United States of America et al v. Donovan et al
MEMORANDUM AND ORDER: For the reasons discussed, the state law claims (Counts 5 through 8) are dismissed as against defendant New York City Heath and Hospitals Corporation on plaintiff s concession, and defendants' motion to dismiss is in all other respects denied. SO Ordered by Judge Raymond J. Dearie on 9/21/2017. (Ramesar, Thameera)
IN CLERK'S OFFK
US DISTRICT COURT(
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
SEP 2 5 2017
UNITED STATES OF AMERICA and NEW
YORK STATE,ex rel. IRINA GELMAN,DPM,
MEMORANDUM & ORDER
-against12 CV 5142(RJD)
GLENN J. DONOVAN,DPM,NEW YORK CITY
HEALTH and HOSPITALS CORPORATION,and
PHYSICIAN AFFILIATE GROUP OF
The qui t^ relator Irina Gelman,formerly a resident in podiatry at Coney Island
Hospital, brings this action on behalf of the United States of America under the False Claims Act
("FCA"),31 U.S.C. §§ 3729 et seq.. and on behalf ofthe State of New York under its equivalent
statute, N.Y. Finance Law §§ 187 et
Gelman alleges that the hospital's podiatric medicine
and surgery residency program operated in contravention of important statutory standards,
regulatory requirements, and contractual obligations, as well as basic safety and honesty
imperatives, and that it made impliedly false certifications to the contrary in its claims for
Medicaid and Medicare reimbursement and annual program funding.
The accusations are disquieting: Gelman alleges, among other things, that the
residents—graduate students in training, not licensed podiatrists—^were rarely supervised when
"The FCA is an anti-fraud statute that may be enforced notjust through litigation brought by
the Government itself, but also through civil qui tarn actions that are filed by private parties,
called relators, in the name of the Government." U.S. ex re^
Response. Inc.. 865 F. 3d 71,78(2d Cir. 2017)(internal quotations and citations omitted).
rendering podiatric services to patients; that at least two,including one promoted to Chief
Resident, practiced podiatry while lacking the permit required to participate in a residency; that
the program director regularly falsified patient records to camouflage his failure to supervise;
that the director also falsified certain residents' records to conceal deficiencies from program-
accreditation authorities; and that Gelman,after bringing these problems to light, was fired in
retaliation. The defendants' fraudulent concealment of these matters, by omission from almost a
decade's worth of filings for government monies, allegedly cost the Medicaid and Medicare
systems millions of dollars.
Defendants move to dismiss the Amended Complaint under Rules 12(b)(6) and 9(b)of
the Federal Rules of Civil Procedure. As explained below, except for the state law claim against
New York City Health and Hospitals Corporation, which is dismissed upon plaintiffs'
concession, ECF Doc 64 at 16 n.l, the motion to dismiss is in all other respects denied.
For purposes ofthe motion,the Amended Complaint is liberally construed, all non-
conclusory factual allegations are assumed to be true, and all reasonable inferences are drawn in
Gelman's favor. Ashcroft v. lobal. 556 U.S. 662,678(2009); Countv of Erie. NY v. Colgan Air,
Inc., 711 F.3d 147, 149(2d Cir. 2013).^
^ "[LJabels and conclusions,""naked assertions devoid offurther factual enhancement" and
"legal conclusion[s] couched as factual allegation[s]"—^which heavily populate the Amended
Complaint—are irrelevant for 12(b)(6) purposes. labal. 556 U.S. at 678(internal quotations and
Gelman entered the podiatry residency program after receiving her Doctorate in Podiatric
Medicine(DPM)in July 2010. Her duties included inpatient, outpatient and emergency room
podiatry consultations and surgical assistance along with the corresponding entry of notes in the
hospital's electronic patient records system. AC ^6. In late 2012 or 2013, after attaining the
position of Chief Resident, Gelman was terminated in retaliation for reporting to defendant New
York City Health and Hospital Corporation the program deficiencies and false billing practices
that are the subject of this lawsuit. AC
Defendant Glenn J. Donovan,DPM,a licensed podiatrist in the State of New York, was
at all relevant times director ofthe hospital's podiatric residency program. AC H 7. He was "the
only attending podiatrist in the ...[pjrogram to supervise activities of all the residents" for the
period July 2010 through in or about 2014. AC. 79. During the relevant time, Donovan also
maintained a full-time private practice with offices in Brooklyn and Manhattan. Id
Although the allegations are both under- and overpled, with repetition and hyperbole
often replacing desired specifics, three basic charges against Donovan and the hospital loudly
and clearly emerge. The first is that Donovan essentially abdicated his responsibility, as director,
to supervise the graduate podiatry students in his charge, but nevertheless billed Medicaid and
Medicare for the podiatric services the students rendered as if he performed them or was present.
