Vito v. Canzoneri, et al
Filing
42
DECISION AND ORDER: The defendants' motions to dismiss, Docket Items 32 and 34, are GRANTED in part, and the remainder of their motions will be granted unless Vito amends his complaint to correct the deficiencies noted in the decision & order wi thin 30 days of the date of this order. No later than 30 days after any second amended complaint is filed, the defendants may answer, move against, or otherwise respond to the second amended complaint. If Vito does not amend his complaint within 30 days of the date of this order, then his amended complaint will be dismissed without further order and the Clerk of the Court shall close the case. SO ORDERED. Issued by Hon. Lawrence J. Vilardo on 3/22/2022. (WMH)-CLERK TO FOLLOW UP-
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA and the
STATE OF NEW YORK ex rel. GEORGE
R. VITO, DPM,
Relator/Plaintiff,
20-CV-505-LJV
DECISION & ORDER
v.
JOSEPH R. CANZONERI, DPM, et al.,
Defendants.
On April 27, 2020, the plaintiff-relator, George R. Vito, filed this action alleging
that the defendants, Joseph R. Canzoneri; Advanced Podiatry Associates, PLLC
(“APA”); and Healogics, Inc., violated the False Claims Act (“FCA”), 31 U.S.C. § 3729 et
seq., and the New York False Claims Act (“NYFCA”), N.Y. Finance Law § 187 et seq.
Docket Item 1. More specifically, the complaint alleges that the defendants engaged in
schemes to improperly solicit payments from Vito and reuse single-use medication vials.
Id. Vito asserts qui tam claims on behalf of the United States and New York State.
Docket Item 28. He also alleges that the defendants committed common law fraud and
that Canzoneri and APA retaliated against him in violation of the FCA and NYFCA. Id.
After Canzoneri and APA moved to dismiss the complaint, Docket Item 19, Vito
filed an amended complaint, Docket Item 28. Canzoneri and APA renewed their motion
to dismiss on July 12, 2021, Docket Item 34, and Healogics filed a separate motion to
dismiss that same day, Docket Item 32. Vito responded to both motions on July 26,
2021, Docket Item 37, and the defendants replied a week later, Docket Items 38 and 39.
For the following reasons, the defendants’ motions to dismiss are granted in part,
and the remainder of their motions will be granted unless Vito amends his complaint to
correct the deficiencies noted below.
FACTUAL BACKGROUND 1
Vito and Canzoneri are both podiatrists who practice in New York State. Docket
Item 28 at ¶¶ 11-12. Vito previously worked at APA, a professional limited liability
company “wholly owned by [] Canzoneri,” under “a July 23, 2018 Employment
Agreement.” Id. at ¶¶ 13, 23. Under that agreement, Vito and Canzoneri shared
hospital privileges at United Memorial Medical Center (“UMMC”) in Batavia, New York,
where Vito “performed surger[ies].” Id. at ¶ 24.
Vito had some problems at APA. For example, Canzoneri “insisted [that] Vito . . .
pay $250 per procedure to Dr. Canzoneri” even after Canzoneri was “no longer []
scrubbing in for [those] procedures.” Id. at ¶ 25. Vito reported Canzoneri’s demands to
UMMC’s surgery chief in May 2019, id., and sometime after Vito “questioned Dr.
Canzoneri’s demand for payment,” Canzoneri terminated Vito’s “employment with APA,”
id. at ¶ 26.
Vito also saw Canzoneri improperly reuse single-use medication vials taken from
the UMMC operating room. Id. at ¶ 28. As part of this scheme, Canzoneri would “treat[]
[patients at] Healogics’ Wound Care Center[,] br[ing] them to the UMMC Operating
Room, use[] medication packaged in single[-]dose vials [there], [and] then t[ake] the
On a motion to dismiss, the Court “accept[s] all factual allegations as true and
draw[s] all reasonable inferences in favor of the plaintiff.” Trs. of Upstate N.Y. Eng’rs
Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir. 2016).
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remainder of those partially[-]used medication vials to re-use, with different patients, at
his APA practice office.” Id. That improper use “ignored infection control standards and
exposed patients to harm and infection.” Id. at ¶ 33. “[P]atients seen in Healogics’
Wound Care Center were billed under Healogics’ EIN and billing numbers.” Id. at ¶ 29.
