard, Roop, 559
F.3d at 824-25, but that case is distinguishable. Roop dealt with a deficient medical
product (blood glucose monitoring systems) and not deficient care. The application of
the worthless services standard is not necessarily the same in both contexts.
- 36 -
In
articulating its stringent worthless services standard, the court in Roop quoted Mikes v.
Straus, another case involving a defective medical product:
poorly calibrated
spirometers. 274 F.3d 687, 703 (2d Cir. 2001). As the court in Hyperion noted, the
reasoning of Mikes operates slightly differently when applied in the nursing home
context, where the service being provided is care to residents. Hyperion, 2014 WL
3385189, at *43. It is possible in the nursing home context to allege worthless services
where care is provided, but the care falls significantly below the standard of care
expected. Id. That substandard care is the equivalent of the defective product, just as
much as if no care was provided. Care that is provided, but that is substandard, is
roughly as useful as a product that does not work.
The fact that the standard would work slightly different in these two factual
contexts makes sense. From a regulator’s standpoint, it is easier to imagine products, like
glucose monitors, existing along a black-and-white, works-or-does-not scale. A product
might not work properly all the time, and there may be issues with it, but the product
must be effectively unusable before FCA liability might arise. Indeed, Congress would
want to avoid allowing any medical provider who had a bad experience with a product to
file an FCA claim. In Roop, for example, the only allegation against the blood glucose
product was that, when misused, it “resulted in serious adverse consequences.” Roop,
559 F.3d at 824. Nursing home services – direct care to elderly patients and residents –
are more nuanced and complex and it is more difficult to assess what is worthless service,
and what is not. As a result, a less stringent standard – one that allows for liability when
a provider seeks reimbursement for seriously deficient care, even if that care is not
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completely worthless – makes good sense. In sum, the Court finds that the relators have
alleged plausible worthless services claims.15
3.
Reverse FCA Claims
The defendants also seek dismissal of Count V, the relators’ reverse FCA claims,
arguing that any reverse FCA allegations should be dismissed because they are too
speculative. The FCA’s reverse fraud claim provision precludes the fraudulent retention
of funds owed to the government. 31 U.S.C. § 3729(a)(1)(G); see also Minn. Stat.
§ 15C.02 (same). The defendants cite United States v. Q International Courier, Inc., 131
F.3d 770, 772-73, (8th Cir. 1997), which dealt with reverse FCA allegations. That case
held that the United States or a relator must show that the government
was owed a specific, legal obligation at the time that the alleged false
record or statement was made, used, or caused to be made or used. The
obligation cannot be merely a potential liability: instead, in order to be
subject to the penalties of the False Claims Act, a defendant must have had
a present duty to pay money or property that was created by a statute,
regulation, contract, judgment, or acknowledgement of indebtedness. The
duty, in other words, must have been an obligation in the nature of those
that gave rise to actions of debt at common law for money or things owed.
Id. at 773; see also Vigil, 639 F.3d at 801-02.
The relators respond that Congress’s revisions to the reverse FCA claim provision
in 2009, as a part of the Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 11121 (2009), renders cases like Q International inapposite and lowers the bar for reverse
15
The Court also rejects the defendants’ argument that the relators have made less
specific or substantial allegations about substandard care than in Hyperion. The relators have
made a host of detailed allegations about grossly substandard care at Twin Rivers, and the effect
of that care. (Am. Compl. ¶¶ 115-78.) These allegations are enough to constitute a worthless
services claim at this stage.
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FCA claims like those presented in this case. Instead, all that is required is the knowing
retention of an overpayment of government funds. See United States v. Lakeshore Med.
Clinic, Ltd., No. 11-892, 2013 WL 1307013, at *4 (E.D. Wisc. Mar. 28, 2013) (“Relator
also states a plausible claim for relief under the amended false claim provision of the
FCA for overpayments withheld after May 20, 2009.
If the government overpaid
defendant for [] services and defendant intentionally refused to investigate the possibility
that it was overpaid, it may have unlawfully avoided an obligation to pay money to the
government.”).
The relators are correct that the 2009 FCA revisions broadened the reach and
scope of a reverse FCA claim. Still, the congressional record also indicates that Congress
wanted the obligation to pay the government to be more than hypothetical. 155 Cong.
