UNITED STATES OF AMERICA et al v. MARAPOSA SURGICAL, INC. et al

Filing 51

MEMORANDUM AND ORDER. 35 Motion to Dismiss and 37 Unopposed Motion for Judicial Notice filed by Defendants MARAPOSA SURGICAL, INC. and ROBERT W. TAHARA, M.D. are GRANTED. Judicial notice, however, extends only as far as recognizing what was pu blicly disclosednot to the truth of the judicially noticed records. Relator's Amended Complaint, which only includes Relator's FCA claims (Counts 1 and 2), are DISMISSED WITH PREJUDICE. Judgment under Rule 58 will be entered forthwith, and the case marked closed. Signed by Judge Cathy Bissoon on 3/27/2024. (jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
ex rel. DAVID W. STEBBINS,
v.

Plaintiff/Relator,

MARAPOSA SURGICAL, INC., et al.,
Defendants.

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Civil Action No. 1:22-10
Judge Cathy Bissoon

MEMORANDUM AND ORDER
I. MEMORANDUM
Defendants’ Motion to Dismiss (Doc. 35) Plaintiff/Relator’s Amended Complaint and
Unopposed Motion for Judicial Notice (Doc. 37) 1 will be granted, for the reasons that follow.
Despite having zero connections to Defendants, Relator’s primary allegation in this False
Claims Act (“FCA”) case is that, since at least 2009, Defendants Maraposa Surgical, Inc. d/b/a
Allegheny Vein and Vascular and Robert W. Tahara, M.D. submitted materially false claims for
reimbursement from Medicare Part B and Medicaid. See generally Am. Compl. (Doc. 18).
Specifically, Relator avers Defendants made false claims certifications to the federal government
and failed to obtain sufficient informed consent from their patients for arteriograms and related
procedures because they were performed in a physician’s office rather than in an ambulatory
surgical center (“ASC”) or ASF licensed under certain Pennsylvania DOH regulations. See id. at

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Defendants’ Unopposed Motion for Judicial Notice relates in large part to the medical terms
and regulatory provisions at issue and Defendant’s 2018 presentation on the Pennsylvania
Department of Health’s (“DOH”) proposed ambulatory surgical facility (“ASF”) regulation,
which are not reasonably subject to dispute. After reviewing the related papers, the Court hereby
grants Defendants’ Unopposed Motion for Judicial Notice. Judicial notice, however, extends
only as far as recognizing what was publicly disclosed—not to the truth of the judicially noticed
records.

¶¶ 3, 41-68. Defendants move to dismiss Relator’s Amended Complaint (Doc. 18), contending
Relator’s FCA claims are precluded under the public disclosure bar and/or falls short of stating a
fraudulent claim with the particularity required by Rule 9(b) or stating a claim under Rule
12(b)(6). The Court agrees that dismissal is appropriate.
First, the public disclosure bar provides that a court shall dismiss an FCA claim if
“substantially the same allegations or transactions as alleged in the action or claim were publicly
disclosed,” unless the relator is an original source of the information. 31 U.S.C. Section
3730(e)(4)(A)(i)-(iii). The Court of Appeals for the Third Circuit uses the Z=X+Y formula to
determine whether a transaction of fraud already was disclosed publicly. See United States v.
Omnicare, Inc., 903 F.3d 78, 83-84 (3d Cir. 2018). An inference of Z (fraud) exists if both X
(misrepresented facts) and Y (true facts) are disclosed through the statutory enumerated public
sources. See United States ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 236 (3d Cir.
2013). “Where the fraud has been publicly disclosed . . . because the public documents set out
. . . its essential elements X+Y – a relator’s claim will be barred so long as it is supported by or
substantially similar to the public disclosures.” Omnicare, 903 F.3d at 84 (internal quotes and
citation omitted). The public disclosure bar “root[s] out . . . stifling parasitic lawsuits” where
“anyone could identify a few regulatory filing and certification requirements . . . until he
discovers a federal contractor who is out of compliance, and potentially reap[s] a windfall in a
qui tam action under the FCA.” Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S.
401, 413 (2011). This case is a classic parasitic lawsuit.
Here, X and Y variables are both public, allowing anyone to deduce the alleged fraud
attributed to Defendants. The X variable (misrepresented facts) is Defendants’ Form CMS-1500