“[E]ach medication injection” was billed “at approximately $195.” Id. at ¶ 30.
Vito raised concerns about this misuse of single-dose medication to UMMC staff
and to Canzoneri in April and May 2019; Vito says that “other UMMC operating room
nurses [also] knew Dr. Canzoneri had been removing partially[-]used single[-]dose vials
out of the hospital” to use in his office. Id. at ¶¶ 34-35, 37-38. In addition, Vito filed a
whistleblower complaint “regarding Dr. Canzoneri’s scheme” with the United States
Department of Health and Human Services’ Office of Inspector General in May 2019.
Id. at ¶ 39; see also Docket Item 36 at ¶ 11.
Eventually, in October 2019, UMMC’s Chief Medical Officer sent a memorandum
to the UMMC Surgery Department about the problem. The memorandum noted that
UMMC had “received a complaint that partially[-]used single[-]use medications are
being removed from the [operating room] for use in a surgeon’s office.” Docket Item 28
at ¶ 40. And it warned that removing single-use medication from the operating room
was a “violation of hospital [] policy and Department of Health Regulations” and
reiterated that “hospital supplies may not be removed from the hospital to a physician[’s]
office.” Id.
Vito then filed this action on April 27, 2020. Docket Item 1. After the United
States declined to intervene in February 2021, the case was unsealed, and Vito
3
pursued his claims as a qui tam relator in the name of the United States. See Docket
Item 10. New York State declined to intervene a month later. See Docket Item 14.
LEGAL PRINCIPLES
I.
FAILURE TO STATE A CLAIM
“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
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 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.” Id. (citing Twombly, 550 U.S. at 556). “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.” Id. (quoting Twombly, 550 U.S. at 556).
II.
SUBJECT MATTER JURISDICTION
“It is a principle of first importance that the federal courts are tribunals of limited
subject matter jurisdiction,” Wright v. Musanti, 887 F.3d 577, 583 (2d Cir. 2018) (citation
omitted), possessing “only that power authorized by Constitution and statute,” Gunn v.
Minton, 568 U.S. 251, 256 (2013). “Article III of the Constitution limits the jurisdiction of
federal courts to the resolution of ‘cases’ and ‘controversies.’” W.R. Huff Asset Mgmt.
Co. v. Deloitte & Touche LLP, 549 F.3d 100, 106 (2d Cir. 2008) (citing U.S. Const. art.
III, § 2). Part of the case-or-controversy requirement is that a plaintiff must have
standing. See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021) (“If the
plaintiff does not claim to have suffered an injury that the defendant caused and the
4
court can remedy, there is no case or controversy for the federal court to resolve.”
(citation and internal quotation marks omitted)).
To satisfy the “irreducible constitutional minimum of standing,” a plaintiff must
show: (1) that he has “suffered an injury in fact—an invasion of a legally protected
interest[,] which is (a) concrete and particularized . . . and (b) actual or imminent[] not
conjectural or hypothetical”; (2) that the injury is “fairly traceable to the challenged action
of the defendant”; and (3) “that it [is] likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S.
555, 560-61 (1992) (alterations, citations, and internal quotation marks omitted). “The
party invoking federal jurisdiction bears the burden of establishing these elements.” Id.
at 561.
DISCUSSION
I.
STATUTORY QUI TAM CLAIMS
“The FCA is an anti-fraud statute that ‘may be enforced not just through litigation
brought by the [g]overnment itself, but also through civil qui tam actions that are filed by
private parties, called relators, ‘in the name of the [g]overnment.’” 2 U.S. ex rel.
Chorches for Bankr. Estate of Fabula v. Am. Med. Response, Inc., 865 F.3d 71, 81 (2d
Cir. 2017) (quoting Kellogg Brown & Root Servs., Inc. v. U.S. ex rel. Carter, 575 U.S.
650, 653 (2015)). As relevant here, the FCA provides that any person who “knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or
“The NYFCA mirrors the federal FCA, and New York courts look to federal law
to interpret the state statute.” U.S. ex rel. Pelullo v. Am. Int’l Grp., Inc., 757 F. App’x 15,
17 (2d Cir. 2018) (summary order).
