United States of America et al v. Care Plus Home Health Care, Inc. et al
Filing
70
OPINION AND ORDER by Chief Judge Gregory K Frizzell ; setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 5/21/2018); granting in part and denying in part 58 Motion to Amend (kjp, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA, ex rel.
SANDRA WAGNER,
Plaintiff,
v.
CARE PLUS HOME HEALTH CARE, INC.;
PRASAD ITTY; and
KUMAR GOVIND,
Defendants.
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Case No. 15-CV-260-GKF-JFJ
OPINION AND ORDER
Before the court is the Motion for Leave to Amend Relator’s Complaint [Doc. #58] of
plaintiff United States of America ex rel. Sandra Wagner. For the reasons discussed below, the
motion is granted in part and denied in part.
I.
Factual Background
Defendant Care Plus Home Health Care, Inc. is a certified home health agency owned and
operated by individual defendants Prasad Itty and Kumar Govind. Plaintiff Sandra Wagner was
formerly employed by Care Plus, first as an independent contractor registered nurse from May
2006 to January 2013, and then as the Office Director of Nursing from January 2013 until her
termination in February 2015.
While employed as the Office Director of Nursing, Wagner alleges that she “determined
that Defendants’ business practices were designed to fraudulently maximize billing, primarily to
Medicare.” [Doc. #60-1, ¶ 28]. Specifically, Wagner asserts that she witnessed two types of
fraudulent conduct by defendants: (1) continuing to provide services to patients who were not
eligible for home health services under the Medicare guidelines, and billing Medicare for such
unnecessary and/or ineligible services; and (2) falsifying required documentation and medical
records to increase Medicare billings and avoid reimbursement of Medicare overpayments.
Wagner estimates that defendants’ alleged scheme has been ongoing since 2010, and resulted in
losses to the United States in the amount of approximately $1,490,000 per year. [Doc. #60-1, ¶
129].
Wagner initiated this qui tam action against defendants on behalf of the United States
pursuant to False Claims Act, 31 U.S.C. §§ 3729 et seq.1 The Complaint asserted three causes of
action: (1) presentation of false claims in violation of 31 U.S.C. § 3729(a)(1)(A); (2) making or
using a false record or statement to cause a false or fraudulent claim to be paid in violation of 31
U.S.C. § 3729(a)(1)(B); and (3) making or using a false record or statement to avoid an obligation
to pay (refund) money to the government in violation of 31 U.S.C. § 3729(a)(1)(G). See [Doc.
#2]. Defendants moved to dismiss count I pursuant to Fed. R. Civ. P. 12(b)(6) and all counts
pursuant to Fed. R. Civ. P. 9(b). See generally [Doc. #39].
In an order of December 11, 2017, this court granted defendants’ motion to dismiss as to
Wagner’s claims for presentation of a false claim in violation of § 3729(a)(1)(A), making or using
a false record or statement to cause a claim to be paid in violation of § 3729(a)(1)(B), and reverse
fraud in violation of § 3729(a)(1)(G) premised on allegations that defendants knowingly brought
1
The False Claims Act permits a private person, called the “relator,” to bring a civil action for
alleged fraud on the U.S. government. 31 U.S.C. § 3730(b). See also U.S. v. Eisenstein, 556 U.S.
928, 932 (2009). In a qui tam action, the government may elect to intervene and proceed with the
action within 60 days, but, if the government declines to take over the action, the relator shall have
the right to conduct the action. 31 U.S.C. § 3730(b)(2) and 3730(b)(4)(B). On May 18, 2017, the
government notified the court that it was not intervening at that time [Doc. #23], and, therefore,
Wagner retains the right to conduct this litigation.
2
on, and retained, ineligible patients. See [Doc. #56]. However, the court denied defendants’
motion to dismiss with regard to Wagner’s claims for presentation of a false claim in violation of
§ 3729(a)(1)(A), making or using a false record or statement to cause a claim to be paid in violation
of § 3729(a)(1)(B), and reverse fraud in violation of § 3729(a)(1)(G), to the extent premised on
allegations that defendants falsified OASIS information and medical records. [Id.] Wagner seeks
leave to amend the Complaint to provide additional supportive factual allegations as to the claims
that were dismissed. See [Doc. #58].
II.