Rec. S4539 (daily ed. Apr. 22, 2009) (statement of Sen. Kyl) (“Obviously, we don’t want
the Government or anyone else suing under the False Claims Act to treble and enforce a
fine before the duty to pay that fine has been formally established.”). In this case, before
the government has actually levied any fines or demands for repayment, the Court finds
that allowing reverse FCA claims here would be too speculative. The relators note that
the 2009 FCA amendments were specifically crafted to encompass overpayments by the
government. S. Rep. 111-10, at 13-15 (2009). But receiving an overpayment from the
government and intentionally keeping it is different from fraudulently obtaining the
payment in the first place. Finding the defendants liable under a reverse FCA theory
based on these claims would amount to double punishment for the same allegedly
wrongful act: submitting fraudulent, false claims to the government. United States ex rel.
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Ruscher v. Omnicare, Inc., No. 08-3396, 2014 WL 2618158, at *28 (S.D. Tex. June 12,
2014) (“[T]he Reverse False Claims Act’s purpose was not to provide a redundant basis
to state a false statement claim . . . .” (internal quotation marks omitted)). The Court
finds that the Reverse FCA, even incorporating the 2009 amendments, is not meant to
reach such a result. Consequently, the Court will dismiss the relators’ reverse FCA
claims.
Additionally, because the FCA and MFCA are almost identical and are
interpreted the same way, Thayer, 765 F.3d at 916 n.1, the Court will dismiss the relators’
reverse MFCA claims.
4.
Conspiracy Claims and Corporate Parent Liability
Finally, the defendants very briefly argue that the relators’ conspiracy allegations
should be dismissed because related corporate entities cannot conspire with each other.
United States ex rel. Rector v. Bon Secours Richmond Health Corp., No. 11-38, 2014 WL
1493568, at *12 (E.D. Va. Apr. 14, 2014) (“[T]he Named Defendants are legally
incapable of conspiring with each other because they are related entities or
subsidiaries.”). The defendants also argue that claims against the corporate defendants
should be dismissed because the relators fail to allege sufficient allegations against
Golden Gate or the other companies that are related to GGNSC Anoka. United States
ex rel. Lisitza v. Par Pharm. Cos., No. 06-06131, 2013 WL 870623, at *5 (N.D. Ill.
Mar. 7, 2013) (“It has been established that merely being a parent corporation of a
subsidiary that commits a FCA violation, without some degree of participation by the
parent in the claims process, is not enough to support a claim against the parent for the
subsidiary’s FCA violation.” (internal quotation marks omitted)).
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The Court finds that the relators have made sufficient allegations against Golden
Gate to allow its claims against the parent company to go forward. The relators have
made specific allegations of wrongdoing as to employees of the parent company,
including that one Golden Gate employee fraudulently modified an MDS form.
Moreover, the relators have alleged a level of control by the parent company over the
culture, policies, and decision-making at GGNSC Anoka that Golden Gate can be held
liable under a veil-piercing theory.
In other words, the relators have succeeded in
plausibly alleging, at least at this stage, that Golden Gate “so dominated the subsidiary
corporation as to negate its separate personality.”
United States ex rel. Hockett v.
Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25, 60 (D.D.C. 2007); see also id. at
60-61 (internal quotation marks omitted) (“[M]erely being a parent corporation of a
subsidiary that commits a FCA violation, without some degree of participation by the
parent in the claims process, is not enough to support a claim against the parent for the
subsidiary’s FCA violation.” (internal alterations and quotation marks omitted)). Beyond
Golden Gate, the Court has already found that the relators have made sufficient
allegations against the key defendant, GGNSC Anoka, and Aegis. As to the defendants’
concerns about other corporate affiliates, the Court has already indicated that it will
dismiss the remaining five corporate defendants.
As for the conspiracy claims in Count IV, the defendants rightly note the
substantial precedent that holds that a parent company and subsidiary/affiliated
companies cannot conspire with each other. United States ex rel. Kneepkins v. Gambro
Healthcare, Inc., 115 F. Supp. 2d 35, 39 (D. Mass. 2000) (“Ownership – even total
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ownership – of a corporation does not by itself impart the corporation's liabilities to the
owner, and that rule is not abated simply because the owner happens to be another
corporation.”). Tellingly, the relators do not address this argument in their opposition
brief. Given the clear precedent on point, the Court will dismiss Count IV, and the FCA
and MFCA conspiracy claims contained therein, entirely.
IV.
RULE 12(B)(1) MOTION TO DISMISS
The defendants also briefly argue that the FCA’s “first-to-file” rule bars the
relators’ FCA claim against the therapy company Aegis, because similar claims were
made against Aegis and are continuing to be litigated in the Johnson case. (United States
ex rel. Johnson v. Golden Gate Nat’l Senior Care, LLC, No. 08-1194, Am. Compl.