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approval” or who “knowingly makes, uses, or causes to be made or used, a false record
or statement material to a false or fraudulent claim” is “liable to the United States
government.” 31 U.S.C. § 3729(a)(1)(A), (B). 3
“The FCA defines a ‘claim’ as ‘any request or demand for money or property’ that
is presented, directly or indirectly, to the United States.” Chorches, 865 F.3d at 81
(alterations omitted) (quoting 31 U.S.C. § 3729(b)(2)(A)). “Fraud under the FCA has
two components: the defendant must submit or cause the submission of a claim for
payment to the government, and the claim for payment must itself be false or
fraudulent.” Id. at 83 (alterations omitted) (quoting Hagerty ex rel. U.S. v. Cyberonics,
Inc., 844 F.3d 26, 31 (1st Cir. 2016)). Plaintiffs must allege the submission of a false
claim to state a viable FCA claim under both subsections 3729(a)(1)(A) and (B). See
U.S. ex rel. Hussain v. CDM Smith, Inc., 2017 WL 4326523, at *8 (S.D.N.Y. Sept. 27,
2017); see also Chorches, 865 F.3d at 84.
“Qui tam complaints filed under the FCA, because they are claims of fraud, are
subject to Rule 9(b).” Chorches, 865 F.3d at 81. Rule 9(b) requires a party “alleging
fraud or mistake[]” to “state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b). “That ordinarily requires a complaint alleging fraud to
Vito alleges that the defendants violated 31 U.S.C. § 3721(a)(1) and 31 U.S.C.
§ 3729(a)(1)(B) in his amended complaint, see Docket Item 28 at ¶¶ 57, 60; in his
response, Vito cites 31 U.S.C. § 3729(a)(1)(A)-(B), see Docket Item 37 at 15. Because
31 U.S.C. § 3721(a)(1) provides a statutory definition of “agency,” the Court assumes
that the statutory provision to which Vito refers in the amended complaint should be 31
U.S.C. § 3729(a)(1)(A).
3
Vito also alleges that the defendants conspired to violate other subsections of the
FCA beyond subsections 3729(a)(1)(A) and (B). See Docket Item 28 at ¶ 62. As set
forth below, the amended complaint offers no basis to support Vito’s cursory allegations
regarding those other subsections.
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‘(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the
speaker, (3) state where and when the statements were made, and (4) explain why the
statements were fraudulent.’” Chorches, 865 F.3d at 81 (quoting U.S. ex rel. Ladas v.
Exelis, Inc., 824 F.3d 16, 25 (2d Cir. 2016)). “But ‘the adequacy of particularized
allegations under Rule 9(b) is case- and context-specific.’” Id. at 81 (alterations omitted)
(quoting Espinoza ex rel. JPMorgan Chase & Co. v. Dimon, 797 F.3d 229, 236 (2d Cir.
2015)).
Vito’s amended complaint does not identify any particular false claims that were
submitted to the federal and state governments; instead, Vito alleges “[u]pon
information and belief” only that such claims were submitted. See Docket Item 28 at ¶¶
57, 60, 64-65. The defendants contend that Vito’s qui tam claims therefore must be
dismissed. See Docket Item 33 at 7; Docket Item 34-3 at 4-7. In response, Vito argues
that the Second Circuit’s decision in Chorches “[r]efut[es] the defense[’s] argument
here.” Docket Item 37 at 10. But because the sparse allegations in the amended
complaint fall far short of the “plausible and particularized factual allegations” of
Chorches, 865 F.3d at 85-86, this Court agrees with the defendants that Vito’s qui tam
claims are subject to dismissal.
In Chorches, the Second Circuit explained that a qui tam relator can satisfy Rule
9(b) without identifying specific claims submitted to the government for payment—in
other words, that a qui tam relator may plead that claims were submitted on “information
and belief” in certain circumstances. To do so, the relator must raise “plausible
allegations creating a strong inference that specific false claims were submitted to the
government and that the information that would permit further identification of those
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claims is peculiarly within the opposing party’s knowledge.” Id. at 86; see also U.S. ex
rel. Gelbman v. City of New York, 790 F. App’x 244, 248 (2d Cir. 2019) (summary order)
(“[T]o survive dismissal under Rule 9(b) when the complaint pleads only on information
and belief that fraudulent claims were actually submitted to the United States, a plaintiff
must (1) ‘make plausible allegations that the bills or invoices actually submitted to the
government were uniquely within the defendant’s knowledge and control,’ and (2)
‘adduce specific facts supporting a strong inference of fraud.’” (alterations omitted)
(quoting Chorches, 865 F.3d at 83)). “Those requirements ensure that those who can
identify examples of actual claims must do so at the pleading stage.” Chorches, 865
F.3d at 86 (emphasis in original).