Motion to Amend Standard
Federal Rule of Civil Procedure 15(a) permits a party to amend its pleading once as a matter
of course within twenty-one (21) days of service or, if the pleading is one to which a responsive
pleading is required, within 21 days of service of the responsive pleading or motion. Fed. R. Civ.
P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party’s
written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2).
Although leave to amend should be freely given “when justice so requires,” Fed. R. Civ.
P. 15(a)(2), “denial of a motion to amend may be appropriate where there has been shown ‘undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance
of the amendment, futility of amendment, etc.’” Steadfast Ins. Co. v. Agric. Ins. Co., No. 05-CV126-GKF-TLW, 2014 WL 1901175, at *4 (N.D. Okla. May 13, 2014) (quoting Foman v. Davis,
371 U.S. 178, 182 (1962)). “‘[T]he grant of leave to amend the pleadings pursuant to Rule 15(a)
is within the discretion of the trial court.’” Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th
Cir. 2006) (alteration in original) (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401
U.S. 321, 330 (1971)).
3
III.
Overview of the False Claims Act
“The FCA ‘covers all fraudulent attempts to cause the government to pay out sums of
money.’” U.S. ex. rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir.
2008) (quoting United States ex rel. Boothe v. Sun Healthcare Grp., Inc., 496 F.3d 1169, 1172
(10th Cir. 2007) (quotation omitted in original)). The relevant sections of the FCA are as follows:
(a)
Liability for certain acts –
(1)
In general. – Subject to paragraph (2), any person who –
(A)
knowingly presents, or causes to be presented, a false or fraudulent
claim for payment or approval;
(B)
knowingly makes, uses, or causes to be made or used, a false record
or statement material to a false or fraudulent claim;
***
(G)
knowingly makes, uses, or causes to be made or used, a false record
or statement material to an obligation to pay or transmit money or
property to the Government, or knowingly conceals or knowingly
and improperly avoids or decreases an obligation to pay or transmit
money or property to the Government,
is liable to the United States Government for a civil penalty of not
less than $5,000 and not more than $10,000, as adjusted by the
Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C.
2461 note; Public Law 104-410), plus 3 times the amount of
damages which the Government sustains because of the act of that
person.
31 U.S.C. § 3729(a)(1)(A), (B), (G) (internal footnote omitted).
A.
31 U.S.C. § 3729(a)(1)(A) Claims
Section 3729(a)(1)(A) imposes liability on persons who knowingly present, or cause to be
presented, a false or fraudulent claim for payment to the government. 31 U.S.C. § 3729(a)(1)(A).
“In order to establish a violation of § 3729(a)(1), ‘a plaintiff must show by a preponderance of the
evidence that: (1) a false or fraudulent claim (2) is presented to the United States for payment or
4
approval (3) with knowledge that the claim is false or fraudulent.’” U.S. ex rel. Troxler v. Warren
Clinic, Inc., No. 11-CV-808-TCK-FHM, 2014 WL 5704884, at *2 (N.D. Okla. Nov. 5, 2014)
(quoting U.S. ex rel. Trim v. McKean, 31 F. Supp. 2d 1308, 1315 (W.D. Okla. 1998)).
Two types of FCA claims exist—factually false claims and legally false claims. See
Conner, 543 F.3d at 1217. “Factually false claims” generally require proof “the government payee
has submitted ‘an incorrect description of goods or services provided or a request for
reimbursement for goods or services never provided.’” Id. (quoting Mikes v. Straus, 274 F.3d 687,
697 (2d Cir. 2001)). “‘Claims arising from legally false requests, on the other hand, generally
require knowingly false certification of compliance with a regulation or contractual provision as a
condition of payment.’” U.S. ex rel. Thomas v. Black & Veatch Special Projects Corp., 820 F.3d
1162, 1168 (10th Cir. 2016) (quoting U.S. ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d
1163 (10th Cir. 2010)).
The Tenth Circuit has recognized two forms of legally false claims under section
3729(a)(1)(a)—express false certification and implied false certification. Shaw v. AAA Eng’g &
Drafting, Inc., 213 F.3d 519, 531-32 (10th Cir. 2000). “Claims under an express-false-certification
theory arise when a payee ‘falsely certifies compliance with a particular statute, regulation or
contractual term, where compliance is a prerequisite to payment.’” Lemmon, 614 F.3d at 1168
(quoting Conner, 543 F.3d at 1217). “The payee’s ‘certification’ need not be a literal certification,
but can be any false statement that relates to a claim.” Id. See also Conner, 543 F.3d at 1217
(opining that certifications may be made through “invoices or other express means”).