(“Johnson Am. Compl.”), May 8, 2014, Docket No. 178); see also 31 U.S.C.
§ 3730(b)(5) (“When a person brings an action under this subsection, no person other
than the Government may intervene or bring a related action based on the facts
underlying the pending action.”); United States ex rel. Sandager v. Dell Mkt., L.P., 872
F. Supp. 2d 801, 807 (D. Minn. 2012) (“The majority of courts interpret § 3730(b)(5) to
bar a later allegation which states all the essential facts of a previously-filed claim, . . .
even if the later claim incorporates somewhat different details.” (internal quotation marks
omitted)).
The Court finds that allegations against Aegis in both cases are sufficiently similar
to bar the relators’ therapy-based claims against Aegis under the FCA’s first-to-file rule.
In Johnson, the complaint alleges that
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Defendants submitted hundreds of claims for payment to Medicare that
were false claims because the claims included charges for therapy services
that were not reimbursable by Medicare. These claims were not
reimbursable because they were not skilled services, the services were
provided by unsupervised therapy assistants or by personnel who were not
qualified to provide physical therapy services, there was no documentation
of the services, and, in some instances, because the services were not
provided at all.
(Johnson Compl. ¶ 30.)
In this case, the relators make similar allegations against Aegis:
Relators observed that many residents, like Resident 12, never received any
physical therapy or received less therapy than was actually billed. . . .
Defendants submitted or caused to be submitted false claims to Medicare
for alleged therapy services provided by physical or occupational therapists,
which in fact may have been provided by Twin Rivers staff that were not
trained or supervised in accordance with the law, regulations, and program
instructions governing Medicare claims.
(Am. Compl. ¶ 97.)
These allegations are essentially the same. The relators point out that the two
complaints are targeting different facilities. However, the complaint in Johnson also
clearly alleges a pattern or practice at “eight other skilled nursing facilities in Minnesota.”
(Johnson Am. Compl. ¶ 31.) Moreover, as the Eighth Circuit has noted, the latter
complaint barred under the first-to-file rule “need not rest on precisely the same facts as a
previous claim to run afoul of this statutory bar.”
United States ex rel. Poteet v.
Medtronic, Inc., 552 F.3d 503, 516 (6th Cir. 2009) (internal quotation marks omitted).
Given the similarity of the allegations in the two complaints, and the fact that the first
complaint specifically alleges that Aegis was engaging in similar conduct at other SNFs
in Minnesota, the Court is satisfied that “the Government is put on notice of its potential
fraud claim, [and that] the purpose behind allowing qui tam litigation is satisfied.”
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Sandager, 872 F. Supp. 2d at 807. The Court will consequently dismiss the relators’
claims against Aegis.
V.
RETALIATION CLAIMS
Finally, the defendants seek dismissal of the relators’ FCA and MFCA retaliation
claims.
To establish an FCA retaliation claim under 31 U.S.C. § 3730(h), a
whistleblower must show that
(1) the plaintiff was engaged in conduct protected by the FCA; (2) the
plaintiff's employer knew that the plaintiff engaged in the protected
activity; (3) the employer retaliated against the plaintiff; and (4) the
retaliation was motivated solely by the plaintiff's protected activity.
Schuhardt v. Washington Univ., 390 F.3d 563, 566 (8th Cir. 2004). The text of the MFCA
retaliation provision, Minnesota Statute § 15C.145, is substantially similar to the federal
corollary, 31 U.S.C. § 3730.
The defendants argue that the relators have failed to show either of the first two
elements. First, the relators were investigating regulatory noncompliance, which the
defendants claim is different from fraudulent activity. Absher, 764 F.3d at 715 (noting
that while a relator may have concerns regarding the quality of care, raising those
concerns is different than investigating actual fraud). Second, the defendants had no idea
the relators were engaging in protected conduct, since all they did was offer concerns and
suggestions, not “threats or warnings of FCA litigation.” United States ex rel. Parks v.
Alpharma, Inc., 493 F. App’x 380, 389 (4th Cir. 2012).
