RESOLUTION NJ LLC v. RIVERSIDE MEDICAL GROUP, P.C.

Filing 64

OPINION. Signed by Judge Susan D. Wigenton on 9/6/2024. (lag, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA and the
STATE OF NEW JERSEY ex rel.
RESOLUTION NJ LLC,

Civil Action No. 22-04165 (SDW) (LDW)

Plaintiffs,

OPINION

v.

September 6, 2024

RIVERSIDE MEDICAL GROUP, P.C.,
Defendant.

WIGENTON, District Judge.
Before this Court is Riverside Medical Group, P.C.’s Motion to Dismiss, (D.E. 48), Plaintiff
Resolution NJ LLC’s First Amended Complaint 1 ((D.E. 14 “FAC”), because: (a) it does not satisfy
the heightened pleading standard of Federal Rule of Civil Procedure 9(b); (b) it is barred by the
False Claims Act’s first-to-file and public disclosure limitations; (c) Resolution NJ LLC is not an
original source as required by the False Claims Act; and (d) the claims are unconstitutional.
Subject matter jurisdiction is proper pursuant to 28 U.S.C. § 1331. Venue is proper pursuant to 28
U.S.C. § 1391. This opinion is issued without oral argument pursuant to Rule 78. For the reasons
stated herein, Defendant’s motion is GRANTED in part because Resolution NJ LLC is not an
original source, and DENIED in part because the FAC does satisfy the pleadings standard, the
claims are not barred by the False Claims Act’s limitations, and the claims are not unconstitutional.

1

The United States declined to intervene in this matter.

1

I.

BACKGROUND
a. Factual History

This case involves a qui tam claim under the False Claims Act (“FCA”), as well as claims
under the New Jersey False Claims Act, N.J.S.A. § 2A:32C-3, (“NJFCA”), arising out of allegedly
fraudulent claims presented by Riverside Medical Group, P.C. (“Riverside”) to Centers for
Medicare & Medicaid Services (“CMS”) for payment of funds. (See generally D.E. 14.)
Riverside advertises itself as an integrated health system with clinicians practicing in
primary care, urgent care, ambulatory surgery, imaging, and more than 25 specialties. (D.E. 14 at
29.) In 2020, in response to the global health pandemic, Riverside operated “COVID Command
Testing Centers” at three locations in New Jersey: Secaucus, Medford, and Hoboken. (Id.) At
these centers, patients who experienced COVID-like symptoms could be evaluated by a Riverside
provider and tested. In practice, patients were permitted to fill out a health screening by telephone
and schedule an appointment for drive-thru testing.
To address the influx of patient care and testing, CMS directed healthcare providers to use
CPT Code 99211 to bill for a COVID-19 symptom and exposure assessment and specimen
collection. Plaintiff, Resolution NJ LLC is a Delaware domestic limited liability company that
was formed shortly before the commencement of this lawsuit. (See D.E. 14 ¶18; D.E. 16 at 15.)
The only member of Resolution NJ LLC (“Relator”) is an anonymous physician who was
employed by Riverside at the time of the alleged fraudulent conduct. (Id.) Relator alleges that
during the physician’s tenure, he met with a number of patients and discovered that Riverside had
billed drive-thru test patients at higher than appropriate CPT Codes for payment. (Id. at 30.) In
many instances, Relator asserts the patients were asymptomatic and sought testing for entrance to
school or the workplace, to enable travel, or as required prior to undergoing a medical procedure.