The relator’s allegations in Chorches cleared that bar even though the relator
could not identify particular claims submitted for reimbursement. The relator in
Chorches, a former emergency medical technician (“EMT”) employed at an ambulance
company, alleged that his former employer regularly instructed its employees to falsely
revise ambulance “run” reports to “ensure that [the] runs would be reimbursable by
Medicare, whether or not ambulance service was in fact” reimbursable. Id. at 76. The
relator alleged that his supervisors “specifically instructed EMTs and paramedics how to
modify the [reports] by including false or misleading information, and [his supervisors]
admitted to [the relator] that the purpose of [the] revisions was to qualify the
[ambulance] run for Medicare reimbursement.” Id. Moreover, the relator “identifie[d]
more than ten specific runs for which [he] was ordered to alter [reports] to include false
or misleading information” and thereby ensure that the runs were reimbursable. Id. at
77.
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In light of those specific allegations—in particular, the relator’s allegation that his
supervisors admitted that “Medicare was the specific target of the fabricated [reports]
that the alleged scheme generated”—the Second Circuit concluded that it was “highly
implausible . . . that the resulting records were never submitted to the federal
government for reimbursement.” Id. at 85. What is more, the relator alleged that the
defendant’s billing practices “made it virtually impossible for most employees to have
access to all of the information necessary to certify on personal knowledge both that a
particular invoice was submitted for payment and that the facts stated to justify the
invoice were false.” Id. at 82. Taken together, the Second Circuit therefore concluded
that the relator had adequately pleaded the submission of false claims, even though his
complaint failed to identify any false claim in particular. Id. at 85-86.
Here, by contrast, Vito offers no similar allegations that would raise a “strong
inference that [the defendants] did in fact submit false claims to the government.” See
id. Vito alleges that Canzoneri demanded payment for surgical procedures without
“scrubbing in for [those] procedures” and he alleges that Canzoneri improperly reused
single-use medication from UMMC in his APA practice office. See Docket Item 28 at ¶¶
25, 28. Beyond generally alleging the existence of the Medicare and Medicaid
programs and broadly identifying certain regulatory requirements, however, Vito fails to
allege any facts suggesting that either scheme resulted in the submission of false
claims to the government. Indeed, Vito does not even allege that Canzoneri treated any
Medicare or Medicaid patients or point to any “records [that] were in fact falsified.” See
Chorches, 865 F.3d at 84.
9
Nor does Vito explain why information identifying bills submitted to the
government is “uniquely within [the defendants’] knowledge and control.” Id. at 83. In a
declaration submitted with his response to the motions to dismiss, Vito says that he
cannot “provide specific examples of billing” because he was “not [] privy to billing
practices by the defendants” after his employment with APA was terminated. Docket
Item 36 at ¶ 8. But Vito did not make that allegation in the amended complaint. See
Docket Item 28. And even if he had, the allegation does not address why Vito cannot
offer any information about bills submitted during his employment at APA. Because
Vito’s amended complaint does not adequately allege the submission of a false claim
and falls short of the bar set in Chorches, his qui tam claims are subject to dismissal. 4
See Gelbman, 790 F. App’x at 249 (affirming “dismissal for failure to satisfy Rule 9(b)’s
particularity standard” where the relator failed to allege the submission of false claims
and failed to make a satisfactory showing under Chorches).
Finally, Vito makes cursory reference to the defendants’ “conspir[acy] to [violate]
31 U.S.C. § 3729, [s]ubsections (A), (B), (D), (E), (F) and (G).” Docket Item 28 at ¶ 62.
Because Vito’s qui tam claims fail under Rule 9(b), this Court need not
otherwise address the viability of those claims. The Court notes, however, that the
theory under which Vito intends to proceed is unclear. “A successful FCA claim
generally occurs in one of three forms: (1) a factually false claim; (2) a legally false
claim under an express false certification theory; and (3) a legally false claim under an
implied certification theory.” U.S. ex rel. Foreman v. AECOM, 19 F.4th 85, 104 n.7 (2d
Cir. 2021) (citation and internal quotation marks omitted). In his response, Vito
suggests that his claims fit an implied certification theory, see Docket Item 37 at 17; Vito
does not, however, articulate how the defendants made “[a] misrepresentation about
compliance with a statutory, regulatory, or contractual requirement [that was] material to
the [g]overnment’s payment decision,” see Universal Health Servs., Inc. v. U.S. ex rel.