The Court will grant the defendants’ motion to dismiss. Even if the relators were
engaging in protected activity, they have not shown that their “employer had knowledge
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[they had] engaged in protected activity.” Schuhardt, 390 F.3d at 563 (internal quotation
marks omitted). Courts have repeatedly noted that, in order to show that an employer had
knowledge, the whistleblower must show that she was explicit with the employer about
her suspicion that the employer was engaging in illegal or fraudulent activity. See, e.g.,
Mikes v. Strauss, 889 F. Supp. 746, 753 (S.D.N.Y. 1995) (“[A]n employee must supply
sufficient facts from which a reasonable jury could conclude that the employee was
discharged because of activities which gave the employer reason to believe that the
employee was contemplating a qui tam action against it.”).
In Schuhardt, the Eighth Circuit found that the employee had made her employer
aware of her actions by specifically telling her employer that its billing practices were
“fraudulent and illegal.” 390 F.3d at 568; see also United States ex rel. McKenzie v.
BellSouth Telecomm., Inc., 123 F.3d 935, 944-45 (6th Cir. 1997) (stating that a
whistleblower could inform his employer of his suspicions by using the terms “illegal,”
“unlawful,” or “qui tam action,” showing the employer a news story about similar fraud
being conducted at a similar company that resulted in qui tam litigation, or engaging in
investigation activities outside the scope of his employment). Similarly, in the Ninth
Circuit case cited in Schuhardt, the court found that the employee had made her employer
aware when, on a recommendation from the employer’s in-house attorney, she lodged a
complaint with the company’s head of ethics, which spurred an investigation into
possible fraud. Moore v. Cal. Inst. of Tech. Jet Propulsion Lab., 275 F.3d 838, 847
(9th Cir. 2002).
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Here, the most the relators did was complain to the managers about subpar care
and, in one instance, state that “These [patients] are paying for care that is not being
done!” (Am. Compl. ¶ 243.) One relator also lodged a complaint with the Minnesota
Department of Health, but the relator has not shown that the defendants were aware that
she filed a complaint. In none of these examples did the relators use the words “fraud,”
“illegal,” or “qui tam.” Nor did they lodge a formal complaint internally, or engage in
conspicuous investigations beyond their areas of responsibility. Their actions were not
enough to put the defendants “on notice that [they were] either taking action in
furtherance of a private qui tam action or assisting in an FCA action brought by the
government.” Schuhardt, 390 F.3d at 568 (internal quotation marks omitted). As a
result, the Court will dismiss Counts VI and VII.16
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that the defendants’ Motion to Dismiss [Docket No. 44] is
GRANTED in part and DENIED in part.
16
In a footnote, the defendants also briefly allege that the relators’ non-MFCA state
retaliation claims, under Minnesota Statute § 181.932, are barred by a two-year statute of
limitations. The defendants cite an abrogated version of Ford v. Minneapolis Public Schools,
845 N.W.2d 566, 568 (Minn. Ct. App. 2014), and do not address the court’s subsequent
conclusion that an “action under Minn. Stat. § 181.932, subd. 1(1), is an action ‘upon a liability
created by statute” to which the “six-year statute of limitations under Minn. Stat. § 541.05,
subd. 1(2) applies.” Ford. v. Minneapolis Pub. Sch., 857 N.W.2d 725, 730 (Minn. Ct. App.
2014). The relators appear to be asserting their whistleblower claims under Section 181.932,
subd. 1(4), but it does not appear that that distinction makes a difference under Ford. In any
event, as the relators noted at argument, the initial complaint was filed on October 24, 2012,
which is less than two years after the terminations of Scharber and Shoemaker. Given the recent
revised opinion in Ford, the Court will deny the defendants’ motion to dismiss the state
retaliation count on statute-of-limitations grounds.
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1.
The motion is GRANTED as to the relators’ claims against GGNSC
Administrative Services, GPH Anoka, GGNSC Clinical Services, Golden Gate Ancillary,
and GGNSC Equity Holdings. Those claims are DISMISSED without prejudice.
2.
The motion is GRANTED as to the relators’ claims against Aegis
Therapies. Claims against Aegis Therapies are DISMISSED with prejudice.
3.
The motion is GRANTED as to the relators’ FCA and MFCA conspiracy
claims [Count IV]. Those claims are DISMISSED with prejudice.
4.
The motion is GRANTED as to the relators’ reverse FCA and MFCA
claims [Count V]. Those claims are DISMISSED with prejudice.
5.
The motion is GRANTED as to the relators’ FCA and MFCA retaliation
claims [Counts VI and VII]. Those claims are DISMISSED with prejudice.
6.
The motion is DENIED in all other respects.
DATED: September 29, 2015
at Minneapolis, Minnesota.
____s/
____
JOHN R. TUNHEIM
Chief Judge
United States District Court
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