In contrast, an implied false certification claim does not require a false representation, but
may result from a material omission—specifically, that the payee failed to comply with a material
statutory, regulatory or contractual requirement. See Universal Health Servs., Inc. v. U.S. ex rel.
5
Escobar, 136 S. Ct. 1989, 1995 (2016). Under an implied false certification theory, “liability can
attach when the defendant submits a claim for payment that 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. In these circumstances, liability may
attach if the omission renders those representations misleading.” Id.
B.
31 U.S.C. § 3729(a)(1)(B) Claims
Section 3729(a)(1)(B) prohibits the use of a false record or statement in order to
demonstrate to the government that a false or fraudulent claim should be paid. 31 U.S.C. §
3729(a)(1)(B); Troxler, 2014 WL 5704884, at *2. Liability under section 3729(a)(1)(B) requires
proof of the following: “‘(1) a false record or statement (2) is used to cause the United States to
pay or approve a fraudulent claim (3) with the defendant’s knowledge of the falsity of the record
or statement.’” Troxler, 2014 WL 5704884, at *2 (quoting Trim, 31 F. Supp. 2d at 1315). In
contrast to 31 U.S.C. § 3729(a)(1)(A), only factually false claims and express false certification
clams are actionable under 31 U.S.C. § 3729(a)(1)(B). See Shaw, 213 F.3d at 531-32.2 Due to the
false record or statement requirement, an implied false certification claim does not exist under 31
U.S.C. § 3729(a)(1)(B). Id. See also Lemmon, 614 F.3d at 1168.
C.
31 U.S.C. § 3729(a)(1)(G) Claims
Section 3729(a)(1)(G) is commonly referred to as the “reverse false claims” provision, and
prohibits “knowingly mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement
material to an obligation to pay or transmit money or property to the Government, or knowingly
conceal[ing] or knowingly and improperly avoid[ing] or decreas[ing] an obligation to pay or
2
Both Lemmon and Shaw analyzed § 3729(a)(2), which was renumbered to § 3729(a)(1)(B) by
passage of the Fraud Enforcement and Recovery Act of 2009, Pub.L. No. 111-21, § 4, 123 Stat.
1616 (2009).
6
transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G); U.S. ex rel. Bahrani
v. Conagra, Inc., 465 F.3d 1189, 1194 (10th Cir. 2006). “A reverse false claim is documentation
resulting in an underpayment to the Government, as opposed to a false claim, generally referring
to an inflated or false bill for payment from the Government.” U.S. ex rel. Grynberg v. Praxair,
Inc., 389 F.3d 1038, 1041 n.2 (10th Cir. 2004). Section 3729(a)(1)(G) “was added ‘to provide that
an individual who makes a material misrepresentation to avoid paying money owed the
Government would be equally liable under the Act as if he had submitted a false claim to receive
money.’” Bahrani, 465 F.3d at 1194 (quoting S. Rep. No. 99-345, at 18, U.S.C.C.A.N. at 5283).
“To prove a ‘reverse false claim’ under FCA section 3729(a)(1)(G) a relator must show
that: (1) the defendant knowingly made a materially false record or statement; (2) to improperly
avoid or decrease an obligation to pay or transmit money or property to the government.” U.S. ex
rel. Duffy v. Lawrence Mem’l Hosp., No. 14-2256-SAC-TJJ, 2017 WL 2905406, at *5 (D. Kan.
July 7, 2017). See also Little v. ENI Petroleum Co., Inc., No. CIV-06-120-M, 2009 WL 2424215,
at *2 (W.D. Okla. July 31, 2009) (“[I]n order to establish defendants’ liability for the alleged
reverse false claims, [relator] must show that (1) defendants made or used statements in order to
avoid or decrease their obligation to pay money to the government; (2) the statements were false
or fraudulent; and (3) defendants knew the statements were false or fraudulent.”).
III.