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claim submissions certifying that their six Current Procedural Terminology (“CPT”) Codes 2 for
office-based claims were eligible for reimbursement, which can be identified through the
National Provider Identifier (“NPI”) Registry and Centers for Medicare and Medicaid Services
(“CMS”) Payment Database. See Am. Compl. ¶¶ 53, 68; Defs.’ Br. (Doc. 36) at 7-11 (citing JN
Exs. 15, 16, 19-A through 19-I, 20-A & 20-B). The Y variable (true facts) is reflected in the
Pennsylvania Bulletin and Pennsylvania DOH facility databases showing the ASF regulations
and the absence of Defendants from the list of licensed ASCs. See Defs.’ Br. 10-11 (citing JN
Exs. 21, 22-A through 22-D); Resp. (Doc. 45) at 3-4. Because both X and Y exist, Relator’s
only claims (Counts 1 and 2) are dismissed under the public disclosure bar. 3
Relator’s contention that the public disclosure bar is inapplicable fails for three reasons.
First, Relator does not dispute that the sources cited by Defendants were not statutory
enumerated public sources, Resp. 1-5, and, in fact, did not oppose Defendants’ Motion for
Judicial Notice, see Defs.’ Br. n.2, which includes such sources. And, as the Court observes
above, the X and Y variables were both public, allowing anyone to deduce that Defendants
allegedly made false certifications when submitting their claims to the federal government and

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The CPT Codes assigned to Defendants’ alleged false claims include 37225, 37227, 37229,
37238, 37252 and 37253. Am. Compl. ¶ 53.

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For avoidance of doubt, the Court finds that the Pennsylvania Bulletin and Pennsylvania DOH
facility databases and its contents referenced herein qualify as “news media” within the meaning
of the FCA as such sources are published online. 31 U.S.C. § 3730(e)(4)(A)(iii); see also Defs.’
Br. 7-9 (listing cases). Additionally, the other online searchable databases and its contents
referenced, here, the NPI Registry and CMS’s Payment Database, qualify as an “other Federal
report” and/or “news media” under the FCA. 31 U.S.C. § 3730(e)(4)(A)(ii)-(iii); see also Defs.’
Br. 7-9 (listing cases). Lastly, the parties dispute whether the 2018 presentation qualifies as
“news media,” compare Defs.’ Br. n.10 with Resp. n.2; thus, the Court does not rely on such
source and declines to analyze whether the 2018 presentation qualifies as a public record under
the FCA.
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failed to obtain sufficient informed consent from their patients when performing these
procedures. Thus, the public disclosure bar is triggered.
Second, Relator contends the public disclosure bar is inapplicable because he does not
rely on the publicly available records and, instead, independently relies on Defendants’ 2018
presentation warning of the proposed Pennsylvania certification requirements and an alleged
conversation with Defendants and their affiliates. Resp. 1-5; Am. Compl. ¶¶ 11, 15; Ex. 1, Am.
Compl. However, this ignores the text of the FCA and Third Circuit precedent that Relator’s
evidence was “substantially the same” as the publicly available records evidencing the alleged
fraud by Defendants, which warrants the applicability of the public disclosure bar. See 31 U.S.C.
§ 3730(e)(4); see also United States ex rel. Silver v. Omnicare, Inc., 903 F.3d 78, 89-90 (3d Cir.
2018) (“[T]he mere application of experience or deductive skills to [public] information or the
addition of another allegation to the already articulated accusation of fraud does not create a new,
non-barred, claim of fraud.”).
Third, Relator’s interpretation of Ominicare is misguided as Relator fails to identify how
his allegations of fraud “exist[ ] solely by virtue of the relator’s added information.” Id. at 90
(emphasis added).
For these reasons, Relator’s Amended Complaint will be dismissed with prejudice as
amendment would be futile. 4