To accomplish this, Donovan made post hoc entries in patients records that signified, falsely,
either his participation in the treatment or his contemporaneous presence.^
^ Donovan's whereabouts are vaguely alleged: he "was "[sjometimes" elsewhere in the Hospital,
and "[a]t other times" was "physically off-site at one of his private practice locations" in
Brooklyn and Manhattan, or at his Staten Island home,or on vacation, or at a medical
conference, or attending to his own private patients. AC 49.
Gelman makes the sweeping accusation that this practice of podiatry by unsupervised
residents occurred "on a regular basis," and "over the course ofseveral years," beginning in or
about 2006 when Donovan became director ofthe program, AC
3, 54,59,64, principally in
the hospital's Outpatient Clinic, but also in the emergency room and in the treatment of hospital
inpatients. AC fl79;
46-64. Her allegations, however, include only one specific incident,
which Gelman labels an "exeimple"(AC H 50): on May 11, 2012, while on duty in the Outpatient
Clinic, Gelman treated seven patients, six of whom were covered by Medicaid; that same day,
Donovan was at a medical conference in midtown Manhattan with two podiatry residents.
Gelman later discovered(AC
102)that the medical record for each ofthe seven patients
falsely identified Donovan as both the billing and attending physician. Apparently, three days
after the Gelman treated the patients, on the day Donovan returned from the medical conference,
Donovan entered notes that "falsely indicate that he was present for the encounter." AC H 51.
The notes state, for example,that "the patient tolerated the visit well" and "tolerated
LIDO/Steroid injection well for painful heal." Id No specific, comparable instances of
unsupervised resident treatment of inpatient or emergency room podiatry patients are alleged.
As for the sine qua non of a False Claims Act—^the actual false bills—^Gelman's
allegations again lack specifics. She pleads only that through Donovan's "fabricated entries in
the medical records" and "[djefendants' standard operating procedures," AC T[ 52-53, the
podiatric services rendered by residents were billed to Medicare and Medicaid as if Donovan had
personal involvement in the treatment. Though one could well wish for more examples or
See Transcript of Oral Argument, April 13,2017 at 28 (plaintiffs' counsel, when addressing the
possibility ofamending to provide additional specifics, remarks that the outpatient clinic is
"where the bulk ofthe [residents'] work was done").
greater precision in exchange for the bombast, liberal construction ofthe pleading reveals, as
noted, the basic charge to be that, during Donovan's review of unsupervised residents' entries in
the patient record system, he entered attending notes or billing codes(or both)sufficient convey
the false impression that he had whatever level of personal involvement in the treatment would
be necessary for reimbursement. See AC 52(outpatient context)f57(inpatient context),1|63
(emergency room).^ The only other details Gelman offers are estimates oftotal patients treated
by unsupervised podiatry residents during the relevant time:(i)40 to 60 per day,four days a
week,in the Outpatient Clinic;(ii) 3-7 inpatient consults daily, five days a week; and (iii) 1-2
emergency room consults daily, seven days a week. Upon Gelman's information and belief.
Medicare or Medicaid covered a "significant number of these patients. AC
The second principal charge is that Donovan knowingly allowed the rendering of
podiatric services by two residents who lacked the permit required by law to participate in a
hospital residency, and that he then defrauded the government by concealing this defect when
claiming Medicaid and Medicare reimbursement for their services. The two are Gelman's fellow
program residents Quinton P. Yeldell and Michael Andrew Walters: each either did not obtain,
or failed to renew,the limited residency permit("LPR")that New York's Education Law § 7008
requires for a resident to practice podiatry in a hospital setting,^ yet Donovan nevertheless
permitted both to write prescriptions, treat patients, and perform surgeries daily during the time
^ For the reasons to be discussed,s^ infra at 15-16,the Court need not reach, at this time,the
question ofthe quantity and nature ofsupervision required by the applicable regulations.
