D'Alessio et al v. Vanderbilt University et al

Filing 98

ORDER: For the reasons described herein, the Motion to Dismiss 83 is DENIED. This case remains scheduled for a jury trial on February 9, 2016, beginning at 9:00 a.m. and for a pretrial conference on February 1, 2016, at 9:00 a.m. IT IS SO ORDERED. Signed by District Judge Todd J. Campbell on 3/19/14. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(tmw)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
UNITED STATES OF AMERICA, ex rel.
JOHN D’ALESSIO, M.D., et al.
v.
VANDERBILT UNIVERSITY, et al.

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NO. 3:11-00467
JUDGE CAMPBELL

ORDER
Pending before the Court are Defendants’ Motion to Dismiss (Docket No. 83), Plaintiffs’
Response in Opposition (Docket No. 92) and Defendants’ Reply (Docket No. 94). For the
reasons described herein, the Motion to Dismiss (Docket No. 83) is DENIED.
Plaintiffs and Relators John D’Alessio, M.D., Alexander Fisher, M.D., and Heather
Hagerman, M.D. have filed a Complaint pursuant to the False Claims Act (“FCA”), 31 U.S.C. §
3729, et seq., and related state statutes against Vanderbilt University, Vanderbilt University
Medical Center, and the Vanderbilt Medical Group and Clinic (“Vanderbilt”), Defendants.
Plaintiffs claim Vanderbilt has submitted false bills for reimbursement under Medicare, Part B.
More specifically, Plaintiffs assert Vanderbilt submits claims that falsely reflect the presence,
supervision and direction of attending physicians in connection with the services of surgeons,
teaching physicians in ICUs and anesthesia services.
Defendants have moved to dismiss the Complaint on the grounds that the Complaint fails
to state a claim for relief, and fails to plead a FCA claim with particularity, as required by Fed.
R. Civ. P. 12(b)(6) and 9(b). Defendants also contend the Complaint should be dismissed
because of the “public disclosure bar” and Plaintiff Fisher’s retaliation claim should be
dismissed.

MOTIONS TO DISMISS
For purposes of a motion to dismiss, the Court must take all of the factual allegations in
the complaint as true. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice. Id.
When there are well-pleaded factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an entitlement to relief. Id. at 1950. A legal
conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss,
nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of
Comstock, 592 F.3d 718, 722 (6th Cir. 2010).
Complaints alleging False Claims Act violations must also comply with Federal Rule of
Civil Procedure 9(b)’s requirement that fraud be pled with particularity. Chesbrough v. VPA,
P.C., 655 F.3d 461, 466 (6th Cir. 2011). Rule 9(b) requires that in alleging fraud, a party must
state with particularity the circumstances constituting fraud. Malice, intent, knowledge and other
conditions of a person’s mind may be alleged generally. Id. In complying with Rule 9(b), a
Relator, at a minimum, must allege the time, place and content of the alleged misrepresentation,

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the fraudulent scheme, the fraudulent intent of the defendants, and the injury resulting from the
fraud. Id. at 467.
FALSE CLAIMS ACT
The FCA penalizes any person who knowingly presents or causes to be presented to an
officer or employee of the U.S. government a false or fraudulent claim for payment or approval.
Chesbrough v. VPA, P.C., 655 F.3d 461, 466 (6th Cir. 2011) (citing 31 U.S.C. § 3729(a)(1)). It
also penalizes any person who knowingly makes, uses or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or approved by the government. Id. A
private individual, known as a realtor, may bring a civil action for a violation of the FCA, also
known as a qui tam action, on behalf of the government. 31 U.S.C. § 3730(b)(1).
The Relator must plead with sufficient particularity that the defendants knowingly
presented to the United States Government a false or fraudulent claim for payment or approval.
31 U.S.C. § 3729; United States ex rel. Dennis v. Health Management Associates, Inc., 2013 WL
146048 at * 11 (M.D. Tenn. Jan. 14, 2013).
The False Claims Act also prohibits retaliatory discharge for reporting false claims. A
claim under 31 U.S.C. § 3730(h) requires proof that the Plaintiff was (1) engaged in a protected
activity; (2) that his employer knew that he engaged in the protected activity; and (3) that his
employer discharged or otherwise discriminated against the employee as a result of the protected
activity. See Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. 2003).

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DISCUSSION
Having reviewed the Complaint, Motion to Dismiss, and the briefs of the parties, the
Court finds that the Complaint adequately states a claim for relief and pleads violations of the
FCA with sufficient particularity. The Complaint adequately pleads state law claims for the same
reason.
The Complaint, if taken as true as required at this stage of the proceedings, is sufficient to
survive a motion to dismiss as to the existence of false claims, false records for payment,
conspiracy and reverse false claims. Fed. R. Civ. P. 12(b)(6) and 9(b); 31 U.S.C. §§
3729(a)(1)(A), (a)(1)(B), (a)(1)(C) and (a)(1)(G). Plaintiffs, for example, allege first-hand
observations of specific false billing practices and procedures. The lack of a “specific false
claim” is a very important factor to consider but it is not per se fatal to a FCA complaint where
the realtor has pled facts that create a “strong inference” of false billing practices based on
personal knowledge. Chesbrough v. VPA, P.C., 655 F.3d 461, 471 (6th Cir. 2011. The Complaint
in this case is sufficient to raise a “strong inference” of purported fraud.
Defendants have also moved to dismiss the Complaint based on the “public disclosure
bar” and because Relators are not “original sources” of the information. 31 U.S.C. §§
3730(e)(4)(A) and (B). Defendants assert that Relators’ claims are substantially the same as prior
publicly disclosed information in Physician at Teaching Hospital (“Path”) audits by the Inspector
General of Health and Human Services. Plaintiffs assert that the Complaint adequately alleges
new claims of specific fraud that occurred starting in 2003, after the 1998 Path audit program.
More specifically, Plaintiffs argue the claims are specific to Vanderbilt during the time period
when they worked there as physicians and acquired first-hand knowledge of the fraud and steps

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by Vanderbilt to avoid detection. The Court finds that the Complaint adequately pleads FCA
claims that are not subject to dismissal on a Motion to Dismiss by the “public disclosure bar” or
“original source” requirement. See, e.g., United States ex rel Goldberg v. Rush Univ. Med. Ctr.,
680 F.3d 933 (6th Cir. 2012).
Finally, the Defendants have moved to dismiss the retaliatory discharge claim by Plaintiff
Fisher. Defendants argue there is no connection between the purported false claims concerns
expressed by Dr. Fisher and his contract not being renewed. The Court finds that Plaintiff Fisher
has adequately pled a claim for retaliatory discharge under the FCA. 30 U.S.C. § 3730(h). The
Complaint, for instance, alleges Dr. Fisher raised concerns about false billings, was then told to
look for another job, and his contract at Vanderbilt was not renewed allegedly because of his
false billing complaints. See, e.g., United States ex rel. Marlar v. BWXT Y-12, LLC, 525 F.3d
439, 449-50 (6th Cir. 2008). This is sufficient to overcome a motion to dismiss.
The Court expresses no opinion on the merits or demerits of Plaintiffs’ claims for
purposes of summary judgment or trial, which are subject to different standards of review than a
motion to dismiss.
This case remains scheduled for a jury trial on February 9, 2016, beginning at 9:00 a.m.
and for a pretrial conference on February 1, 2016, at 9:00 a.m.
IT IS SO ORDERED.
__________________________________
TODD J. CAMPBELL
UNITED STATES DISTRICT JUDGE

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