United States of America et al v. Doyle et al
Filing
67
OPINION AND ORDER granting in part and denying in part 48 CDC Defendants' MOTION to Dismiss. Specifically, the Court denies the Motion (Doc. 48) with respect to all claims against CDC Martins Ferry and CDC Steubenville. The Court grants the Motion (Doc. 48) in all other respects. Accordingly, the Court dismisses with prejudice all claims against CDC Calcutta, CDC Champion Heights, CDC Dennison, CDC Newcomerstown, CDC Shadyside, and Doyle. The Court also grants 49 the NADG Defendants 039; Motion to Dismiss in its entirety, and thereby dismisses with prejudice all claims against the NADG Defendants. The Court denies 57 Kramer's Motion for Leave to File Fourth Amended Complaint. The Court therefore also denies as moot 62 the NADG Defendants' Partially Unopposed Motion for Leave to File Surreply Brief, Instanter. The Court directs the Clerk to terminate Doyle, CDC Calcutta, CDC Champion Heights, CDC Dennison, CDC Newcomerstown, CDC Shadyside, and the NADG Defendants from this action. This action will proceed as to all claims against CDC Martins Ferry and CDC Steubenville. Signed by Judge Douglas R. Cole on 4/21/22. (sct)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
UNITED STATES OF AMERICA ex
rel. JOHN N. KRAMER, D.D.S.,
Plaintiff,
Case No. 1:18-cv-373
JUDGE DOUGLAS R. COLE
v.
ROBERT A. DOYLE, JR., D.M.D., et
al.,
Defendants.
OPINION AND ORDER
This matter comes before the Court on (1) Defendants’ Robert A. Doyle, Jr.,
D.M.D., Complete Dental Care Calcutta, LLC (“CDC Calcutta”), Complete Dental
Care Champion Heights, LLC (“CDC Champion Heights), Complete Dental Care
Dennison, LLC (“CDC Dennison”), Complete Dental Care Martins Ferry, LLC (“CDC
Martins
Ferry”),
Complete
Dental
Care
Newcomerstown,
LLC
(“CDC
Newcomerstown”), Complete Dental Care Shadyside, LLC (“CDC Shadyside”), and
Complete Dental Care Steubenville, LLC (“CDC Steubenville”) (together, the “CDC
Defendants”) Motion to Dismiss (Doc. 48); (2) Defendants’ North American Dental
Group, LLC (“NADG”) and North American Dental Management, LLC (“NADM”)
(together, the “NADG Defendants”) Motion to Dismiss (Doc. 49); (3) Plaintiff John N.
Kramer, D.D.S.’s Motion for Leave to File Fourth Amended Complaint (Doc. 57); and
(4) the NADG Defendants’ Partially Unopposed Motion for Leave to File Surreply
Brief, Instanter (Doc. 62). For the reasons that follow, the Court GRANTS IN PART
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and DENIES IN PART the CDC Defendants’ Motion to Dismiss (Doc. 48). The Court
GRANTS the NADG Defendants’ Motion to Dismiss (Doc. 49) in its entirety. Because
further amendment would be futile, the Court also DENIES Kramer’s Motion for
Leave to File Fourth Amended Complaint (Doc. 57). Accordingly, the Court DENIES
AS MOOT the NADG Defendants’ Partially Unopposed Motion for Leave to File
Surreply Brief, Instanter (Doc. 62). The Court DISMISSES WITH PREJUDICE all
claims against Doyle, CDC Calcutta, CDC Champion Heights, CDC Dennison, CDC
Newcomerstown, CDC Shadyside, and the NADG Defendants.
BACKGROUND
For purposes of the instant motions to dismiss, the Court accepts as true the
factual allegations in the operative Third Amended Complaint (Doc. 37). Thus, the
Court reports and relies on those allegations here, but with the disclaimer that these
facts are not yet established, and may never be.
On May 31, 2018, Kramer, a dentist who practices in Martins Ferry, Ohio, filed
the original Complaint as the Relator in this qui tam action. (See Doc. 1). Kramer
filed an Amended Complaint (Doc. 11) on March 6, 2019, and a Second Amended
Complaint (Doc. 14) on June 4, 2019. On November 8, 2019, the United States
declined to intervene. (See Doc. 26). Both sets of Defendants filed Motions to Dismiss
(Docs. 28, 31) the Second Amended Complaint on November 12, 2019. Shortly
thereafter, on December 3, 2019, Kramer filed a Third Amended Complaint (Doc. 37),
which is now the operative complaint in this action.
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In general terms, the Third Amended Complaint alleges that all Defendants
violated the False Claims Act (“FCA”) by submitting or causing submission to the
Ohio Medicaid program of insurance claims for dental procedures, particularly root
canals, that were not medically necessary or for which the individual who performed
the procedure was not properly licensed. As to the former, Kramer recites that the
Ohio Medicaid program requires any medical provider to enter a Provider Agreement
that includes a requirement “[t]o render medical services as medically necessary for
the patient and only in the amount required by the patient.” (Third Am. Compl., Doc.
37, #459 (quoting Ohio Admin. Code 5160-1-17.2)). Medical necessity means that the
treatment “[m]eets generally accepted standards of medical practice,” “[i]s the lowest
cost alternative that effectively addresses and treats the medical problem,” and is
“[n]ot provided primarily for the economic benefit of the provider.” (Id. at #462
(quoting Ohio Admin. Code 5160-1-01(C))).
In addition to these general criteria, Kramer explains that Ohio Medicaid
imposes certain specific requirements regarding root canals. First, root canals are
“covered only when the overall health of the teeth … is good except for the indicated
tooth or teeth.” (Id. at #467 (quoting Ohio Admin. Code 5160-5-01(F)(1), App’x A at
7)). Second, “[t]he patient must experience chronic pain (as evidenced by sensitivity
to hot or cold or through percussion or palpation), or there must be a fistula present
that is associated with tooth infection or chronic systemic infection.” (Id.). Third, if
an x-ray or other “image” does not show a need for a root canal, “then the need for [a
root canal] must be substantiated by clinical documentation.” (Id.).
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As for his licensing allegations, Kramer notes that Medicaid regulations limit
reimbursement for dental services to those services that are provided by properly
licensed dentists. (Id. at #463 (citing Ohio Admin. Code 5160-5-01(C)(1)(a), (C)(1)(b))).
To be properly licensed, the dentist must hold a “current license from the state dental
board.” (Id. at 463–64 (citing Ohio Rev. Code 4715.09(A))). Among other things, nondentists may not perform root canals or cut into teeth. (Id. at #494–95 (citing Ohio
Rev. Code 4715.64(A))). Ohio Medicaid considers “[b]illing for services that are
outside the current license limitations, scope of practice, or specific parameters of the
person supplying the service” to be “fraud, waste, and abuse.” (Id. at #495 (citing Ohio
Admin. Code 5160-1-29(C)(9))).
Against that regulatory backdrop, the core theory of Kramer’s Third Amended
Complaint is that “the business practice and policy of Complete Dental Care is to
submit false claims for medically unnecessary services to the Ohio Medicaid Program
for federal funds.” (Id. at #509). In support of this claim, Kramer makes allegations
regarding eight specific patients who received or sought dental care from CDC
Martins Ferry or CDC Steubenville, all of whom Kramer subsequently treated, and
all of whom were Medicaid patients except one. Kramer alleges that the care his eight
example patients received from (or, as to two patients, was offered by) CDC Martins
Ferry or CDC Steubenville did not conform to either the general standards of the
Ohio Medicaid program or its specific requirements regarding root canals. More
specifically, Kramer alleges that each example patient actually received (or was
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offered) one or more medically unnecessary root canals, and that some dental
procedures were performed by individuals who were not licensed to perform them.
Kramer makes the following specific allegations with respect to each patient:
(1) CDC Martins Ferry performed seven root canals “of very poor quality” on
Patient One over a period of three months without gathering preoperative x-rays,
clinical tests, or any documentation of trauma or infection. (See id. at #470, 475–76).
Less than two years later, personnel at CDC Martins Ferry recommended extraction
of the same teeth on which the patient had previously received root canals. (See id.
at #479). For Patient One only, Kramer identifies the date of each dental procedure,
billing codes, and amounts paid by the Ohio Medicaid program. (Id. at #481–82).
(2) CDC Steubenville performed four medically inappropriate root canals on
Patient Two’s “grossly decayed” upper front teeth, teeth numbers 7–10, even though
Patient Two did not want root canals and instead asked for removal of those teeth.