^ Defendants do not engage in an interpretive quarrel with Education Law § 708's LPR
requirement, or with New York Education Law § 6512, which Gelman also cites, which makes it
a Class E felony to practice podiatry without legal authority.
they lacked an LPR. AC
65-72.^ Walters also supervised and taughtjunior residents and
assumed more significant responsibilities in clinical matters after Donovan elevated him to Chief
Resident while he still lacked an LPR. AC H 72.^ The actionable false claims were made when
defendants submitted charges to Medicare and Medicaid for treatments and surgeries performed
by Yeldell and Walters during the time each lacked an LPR without disclosing that credentialing
defect or by misrepresenting that Donovan performed the services. AC
Gelman's third basic charge is that the improprieties Just discussed, and still others to be
addressed, were concealed to avoid jeopardizing the federal and state funds earmarked for
approved Graduate Medical Education("GME")programs such as hospital residencies, which
defendants received annually.
413.75 et s^.; AC
generallv 42 U.S.C. § 1395ww(h),42 C.F.R. §§ 412.105 and
38-39(legal allegations not challenged in defendants' motion papers). The
key word is "approved;" in the field of podiatry, that designation is apparently bestowed by the
Council on Podiatric Medical Education ofthe American Podiatric Medical Association
("CPME")once it is satisfied that a program complies with all applicable CPME-published
standards. Of note, beginning with its first year of provisional approval, a podiatric residency
program must file with CPME an annual report disclosing various categories ofinformation that
affect its approval status. AC 45. The amount ofGME funds contributed to an "approved"
program, in turn, is based on information furnished by the educational institution (here, the
Gelman's allegations on this subject are detailed, including the relevant dates and specific
surgical procedures in which Walters and Yeldell participated. AC
^ The allegations cite Walters' linkedin.com profile, where he states that, as chief resident, he
managed a staff of4 residents, oversaw a daily clinic treating an average of60 patients daily,
performed more than 300 surgical procedures, and wrote prescriptions. AC 73.
hospital) in cost reports filed annually with Medicare and Medicaid. See generally 42 C.F.R. §§
413.76,413.77; N.Y. Public Health Law § 2807-c; 10 N.Y.C.R.R. Part 86; AC H 39(law not
challenged in defendants' motion papers).
Returning to the allegations: Gelman claims that the hospital falsely maintained the
program's "approved" status by failing to disclose in its annual reports to CPME the many
problems with the program discussed above, as well as other defects, all allegedly grounds for
non-approval. An especially disquieting such allegation is that Donovan not only made false
entries in patient records but also fraudulently manipulated information in certain residents'
academic records in order to falsely represent that these residents had satisfied the necessary
requirements for graduation and, in turn, board certification eligibility. For example, Donovan
"transferred" 17 biomechanical examinations performed by Gelmein(and so documented in the
hospital's records)to Walters, whose patient encounter numbers in that category were low.
Gelman also discovered that Donovan redistributed another 39 procedures she performed from
her records to those of other residents. AC
88-91. Donovan's falsification of resident records
extended to program graduates who, because of insufficient clinical encounters or other
deficiencies, should not in fact have been graduated; Gelman cites one instance of Donovan
pressuring a former program participant to fabricate post hoc entries for cases Donovan had
fraudulently transferred to his records. AC
93-94. Gelman believes Donovan's motivation
was the possibility that the program might convert from a two- to a three-year residency, which
would entail increased CPME scrutiny. AC ^ 92.
Gelman alleges that because ofthese many problems and still others, the podiatry
residency program,in violation of a host of CPME standards(AC
43-44, 77-97), maintained
its "approved" status only because it failed to disclose these violations in the annual report it
filed with CPME;later, when Gelman herself tried to blow the whistle, the hospital falsely
reassured CPME with further misrepresentations. AC ^ 96. The annual cost reports that the
hospital in turn filed with Medicaid and Medicare—on the basis of which, as noted, the amount
of GME funding was calculated—failed to disclose "the fraud infecting the [p]rogram, or the fact
that the [hospital] was dishonestly maintaining the [pjrogram's 'approved status." Each such
cost report, Gelman alleges,"constituted a false claim for GME funding." AC K 97.