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Relator also alleges that “in the overwhelming majority of known examples, the patient was not
provided with any meaningful examination and, further, did not exit [their car.]” (Id.) Riverside
is alleged to have falsified patient records (e.g., patient progress notes) in an effort to conceal that
examinations were not being performed. Riverside allegedly submitted falsified records to CMS
and the Health Resources & Services Administration (HRSA) Program for payment and, to date,
has not refunded government healthcare programs any amounts it received for payments based on
falsified records. (Id. at 34.)
b. Procedural History
Relator initiated this lawsuit on June 17, 2022. On May 31, 2023, Relator filed the FAC
which includes seven counts: Counts I–III- Violation of the FCA; Count IV- Violation of the
NJFCA; Count V- Unjust Enrichment; Count VI- Payment by Mistake; and Count VII- Retaliation.
Riverside filed a motion to dismiss on July 12, 2023 which was administratively terminated due
to case reassignment. 2 The instant motion was filed on February 5, 2024. Relator does not oppose
the dismissal of Counts V, VI, and VII. (D.E. 26 at 3.) Briefing was timely filed.
II.

STANDARD OF REVIEW
When considering whether a motion to dismiss is viable, this Court “accept[s] all factual

allegations as true, construe[s] the complaint in the light most favorable to the plaintiff, and
determine[s] whether, under any reasonable reading of the complaint, the plaintiff may be entitled
to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 23 (3d Cir. 2008) (citation omitted). For
a complaint to be adequate, it must be “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Fed. R.

This matter was originally assigned to Judge McNulty and was later reassigned to Judge Salas. By Text Order signed
on February 1, 2024, Judge Salas terminated all pending motions and deemed them re-filed as of that date. The matter
was reassigned to this Court on May 22, 2024.
2

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Civ. P. 8(a)(2)). “Factual allegations must be enough to raise a right to relief above the speculative
level[.]” Id.; see Phillips, 515 F.3d at 232. If the “well pleaded facts do not permit the court to
infer more than the mere possibility of misconduct,” the complaint should be dismissed for failing
to show “that the pleader is entitled to relief” as required by Rule 8(a)(2). W. Run Student Hous.
Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169–70 (3d Cir. 2013).
III.

DISCUSSION

The FCA prohibits the submission of false or fraudulent claims for payment to the United
States and authorizes qui tam actions, by which private individuals may bring a lawsuit on behalf
of the government in exchange for the right to retain a portion of any resulting damages award.
See Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 131 S. Ct. 1885, 179 L.Ed.2d 825
(2011). Under the FCA any person who “knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval” is civilly liable to the United States. 31
U.S.C. § 3729(a)(1)(A). The FCA also makes liable anyone who “knowingly makes, uses, or
causes to be made or used, a false record or statement material to” a false or fraudulent claim. 31
U.S.C. § 3729(a)(1)(B). “Parties may sue under the False Claims Act in two ways. First, the
Attorney General may sue anyone who violates the Act. 31 U.S.C. § 3730(a). Second, any person
may bring a [qui tam] suit in the Government's name. Id. § 3730(b)(1). When a private person
(the relator) brings a [qui tam] suit, the Government may choose to intervene. Id. § 3730(b)(2).
Whether the Government intervenes or not, it gets the bulk of the recovery. See id. § 3730(d). If
it chooses to intervene, it takes over the lead as plaintiff; if not, the relator keeps prosecuting the
suit. Id. § 3730(c)(1), (3).” In re Plavix Mktg. Sales Prac. and Products Liab. Litig. (No. II), 974
F.3d 228 (C.A.3 (N.J.), 2020)