Analysis of Proposed Amended Complaint
Wagner’s proposed Amended Complaint asserts three causes of action premised on
allegations that defendants knowingly continued to provide services to patients who were not
eligible for home health services under the Medicare guidelines, and billing Medicare for such
unnecessary and/or ineligible services: (1) presentation of false claims in violation of 31 U.S.C. §
3729(a)(1)(A); (2) making or using a false record or statement to cause a false or fraudulent claim
7
to be paid in violation of 31 U.S.C. § 3729(a)(1)(B); and (3) making or using a false record or
statement to avoid an obligation to pay (refund) money to the government in violation of 31 U.S.C.
§ 3729(a)(1)(G). See [Doc. #60-1]. Defendants argue that Wagner’s motion to amend should be
denied because Wagner fails to provide sufficient additional facts to support her claim as required
by Fed. R. Civ. P. 9(b) and therefore Wagner fails to cure previously identified deficiencies.3
With respect to allegations based on implied false certification theory, the court will
consider only if the allegations state a plausible claim under 31 U.S.C. § 3729(a)(1)(A). However,
the court will analyze whether the allegations based on express false certification theory state a
plausible claim under § 3729(a)(1)(A), § 3729(a)(1)(B), or § 3729(a)(1)(G).
A.
31 U.S.C. § 3729(a)(1)(A) Claims
This court previously dismissed the Complaint’s implied false certification claim for failure
to satisfy the pleading requirements of Fed. R. Civ. P. 9(b). Wagner’s Amended Complaint
provides seven (7) exemplar sample patients as cases wherein defendants billed ineligible
Medicare patients for home health benefits.4 The Amended Complaint includes new allegations
3
Additionally, defendants argue that Wagner’s motion to amend does not provide the level of
specificity required by LCvR 7.2(l). However, Wagner attached her proposed Amended
Complaint to her reply and therefore defendants’ LCvR 7.2(l) argument is moot. See [Doc. #60;
60-1].
4
The Amended Complaint includes a total of fifteen (15) exemplar patients and, unlike Wagner’s
original Complaint, does not distinguish between exemplar patients related to the alleged provision
of home health services to ineligible Medicare patients and those exemplar patients for allegations
that defendants falsified documentation and medical records to increase Medicare billings and
avoid reimbursements of Medicare overpayments. However, the Amended Complaint includes no
additional allegations related to the eight (8) exemplar patients previously identified as examples
of defendants’ falsifying OASIS information and medical records from the original Complaint.
Based on this court’s review, the eight exemplar patients previously identified as supporting
allegations of falsifying documents and medical records do not include any new allegations that
defendants provided home health services to ineligible Medicare patients and the court will not
consider the remaining eight exemplar patients for purposes of Wagner’s Motion to Amend. See
[Doc. #60-1]. Nor does the court consider Wagner’s claims premised on defendants’ falsification
of OASIS information and medical records unrelated to the retention of ineligible patients.
8
directed to the alleged false claims. Thus, the court will consider whether the new allegations
demonstrate the “specifics of a fraudulent scheme and provide an adequate basis for a reasonable
inference that false claims were submitted as part of that scheme.” Lemmon, 614 F.3d at 1172.
This requires allegations sufficient to “‘set forth the ‘who, what, when, where and how’ of the
alleged fraud.’” U.S. ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 727
(10th Cir. 2006) (quoting Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th
Cir. 1997)). See also [Doc. #56, at pp. 3-7 (this court’s discussion of Fed. R. Civ. P. 9(b)’s pleading
requirements specific to the False Claims Act in the Tenth Circuit)].
With regard to “who,” the Amended Complaint includes seven specific patient examples.
For five of the seven exemplar patients, Wagner attaches a Form CMS-485, which identifies the
certifying nurse.5 See [Doc. #60-1, 61-2, 61-3, 61-5, 61-6]. Additionally, for three of the seven,
Wagner identifies other health care providers involved in the patients’ care. See [Doc. #60-1, ¶¶
63-64, 70, 78-79].
As for “when,” the Amended Complaint includes new allegations as to the periods when
home health services were provided to ineligible patients. Specifically, the Amended Complaint
alleges that Medicare patient ID no. 440403341B6 was recertified as requiring home health care
for the periods from September 9, 2013 to November 7, 2013 and June 11, 2014 to August 9, 2014;
Medicare patient ID no. 447188496D was recertified for the period from September 9, 2013 to
November 7, 2013; Medicare patient ID no. H42195960 was recertified for the period from July
29, 2014 to September 29, 2014; Medicare patient ID no. H55489859 was recertified for the period
from September 20, 2013 to November 18, 2013; and Medicare patient ID no. 445786225A was
“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all
purposes.” Fed. R. Civ. P. 10(c).