Federal Rule of Civil Procedure 12(b)(6)
"To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft, 556 U.S. at
678(quoting Bell Atl. v. Twomblv> 550 U.S. 544, 570(2007)). "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. There is no
litmus test: "[djetermining whether a complaint states a plausible claim" is "context-specific"
and "requires the reviewing court to draw on its judicial experience and common sense." Id In
general, plausibility is understood as lying between probability and mere possibility. Id. at 678
("The plausibility standard is not akin to a probability requirement, but it asks for more than a
sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are
merely consistent with a defendant's liability, it stops short ofthe line between possibility and
plausibility of entitlement to relief."). In short, to survive at 12(b)(6), a plaintiff must"nudge
[her] claims across the line from conceivable to plausible." Twomblv,550 U.S. at 570.
False Claims Act
The FCA imposes liability on any person who:"knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or approval" or "knowingly makes, uses, or
caused to be made or used, a false record or statement material to a false or fraudulent claim," 31
U.S.C. § 3729(a)(1)(A),(B).^ A "claim" is defined as "any request or demand ...for money or
property" that is presented, directly or indirectly, to the United States, which includes any
'reimbursement requests made to the recipients offederal funds under federal benefits
programs." Universal Health Services. Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989,1996(2016).
(citing 31 U.S.C. § 3729(b)(2)(A)).
"Fraud under the FCA has two components: the defendant must submit or cause the
submission ofa claim for payment to the government, and the claim for payment must itself be
false or fraudulent." U.S. ex rel. Chorches v. American Medical Response,Inc., 865 F. 3d 71, 83
(2d Cir. 2017)(internal quotation, citation and alteration omitted). The theory offalsity
advanced in this case is what is commonly referred to as "implied false certification," which the
Supreme Court now recognizes to be actionable "at least in certain circumstances."'® Universal
® Count One ofthe Amended Complaint, invoking subparagraph(A),concerns the false claims
filed with Medicaid and Medicare whereas Count Two,invoking subparagraph (B), seeks to
impose liability separately for the falsification of patient, resident and other records "material to"
the false claims. Count Three invokes a separate subparagraph,(G), which imposes liability on
any person who "knowingly makes, uses, or causes to be made or used, a false record or
statement material to an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or
transmit money or property to the Government." 31 U.S.C. § 3729(a)(1)(G). Finally, Count
Four invokes the FCA's conspiracy provision, 31 U.S.C. § 3729(a)(1)(C).
'® As the Court understands the pleading and the parties' briefs, none ofthe other theories of
FCA liability—such as factual falsity(when the goods or services described in the claim are
Health. 136 S. Ct. at 1996. Specifically, omissions are actionable when:"first, the claim does
not merely request payment, but also makes specific representations about the goods or services
provided; and second, the defendant's failure to disclose noncompliance with material statutory,
regulatory, or contractual requirements makes those representations misleading half-truths." 136
S. Ct. at 2001.
The materiality requirement is "rigorous," id. at 1996 and "demanding,"id at 2003,
"because the FCA is not a vehicle for punishing garden-variety breach of contract or regulatory
violations." Id There is, however, no litmus test: as the Court explained,"[djefendants can be
liable for violating requirements even ifthey were not expressly designated as conditions of
payment," and "[cjonversely, even when a requirement is expressly designated a condition of
payment, not every violation gives rise to liability." Id "What matters is not the label the
Government attaches to a requirement, but whether the defendant knowingly violated a
requirement that the defendant knows is material to the Government's payment decision.''^
The Court enumerated multiple evidentiary indicia of materiality'' that can be understood
as requiring, at the pleading stage, allegations plausibly tending to show that a governmental
inaccurate or phantom)or express legally falsity(when compliance with a specific statute or
regulation has been expressly misrepresented)—is implicated here.
'' The Court explained:
proof of materiality can include, but is not necessarily limited to, evidence that the
defendant knows that the Government consistently refuses to pay claims in the
mine run ofcases based on noncompliance with the particular statutory,
regulatory or contractual requirement. Conversely, if the Government pays a
particular claim in full despite its actual knowledge that certain requirements were
violated, that is very strong evidence that those requirements are not material. Or,
recipient ofthe alleged false claim would have rejected payment had it known the whole story.