(Id. at #483–84). When Patient Two sought removal instead of root canals, the CDC
Steubenville dentist became angry and “threw instruments on the table.” (Id. at
#483). Performance of those root canals without placing crowns on the teeth “only
delayed” extraction, which was inevitably necessary. (Id. at #484).
(3) During a single appointment, CDC Martins Ferry personnel performed six
“poor quality” root canals for Patient Three on teeth that showed no need for that
procedure in x-rays Kramer reviewed shortly afterward, and for which Patient Three
had reported no pain, trauma, or signs of infection. (See id. at #485–88). CDC Martins
Ferry personnel also failed to provide Patient Three or Kramer (as Patient Three’s
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subsequent dentist) with the preoperative x-rays or other documentation required for
a root canal procedure by Ohio Medicaid. (Id. at #486).
(4) CDC Martins Ferry personnel proposed a medically unnecessary root canal
on Patient Four, a child who was not a Medicaid beneficiary, for a tooth that showed
no sign of need for such procedure in x-rays, and in which the child had no pain. (Id.
at #492–93). Patient Four did not receive that root canal. (See id.).
(5) CDC Martins Ferry personnel performed three medically unnecessary root
canals on Patient Five. (See id. at #497–98). In violation of Ohio licensure law, a nondentist was the one who filled the root canals on two of the teeth with gutta-percha.
(Id. at #496–97). CDC Martins Ferry personnel performed the root canal on the third
tooth without informing Patient Five that it would do so. (Id. at #498). The third tooth
subsequently required “extensive work” due to the poor quality of the unnecessary
root canal. (Id.).
(6) Patient Six received a medically unnecessary root canal on one tooth and
also received fillings on approximately twelve other teeth. (See id. at #500–02). Nondentists cut into the teeth as part of the filling procedures in violation of Ohio
licensure law. (See id. at #501–02).
(7) Patient Seven, a child, had pain in only one tooth, but CDC Martins Ferry
personnel recommended “four or five” root canals, two of which they in fact performed.
(Id. at #504–05). The procedures left an “inappropriate gap” between those two teeth,
putting the patient at risk of infection. (Id. at #506). A non-dentist cut into a tooth in
violation of Ohio licensure law. (Id. at #506–07).
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(8) CDC Martins Ferry personnel told Patient Eight that he needed eighteen
(18) root canals, nine of which it proposed to do the same day. (Id. at #507). According
to Kramer, several of these teeth were so decayed that root canals would likely be
unsuccessful and they would need to be extracted anyway. (Id. at #508). On the other
hand, many of the remaining teeth showed no signs of needing root canals in
Kramer’s subsequent x-rays. (Id. at #509). Patient Eight did not receive root canals
at CDC Martins Ferry.
With respect to the CDC Defendants other than CDC Martins Ferry and CDC
Steubenville, Kramer alleges that Doyle owns all seven CDC branches named in the
Third Amended Complaint, with sixteen other dentists working under Doyle’s
direction at the various locations. (See id. at #448). Kramer further alleges that “[a]s
the owner and ‘mentor’ in control of all Complete Dental Care practices, Doyle
directed the shared practices, procedures, and financial goals that drive the
unnecessary and unlicensed dental procedures that Complete Dental Care inflicts on
Medicaid patients at all of its locations.” (Id. at #449). Kramer also alleges that Doyle
sometimes calls employees of CDC practices on the phone if they do not make their
daily revenue goals, although “not much” otherwise happens to such employees. (Id.
at #491).
And as for the NADG Defendants, Kramer alleges that the parent company,
NADG, “purchased or acquired a management interest in Dr. Doyle’s Complete
Dental Care practices” sometime in late 2018. (Id. at #453). This suggests that NADG
had “purchased or acquired” that otherwise unspecified “management interest” by
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the time Patients Six and Seven, and possibly Patient Five, received treatment at
CDC Martins Ferry. Kramer alleges that the NADG Defendants knew the CDC
Defendants could not maintain the revenue they were generating without continuing
Doyle’s practices of performing medically unnecessary dental procedures and of
having non-dentists perform procedures that only dentists may perform under Ohio
law. (Id. at #454). But Kramer alleges that the NADG Defendants nevertheless not
only continued these practices but financially incentivized them by offering equity to
dentists who met certain revenue targets. (Id.).
THE PENDING MOTIONS
On December 24, 2019, the CDC Defendants and the NADG Defendants each
moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). (Docs. 48, 49). The
CDC Defendants argue that Kramer fails to state a claim against CDC Martins Ferry
and CDC Steubenville because he only alleges that he disagrees with the medical
treatment that the example patients were offered or received at those locations. (CDC
Mot. to Dismiss (“CDC Mot.”), Doc. 48, #556). The CDC Defendants also argue that
Kramer has failed to identify any specific false claim or statement by Doyle and the
five corporate CDC Defendants other than CDC Martins Ferry and CDC
Steubenville. (Id. at #555). The NADG Defendants argue primarily that Kramer has
failed to allege that any of them submitted or caused submission of a false claim or
statement. (See NADG Mot. to Dismiss (“NADG Mot.”), Doc. 49, #580). Kramer
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responded in opposition (Doc. 54) on January 23, 2020, 1 and both sets of Defendants
replied in support (Docs. 55, 56) on February 6, 2020.
On February 14, 2020, Kramer filed a Motion for Leave to File Fourth
Amended Complaint (Doc. 57), to which he attached his Proposed Fourth Amended
Complaint (see Docs. 57-1, 57-2). The Proposed Fourth Amended Complaint adds
general factual allegations that Doyle directly instructed non-dental employees at
CDC locations to add services to some patients’ treatment plans that were not
approved by the patient’s treating dentist. (See Prop. Fourth Am. Compl., Mot. to
Amend Ex. B, Doc. 57-2, #1093). Kramer’s source for this information is “[a] former
Complete Dental Care employee who worked at several Complete Dental Care offices
in 2017, including Martins Ferry and Shadyside.” (Id. at #1092). Another former
employee, this one from NADG’s Refresh Dental Office in Shaker Heights, Ohio,
reported to Kramer that the NADG Defendants have sent Doyle to that location to
lead an “Optimization Team” instructing dentists to perform medically unnecessary
root canals and belittling dentists who refuse to do so. (See generally id. at #1095–
98). Both sets of Defendants responded in opposition (Docs. 59, 60) to Kramer’s
Motion to Amend on March 6, 2020. Kramer replied in support (Doc. 61) on March
20, 2020.
On the same day, the United States also responded in opposition (Doc. 53) to exercise its
statutory veto power over the NADG Defendants’ Motion to Dismiss to the extent that the
NADG Defendants argue that the FCA’s public disclosure bar is grounds for dismissal of
Kramer’s claims. (See U.S. Resp. in Opp’n to NADG Mot., Doc. 53, #599 (citing 31 U.S.C.
§ 3730(e)(4)(A))). The NADG Defendants do not contest that exercise of the government’s
statutory power in their Reply. (See Doc. 55, #902). Accordingly, the Court does not consider
the public disclosure bar as a basis for dismissal here.
1
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On April 2, 2020, the NADG Defendants filed a Partially Unopposed Motion
for Leave to File Surreply Brief, Instanter (Doc. 62) in connection with Kramer’s
Motion to Amend. The NADG Defendants argue that a surreply is appropriate
because Kramer’s Reply in support of his Motion to Amend makes new arguments
regarding the legal standard for liability under the FCA and attaches a then-recent
USA Today article about the NADG Defendants’ patient care practices. (See Mot. for
Leave to File Surreply (“Surreply Mot.”), Doc. 62, #1270–71). Kramer responded in
opposition (Doc. 63) on April 23, 2020, opposing the NADG Defendants’ Motion only
in part. Specifically, Kramer does not oppose the NADG Defendants’ request to file a
surreply with respect to the USA Today article. (Resp. in Opp’n to Surreply Mot., Doc.
63, #1289). But Kramer does oppose granting the NADG Defendants leave to file a
surreply in all other respects. (See id.).
LEGAL STANDARD
At the motion to dismiss stage, a complaint must “state[] a claim for relief that
is plausible, when measured against the elements” of a claim. Darby v. Childvine,
Inc., 964 F.3d 440, 444 (6th Cir. 2020) (citing Binno v. Am. Bar Ass’n, 826 F.3d 338,
345–46 (6th Cir. 2016)). “To survive a motion to dismiss, in other words, [plaintiffs]
must make sufficient factual allegations that, taken as true, raise the likelihood of a
legal claim that is more than possible, but indeed plausible.” Id. (citations omitted).