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Relator did not allege—nor could he—that he was an original source who “materially add[ed]
to the publicly disclosed . . . transactions.” 31 U.S.C. § 3730(e)(4)(B)(2); see also Resp. 4-5.
Thus, the Court declines to address this exception.
Additionally, Relator’s Amended Complaint will be dismissed for failure to plead fraud with
particularity under Rule 9(b). Relator argues that he had “separate conversations” with
Defendant Dr. Tahara and some of his associates regarding this scheme. Am. Compl. ¶¶ 11, 15.
But these factual allegations are vague at best and “rest on mere labels and conclusions.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); United States ex rel. Judd v. Quest
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Relator also fails to state a claim under Rule 12(b)(6). “An [FCA] violation includes four
elements: falsity, causation, knowledge, and materiality.” United States ex rel. Petratos v.
Genentech Inc., 855 F.3d 481, 487 (3d Cir. 2017). A failure to establish any of these elements is
fatal to Relator’s claims.
Regarding the element of materiality, the Court finds Relator has failed to allege facts
showing that Medicare and Medicaid “would not have reimbursed . . . claims” for arteriograms
and related procedures had it been aware of Defendants’ alleged misrepresentations. United
States ex rel. Druding v. Care Alts., 952 F.3d 89, 92 (3d Cir. 2020). Relator’s reliance on
“boilerplate language conditioning payment under Medicare and Medicaid on compliance with
all laws and regulations [is] not sufficient to satisfy the demanding standard established in
Escobar.” United States v. Kindred Healthcare, Inc., 469 F. Supp. 3d 431, 450 (E.D. Pa. 2020)
(citation omitted). Although the parties do not contend that the government had “actual
knowledge” of Defendants’ alleged violations, the government has paid Defendants since 2009,
see ¶ 11, and CMS’s Medicare Physician Fee Schedule’s inclusion of the six CPT Codes
Defendants have used for claim submissions and Novitas’s LCD L35092, indicate that the
alleged noncompliance is minor or insubstantial. See Universal Health Servs. v. United States ex

Diagnostics Inc., 638 F. App’x 162, 169 (3d Cir. 2015) (finding relator’s allegations deficient
under Rule 9(b) for failing to provide sufficient details or “reason to believe” claims were
submitted). Relator relies, again, on the 2018 presentation, but this only suggests that
Defendants believed the proposed ASF regulation may threaten vascular procedures, id. ¶ 13, not
that Defendants took any action regarding the Medicare and Medicaid claims. This amounts to
nothing more than “describing a mere opportunity for fraud,” which “will not suffice.” Judd,
638 F. App’x at 169 (quoting Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 157, 156 (3d Cir.
2014)). Further, even taking the allegations in the Amended Complaint as true, the evidence
“merely allege[s] a belief that Defendant[s] at some point in time falsely certified” that the
arteriograms and related procedures were performed in an ASC or properly licensed ASF.
United States ex rel. Scalamogna v. Steel Valley Ambulance., 2018 WL 3122391, at *9 (W.D.
Pa. June 26, 2018). “Without any supporting information or indicia of reliability, this claim
cannot survive under Rule 9(b).” Id.; see also Foglia, 754 F.3d at 156.
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rel. Escobar, 136 S. Ct. 1989 (2016). Moreover, Relator fails to allege any facts indicating that
“the Government consistently refuses to pay claims in the mine run of cases based on
noncompliance with the particular statutory, regulatory, or contractual requirement.” Id. at 2003;
see generally Am. Compl. & Resp. Lastly, the Department of Justice’s decision not to intervene
after two requests for extensions, Docs. 3, 8 & 10, suggests to the Court that Defendants’
noncompliance is immaterial. Petratos, 855 F.3d at 490. Taken together, the Court concludes
Relator cannot establish materiality.
Similarly, the Court finds Relator has failed to establish falsity based on either of his
fraudulent inducement, or express or implied false certification theories. For his fraud theories,
Relator relies on the general compliance with certifications in forms CMS-1500 and CMS-855I.
Am. Compl. ¶¶ 2-5, 27-31, 37, 45-52, 55-68, 74-81, 84-85. Defendants argue that an FCA claim
requires a relator to identify a specific federal payment requirement to establish falsity, see
Defs.’ Br. 15-19, but the Court finds this argument unpersuasive as none of the cited cases
purport to require a relator to point to a federal payment condition, see id. Nonetheless, as
Defendants correctly argue, Defendants—neither as a facility nor as the individual provider—
thwart the “conditions for payment set by the government.” United States v. Care Alternatives,
952 F.3d 89, 97 (3d Cir. 2020). Here, Relator conflates facility licensure with individual
provider licensure and regulations dealing with hospitals versus physician offices. See Defs.’ Br.
15-21. Pennsylvania law explicitly excludes physicians’ offices, like Defendant Maraposa
Surgical, from Pennsylvania DOH’s licensing jurisdiction to be subject to the ASF rules, see 35
Pa. Stat. § 448.802a (“The term health care facility shall not include an office used primarily for
the private practice of a health care practitioner.”), and Defendant Dr. Tahara is a licensed
physician, see Am. Compl. ¶¶ 16-17. Further, Relator’s allegation that Defendants failed to