Escobar, 579 U.S. 176, 181 (2016). In any second amended complaint, Vito should
clarify the theory under which he intends to proceed. See U.S. ex rel. Gelbman v. City
of New York, 2018 WL 4761575, at *6 (S.D.N.Y. Sept. 30, 2018), aff’d, 790 F. App’x 244
(2d Cir. 2019).
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Subsections (D) through (G) of the FCA impose liability for claims related to “property or
money used[] or to be used[] by the [g]overnment” that a party “has possession,
custody, or control of”; “document[s] certifying receipt of property used[] or to be used[]
by the [g]overnment”; public property; and “obligation[s] to pay or transmit money or
property to the [g]overnment.” See 31 U.S.C. § 3729(a)(1)(D)-(G). Because the
amended complaint does not refer to any of those categories of property, money,
documents, or obligations, this Court can only speculate as to how the defendants
conspired to violate those provisions of the FCA. And for that reason, any claims under
those subsections also are subject to dismissal. See Wood ex rel. U.S. v. Applied
Research Assocs., Inc., 328 F. App’x 744, 748 (2d Cir. 2009) (summary order)
(affirming dismissal of FCA claim where “the [a]mended [c]omplaint ma[de] no mention
of any financial obligation that the [defendants] owed to the government”).
In sum, Vito is correct that he need not allege particular false claims to state
viable claims under the FCA and NYFCA, but his allegations still must give rise to “a
strong inference that specific false claims were submitted to the government.” See
Chorches, 865 F.3d at 86. The amended complaint does not make such allegations
here. And for that reason, Vito’s FCA and NYFCA qui tam claims are subject to
dismissal.
II.
RETALIATION CLAIMS
Vito also brings retaliation claims under the FCA and NYFCA. Docket Item 28 at
¶¶ 74-87. Section 3730(h)(1) of the FCA protects an employee against retaliation
“because of lawful acts done by the employee[] . . . in furtherance of an action under
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this section or other efforts to stop [one] or more violations” of the FCA. 5 31 U.S.C. §
3730(h)(1). Just as NYFCA qui tam claims parallel FCA claims under section 3729, a
retaliation claim under the NYFCA follows the FCA as well. See Dhaliwal v. Salix
Pharm., Ltd., 752 F. App’x 99, 100 (2d Cir. 2019) (summary order).
To state a claim for retaliation under the FCA, a plaintiff “generally [must] show
that (1) he engaged in activity protected under the statute, (2) the employer was aware
of such activity, and (3) the employer took adverse action against him because he
engaged in the protected activity.” Id. “The inquiry as to whether an employee engaged
in protected conduct involves determining whether an employee’s actions sufficiently
furthered an action filed or to be filed under the FCA, and, thus, equated to ‘protected
conduct.’” U.S. ex. rel. Scharff v. Camelot Counseling, 2016 WL 5416494, at *10
(S.D.N.Y. Sept. 28, 2016) (citation omitted). “‘Protected activity’ is interpreted broadly,
and an employee’s activities may be protected even where an FCA suit has not been
filed.” Id. (citation and internal quotation marks omitted); see also Dhaliwal, 752 F.
App’x at 100 (explaining that the FCA prohibits “retaliation against not only those who
actually file a qui tam action, but also against those who plan to file a qui tam that never
gets filed, who blow the whistle internally or externally without the filing of a qui tam
action, or who refuse to participate in the wrongdoing” (italics added) (quoting
Chorches, 865 F.3d at 97)). Thus, it is sufficient “to show that a plaintiff’s investigation
reasonably could have led to an FCA action.” Dhaliwal, 752 F. App’x at 100 (alterations
and citation omitted).
“The particularity requirement of Rule 9(b) does not apply to retaliation claims
under the FCA.” Chorches, 865 F.3d at 95.