In making that determination, the Court must “construe the complaint in the
light most favorable to the plaintiff, accept its allegations as true, and draw all
reasonable inferences in favor of the plaintiff.” Bassett v. Nat’l Collegiate Athletic
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Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (internal quotation omitted). That is so,
however, only as to factual allegations. The Court need not accept as true a plaintiff’s
legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007)).
Moreover, the well-pled facts must be sufficient to “raise a right to relief above
the speculative level,” such that the asserted claim is “plausible on its face.” Iqbal,
556 U.S. at 678; Twombly, 550 U.S. at 546–47. Under the Iqbal/Twombly plausibility
standard, courts play an important gatekeeper role, ensuring that claims meet a
threshold level of factual plausibility before defendants are subjected to the potential
rigors (and costs) of the discovery process. “Discovery, after all, is not designed as a
method by which a plaintiff discovers whether he has a claim, but rather a process
for discovering evidence to substantiate plausibly-stated claims.” Green v. Mason, 504
F. Supp. 3d 813, 827 (S.D. Ohio 2020).
The plausibility requirement has additional teeth as to claims, such as those
here, that assert fraud. That is because, under Federal Rule of Civil Procedure 9(b),
a party alleging fraud must “state with particularity the circumstances constituting
fraud,” but “conditions of a person’s mind may be alleged generally.” That means that
“a plaintiff, at a minimum, must ‘allege the time, place, and content of the alleged
misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent
intent of the defendants; and the injury resulting from the fraud.’” United States ex
rel. Bledsoe v. Cmty. Health Sys., Inc. (“Bledsoe I”), 342 F.3d 634, 643 (6th Cir. 2003)
(quoting Coffey v. Foamex L.P., 2 F.3d 157, 161–62 (6th Cir. 1993)). Stated another
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way, a plaintiff must identify the “‘who, what, when, where, and how’ of the alleged
fraud.” Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006)
(quoting United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125
F.3d 899, 903 (5th Cir. 1997)).
Because this case involves multiple defendants, another aspect of Federal Rule
of Civil Procedure 9(b) also come into play. Specifically, the particularity requirement
prohibits plaintiffs from relying on “group pleading.” That is, “[a] complaint may not
rely upon blanket references to acts or omissions by all of the defendants.” See, e.g.,
Bledsoe I, 342 F.3d at 643. Rather, under Rule 9(b), “each defendant named in the
complaint is entitled to be apprised of the circumstances surrounding the fraudulent
conduct with which he individually stands charged.” Id; see also United States ex rel.
Bledsoe v. Cmty. Health Sys., Inc. (“Bledsoe II”), 501 F.3d 493, 510 (6th Cir. 2007)
(“[I]mproperly pled allegations of fraud do not become adequate merely by placing
them in the same complaint with allegations that are sufficient …. Allowing such a
complaint to go forward in toto would not provide defendants with the protections
that Rule 9(b) was intended to afford them ….”). Or phrased slightly differently, “[t]he
prohibition on group pleading under Rule 9(b) prevents a plaintiff from simply
lumping multiple defendants together without explaining each defendant’s culpable
role.” Sugarlips Bakery, LLC v. A&G Franchising, LLC, No. 3:20-cv-00830, 2022 WL
210135, at *10 (M.D. Tenn. Jan. 24, 2022).
The Sixth Circuit has also interpreted Rule 9(b) to impose another requirement
specific to FCA cases. To state a claim against a defendant for violating 31 U.S.C.
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§ 3729(a)(1)(A), a plaintiff who alleges a fraudulent scheme “must also identify a
representative false claim that was actually submitted to the government.”
Chesbrough v. VPA, P.C., 655 F.3d 461, 470 (6th Cir. 2011). That is because the FCA
“attaches liability, not to the underlying fraudulent activity or to the government’s
wrongful payment, but to the claim for payment.” Sanderson, 447 F.3d at 877–78
(citation omitted). Accordingly, “Rule 9(b) does not permit a False Claims Act plaintiff
merely to describe a private scheme in detail but then to allege simply that claims
requesting illegal payments must have been submitted, were likely submitted or
should have been submitted to the Government.” Id. at 877. Instead, the false claim
itself is “the sine qua non of a False Claims Act violation.” Id. at 878.
To “identify” a specific claim, a plaintiff must include details such as claim
submission dates or amounts that would allow the defendant “reasonably to pluck
out” the allegedly fraudulent representative claim or claims “from all the other claims
[it] submitted.” See United States ex rel. Owsley v. Fazzi Assocs., Inc., 16 F.4th 192,
197 (6th Cir. 2021). The Sixth Circuit has characterized this requirement as
“stringent” at the pleading stage. United States ex rel. Ibanez v. Bristol-Myers Squibb
Co., 874 F.3d 905, 914 (6th Cir. 2017).
Finally, because Kramer has requested that this Court grant him leave to file
his Proposed Fourth Amended Complaint in lieu of granting dismissal, another set of
standards also comes into play. (See Resp. in Opp’n to Mots. (“Opp’n”), Doc. 54, #650;
see also Mot. for Leave to File Fourth Am. Compl. (“Mot. to Amend”), Doc. 57). Under
Federal Rule of Civil Procedure 15, a party may amend only with the opposing party’s
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written consent (which was not forthcoming here), or leave of the Court. As to the
latter, although the question is committed to the trial court’s discretion, the “court
should freely give leave when justice so requires.” Foman v. Davis, 371 U.S. 178, 182
(1962). When assessing whether to grant leave, the Court should consider whether
there has been “undue delay in filing, lack of notice to the opposing party, bad faith
by the moving party, repeated failure to cure deficiencies by previous amendments,
undue prejudice to the opposing party, or whether the amendment would be futile.”
Gen. Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990) (citation and
internal quotation marks omitted).
LAW AND ANALYSIS
This case turns largely on Federal Rule of Civil Procedure 9(b)’s requirement
to allege fraud with particularity. As discussed above, in the context of FCA cases,
the Sixth Circuit has interpreted Rule 9(b) to require a plaintiff to identify a specific
representative false claim that was actually submitted to the government. 2 That is
sometimes called the “presentment” requirement. See, e.g., United States ex rel.
Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750, 768 (6th Cir. 2016).
There is an exception to this requirement for plaintiffs who allege that they have “personal
knowledge” of a defendant’s billing practices, sometimes dubbed “the Prather exception.” See
United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750, 769 (6th
Cir. 2016); Ibanez, 874 F.3d at 915. Such a plaintiff may allege facts supporting a strong
inference that claims were submitted to the government without identifying a specific claim.
See Prather, 838 F.3d at 769. Kramer does not allege personal knowledge of the Defendants’
billing practices and apparently disavows reliance on the Prather exception. (See Reply in
Supp. of Mot. for Leave to File Fourth Am. Compl., Doc. 61, #1172). Moreover, as discussed
in more detail below, Kramer does identify some representative claims with sufficient
particularity as to some Defendants. For these reasons, the Court does not consider whether
the Prather exception might be an alternative avenue to liability for any Defendant here.
2
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The parties do not dispute that the presentment requirement applies in this case. But
they do dispute, at least implicitly, how the presentment requirement applies to
multi-defendant cases such as this one. For example, the CDC Defendants argue that
dismissal of Kramer’s claims against Doyle and five of the seven corporate CDC
Defendants is warranted because Kramer fails to tie those Defendants to an
identified representative false claim. (CDC Mot., Doc. 48, #555–56). By contrast,
Kramer argues that he need only identify a single representative claim in order to
allege the entire scheme as to all Defendants. (Opp’n, Doc. 54, #644).
Thus, before turning to the sufficiency of the allegations against each
Defendant here, the Court must confront a pure question of law. In a multi-defendant
FCA case, must a plaintiff identify a representative claim submitted, or caused to be
submitted, by each defendant in order to state a claim against that defendant? Or is
it enough to identify a representative claim submitted, or caused to be submitted, by
some, but not all, defendants, and then allege that the remaining defendants were
part of the fraudulent scheme, without tying them to the identified representative
claim?