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obtain adequate informed consent from their patients prior to administering anesthesia, see Am.
Compl. ¶¶ 5, 51-52, 63-65, 74, is unavailing as such allegations are more “akin to a medical
malpractice action and not an FCA action,” United States ex rel. Lord v. NAPA Mgmt. Servs.
Corp., 2017 WL 5450757, at *10 (M.D. Pa. Nov. 14, 2017) (citing Escobar, 136 S. Ct. at 2004),
given the adequacy of consent “reflect[s], at most, a difference of opinion . . . about what
constitutes informed consent under the circumstances[,] which does not constitute a false claim
under the FCA,” id. at *11. Thus, the Court finds Relator cannot establish falsity. 5

The Court hereby enters the following:
II. ORDER
Based on the foregoing, the Motion to Dismiss (Doc. 35) and Unopposed Motion for
Judicial Notice (Doc. 37) filed by Defendants Maraposa Surgical, Inc. d/b/a Allegheny Vein and
Vascular and Robert W. Tahara, M.D. are GRANTED. Judicial notice, however, extends only
as far as recognizing what was publicly disclosed—not to the truth of the judicially noticed
records. Relator’s Amended Complaint, which only includes Relator’s FCA claims (Counts 1

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With respect to the element of knowledge, and for substantially the same reasons Relator’s
claims fail under Rule 9(b), Relator has failed to allege any facts that suggest scienter—that
Defendants knowingly violated any payment condition. Although the Court recognizes that such
an inquiry typically is saved for the summary judgment stage, Relator’s most specific assertion is
the 2018 presentation, which merely alleges Defendants’ awareness of Pennsylvania DOH’s
proposed regulations—not whether Defendants submitted false claims for reimbursement. And
as an outsider without any ties to Defendants, it is implausible for this circumstantial evidence to
overcome Relator’s lack of personal knowledge to “create[ ] a strong inference that specific false
claims were submitted to the government.” Scalamogna, 2018 WL 3122391, at *3 (citation
omitted). Accordingly, Relator cannot establish knowledge.
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and 2), are DISMISSED WITH PREJUDICE. 6 Judgment under Rule 58 will be entered
forthwith, and the case marked closed.

March 27, 2024

s/Cathy Bissoon
Cathy Bissoon
United States District Judge

cc (via ECF email notification):
All Counsel of Record

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For reasons that should be obvious, dismissal of Relator’s claims will be with prejudice, as
amendment would be futile. Great W. Mining & Min. Co. v. Fox Rothschild LLP, 615 F.3d 159,
175 (3d Cir. 2010).
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