See 31 U.S.C. § 3729(b)(4)(FCA itself defines "material" to mean "having a natural tendency to
influence, or be capable ofinfluencing, the payment or receipt of money or property"); Universal
Health. 136 S. Ct. at 2002("without deciding whether § 3729(a)(l)(A)'s materiality requirement
is governed by § 3729(b)(4) or derived directly from the common law," explains that "[u]nder
any understanding ofthe concept, materiality looks to the effect on the likely or actual behavior
ofthe recipient ofthe alleged misrepresentation")(internal quotation, citation, and alteration
Indeed, both the facts of Universal Health and the Court's hypotheticals illustrate that
materiality is essentially a matter ofcommon sense rather than technical exegesis of statutes and
regulations. See Universal Health. 136 S. Ct. at 2000,2004(omissions materials because
"[ajnyone informed that a social worker" counseled teenagers "would probably" conclude that
he met"core" statutory requirements "central to the provision of mental health counseling" such
as "specialized training in children's services" and "the prescribed qualifications for the job")
(emphasis added); id at 2001-2002("a reasonable person would realize the imperative of a
functioning firearm" when fulfilling a federal gun order "even ifthe Government did not
spell...out" that "guns it orders must actually shoot")(emphasis added).
ifthe Government regularly pays a particular type ofclaim in full despite actual
knowledge that certain requirements were violated, and has signaled no change in
position, that is strong evidence that the requirements are not material.
Universal Health. 136 S. Ct. at 2003-2004.
Allegations ofFCA fraud must also satisfy the heightened pleading standard of Rule 9(b).
Chorches. 865 F.3d at 81;s^ Fed. R. Civ. P.9(b)("In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or mistake"). Rule 9(b)is "designed
to provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant's
reputation from improvident charges of wrongdoing, and to protect a defendant against the
institution of a strike suit." U.S. ex rel. Ladas v. Exelis. Inc.. 824 F.3d 16, 26(2d Cir. 2016).
Rule 9(b)typically requires a plaintiff alleging fraud to identify the specific statements alleged to
be fraudulent as well as who made them, when, where, and why. Ladas, 824 F.3d at 25.
In Chorches. however,the Second Circuit announced a different standard for qui tarn
FCA suits:"In applying Rule 9(b)to the submission offalse claims under subsections
3729(b)(2)(A)and(B)of the FCA,we decline to require that every qui tarn complaint allege on
personal knowledge specific identified false invoices submitted to the government." 865 F.3d at
85. Instead,"a complaint can satisfy Rule 9(b)'s particularity requirement by making plausible
allegations creating a strong inference that specific false claims were submitted to the
government and that the information that would permit further identification ofthose claims is
peculiarly within the opposing party's knowledge." Id (emphasis added).
Plausibility and Specificity
The dispositive question is whether,"constru[ed] liberally" with "all reasonable
inferences [drawn] in the plaintiffs favor," Countv ofBrie. 711 F.3d at 149(internal quotation
and citation omitted), the Amended Complaint pleads enough factual content"to allow the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged." lobal.
556 U.S. at 678. Because the "misconduct alleged" in an FCA case is the filing offalse claims,
application ofthe Iqbal standard here necessarily incorporates the Chorches standard, which, as
noted, likewise has plausibility as its keynote.
Drawing on its experience and common sense,the Court concludes, both for Chorches
and Iqbal purposes, that the balance ofconsiderations tips in plaintiffs' favor on plausibility, and
in the main, her pleading survives the motion to dismiss. Beneath and between the bombast,
hyperbole and superfluity, the essential allegations against defendants, as already summarized,
are plainly discernible^^ and, iftrue, would establish FCA liability under section 3729(a)(1). See
Chorches. 865 F.3d at 83(FCA fraud is, simply, submission ofclaim for payment to the
government that is false).
The heart of defendants' briefs in support ofthe motion to dismiss and their oral
argument, which pre-date Chorches. issued in July 2017, is that the Amended Complaint fails to
plead any specific false bills, the sine qua non ofFCA liability. The absence of specific bills,
this line ofargument continues, not only makes it impossible to discern any misrepresentations
made by any defendant to any governmental body, but necessarily forecloses any plausible view
ofthe misrepresentations as material. Indeed, absent the pleading of a specific bill, defendants
even argue that the so-called "teaching physician rule" allegedly violated by Donovan's rare
presence among his practicing podiatric interns "is simply not implicated." ECF 66(reply brief)
at p. 6.
Chorches renders much ofthis line of argument moot, as it essentially absolves Gelman
for failing to plead specific bills, provided that the filing ofspecific false claims is strongly and
ECF No.63 at 10-12(defendants' motion papers aptly summarizing the allegations),
plausibly inferable from her allegations. Id,865 F.3d at 85. The Court concludes that the
necessary inferences are available.