To the Court’s knowledge, neither the Sixth Circuit nor any district court in
this circuit has explicitly addressed this issue thus framed. Still, there is considerable
case law on the pleading standards applicable in FCA cases more generally, and the
Court finds that precedent instructive here. Based on binding Sixth Circuit case law,
the Court concludes that to state a claim against a given defendant, a complaint must
identify a specific false claim submitted, or caused to be submitted, by that defendant.
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In other words, a complaint that identifies one or more representative claims with
sufficient particularity, but then connects only some, but not all, of the defendants to
those identified claims, fails to state a claim against the defendants whose connection
to the identified claims it has not adequately pled.
That is not to say that the particular defendant him, her, or itself must have
actually presented the identified claim. Rather, it is enough if that defendant has a
causal link to the submission of the claim. Thus, for example, if a business owner uses
his managerial authority to cause a claim to be submitted, the owner may be on the
hook under the FCA. Conversely, though, identifying a claim that one entity
submitted would not suffice to state an FCA claim against another affiliated entity
on the theory that the latter entity was under common operational control, and thus
likely submitted false claims, as well.
The Court finds such a claim-by-claim, rather than complaint-by-complaint,
approach to the presentment requirement more compatible with Sixth Circuit case
law. For one thing, as discussed above, the Sixth Circuit has repeatedly emphasized
that Rule 9(b) prohibits group pleading in complaints alleging fraud. See, e.g., Bledsoe
I, 342 F.3d at 643. Put another way, a plaintiff may not rely on allegations of fraud
that lump all defendants together, without separately explaining each defendant’s
role in the alleged fraudulent conduct. See Sugarlips, 2022 WL 210135, at *10. The
Sixth Circuit has emphasized that at least part of the rationale for the rule against
group pleading is that each defendant is entitled to notice of the specific fraudulent
conduct in which the plaintiff alleges that he individually engaged. Bledsoe I, 342
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F.3d at 643. Thus, the presence of allegations in a complaint that are adequately pled
as to some defendants does not lower the bar to state a claim against the remaining
defendants. Cf. Bledsoe II, 501 F.3d at 510 (“[I]mproperly pled allegations of fraud do
not become adequate merely by placing them in the same complaint with allegations
that are sufficient ….”).
To be sure, bootstrapping additional defendants onto identified claims whose
submission those defendants did not cause might not be group pleading in the
narrowest sense, at least insofar as a plaintiff also alleges the role that those
additional defendants played in the fraudulent scheme more generally. But the Court
finds that the rule against group pleading logically extends to the applicability of the
presentment requirement to each defendant in a multi-defendant case. The Court
sees nothing in the case law to indicate that what it takes to state a claim against a
given defendant in an FCA case should depend on how many other defendants a
complaint also names. To the contrary, the Sixth Circuit has repeatedly said the
opposite—Rule 9(b) requires plaintiffs to allege fraud with particularity on a
defendant-by-defendant basis, and not generally as to all defendants. See Bledsoe I,
342 F.3d at 643; Bledsoe II, 501 F.3d at 510. In the same vein, the Sixth Circuit has
stated that a plaintiff who alleges that a defendant submitted or caused submission
of false claims must “identify the entire chain—from start to finish” that connects the
defendant to an identified representative claim. Ibanez, 874 F.3d at 914. The case law
contains no suggestion that this requirement is diminished where a complaint names
more than one defendant. Thus, the Court holds that Rule 9(b) requires a plaintiff to
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adequately allege each element of the FCA claim, including identifying a
representative claim actually submitted or caused to be submitted by the defendant
in question, in order to state a claim against that defendant.
The Court finds further support for its interpretation of the pleading standard
for presentment in multi-defendant FCA cases in Sixth Circuit precedent that
actually applies the presentment requirement in such contexts. For example, in
Owsley, the plaintiff alleged that a single third-party medical coding company
prepared fraudulent materials used by each of several home-health agencies owned
by a common parent. 16 F.4th at 195. However, the plaintiff only provided example
claims from the agency where she had worked, not the other sister agencies. See id.
at 197. The Sixth Circuit determined that dismissal of the claims against the other
agencies was appropriate because the plaintiff had not fulfilled the presentment
requirement as to those agencies. Id.
Thus, in Owsley, common ownership and a common connection to the billing
company that allegedly facilitated the fraudulent scheme apparently did not
substitute for fulfilling the presentment requirement as to each defendant. While this
conclusion was arguably dicta, because the Sixth Circuit also found that the plaintiff
did not fulfill the presentment requirement with respect to even the home-health
agency where she worked, see id., it nevertheless illustrates that the Owsley court
apparently contemplated full applicability of the presentment requirement to each
defendant in a multi-defendant case. 3
Judge Clay’s partial dissent in United States ex rel. Branhan v. Mercy Health System of
Southwest Ohio, 188 F.3d 510 (Table), 1999 WL 618018, at *10 (6th Cir. Aug. 5, 1999),
3
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Kramer’s argument to the contrary rests on an unwarranted extension of the
notion of a “fraudulent scheme” as a means of satisfying Rule 9(b). To be sure, the
Sixth Circuit has said that a plaintiff who adequately identifies a single
representative claim may proceed to discovery on “the entire fraudulent scheme.”
Bledsoe II, 501 F.3d at 510. But as explained in more detail below, in context, this
holding allows plaintiffs to aggregate false claims of the same kind submitted by a
given defendant, not to bring in additional defendants without otherwise satisfying
the presentment requirement as to those defendants.
In Bledsoe II, the plaintiff adequately identified a representative claim in
which a hospital added extra diagnosis codes to a patient’s principal diagnosis code
in order to fraudulently increase the amount of claims submitted for that patient. 501
F.3d at 514–15. The Sixth Circuit held that this single representative false claim was
enough for the case to proceed as to all alleged false claims of that kind submitted by
the same defendants. Id. at 515. In other words, a plaintiff who adequately alleges a
representative claim is not limited to seeking relief with respect to only that one
identified claim, but may pursue his case against the defendant who submitted the
identified claim with respect to similar claims also submitted by that defendant.
provides further support for strictly applying the presentment requirement to each defendant
in a multi-defendant case. There, despite concluding, contrary to the majority, that the
plaintiff had met the presentment requirement as to one hospital, he nonetheless agreed that
the plaintiff had failed to state a claim on presentment grounds as to the other hospitals, all
of whom the plaintiff had alleged were under common control and part of the same fraudulent
billing scheme. Id. Like the Owsley court, Judge Clay thus apparently assumed that the
presentment requirement applies with full force to each defendant in a multi-defendant case.
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Allowing a plaintiff who alleges a fraudulent scheme by a defendant to identify
only one or a subset of representative claims submitted by that defendant makes
sense. In the absence of such an aggregating principle, many cases alleging false
claims would either be miniscule in scope, since they would only pertain to one or a
few alleged false claims identified in a complaint, or prohibitively unwieldy, since a
plaintiff alleging a vast scheme would have to describe every one of potentially
hundreds or thousands of similar false claims before even proceeding to discovery.
See id. at 509 (“Where the allegations in a relator’s complaint are complex and farreaching, pleading every instance of fraud would be extremely ungainly, if not
impossible.”) (citation and internal quotation marks omitted). But allowing a plaintiff
who identifies a representative claim by one defendant to also pursue other alleged
false claims by that same defendant is a far cry from saying that a plaintiff need not
satisfy the presentment requirement at all with respect to other defendants who did
not submit (or cause submission of) the identified claim.
Kramer’s view also leaves key questions unanswered. Just how does a plaintiff
tie a defendant to an alleged fraudulent scheme, if not by identifying a representative
false claim that the defendant in question submitted or caused to be submitted? In
Bledsoe II, the Sixth Circuit undertook a painstaking claim-by-claim analysis of a
range of allegations about different kinds of fraudulent claims, finding the
presentment requirement fulfilled as to one of those categories (or “schemes”), but
not the others. For example, the presentment requirement was met as to a scheme
involving adding diagnosis codes, as discussed above, but was not met as to a scheme
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involving unnecessary glucometer and heel sticks. 501 F.3d at 512, 514. Thus, even
in the context of a single defendant, the Sixth Circuit limited the scope of a
“fraudulent scheme” to include only alleged false claims sufficiently like the identified
claim at issue. See id. at 510 (“We conclude that the concept of a fraudulent scheme
should be construed as narrowly as is necessary to protect the policies promoted by
Rule 9(b).”). More specifically, the Sixth Circuit said that the identified claim must
be “representative” of the category of claims that allegedly comprise the fraudulent
scheme. Id.