5
9
recertified for the period from October 1, 2013 to November 29, 2013. See [Doc. #60-1, ¶¶ 48,
56, 65, 76, 82]. Additionally, unlike the original Complaint, the Amended Complaint includes
sufficient allegations from which the court may infer that the allegations relate to conduct
occurring prior to November of 2014. [Id. ¶¶ 51, 59, 67, 78, 81]. Thus, the Amended Complaint
includes sufficient allegations from which the court may infer that the claims arose during the
period from September 9, 2013 to November 1, 2014. Further, with regard to “where,” the
Amended Complaint alleges that Wagner worked for Care Plus—and therefore the misconduct
occurred—in Tulsa, Oklahoma. [Id. ¶¶ 14-15].
Concerning “how” and “what,” the Amended Complaint includes new allegations of the
services actually provided to the exemplar patients. For example, first, with regard to Medicare
patient ID no. 440403341B6, the Amended Complaint alleges that home health care providers took
a monthly blood draw and instructed the patient on medication for chronic conditions, although
the instruction was not warranted by any change in condition. [Id. ¶¶ 45, 49]. Additionally, the
Amended Complaint includes new allegations from which the court may infer that the same patient
did not qualify for home health services, including assertions that the patient had the ability to
ambulate and independently left her home for trips that “were neither infrequent nor short in
duration” to shop or dine out. [Id., ¶ 47]. Second, as to Medicare patient no. H55489859, the
Amended Complaint attaches Form CMS-485 for the period from September 20, 2013 to
November 18, 2013, signed by Tamara Bailey, and includes new allegations that the patient
ambulated independently. [Id., ¶¶ 75-76; Doc. #61-5]. The Amended Complaint alleges that the
assertions in the Form CMS-485 were inconsistent with homebound status, but that defendants
nevertheless billed Medicare for physical therapy services as home health care services. See [Doc.
#60-1, ¶ 77]. Third, with regard to Medicare patient ID no. 445786225A, the Amended Complaint
10
includes new allegations that defendants provided weekly skilled nursing services for education
on chronic conditions and medications, and that Tamara Bailey recertified the patient as eligible
for home health services during the relevant period. [Id., ¶¶ 82-83; Doc. #61-6].
Additionally, the Amended Complaint includes new allegations regarding those patients
for which the original Complaint previously documented the services actually provided. See [Doc.
#56, pp. 14-15]. With regard to Medicare patient ID no. 447188496D, the Amended Complaint
attaches documents identifying nurse Tamara N. Bailey as the executor of the patient’s Form CMS485 recertification form. See [Doc. #61-2]. As to the same patient, the Amended Complaint
includes new allegations, based on a medical diagnosis of unspecified anemia, that the patient did
not qualify for the home health care received. See [Doc. #60-1, ¶ 55]. The Amended Complaint
has also added allegations as to Medicare patient ID no. H42195960, including assertions that the
patient’s care was provided twice weekly for the first week of service and once weekly for the
remaining known four months of service; that the patient was not incapable of pre-filling his
medication planners (the identified service provided); that the Form CMS-485 was completed by
Tamara Bailey; and that the OASIS-C recertification included Wagner, Pamela Carp, and Sara
Repschlaeger. See [Doc. #60-1, ¶¶ 60-61 and 64-65; Doc. #61-3]. Finally, as for Medicare patient
ID no. 448409217A, the Amended Complaint attaches documents indicating Lorena Barboza
provided various services. See [Doc. #61-4].
Finally, the Amended Complaint includes new allegations specifically asserting that
defendants billed Medicare for the home health services provided during the relevant time period.
See [Doc. #60-1, ¶¶ 50, 55, 66, 83-84]. Wagner’s allegations are based on personal knowledge in
her position as Office Director of Nursing. [Id., ¶¶ 26-27, 42]. These allegations, taken with the
personal knowledge of defendants’ billing practices gained through Wagner’s position as Office
11
Director of Nursing, permit the inference that false claims were, in fact, submitted to the
government for payment. See United States ex rel. Myers v. America’s Disabled Homebound,
Inc., No. 14-C-8525, 2018 WL 1427171, at *4-5 (N.D. Ill. Mar. 22, 2018). With respect to four
of the seven exemplar patients, the Amended Complaint alleges that defendants knew of patients’
ineligibility when the claims were submitted. See [Doc. #60-1, ¶¶ 42-43, 57, 66, 77].