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In addition to the provisions in the Act itself, courts have to interpret Rule 9(b) of the
Federal Rules of Civil Procedure, which addresses the heightened pleading requirements for
allegations of fraud or mistake. In other words, Relator’s pleadings must satisfy all three elements
of the FCA, as well as satisfy Rule 9(b)’s heightened pleading standard.
a. The FAC Satisfies Rule 9(b)
Federal Rule of Civil Procedure 9(b) states that “[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting fraud or mistake.” “To do so,
allegations must go well beyond Rule 8’s threshold of plausibility. A mere plausible inference of
illegality is not enough.” United States ex rel. Bookwalter v. UPMC, 946 F.3d 162, 176 (3d Cir.
2019). Instead, “a relator must establish a strong inference that false claims were submitted, and
the possibility of a legitimate explanation undermines the strength of the inference of illegality.”
United States ex rel. Silver v. Omnicare, Inc., 903 F.3d 78, 92 (3d Cir. 2018) (quoting Foglia v.
Renal Ventures Mgmt., 754 F.3d 153, 158 (3d Cir. 2014) (internal quotations omitted)). In the
FCA context, a relator must provide only “particular details of a scheme to submit false claims
paired with reliable indicia that lead to a strong inference that claims were actually submitted.”
Foglia, 754 F.3d at 157–58. A relator must allege “‘the who, what, when, where, and how of the
events at issue.’” UPMC, 946 F.3d at 176 (quoting United States ex rel. Moore & Co., P.A. v.
Majestic Blue Fisheries, LLC, 812 F.3d 294, 306–07 (3d Cir. 2016)). However, “Rule 9(b) does
not require the relators to plead anything more, such as the date, time, place, or content of every
single allegedly false Medicare claim” because the “falsity here comes not from a particular
misrepresentation, but from a set of circumstances that, if true, makes a whole set of claims at least
prima facie false.” UPMC, 946 F.3d at 176. Furthermore, a relator need not show “the exact
content of the false claims in question,” as “requiring this sort of detail at the pleading stage would

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be one small step shy of requiring production of actual documentation with the complaint, a level
of proof not demanded to win at trial and significantly more than any federal pleading rule
contemplates.” Foglia, 754 F.3d at 156 (quotations and citation omitted).
Riverside argues that the FAC lacks the specificity required by 9(b) and thus should be
dismissed. To the contrary, this Court is satisfied that viewing the FAC in the light most favorable
to Relator, it has provided enough detail to identify the “who, what, where, and when” for an FCA
fraud claim. Indeed, the FAC explains the applicable CPT codes for outpatient visits and describes
the process for assigning such codes. It details several patient interactions at Riverside’s three
New Jersey COVID Command Testing Centers during the timeframe Relator alleges the
fraudulent billing practices occurred. The FAC identifies at least two patients whose visits were
erroneously coded and billed to CMS as part of the billing fraud. Further, Relator alleges six other
specific encounters that did not ultimately result in fraudulent claims being submitted directly to
CMS, but nevertheless does provide specific details of Riverside’s scheme to submit false claims
for payment. The FAC is accompanied by charts that demonstrate the implausibility in Riverside’s
CPT coding practices. For example, according to the data provided in the FAC, in its billing
records, Riverside purports to have tested approximately 451 patients over a span of 7.75 hours
which would equate to over 58 patients tested per hour and 1.03 minutes spent by the provider per
patient encounter (assuming the advanced practice nurses worked continuously without break).
Relator alleges that a minute long visit with a patient, assuming the patient was even seen which
is another doubt Relator raises, should not result in a CPT code 99213 that charges more to the
insurance providers including CMS. The facts as alleged in the FAC satisfy the pleadings standard
for both Rule 8(a) and 9(b).