If alleging a fraudulent scheme were an avenue for bringing in additional
defendants, and not only additional false claims by a given defendant, the Court
would expect to find some similar limiting principle for determining when a
defendant is sufficiently tied to a fraudulent scheme. But Kramer cites, and the Court
has found, no precedent that provides any general standard to guide such a
determination. In the Court’s view, the most likely explanation for that absence is
that alleging a fraudulent scheme is not an alternative to fulfilling the presentment
requirement as to each defendant in a multi-defendant case, but only a vehicle for
aggregating false claims made by a given defendant.
In reaching this result, the Court acknowledges it is perhaps reading too much
into Owsley’s tea leaves. One could imagine, for example, an alternative approach
where a plaintiff need only identify one or more representative claims by a given
defendant, coupled with allegations that show it was likely that the other defendants
in the “scheme” themselves submitted similar claims. For example, imagine a single
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owner of five affiliated business entities, all operating in the same field. The owner
has a uniform operations manual that it uses for each entity. The plaintiff plausibly
alleges that the manual’s procedures cause Entity 1 to submit false claims, of which
the plaintiff provides one or more representative examples in her complaint. The
plaintiff then also alleges that all five entities use the same operations manual, and
that they submit claims, but the plaintiff does not allege any representative claims
submitted by the remaining entities. The Court could conceive of pleading rules
where such allegations would suffice to state a plausible claim against all five
entities. But the Court declines to adopt that rule here, largely because that approach
appears to the Court inconsistent with both (1) Owsley, which seems to require
allegations tying each defendant to the submission of one or more representative false
claims identified in the complaint, and (2) the Sixth Circuit’s admonition to construe
“the concept of a fraudulent scheme” “as narrowly as is necessary to protect the
policies promoted by Rule 9(b).” Bledsoe II, 501 F.3d at 510.
Based on that understanding, the Court will proceed on a defendant-bydefendant basis, in each case asking whether Kramer adequately alleges that that
defendant has submitted, or caused to be submitted, a false claim that Kramer has
identified with sufficient particularity. The Court finds that Kramer has met this
requirement with respect to two of the seven corporate CDC Defendants, but not with
respect to Doyle, the other five corporate CDC Defendants, or the NADG Defendants.
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A.
The Third Amended Complaint States A Claim Against CDC Martins
Ferry.
The Court begins with the dental practice that Kramer alleges submitted false
claims for five patients whom Kramer himself subsequently treated, CDC Martins
Ferry. As discussed in more detail above, Kramer alleges that CDC Martins Ferry
conducted medically unnecessary or unlicensed dental procedures on Patients One,
Three, Five, Six, and Seven, all Medicaid beneficiaries, and submitted claims for
those procedures to Medicaid. For Patient One only, Kramer also provides exact
service dates, billing codes, and amounts for the alleged false claims. For the reasons
that follow, these allegations suffice to state FCA claims for both submission of a false
claim and false statement against CDC Martins Ferry.
1.
The Third Amended Complaint Adequately Alleges Submission
Of False Claims By CDC Martins Ferry.
Anyone who “knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval” to the United States government has
violated the FCA. See 31 U.S.C. § 3729(a)(1)(A). Under the “implied certification”
theory of liability, a claim may be “false or fraudulent” if it “makes specific
representations about the goods or services provided, but knowingly fails to disclose
the defendant’s noncompliance with a statutory, regulatory, or contractual
requirement.” Universal Health Servs., Inc. v. United States, 579 U.S. 176, 181 (2016).
However, “[a] misrepresentation about compliance with a statutory, regulatory, or
contractual requirement must be material to the Government’s payment decision in
order to be actionable under the False Claims Act.” Id.
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Here, Kramer’s detailed allegations that CDC Martins Ferry performed
medically unnecessary and unlicensed procedures on Patients One, Three, Five, Six,
and Seven, combined with his identification of service dates, billing codes, and
amounts paid for Patient One, suffice to state a claim for submission of a false claim
to the Ohio Medicaid program under an implied certification theory. The Third
Amended Complaint alleges that Kramer personally examined the patients who
received these procedures at CDC Martins Ferry and learned facts about each that
support not only a general absence of medical necessity, but also failure to conform
to the specific requirements for root canals as indicated in the Provider Service
Agreement and Ohio Administrative Code. For example, the Third Amended
Complaint alleges that some Medicaid patients had no pain or infection and that CDC
Martins Ferry failed to conduct x-rays or collect other documentation as required
before proceeding with a root canal. (See, e.g., Third Am. Compl., Doc. 37, #475, 489).
The Third Amended Complaint further alleges that non-dentists performed
procedures on Medicaid patients, such as cutting into teeth, that only dentists were
to perform under Ohio law. (See id. at #501). Notably, for Patient One, the Third
Amended Complaint also identifies the date of service submitted to the Ohio Medicaid
program for each procedure at issue, the amount of reimbursement, and the billing
code. (Id. at #481–82).
Together, these allegations state that CDC Martins Ferry submitted Ohio
Medicaid claims for root canals and other dental procedures that concealed violations
of statutory, regulatory, and contractual requirements. These requirements included
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Ohio Medicaid’s medical necessity requirement reflected in the Service Provider
Agreement, the specific documentation and symptom requirements of the Ohio
Administrative Code, and Ohio’s dental licensure requirements. See Ohio Admin.
Code 5160-5-01(F)(1). It is plausible that all of these requirements are material to
the government’s payment decision regarding claims submitted for dental services.
See, e.g., United States v. Bertram, 900 F.3d 743, 749 (6th Cir. 2018) (lack of medical
necessity of urinalysis tests material); United States ex rel. Doe v. Heart Solution, PC,
923 F.3d 308, 317 (3d Cir. 2019) (lack of licensure to perform neurological test
material). Kramer also identifies specific false claims by date, billing code, and
amount paid for Patient One, thus satisfying the requirement to identify “a
representative false claim that was actually submitted to the government.” See
Chesbrough, 655 F.3d at 470. To be sure, at an appropriate stage of this litigation,
CDC Martins Ferry might be able to show that it did comply with the requirements
at issue, that its noncompliance was not material, or that it did not submit the claims
Kramer alleges. If so, then summary judgment might be appropriate. For purposes of
a motion to dismiss, however, Kramer’s allegations against CDC Martins Ferry
suffice to state a claim.
The CDC Defendants urge a different result, arguing that Kramer’s allegations
amount to mere disagreement with the dental treatments that CDC Martins Ferry
offered, which is insufficient to support a claim for violation of the FCA. (See CDC
Mot., Doc. 48, #556–57). But the Third Amended Complaint alleges more than a mere
difference of opinion. For one thing, it alleges that CDC Martins Ferry violated Ohio
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Medicaid’s express requirements by performing root canals and other dental
procedures without x-rays or other documentation showing their medical necessity,
in the absence of pain, infection, or trauma to the tooth, and with non-dentists
performing tasks only a licensed dentist may perform under Ohio law. (See Third Am.
Compl., Doc. 37, #466–68). Thus, Kramer does not merely allege that CDC Martins
Ferry performed shoddy work, but rather that it billed Ohio Medicaid for work that
did not materially comply with that program’s express requirements.
Moreover, as the Sixth Circuit has recently stated, “opinions may trigger
liability for fraud when they are not honestly held by their maker, or when the
speaker knows of facts that are fundamentally incompatible with his opinion.” United
States v. Paulus, 894 F.3d 267, 275 (6th Cir. 2018). The Third Amended Complaint
plausibly alleges that CDC Martins Ferry submitted claims for dental procedures
that the performing dentist did not honestly believe were medically necessary, or at
the very least in spite of the employee’s knowledge of facts that were fundamentally
incompatible with the medical necessity of those procedures. For example, it is
plausible that the CDC Martins Ferry’s treating dentists knew that patients whose
teeth were free of pain, infection, or trauma did not need root canals. (See Third Am.
Compl., Doc. 37, #475, 489). Again, if Kramer cannot ultimately prove such
knowledge, then summary judgment may be appropriate. But the Third Amended
Complaint adequately alleges, at the pleading stage, knowing submission of a false
claim by CDC Martins Ferry. See Fed. R. Civ. P. 9(b) (knowledge may be alleged
generally). Accordingly, the Court DENIES the CDC Defendants’ Motion to Dismiss
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(Doc. 48) Kramer’s Third Amended Complaint (Doc. 37) with respect to Kramer’s
claim for submission of false claims against CDC Martins Ferry.