Based on these new allegations, the court is persuaded that the Amended Complaint cures
previously identified deficiencies, and provides sufficient factual allegations of a violation of 31
U.S.C. § 3729(a)(1)(A) to satisfy Rule 9(b) and permit a reasonable inference that false claims
were submitted as part of defendants’ fraudulent scheme.
Further, although not raised by defendants in response to Wagner’s motion to amend,
defendants previously argued that Wagner’s claims premised on retention of ineligible patients
could not state a plausible claim pursuant to Fed. R. Civ. P. 12(b)(6) because whether a patient is
eligible for Medicare home health benefits is a determination made by the patient’s physician, not
the home health care provider. However, defendants’ argument is contrary to the plain language
of the Code of Federal Regulations.
Home-health agency’s patients are referred for home-health services by their
physicians who are required to certify that the patient is under their care, that the
physician has established and will periodically review a 60-day plan of care, that
the patient is homebound, and that the patient requires one of the types of homehealth services that qualifies for Medicare. After receiving a patient referral, a
home-health agency is required to provide its own patient-specific, comprehensive
assessment, called an Outcome and Assessment Information Set (“OASIS”). 42
C.F.R. § 484.55. During this initial assessment, the home-health agency must
determine the immediate care and support needs of the patient, and, for Medicare
patients, determine eligibility for the Medicare home health benefit, including
homebound status. Id.
A 60-day plan of care is called an “episode.” After each episode, a patient must be
recertified to receive funds from Medicare. To be recertified, the patient’s
physician must review and sign the patient’s plan of care, making any necessary
changes, and the home-health agency must complete a new assessment, and
12
determine that the patient is still eligible to receive Medicare-funded homehealth services.
United States ex rel. White v. Gentiva Health Servs., Inc., No. 10-CV-394-PLR-CCS, 2014 WL
2893223, at *2 (E.D. Tenn. June 25, 2014) (emphasis added); see also Myers, 2018 WL 1427171,
at *6 (“Whether a patient is homebound is not a matter of opinion. Rather, it is a matter of fact
determined according to the regulatory standard.”); 42 U.S.C. § 484.55(b). Thus, amendment
would not be futile as the Amended Complaint states a plausible claim for violation of 31 U.S.C.
§ 3729(a)(1)(A) during the period from September 9, 2013 to November 1, 2014 premised on
retention of ineligible patients.
B.
31 U.S.C. § 3729(a)(1)(A) and § 3729(a)(1)(B) Express False Certification Claims
“To prove a false claim under subsections (A) or (B), a relator must show that defendant:
(1) made a claim; (2) to the government; (3) that is materially false or fraudulent; (4) knowing of
its falsity; and (5) seeking payment from the federal government.” United States ex rel. Duffy v.
Lawrence Mem’l Hosp., No. 14-2256-SAC-TJJ, 2017 WL 2905406, at *5 (D. Kan. July 7, 2017).
Thus, an express false certification claim requires an averment of a false or fraudulent statement
related to a claim for payment to the government. See Lemmon, 614 F.3d at 1168; Little v. ENI
Petroleum Co., Inc., No. CIV-06-120-M, 2009 WL 2424215, at *2 (W.D. Okla. July 31, 2009).
This court previously dismissed the Complaint’s express certification claims for failure to
identify with specificity the predicate false statements. See [Doc. #56, pp. 15-17]. However, the
Amended Complaint includes new factual allegations regarding the allegedly false statements.