To be sure, the quantity of specific incidents alleged is greatly disproportionate to the
length ofthe pleading(more than 150 paragraphs spanning more than 50 pages)—and far less
than what was pled in Chorches—but what specifics are alleged are compelling: the outright
falsification of outpatient records by the program's own director, the open practice of podiatry by
residents lacking the basic permit required by state law,the doctoring of residents' academic
records to avoid jeopardizing accreditation (and in turn, federal program funding), and abdication
ofthe supervision that is the sine qua non of an educational program. Common sense and
judicial experience validate Gelman's allegation that many ofthe patients treated at Coney Island
Hospital were Medicaid or Medicare eligible; it is also a matter ofcommon sense that Coney
Island Hospital would and did seek to get paid and so would have regularly filed reimbursement
claims throughout the period alleged.
The strong inferences that these allegations create is self-evident: first, something was
seriously amiss at Coney Island Hospital's podiatry residency program, and second, Donovan
himselfheXicvQdi that the contents of patient and resident records that he falsified would be
important—^presumably,to recipients of bills based on those records, or auditors, or accreditation
institutions like CPME.'^ Furthermore, the allegation that Gelman was the victim of adverse
employment action in retaliation for her efforts to expose the many improprieties described casts
The third branch of Gelman's allegations are plainly sufficient in this regard, as they
specifically name documents alleged to be false claims under section 3729(a)(1)(A) or false
records material to the false claims under section 3729(a)(1)(B): the annual reports defendants
filed with CPME and the annual cost reports filed with Medicare and Medicaid.
the entire body of allegations in an even more serious and credible light, and thus, to the extent
they needed it, helps"nudge
[them] across the line from conceivable to plausible." Twomblv,
550 U.S. at 570.
Gelman is cautioned that, though her lawsuit survives the motion to dismiss, it lives in
the shadows ofthe FCA's rigorous materiality requirement. As Universal Health emphasizes,
the FCA "is not an all-purpose antifraud statute," nor "a vehicle for punishing garden-variety
breaches ofcontract or regulatory violations." 136 S. Ct. at 2003 (internal quotation and citation
omitted). It may be something of a plaintiffs windfall at this stage that materiality under
Universal Health is essentially an evidentiary question, but the day of reckoning will come at
As discussed above, however,the Court understands Universal Health as requiring, at the
pleading stage, that the undisclosed regulatory and other violations be plausibly pled as relevant
to the payment decision, either as a matter ofcommon sense, or in the mind's eye ofthe filer of
This much Gelman has indeed accomplished: without reaching the question of how
As noted, but worthy of underscoring, the Court explained, inter alia:(i)that certain omissions
were material because "fajnyone informed that a social worker" counseled teenagers "would
probably" conclude that he met"core" statutory requirements "central to the provision of mental
health counseling" such as "specialized training in children's services" and "the prescribed
qualifications for the job," 136 S. Ct. at 2000,2004(emphasis added), and (ii) that"a reasonable
person would realize the imperative ofa functioning firearm" when fulfilling a federal gun order
"even ifthe Government did not spell...out" that "guns it orders must actually shoot." Id at
As already noted, but also worthy of underscoring, the Court stated:"What matters is not the
label the Government attaches to a requirement, but whether the defendant knowingly violated a
requirement that the defendant knows is material to the Government's payment decision." 136 S.
Ct. at 2003(emphasis added).
much supervision of podiatry residents is an express condition of payment(and ifthat question is
answered differently for Medicaid and Medicare), or the comparable set of questions involving
other statutory, regulatory, CPME,and contractual provisions cited in the Amended Complaint,
the Court is satisfied that their relevance to the payment decision has been adequately pled. In
the parlance of Universal Health, because residents are, after all, still only graduate students^ "a
reasonable person would realize the imperative" of adequately supervising their treatment of
actual patients. Likewise,"anyone informed" that a program "approved" by its field's
accrediting body would assume that approval was validly earned and that its participants were
lawfully authorized to participate. Finally, Donovan's alteration of the content ofintemal
hospital records strikes a potent materiality chord, as it strongly indicates his belief thatthat
content would be important.
For the reasons discussed, the state law claims(Counts 5 through 8)are dismissed as
against defendant New York City Hedth and Hospitals Corporation on plaintiffs concession,
and defendants' motion to dismiss is in all other respects denied.
Dated: Brooklyn, New York
s District Judge
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