2.
The Third Amended Complaint Adequately Alleges False
Statements By CDC Martins Ferry.
Separately, a person violates the FCA if he or she “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). For many of the same reasons discussed above,
Kramer states a claim against CDC Martins Ferry for violation of this statutory
provision under an implied certification theory. Kramer plausibly alleges that, in
submitting the indicated claims for Patients One, Three, Five, Six, and Seven to the
Ohio Medicaid program, CDC Martins Ferry impliedly certified, for example, that the
dental procedures at issue were medically necessary, supported by appropriate
documentation, and performed by licensed professionals. The CDC Defendants’
argument against this conclusion is that Kramer has failed to allege that any
violations of statutory, regulatory, or contractual requirements of the Ohio Medicaid
program were material. (See CDC Mot., Doc. 48, #560). At this stage, though, that
argument fails for the reasons discussed above. See Bertram, 900 F.3d at 749; Doe,
923 F.3d at 317. Accordingly, the Court DENIES the CDC Defendants’ Motion to
Dismiss (Doc. 48) Kramer’s Third Amended Complaint (Doc. 37) with respect to
Kramer’s claim for false statement against CDC Martins Ferry.
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B.
The Third Amended Complaint States A Claim Against CDC
Steubenville.
As in the case of CDC Martins Ferry, Kramer alleges that he personally treated
one former patient of CDC Steubenville, namely Patient Two. (See Third Am. Compl.,
Doc. 37, #483–85). And Kramer’s allegations about dental procedures performed on
Patient Two are similar to his allegations about the five former patients of CDC
Martins Ferry. Specifically, Kramer alleges that CDC Steubenville performed, and
billed Ohio Medicaid for, “poor quality” root canals on four “grossly decayed” teeth,
teeth numbers 7–10, that required extraction anyway. (Id. at #484, 485). Thus,
Kramer alleges that the dental procedures at issue did not conform to Ohio Medicaid’s
reimbursement criteria, which require that a procedure “[m]eets generally accepted
standards of medical practice,” “[i]s the lowest cost alternative that effectively
addresses and treats the medical problem,” and is “[n]ot provided primarily for the
economic benefit of the provider.” See Ohio Admin. Code 5160-1-01(C). Much like the
allegations regarding procedures performed by CDC Martins Ferry discussed above,
these alleged shortcomings are plausibly material for purposes of both 31 U.S.C.
§§ 3729(a)(1)(A) and (B). See Bertram, 900 F.3d at 749; Doe, 923 F.3d at 317.
Moreover, Kramer also identifies the representative false claims with respect
to Patient Two with sufficient specificity. While Kramer does not allege the exact date
on which CDC Steubenville performed the dental procedures at issue on Patient Two,
instead stating only that they happened in “winter 2017/2018” (id. at #483), Kramer
does describe Ohio Medicaid claims for root canals on four “grossly decayed” teeth,
teeth numbers 7–10, and provides a total amount of $990.52 for the alleged false
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claims. (See id. at #484). That is enough detail to enable CDC Steubenville
“reasonably to pluck out” these claims “from all the other claims [it] submitted.” See
Owsley, 16 F.4th at 197. Accordingly, the Court DENIES the CDC Defendants’
Motion to Dismiss (Doc. 48) Kramer’s Third Amended Complaint (Doc. 37) with
respect to Kramer’s claims for both submission of a false claim and false statement
against CDC Steubenville.
C.
The Third Amended Complaint Fails To State A Claim Against The
Other CDC Defendants.
Unlike the case with CDC Martins Ferry and CDC Steubenville, the Third
Amended Complaint does not allege that Kramer treated patients who received root
canals or other dental procedures at any of the other five corporate CDC Defendants.
Nor does Kramer point to any other information suggesting that any specific claim
for reimbursement that those other CDC Defendants submitted was false. Nor does
the Third Amended Complaint specifically allege how Doyle himself was involved in
the allegedly false claims that Kramer identifies CDC Martins Ferry and CDC
Steubenville as having submitted. Rather, Kramer seeks to paint with a broad brush.
He essentially alleges that, because Doyle was the owner and operator of the various
CDC sites, it is plausible to assume that if dentists at one or more CDC sites were
submitting false claims, so were dentists at the other CDC sites. For the reasons
previewed above, and further discussed below, the Court concludes that this amounts
to a form of “group pleading” that Rule 9(b) prohibits.
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1.
The Third Amended Complaint Fails To Allege A False Claim Or
False Statement By Doyle.
The Third Amended Complaint fails to allege that Doyle submitted or caused
submission of any specific false claim to the Ohio Medicaid program. As noted,
Kramer alleges facts generally showing that CDC Martins Ferry and CDC
Steubenville submitted false claims. He then alleges that Doyle owned and
“mentored” the CDC entities and was responsible for the “shared practices,
procedures, and financial goals” that allegedly encouraged submission of false claims,
including sometimes calling employees on the phone if they failed to make their
revenue targets. (See Third Am. Compl., Doc. 37, #449, 491). But the problem is that
Kramer does not tie these broad oversight allegations to any specific false claim or
statement identified in the Third Amended Complaint. For example, as to the CDC
Martins Ferry and CDC Steubenville claims discussed above, Kramer does not allege
that Doyle treated those patients, submitted those claims, or indeed played any role
in them or even knew about them. See Branhan, 1999 WL 618018, at *10 (Clay, J.,
concurring in part) (plaintiff did not adequately plead parent company’s connection
to fraudulent claims submitted by one subsidiary); Ibanez, 874 F.3d at 915 (affirming
dismissal of FCA claim involving alleged complex scheme for failure to “cover the
ground from one end of this scheme … to the other” with respect to identified claim).
True, the FCA applies to individual defendants who “cause” submission of false
claims even if they were not personally involved in submitting the claims at issue.
See, e.g., United States v. SouthEast Eye Specialists, PLLC, No. 3:17-cv-00689, 2021
WL 5150687, at *15 (M.D. Tenn. Nov. 5, 2021). But liability under the FCA still
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requires “some action by the defendant whereby the claim is presented or caused to
be presented.” United States v. Murphy, 937 F.2d 1032, 1039 (6th Cir. 1991). While
the Sixth Circuit apparently has not addressed the precise causation standard that
applies, other circuit courts have held that the FCA requires “proximate causation.”
See Ruckh v. Salus Rehab., LLC, 963 F.3d 1089, 1106–07 (11th Cir. 2021); United
States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 714–
15 (10th Cir. 2006), abrogated on other grounds by Cochise Consultancy, Inc. v. United
States ex rel. Hunt, 139 S. Ct. 1507 (2019); see also United States v. Luce, 873 F.3d
999, 1012 (7th Cir. 2017) (FCA damages provision requires proximate causation);
United States v. Miller, 645 F.2d 473, 475–76 (5th Cir. 1981) (same); United States v.
Hibbs, 568 F.2d 347, 354 (3d Cir. 1977) (same). Specifically, “a defendant’s conduct
may be found to have caused the submission of a claim for [Medicaid] reimbursement
if the conduct was (1) a substantial factor in inducing providers to submit claims for
reimbursement, and (2) if the submission of claims for reimbursement was
reasonably foreseeable or anticipated as a natural consequence of defendants’
conduct.” Ruckh, 963 F.3d at 1107.
Considered under these principles, the Third Amended Complaint’s allegations
against Doyle on the causation front are too general and conclusory to state with
particularity that Doyle proximately caused the submission of any of the identified
false claims by CDC Martins Ferry or CDC Steubenville. In other words, the Third
Amended Complaint fails to identify the “who, what, when, where, and how” of
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Doyle’s role in the submission of any identified false claim. See Sanderson, 447 F.3d
at 877.