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As stated, the FCA is triggered when any person who “knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or approval.” The facts as alleged in the FAC
also adequately establish scienter. In several instances, Relator alleges that Riverside knowingly
created false billing statements and knowingly presented those statement and supporting fraudulent
records to insurance providers and CMS.
b. The Public Disclosure and First-to-file Bars Do Not Apply
Riverside argues that Relator’s case is premised on public information and information
gleaned from earlier lawsuits against the same New Jersey healthcare facilities and as such is
barred by the FCA. (D.E. 16 at 6.) This Court dismisses any action or claim, unless brought by
the government, if the substantially same allegations or transactions alleged were publicly
disclosed. See Majestic Blue Fisheries, 812 F.3d at 300. However, the burden to show that a claim
has already been publicly disclosed rests with the defendant. “[T]o be publicly disclosed, the
alleged fraud must have been revealed through at least one of three sources: (1) ‘a Federal criminal,
civil, or administrative hearing in which the Government or its agent is a party’; (2) ‘a
congressional, Government Accountability Office, or other Federal report, hearing, audit, or
investigation’; or (3) ‘news media.’” Id. at 298 (citing 31 U.S.C. § 3730(e)(4)(A), (B) (2012)).
Similarly, the FCA contains a first-to-file bar which stops a new “person” from
“interven[ing] or bring[ing] a related action based on the [same] facts.” 31 U.S.C. § 3730(b)(5).
“A later case need not rest on precisely the same facts as a previous claim to run afoul of this
statutory bar. Rather, if a later allegation states all the essential facts of a previously-filed claim,
the two are related and section 3730(b)(5) bars the later claim, even if that claim incorporates
somewhat different details.” U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Lab'ys, Inc.,
149 F.3d 227, 232–33 (3d Cir. 1998).

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Riverside argues that in one case, United States ex. rel. Hodge v. Urgent Care Holdings
Inc., No. 2:21cv7596 (D.N.J., Nov. 29, 2022) (J. Wigenton), the plaintiff sued Urgent Care
Holdings, Inc. d/b/a MedExpress Urgent Care including all of its practices in New Jersey.
Riverside asserts that the relationship between it and MedExpress clinics was well known publicly
and that many MedExpress New Jersey clinics became Riverside clinics in 2020. It further argues
that “[b]ecause there is a similar lawsuit (Hodge) pending that involves Riverside, its affiliates,
and practices under common management during the same time period, Relator’s FCA claims
should be dismissed as barred by the first-to-file bar.” (D.E. 16 at 7–8.)
The fatal flaw in Riverside’s argument is that Hodge does not directly or indirectly disclose
Riverside as a party or affiliate such that the public disclosure or first-to-file bars would apply
here. First, the claims alleged in Hodge involve a completely different billing scheme. Second,
the alleged scheme is limited only to conduct occurring in Virginia by Virginia clinics. Finally,
Riverside and the defendant in Hodge, Urgent Care are unrelated entities. Urgent Care certified
in Hodge that it is a wholly owned subsidiary of United Health Group Incorporated whereas
Riverside certified here that its sole shareholder is Guarang Ravaji Brahmbharr M.D. (D.E. 26 at
5–6.) Importantly, Riverside is not mentioned in Urgent Care’s Corporate Disclosure Statements
filed in Hodge; similarly, Urgent Care is not referred to in Riverside’s Corporate Disclosure
Statement. It appears from these filings that Urgent Care and Riverside have entirely distinct
ownership and Riverside fails to support its assertion that the two entities are related. Such an
assertion is not obvious or readily discoverable by the public to satisfy the FCA’s public disclosure
and first-to-file bars. As such, the bars do not apply here.
c. Relator Is Not An Original source.

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Riverside argues that Relator’s claims fail because it is not an “original source” of any
information. It asserts that because Relator is a company that did not exist until a month before
this suit was filed, it has no direct knowledge of any wrongdoing and cannot base its allegations
on the knowledge of the anonymous individual physician. (D.E. 16 14–15.)
Under the FCA Section 3730(e)(4)(A), “[n]o court shall have jurisdiction over an
action . . . based upon the public disclosure of allegations or transactions in a criminal, civil, or
administrative hearing, in a congressional, administrative, or Government Accounting Office [sic]
report, hearing, audit, or investigation, or from the news media, unless the action is brought by the
Attorney General or the person bringing the action is an original source of the information.”
Section 3730(e)(4)(B) defines an “original source” as “an individual who has direct and
independent knowledge of the information on which the allegations are based and has voluntarily
provided the information to the Government before filing an action under this section which is
based on the information.” “[C]ourts must be mindful of suits based only on “secondhand
information, speculation, background information or collateral research[.]” U.S. ex rel. Atkinson
v. PA. Shipbuilding Co., 473 F.3d 506, 523 (3d Cir. 2007) (internal citation and quotation omitted);
see generally U.S. ex. rel. Mistick PBT v. Hous. Auth. of City of Pittsburgh, 186 F.3d 376, 386–87
(3d Cir. 1999) (finding that relator had only secondhand information of a fraud it did not directly
observe).
The FAC contains allegations pled “upon information and belief.” (D.E. 14 ¶¶ 102, 107–
08.) Although this Court is satisfied that the public disclosure bar does not apply, the allegations
must still be based on direct knowledge. While the information alleged in the FAC has not been
publicly disclosed in prior suits, because Relator is an LLC that did not exist at the time the fraud
is alleged to have occurred and has made no showing that it has a legitimate claim to the