Specifically, the Amended Complaint includes allegations from which the court may infer that a
Form CMS-485 completed regarding Medicare patient ID nos. 440403341B6, 447188496D,
H42195960, H55489859, 441244106A, and 445786225A falsely represented that the patients
required maximum assistance and taxing effort to leave the home, and the inability to leave the
13
home unassisted.6 See [Doc. #60-1, ¶¶ 46-48, 54, 65, 75-76, 78-80, and 81-82]. Further, the
Amended Complaint attaches the Forms CMS-485, which document the person who authored the
false statement, the date of the false statement, and the means used. See [Doc. #61-1, 61-3, 61-5,
61-6]. The Amended Complaint includes allegations from which the court may infer that
defendants knowingly falsified the documents in order to seek payment from the government. See
[Doc. #60-1, ¶¶ 50, 57-58, 66, 76-77, 80, 82-84]. Taking these allegations as true, Wagner has
provided sufficient information to cure previously identified deficiencies, and satisfied the
requirements of Fed. R. Civ. P. 9(b). Thus, Wagner’s motion to amend is granted with respect to
the FCA express false certification claims premised on allegations that defendants knowingly
retained and provided Medicare services to ineligible patients in violation of §§ 3729(a)(1)(A) and
3729(a)(1)(B) for the period from September 9, 2013 to November 1, 2014.
C.
§ 3729(a)(1)(G) Express False Certification Claims
Analyzing whether Wagner’s factual allegations that ineligible patients were brought, and
retained, on defendants’ home health care service, the court concludes that the allegations are
insufficient to state a plausible FCA claim under § 3729(a)(1)(G).
6
The Amended Complaint includes one patient example—Medicare patient ID no.
440403341B6—relative to which Wagner alleges that a doctor certified the patient as being
homebound. See [Doc. #60-1, ¶¶ 42-44]. However, the Amended Complaint also includes
allegations that Prasad Itty knew the patient did not qualify for home health services but engaged
in “doctor shopping” in order to continue to bill Medicare for home health services, including
services during a period when the patient was not certified as homebound. [Id., ¶ 44]. Thus,
Wagner’s claims are not undercut by allegations of the physician’s certification. Further, unlike
the original Complaint, the Amended Complaint includes allegations that the exemplar patients
left their homes for reasons other than medical treatment, such as to shop or dine out. [Id., ¶¶ 47,
54, 70, 78, 81]. At the motion to dismiss stage, the court is bound to accept these allegations as
true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“A complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
14
As previously stated, “[t]o prove a ‘reverse false claim’ under FCA section 3729(a)(1)(G)
a relator must show that: (1) the defendant knowingly made a materially false record or statement;
(2) to improperly avoid or decrease an obligation to pay or transmit money or property to the
government.” Duffy, 2017 WL 2905406, at *5. The Amended Complaint alleges “[t]he false
certifications, CMS forms, medical records, and other representations made or caused to be made
by Defendants – which were material to an obligation to pay or transmit money to the Government,
knowingly concealed or knowingly and improperly avoided or decreased an obligation to pay or
transmit money or property to the Government.” [Doc. #60-1, ¶ 192]. This formulaic recitation
that defendants made false certifications knowingly to conceal or avoid an obligation to pay or
transmit money or property to the government does not satisfy the Twombly standard, much less
Rule 9(b). See Twombly, 550 U.S. at 555.
Nor does the Amended Complaint provide sufficient factual support. The Amended
Complaint includes no factual allegations that defendants owed a specific financial obligation to
the government with regard to any of the seven exemplar patients. Further, there are no allegations
that any of the alleged false statements or records were used to decrease a financial obligation with
respect to the seven patients. Finally, the Amended Complaint includes no allegations that
defendants received an additional documentation request from Medicare for any of the seven
patients. Thus, the Amended Complaint includes insufficient factual allegations of a reverse false
claim premised on the retention of ineligible patients to satisfy the pleading requirements of Fed.
R. Civ. P. 12(b)(6) and Fed. R. Civ. P. 9(b), and therefore does not cure deficiencies previously
identified by this court. Accordingly, Wagner’s request for leave to amend to assert a reverse false
certification claim premised on retention of ineligible patients is denied.
15
IV.
Conclusion
Based on the foregoing, plaintiff United States of America ex rel. Sandra Wagner’s Motion
for Leave to Amend Relator’s Complaint [Doc. #58] is granted in part and denied in part. Wagner
may amend her Complaint to assert claims under §§ 3729(a)(1)(A) and 3729(a)(1)(B) for retention
of ineligible patients for the period from September 9, 2013 to November 1, 2014. However,
Wagner’s request for leave to amend to assert a claim under § 3729(a)(1)(G) premised on retention
of ineligible patients is denied. Wagner shall file her Amended Complaint consistent with this
court’s Order no later than May 21, 2018.
ENTERED this 14th day of May, 2018.
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