The Third Amended Complaint’s apparent theory of causation is that Doyle set
“financial goals” for the practices (Doc. 37, #449) and sometimes pursued those
financial goals by making phone calls to employees who did not meet them (id. at
#491). But Kramer fails to provide any detail that would connect those general goals
and practices to the representative false claims the Third Amended Complaint
identifies. Cf. United States v. Anesthesia Servs. Assocs., PLLC, Case No. 3:16-cv0549, 2019 WL 7372511, at *7–8 (M.D. Tenn. Dec. 31, 2019) (broad allegations that
individual doctor in managerial role “pressured” providers to increase revenue failed
to state claim). Kramer does not allege, for example, that any employee who treated
one of the example patients ever received a phone call from Doyle about revenue, nor
does he provide even approximate timing, content, or participants in any specific
phone call. Kramer also provides no specifics about how or when Doyle personally set
or communicated pertinent revenue targets to employees. Nor does Kramer allege
that Doyle instructed employees to provide unnecessary or unlicensed services or
created incentives tied to providing specific services. Cf. United States ex rel. Norris
v. Anderson, 271 F. Supp. 3d 950, 955 (6th Cir. 2017) (doctor told staff to use
fraudulently high billing code); SouthEast Eye, 2021 WL 5150687, at *15 (identified
optometrists received financial inducements tied to specific referrals in kickback
scheme). Without something along those lines, the Third Amended Complaint fails to
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allege with particularity that Doyle individually caused submission of an identified
false claim to the Ohio Medicaid program.
To the extent Kramer instead is relying on some kind of veil-piercing theory to
reach Doyle, that fails, as well. To start, Kramer does not mention veil-piercing by
name, either in the Third Amended Complaint or in his briefing. But more to the
point, the Third Amended Complaint fails to make the kinds of allegations that would
support Doyle’s liability on a veil-piercing theory. For example, Kramer does not
allege facts suggesting that Doyle ignored or misused the corporate form. See United
States v. Dynamic Visions, Inc., 220 F. Supp. 3d 16, 25 (D.D.C. 2016) (“In determining
whether to pierce the corporate veil, the Court asks: (1) is there such a unity of
interest and ownership that the separate personalities of the corporation and the
individual no longer exist?; and (2) if the acts are treated as those of the corporation
alone, will an inequitable result follow?”).
In short, the allegations against Doyle do not sufficiently connect him to any
identified false claim to support liability. Likewise, Kramer identifies no specific false
statements by Doyle himself in connection with any of his example patients or in any
other connection. Thus, the Third Amended Complaint also fails to state a claim
against Doyle for false statement in violation of 31 U.S.C. § 3729(a)(1)(B).
Because the Third Amended Complaint does not allege facts that state with
particularity that Doyle was responsible for any false claim or false statement, the
Court GRANTS the CDC Defendants’ Motion to Dismiss (Doc. 48) the Third
Amended Complaint (Doc. 37) with respect to Doyle.
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2.
The Third Amended Complaint Fails To Identify Any Specific
False Claim By CDC Calcutta, CDC Champion Heights, CDC
Dennison, CDC Newcomerstown, Or CDC Shadyside.
As discussed above, a plaintiff alleging a fraudulent scheme to submit false
claims in violation of the FCA must identify at least one representative claim for
payment that was actually submitted to the government, and that is somehow
attributable to the defendant. Chesbrough, 655 F.3d at 470. Kramer fails to do this
for the five corporate CDC Defendants other than CDC Martins Ferry and CDC
Steubenville. That is fatal to his claims against those Defendants.
Again, Kramer argues that he need not allege a false claim by each corporate
CDC Defendant because he is alleging a fraudulent scheme involving all of them. (See
Opp’n, Doc. 54, #644). But, as discussed in more detail above, the Court determines
that alleging a fraudulent scheme is only a way of aggregating false claims of the
same kind submitted by the same defendant, not a vehicle for bringing in additional
defendants with respect to whom a plaintiff otherwise fails to identify a specific claim.
Accordingly, the Court holds that Kramer fails to state a claim for violation of 31
U.S.C. § 3729(a)(1)(A) against the corporate CDC Defendants other than CDC
Martins Ferry and CDC Steubenville.
Moreover, even if a plaintiff could satisfy Rule 9(b)’s pleading requirement by
identifying a false claim by one entity, and then alleging facts sufficient to show that
other affiliated entities likely made similar false claims (e.g., because of common
operational rules among the entities), the Court concludes that Kramer has failed to
provide such allegations here. That is, the inference Kramer presumably would want
the Court to draw is that Doyle caused the false claims to be submitted at CDC
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Martins Ferry and CDC Steubenville, and thus it is plausible to conclude that he
likewise caused false claims to be submitted by the other corporate CDC Defendants.
As set forth immediately above, though, the Court concludes that Kramer fails to link
Doyle to the representative claims the Complaint identifies, meaning in turn that
Kramer cannot rely on Doyle as the bridge to connect the other corporate CDC
Defendants to those allegedly fraudulent claims.
Accordingly, for both of these reasons, the Court GRANTS the CDC
Defendants’ Motion to Dismiss (Doc. 48) with respect to this claim against those five
other corporate CDC Defendants in the Third Amended Complaint (Doc. 37).
For similar reasons, the Third Amended Complaint also fails to state a claim
against the five CDC Defendants other than CDC Martins Ferry and CDC
Steubenville for false statement in violation of 31 U.S.C. § 3729(a)(1)(B). Kramer does
not allege that these entities made any statements with respect to the specific false
claims (by CDC Martins Ferry and CDC Steubenville) that Kramer identifies in the
Third Amended Complaint. Nor does he identify any other specific false statements
by the five other corporate CDC Defendants (in large part, no doubt, because he fails
to identify any false claims those five entities submitted). Accordingly, the Court
GRANTS the CDC Defendants’ Motion (Doc. 48) with respect to Kramer’s claim for
false statement in violation of 31 U.S.C. § 3729(a)(1)(B) in the Third Amended
Complaint (Doc. 37) against the five corporate CDC Defendants other than CDC
Martins Ferry and CDC Steubenville.
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D.
The Third Amended Complaint Fails To State A Claim Against The
NADG Defendants.
It is undisputed that the NADG Defendants had no business relationship with
the CDC Defendants when several of Kramer’s example patients received treatment
at CDC Martins Ferry or CDC Steubenville. But the Third Amended Complaint
alleges that the NADG Defendants did have a business relationship with the CDC
Defendants by the time Patients Six and Seven, and perhaps Patient Five, received
treatment at CDC Martins Ferry. (See Doc. 37, #453, 496, 500, 504). Much as with
respect to Doyle, though, the problem is that Kramer fails to allege that the NADG
Defendants played any role in the submission of false claims or statements for those
patients. For example, Kramer does not allege that the NADG Defendants or their
employees actually submitted claims to Ohio Medicaid, either in general or for the
example patients mentioned in the Third Amended Complaint. Nor does Kramer
allege any act by the NADG Defendants that caused the submission of a specific false
claim.
Instead, Kramer refers to the claims for payment as “Complete Dental Care’s
claims,” and only alleges generally that “[b]y virtue of its control over Complete
Dental Care’s dental practice and its encouragement of Doyle’s schemes, North
American Dental Group also caused the submission of these false claims.” (Id. at
#502, 506). Kramer attempts to substantiate this “control” by alleging that the NADG
Defendants continued the CDC Defendants’ allegedly unrealistic revenue targets,
kept track of individual dentists’ revenue, and rewarded those dentists who met their
revenue targets. (Id. at #454). But, much as with Doyle, these allegations do not
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suggest that the NADG Defendants played a role in the submission of false claims,
or that they were responsible for any false statements with respect to the alleged false
claims, for Patients Five, Six, and Seven specifically, the only relevant patients for
whom Kramer identifies specific false claims. See Ibanez, 874 F.3d at 915; Branhan,
1999 WL 618018, at *10 (Clay, J., concurring in part); Anesthesia Servs., 2019 WL
7372511, at *7–8. Kramer also does not provide any specific facts about how or when
the NADG Defendants caused employees of CDC Martins Ferry to perform allegedly
unnecessary dental procedures or submit false claims for Patients Five, Six, and
Seven.
As in the case of Doyle, Kramer’s allegations also fall far short of what would
be required to plausibly suggest that Kramer could reach the NADG Defendants on
a veil-piercing theory. That is especially true given the Third Amended Complaint’s
lack of clarity as to whether the NADG Defendants are the “owner” or only the
“partner” of the corporate CDC Defendants, as well as its vague allegations that both
Doyle and the NADG Defendants “control” the corporate CDC Defendants. (See Third
Am. Compl., Doc. 37, #449, 453, 503). Accordingly, the Court GRANTS the NADG
Defendants’ Motion (Doc. 49) in its entirety, and DISMISSES the claims against
NADG in the Third Amended Complaint (Doc. 37) WITH PREJUDICE.
E.
The Court Denies Kramer’s Motion For Leave To Amend Because
Further Amendment Would Be Futile.