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Vito contends that his employment at APA was terminated because of protected
activity. 6 Specifically, Vito alleges that he engaged in protected activity when he
repeatedly “raised his concerns regarding Dr. Canzoneri’s scheme” to “steal, re-use,
and re-bill partially[-]used single[-]dose vial medications previously billed at UMMC.”
Docket Item 28 at ¶¶ 32, 34. Those allegations suggest that he raised concerns about
the scheme to improperly bill reused medication and that Canzoneri knew he did—in
other words, that Vito “engaged in [protected] activity” and that “[his] employer was
aware of [that] activity.” See Dhaliwal, 752 F. App’x at 100.
But regardless of whether those allegations satisfy the pleading standard of Rule
8(a), Vito does not allege that he was terminated because of those complaints. Instead,
Vito specifically alleges that his “employment with APA was terminated by Canzoneri”
after he “questioned Dr. Canzoneri’s demand for payment.”7 Docket Item 28 at ¶ 26. In
other words, Vito alleges that he was terminated not for reporting improper reuse of
In counts four and five of the amended complaint, Vito asserts that Canzoneri
and APA retaliated against him by “initiating a pretextual, baseless summary
suspension of Vito’s privileges at UMMC.” Docket Item 28 at ¶¶ 77, 84. Vito does not,
however, allege any facts about the “summary suspension of Vito’s privileges at
UMMC,” so this Court limits its consideration of Vito’s retaliation claim to Vito’s
termination. Likewise, the amended complaint is not a model of clarity as to whether
Canzoneri’s demand for improper payments was a retaliatory act or the underlying
fraudulent scheme that prompted retaliation. Compare id. at ¶ 77 (alleging Canzoneri
and APA retaliated against Vito by “attempting to extort wrongful payments”), with id. at
¶ 78 (alleging that Vito “engaged in activities protected under the FCA by investigating
and reporting [] Canzoneri’s scheme to . . . attempt to extort wrongful payments from
Vito”). In any event, Vito’s retaliation claim fails for the reasons stated below.
6
Vito does not say exactly when he was terminated at APA. The timing might
support a claim that he was terminated for raising concerns about the reuse of singleuse medications. See Scharff, 2016 WL 5416494, at *10 (“The plausibility of [the
plaintiff’s] retaliation claim is strengthened by the temporal proximity between his
communications to supervisors and his subsequent termination.”).
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single-use medication vials, but instead for objecting to Canzoneri’s request that “Vito []
pay $250 per procedure . . . even though Canzoneri would no longer be scrubbing in.”8
Id.
And even under the “relatively low” standard applicable to FCA retaliation claims,
see Chorches, 865 F.3d at 95 (citation omitted), the amended complaint does not allege
how Vito’s “question[ing]” Canzoneri’s request for payments was an “effort[] to stop
[one] or more violations” of the FCA. 31 U.S.C. § 3730(h)(1). Indeed, only two
sentences of the amended complaint provide the factual basis of Canzoneri’s alleged
scheme to solicit payments. Docket Item 28 at ¶¶ 25-26. And neither sentence
connects the demand for improper payments from Vito to false claims submitted to the
government; that is, neither sentence shows how Vito’s objection to Canzoneri’s
“demand for payment” could be an “investigation[] [or] inquir[y] . . . directed at exposing
a fraud upon the government.” Scharff, 2016 WL 5416494, at *10 (citation omitted).
Because Vito has not alleged that he was terminated because he engaged in
protected activity, his retaliation claim also is subject to dismissal. 9
And even if Vito’s allegations can be read so broadly to suggest that he was
terminated for reporting the reuse of single-use medications, his retaliation claim still
would be subject to dismissal because he does not link that to claims submitted to the
federal or state government. As noted above, Vito does not even allege that Canzoneri
treated Medicare or Medicaid patients, let alone that reused vials were connected with
them. Without that connection, Vito’s complaints could not “reasonably [] be expected
to prevent the submission of a false claim to the government.” Chorches, 865 F.3d at
96.
8
Because this Court concludes that Vito’s retaliation claims cannot proceed
against Canzoneri or APA, it does not reach defendant Canzoneri’s argument that those
claims cannot proceed against him individually. See Docket Item 34-3 at 11-12. To the
extent that Vito intends to raise an “alter ego” theory of liability, however, the sparse
allegations in the amended complaint fail to satisfy the “heavy burden” of demonstrating
9
14
III.