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information it alleges, it cannot claim direct knowledge. Indeed, Relator relies on the knowledge
of its undisclosed principal who claims to have been employed by Riverside as a physician at all
relevant times and either witnessed or became aware of the fraudulent coding practices through
billing records. The information Relator claims to possess is at best secondhand. This is not to
say an entity cannot ever be an original source and a proper relator in an FCA matter, but rather
the entity would, at the very least, need to be in existence and an original source of the facts being
alleged. See generally, Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 451–51 (5th Cir.
1995) (affirming district court’s finding that the entity was not a proper relator because it was
formed after the alleged events occurred). Here, the original source is the individual physician,
not Relator, and the knowledge of the undisclosed individual cannot be imputed to the LLC.
Further, disclosing the identity of the “principal” or “physician” is necessary to ensure a proper
public disclosure so that Riverside does not face subsequent claims from the same individual(s).
d. The FCA Claims are Constitutional.
Riverside argues that because the United States declined to intervene it would be
unconstitutional to allow Relator to proceed with this lawsuit as it would impede on the exclusive
power of the executive branch to enforce laws of the United States pursuant to Article II of the
Constitution. Qui tam FCA actions do not run afoul the separations of powers and appointment
clauses as suggested by Riverside because the Government maintains “sufficient control” over
such actions. Morrison v. Olson, 487 U.S. 654, 693 108 S.Ct. 2597, 101 L.Ed.2d 569 (1988)); see
also U.S. Dep't of Hous. & Urb. Dev. ex rel. Givler v. Smith, 775 F. Supp. 172, 178 (E.D. Pa.
1991).

In sum, the Government may “intervene and then take primary responsibility for

conducting the litigation; it can seek judicial limitation of the relator’s participation; it can seek a
stay of the relator’s discovery; and it can seek dismissal or settlement over the relator’s objection.”

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U.S. ex rel. Kelly v. Boeing Co., 9 F.3d 743, 753 (9th Cir. 1993). Qui tam relators have limited
authority in these matters. Further, the Supreme Court has long held that relators have Article III
standing in qui tam actions. Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S.
765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). Relator’s claims are constitutional despite the
Government declining to intervene. 3
IV.

Conclusion

For the reasons set forth above, Defendant Riverside Medical Group P.C.’s Motion to
Dismiss the First Amended Complaint, (D.E. 14), is DENIED in part and GRANTED in part
without prejudice. Resolution NJ LLC shall have thirty (30) days from the date of the Order to
amend the FAC, in accordance with this opinion, identifying the principal of the LLC. An
appropriate order follows.

/s/ Susan D. Wigenton
SUSAN D. WIGENTON, U.S.D.J.
Orig: Clerk
cc:
Parties
Leda D. Wettre U.S.M.J.

In addition to the FCA claims arising under 31 U.S.C. 3729–33, Relator also raises a New Jersey False Claims
violation arising under N.J.S.A. § 2A:32C-3. This Court will defer ruling on its exercise of supplemental jurisdiction
over the state claim until after Relator has amended the FAC in accordance with this Opinion and subsequent Order.
3

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