Because the Court finds that the Third Amended Complaint fails to state a
claim against several of the Defendants in this action, the Court also must consider
Kramer’s Motion for Leave to File Fourth Amended Complaint in lieu of dismissing
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Kramer’s claims against those Defendants. For the reasons that follow, the Court
DENIES Kramer’s Motion for Leave to File Fourth Amended Complaint (Doc. 57) in
its entirety.
At the outset, the Court notes that this would be Kramer’s fifth attempt to
state a claim against all Defendants in this action. Accordingly, even if the Fourth
Amended Complaint did successfully state a claim against some or all of the
Defendants as to whom the Third Amended Complaint fails, the Court might still be
inclined to deny leave to amend on grounds of “repeated failure to cure deficiencies
by previous amendments” and “undue prejudice to the opposing part[ies].” See Gen.
Elec. Co., 916 F.2d at 1130. Ultimately, though, the Court need not rely on this
rationale, because the Fourth Amended Complaint in any event fails to remedy the
deficiencies of the Third Amended Complaint with respect to all Defendants at issue.
1.
The Proposed Fourth Amended Complaint Would Fail To State
A Claim Against Doyle.
The new allegations concerning Doyle in Kramer’s Proposed Fourth Amended
Complaint do not remedy Kramer’s failure to state a claim against Doyle in his Third
Amended Complaint. Kramer alleges that a former Complete Dental Care employee
who worked at “several” CDC locations, “including Martins Ferry and Shadyside,”
told him that Doyle often instructs non-dentists to add items to patient treatment
plans that the assigned dentist never approved. (See Prop. Fourth Am. Compl., Mot.
to Amend Ex. B, Doc. 57-2 #1092–95). To be sure, these allegations may substantiate
a greater role for Doyle in the alleged provision of unnecessary dental services by
other dentists than was apparent from Kramer’s Third Amended Complaint. But they
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do not get Kramer across the finish line because they still fail to tie Doyle to any
specific false claim that the Proposed Fourth Amended Complaint identifies. As
noted, a qui tam plaintiff must identify a claim representing the allegedly fraudulent
conduct with sufficient specificity to allow defendant “reasonably to pluck out” that
claim “from all the other claims [he] submitted.” See Owsley, 16 F.4th at 197. As
applicable here, then, Kramer must identify one or more claims in which the alleged
changes to treatment plans made at Doyle’s instruction led to submission of a false
claim.
Measured against that standard, the Proposed Fourth Amended Complaint
falls short. For example, it does not allege that Doyle modified the treatment plans
for any of the specific example patients Kramer identifies (which modification might
then have caused the submission of the identified false claims for those patients to
Ohio Medicaid). 4 Nor does it identify any other specific instance in which a Doyleinstructed change resulted in Medicaid being billed at all. Accordingly, however
troubling Doyle’s alleged conduct, Kramer again has failed to tie that conduct to any
identified false claim or statement Doyle made or caused to be made to the
government. See Sanderson, 447 F.3d 877–78 (the FCA “attaches liability, not to the
underlying fraudulent activity or to the government’s wrongful payment, but to the
Indeed, the Proposed Fourth Amended Complaint instead alleges that Doyle’s practice of
changing patient treatment plans did not begin until September 2017, more than two years
after the identified claims submitted for Patient One by CDC Martins Ferry. (See Doc. 57-2,
#1092). Moreover, the Proposed Fourth Amended Complaint does not allege that the
employee on whom Kramer relies for the information about Doyle changing treatment plans
ever worked at CDC Steubenville, such that she could have observed Doyle changing the
treatment plan for Patient Two, the only identified patient who allegedly received improper
dental care at that location. (See id.).
4
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claim for payment”) (citation and internal quotation marks omitted). For these
reasons, the Court DENIES Kramer’s Motion for Leave to File Fourth Amended
Complaint (Doc. 57) with respect to Doyle and accordingly DISMISSES WITH
PREJUDICE all claims against Doyle.
2.
The Proposed Fourth Amended Complaint Would Fail To State A
Claim Against CDC Calcutta, CDC Champion Heights, CDC
Dennison, CDC Newcomerstown, or CDC Shadyside.
Kramer’s Proposed Fourth Amended Complaint adds no new allegations of
specific false claims or statements by corporate CDC Defendants other than CDC
Martins Ferry or CDC Steubenville. Thus, for the reasons already discussed above in
connection with Kramer’s Third Amended Complaint, Kramer’s Fourth Amended
Complaint still fails to state a claim against these other entities. To wit, the Court
interprets Sixth Circuit case law to require allegations of presentment as to each of
the corporate CDC Defendants, which Kramer’s Proposed Fourth Amended
Complaint still fails to provide. Moreover, even if some inference arising from the
common ownership or control by Doyle could be a permissible basis for extending FCA
liability to the other corporate CDC Defendants, that linchpin is missing here,
because the Proposed Fourth Amended Complaint fails to adequately allege Doyle’s
own connection to the identified false claims, as discussed immediately above.
Accordingly, the Court DENIES Kramer’s Motion for Leave To File Fourth Amended
Complaint (Doc. 57) with respect to the five CDC Defendants other than CDC Martins
Ferry and CDC Steubenville and DISMISSES Kramer’s claims against those five
CDC Defendants WITH PREJUDICE.
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3.
The Proposed Fourth Amended Complaint Would Fail To State
A Claim Against the NADG Defendants.
Stated briefly, Kramer’s new allegations about the NADG Defendants are that
a former employee of NADG’s Refresh Dental office in Shaker Heights, Ohio (not
otherwise affiliated with Doyle or CDC), told Kramer that the NADG Defendants
have sent Doyle to that location to lead an Optimization Team to increase revenue by
encouraging medically unnecessary dental procedures. (See Prop. Fourth Am.
Compl., Mot. to Amend Ex. B, Doc. 57-2, #1095–98). These new allegations, which do
not concern the scheme in which all Defendants are allegedly participating together,
do not remedy the deficiencies in Kramer’s Third Amended Complaint as to the
NADG Defendants. Kramer’s new allegations do nothing to tie the NADG Defendants
to the specific false claims for dental treatment that Kramer alleges CDC Martins
Ferry and CDC Steubenville submitted to Ohio Medicaid, which are still the only
specific alleged false claims Kramer identifies. See Chesbrough, 655 F.3d at 470;
Ibanez, 874 F.3d at 915. Accordingly, the Court DENIES Kramer’s Motion for Leave
to File Fourth Amended Complaint (Doc. 57) with respect to the NADG Defendants
and therefore DISMISSES Kramer’s claims against the NADG Defendants WITH
PREJUDICE.
F.
The NADG Defendants’ Partially Unopposed Motion For Leave To File
Surreply, Instanter, Is Moot.
Because the Court denies Kramer’s Motion for Leave to File Fourth Amended
Complaint (Doc. 57) in its entirety, the Court also DENIES AS MOOT the NADG
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Defendants’ Partially Unopposed Motion for Leave to File Surreply Brief, Instanter
(Doc. 62).
CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN
PART the CDC Defendants’ Motion to Dismiss (Doc. 48). Specifically, the Court
DENIES the Motion (Doc. 48) with respect to all claims against CDC Martins Ferry
and CDC Steubenville. The Court GRANTS the Motion (Doc. 48) in all other respects.
Accordingly, the Court DISMISSES WITH PREJUDICE all claims against CDC
Calcutta, CDC Champion Heights, CDC Dennison, CDC Newcomerstown, CDC
Shadyside, and Doyle. The Court also GRANTS the NADG Defendants’ Motion to
Dismiss (Doc. 49) in its entirety, and thereby DISMISSES WITH PREJUDICE all
claims against the NADG Defendants. The Court DENIES Kramer’s Motion for
Leave to File Fourth Amended Complaint (Doc. 57). The Court therefore also
DENIES AS MOOT the NADG Defendants’ Partially Unopposed Motion for Leave
to File Surreply Brief, Instanter (Doc. 62). The Court DIRECTS the Clerk to
TERMINATE Doyle, CDC Calcutta, CDC Champion Heights, CDC Dennison, CDC
Newcomerstown, CDC Shadyside, and the NADG Defendants from this action. This
action will proceed as to all claims against CDC Martins Ferry and CDC Steubenville.
SO ORDERED.
April 21, 2022
DATE
DOUGLAS R. COLE
UNITED STATES DISTRICT JUDGE
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