COMMON LAW FRAUD CLAIM
In addition to his claims under the FCA and the NYFCA, Vito brings a common
law fraud claim under New York law. Docket Item 28 at ¶¶ 69-73. He alleges that the
defendants “commit[ted] common law fraud” by “engag[ing] in false, misleading, and
deceptive practices to bill patients, their insurance companies, the United States[,] and
[New York State] for re-used medication vials.” Docket Item 28 at ¶ 70. In other words,
Vito seeks to assert a common law fraud claim on behalf of the United States and New
York State governments, as well as on behalf of patients and private insurance
companies, for injuries suffered by those third parties. 10
But “[t]here is[] no common law right to bring a qui tam action; rather, a particular
statute must authorize a private party” to bring suit on behalf of the government. See
Woods v. Empire Health Choice, Inc., 574 F.3d 92, 98 (2d Cir. 2007). So Vito does not
have standing to bring a qui tam common law fraud action on behalf of the government.
See id. And that is true even though Vito may have suffered some injury unrelated to
the injury that a government suffered from the alleged fraud. See id. at 97 (“In a qui tam
action, a private plaintiff[] . . . brings suit on behalf of the [g]overnment to recover a
remedy for a harm done to the [g]overnment.” (emphasis added)). Moreover, to the
extent that Vito’s fleeting references to patients and insurance companies is intended to
assert the rights of others not before the Court, any attempt to establish third-party
that APA was Canzoneri’s alter ego. See U.S. ex rel. Brumfield v. Narco Freedom, Inc.,
2018 WL 5817379, at *2-5 (S.D.N.Y. Nov. 6, 2018).
Vito does not raise a common law fraud claim based on his own payments to
Canzoneri for surgeries in which Canzoneri did not participate. See Docket Item 28 at
¶¶ 69-73.
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standing falls well short. See N.Y. State Citizens’ Coal. for Children v. Poole, 922 F.3d
69, 75 (2d Cir. 2019) (“Whatever the status of the third-party standing bar, our cases
have developed an exception to it where a plaintiff can show (1) a close relationship to
the injured party and (2) a barrier to the injured party’s ability to assert its own interests.”
(citation and internal quotation marks omitted)).
Because Vito cannot bring a qui tam common law fraud claim, and because he
offers no reason why he can assert a common law fraud claim on behalf of other private
parties not before the Court, his common law fraud claim is subject to dismissal.
IV.
LEAVE TO AMEND
Vito does not request leave to amend. See generally Docket Item 37. And
Healogics contends that leave to amend should not be granted because Vito already
has amended his complaint once and any further leave to amend “would be futile.”
Docket Item 33 at 11-12; Docket Item 39 at 9-10. But because “[d]istrict courts typically
grant plaintiffs at least one opportunity to plead fraud with greater specificity when they
dismiss under Rule 9(b),” this Court grants Vito leave to amend his complaint. See
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007). Within 30
days of the date of this order, Vito may amend his complaint to correct the deficiencies
noted above. 11
Leave to amend any common law fraud claim asserted on behalf of the federal or
state government is denied, however, because Vito lacks standing to assert a common
Because the Court grants Vito leave to amend his complaint, it does not reach
Canzoneri’s and APA’s request for attorneys’ fees and expenses under 31 U.S.C. §
3730(d)(4). See Docket Item 34-3 at 12.
11
16
law qui tam claim. Leave to amend that claim therefore would be futile. See McCarthy
v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007).
CONCLUSION
For all the above reasons, the defendants’ motions to dismiss, Docket Items 32
and 34, are GRANTED in part. Vito’s qui tam common law fraud claim is dismissed,
and his other claims will be dismissed unless Vito amends his complaint, within 30 days,
to correct the deficiencies noted above. No later than 30 days after any second
amended complaint is filed, the defendants may answer, move against, or otherwise
respond to the second amended complaint. If Vito does not amend his complaint within
30 days of the date of this order, then his amended complaint will be dismissed without
further order and the Clerk of the Court shall close the case.
SO ORDERED.
Dated: March 22, 2022
Buffalo, New York
/s/ Lawrence J. Vilardo
LAWRENCE J. VILARDO
UNITED STATES DISTRICT JUDGE
17
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