Health Dimensions Rehabilitation, Inc., et al. v. RehabCare Group Inc.

Filing 198

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that RSM and HSIs Motion (Doc. No. 161) to Compel Adequate Responses to Interrogatory Requests 3 and 5 is GRANTED. The Government shall fully respond to these Interrogatories within ten days of the date of this Memorandum and Order. (Response to Court due by 3/14/2013.) Signed by District Judge Audrey G. Fleissig on 3/4/2013. (KSM)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

UNITED STATES OF AMERICA ex rel
HEALTH DIMENSIONS
REHABILITATION, INC.,
Plaintiff,
vs.
REHABCARE GROUP, INC.;
REHABCARE GROUP EAST, INC.;
REHAB SYSTEMS OF MISSOURI; and
HEALTH SYSTEMS, INC.,
Defendants.

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Case No. 4:12CV00848 AGF

MEMORANDUM AND ORDER
This matter is before the Court upon the motion (Doc. No. 161) of Defendants
Rehab Systems of Missouri (“RSM”) and Health Systems, Inc. (“HSI”) seeking to
compel the Government to provide them with adequate responses to Interrogatory
Requests 3 and 5 of their joint First Set of Interrogatories. For the reasons set forth
below, this motion shall be granted.
BACKGROUND
The case involves qui tam claims brought by Relator Health Dimensions
Rehabilitation, Inc., in which the Government later intervened, alleging fraudulent
payments and kickbacks by four Defendants in their capacities as providers of physical,
occupational, and speech therapy, nursing home management, and therapy contracting

services at nursing homes in Missouri. The Government alleges that the two non-moving
Defendants (jointly referred to herein as “RehabCare”) entered into an arrangement with
RSM, pursuant to which RehabCare provided RSM with a $600,000 upfront payment and
agreed to give RSM a lucrative contract in exchange for RSM and HSI directing therapy
referrals to RehabCare. The Government further alleges that, under the contract, RSM
was guaranteed a portion of RehabCare’s revenue generated from the referrals, and that
RSM made thousands of referrals to RehabCare.
The Interrogatories and Responses at issue are, in relevant part, as follows:
Interrogatory Request 3: “Identify the individual(s) who received the
remuneration that the Government here contends violated the Anti-Kickback
Statute (42 U.S.C. § 1320a-7b(b)).”
RESPONSE: “this interrogatory suggests a contention that is contrary to the
Government’s actual contentions. The Government contends that corporate entities
received the remuneration. The owners and/or shareholders of the companies profited as
a result of the remuneration.”
Interrogatory Request 5: “Identify the individual(s) who made referrals to
RehabCare that the Government contends violated the Anti-Kickback Statute (42
U.S.C. § 1320a-7b(b)).”
RESPONSE: “[P]ursuant to Rule 33(d), the United States will electronically
produce claims data and cost reports responsive to this request. The burden of
deriving or ascertaining the answer to this interrogatory from those files is the
same for Defendants as it is for the United States.”
(Doc. No. 162-1 at 7, Doc. No. 162-2 at 7-9.)
RSM argues that while the Government alleges that corporate entities received the
illegal remuneration and made the illegal referrals, a violation of the Anti-Kickback
Statute requires knowing and willful action, which necessarily must be carried out by
individuals. RSM further contends that the claims data the Government references in its
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response to Interrogatory Request 5 would not provide the requested information. RSM
asserts that if the Government cannot answer these questions, the case should be
dismissed under Federal Rule of Civil Procedure 9(b) for failure to state a claim with
particularity.
The Government responds that based on its underlying theory of the case – that
corporate entities violated the Anti-Kickback Statute and that corporate entities, not
individuals, are liable under the False Claims Act – it has sufficiently answered the two
Interrogatories at issue. Specifically addressing its response to Interrogatory Request 3,
the Government references its Response to Defendants’ Motion to Dismiss, which states
that RSM, as a corporate entity, violated the Anti-Kickback Statute by receiving improper
remuneration from RehabCare and that the three owners of RSM received the value of
the kickbacks. In addition, the Government asserts that RSM’s use of a discovery motion
to raise grounds for dismissal is misplaced.
DISCUSSION
United States ex. rel. Pogue v. Diabetes Treatment Centers of America, Inc., 235
F.R.D. 521 (D.D.C. 2006), relied upon by RSM and HSI, is instructive in the present
interrogatory dispute. In Pogue, a qui tam action was filed under the False Claims Act
against a healthcare corporation, Diabetes Treatment Centers of America, Inc. (“DTCA”),
for causing false Medicare and Medicaid claims to be submitted by paying illegal
kickbacks to physicians in return for patient referrals.
During discovery, DTCA filed a motion to compel responses to interrogatories,
one of which mirrored Interrogatory Request 3 in the present action. The Court rejected
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the Relator’s arguments that: he answered the interrogatory by a statement of his
allegation of corporate wrongdoing; the interrogatory could be answered by DTCA; and
the interrogatory sought protected work product. The Court found “no legitimate
problem with the information sought by” the interrogatory. Id. at 524. Furthermore, the
Court held that the plaintiff could not “rely on his statement that he has answered the
interrogatory with his . . . restatement of the allegation. This vague statement is wholly
inadequate to satisfy Rule 33’s directive that interrogatories ‘shall be answered separately
and fully in writing.’ FED. R. CIV. P. 33(b)(1).” Id. Another interrogatory in dispute in
Pogue was similar to Interrogatory Request 5 in the present action and sought
identification of those who received illegal compensation in exchange for referrals. Once
again, the Pogue Court found the interrogatory to be proper. Id. at 526.
The Government attempts to distinguish Pogue from the present action on the
ground that the allegation in Pogue was that a corporation paid 276 physicians in order to
obtain referrals, whereas, in this case, the allegation is that a single corporation, RSM,
received kickbacks. However the Court’s reasoning in Pogue does not rely upon the
number of alleged recipients of kickbacks. Therefore, Pogue provides persuasive
guidance to the dispute at hand. Providing the names sought will not undermine the
Government’s theory of the case. The Court notes that a Protective Order has been
entered in this case, permitting the parties to designate information as confidential or
highly confidential.
CONCLUSION
The Court finds that cause exists to grant RSM and HSI’s motion to compel.
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Accordingly,
IT IS HEREBY ORDERED that RSM and HSI’s Motion (Doc. No. 161) to
Compel Adequate Responses to Interrogatory Requests 3 and 5 is GRANTED. The
Government shall fully respond to these Interrogatories within ten days of the date of this
Memorandum and Order.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE

Dated this 4th day of March, 2013.

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