Filing
53
ORDER granting 36 Motion to Dismiss for Failure to State a Claim; granting 40 Motion to Dismiss. (Ordered by Judge Jane J Boyle on 7/9/2014) (Judge Jane J Boyle)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNITED STATES OF AMERICA and
STATE OF TEXAS,
ex rel. LESLIE ANN WILLIAMS,
Plaintiffs,
v.
MCKESSON CORPORATION, and
D/B/A MCKESSON PROVIDER
TECHNOLOGIES, and
DR. STEPHEN LARSON,
Defendants.
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CIVIL ACTION NO. 3:12-CV-0371-B
MEMORANDUM OPINION AND ORDER
Defendants McKesson Corporation d/b/a McKesson Provider Technologies (“McKesson”)
and Dr. Stephen Larson (“Dr. Larson”) move to dismiss (docs. 36, 40) the Second Amended Qui
Tam Complaint (“Complaint”). For the following reasons, the Court GRANTS Defendants’ Motions
to Dismiss (docs. 36, 40) and DISMISSES WITHOUT PREJUDICE the Complaint’s three claims.
I.
BACKGROUND
Relator Leslie Ann Williams (“Williams”) filed this qui tam action on behalf of the United
States and State of Texas after she allegedly uncovered a series of false Medicare/Medicaid claims
submitted by Defendants.1 Second Am. Compl. (“Compl.”), Doc. 27, ¶¶ 1, 36. These claims were
1
The following facts, drawn from the Complaint, are “accepted as true” for purposes of the Motions.
Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012). That said, the Court is not “bound to accept as true
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paid out indirectly by the U.S. and Texas governments, since Medicare is a federally-funded program
that pays for certain health care services “based on age, disability, or affliction with end-stage renal
disease,” and Medicaid is a federally/state-funded program that pays for certain medical expenses
incurred by “children under the age of 21, orphans, low-income patients, and pregnant and disabled
patients.” Id. ¶¶ 11, 12, 17.
Defendant McKesson is a Texas-based entity that provides, among other things, billingrelated services to the health care industry. Id. ¶ 4. McKesson allegedly submitted the claims at issue
for services rendered by Defendant Dr. Larson, “a dentist holding a Doctor of Medical Denistry”
(“D.M.D.”) who works in the anesthesiology department at the University of Texas Health Science
Center–Houston (“UTHSC”). Id. ¶¶ 5. These claims were purportedly “false” or “fraudulent,”
because they sought reimbursement from Medicare/Medicaid “for services that were outside the
scope of [Dr. Larson’s] authorized practice area.” Id. ¶ 25. More specifically, Dr. Larson “was billing
for and providing supervision for anesthesia services outside the scope of general dentistry and oral
dentistry,” which, according to Williams, exceeded Dr. Larson’s D.M.D licensure. Id. ¶ 24. Dr.
Larson also apparently falsely signed patients’ “record[s] and billing as a medical doctor (M.D.),” and
“routinely signed off as [an M.D.] on medical charts and medical academic records for other midlevel providers and medical students in either a supervisory or provider capacity so as to ensure
payment of those providers.” Id.
The Complaint sets forth the general process by which Dr. Larson and McKesson worked
a legal conclusion couched as a factual allegation." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Such assertions are instead characterized as allegations
of the Relator.
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together to submit these purportedly false medical bills. The general process starts with UTHSC
doctors, such as Dr. Larson, filling out medical records and charge-invoices for services rendered and
sending those records to McKesson, who generates a claim and billing statement after reviewing the
pertinent records. Id. ¶ 17. McKesson then sends these bills to patients, and when appropriate, thirdparty payors, such as insurance companies or Medicare/Medicaid providers. Id. ¶ 17. If
Medicare/Medicaid or some other third party payor denies McKesson’s reimbursement claim or does
not pay the requested amount, McKesson “review[s] the patient’s account to try and determine the
reason for the denial.” Id. ¶ 17. Based on this review, McKesson decides “whether to appeal the
denial and resubmit the claim(s) for payment.” Id.
Relator Williams claims she discovered Dr. Larson’s non-dental anaesthesia billing while
working at McKesson. Hired in 2007 as Senior Director of Client/Account Management, Williams’s
responsibilities at McKesson included “reviewing doctors’ requests and accounts after denials.” Id.
¶ 3, 18. “Sometime in May of 2008,” Williams noticed “repeated denials of claims and requests for
follow-up and payment submitted on [Dr. Larson’s] bills.” Id. ¶ 22. This led her to “revie[w] Dr.
Larson’s patients’ accounts, provider enrollment files, certifications and licenses, along with various
coding, billing diagnosis, medical, dental codes and modifiers and the claim billing statements he had
been submitting for payment.” Id. ¶ 24. Based on this, Williams concluded that Dr. Larson was
submitting bills for services “outside the scope of his authorized practice area.” Id. ¶ 25. Accordingly,
she “notified her direct supervisor Elizabeth Duhon,” who is “McKesson’s corporate compliance and
revenue cycle director.” Id. ¶ 27.
Over a year later, June 2010, “McKesson was still processing Dr. Larson’s out of scope billing
statements,” so Williams “again notified Ms. Duhon” as well as certain executives responsible for
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compliance at McKesson and UTHSC “that this was wrong and constituted false claim[s].” Id. ¶ 29.
After “repeatedly voic[ing] her concerns” throughout 2009 to no avail, Williams, on January 4, 2010,
“instructed one of her managers under her supervision to again review Dr. Larson’s credentials and
follow up on the status of the investigation submitted to McKesson’s corporate compliance.” Id. ¶¶
29, 31. “The next day,” McKesson gave Williams a thirty day notice of her termination. Id. ¶ 32.
And despite attributing Williams’s termination to a reduction in force, “McKesson posted an
advertisement seeking to hire someone for her position” within a week of her termination. Id. ¶ 33.
On February 3, 2012, Williams filed suit (doc. 1) against Defendants. After amending twice,
Williams filed the current version on her Complaint—the Second Amended Qui Tam Complaint
(doc. 27)—on August 22, 2013. The three–count Complaint charges Defendants with violating the
False Claims Act (“FCA”) and Texas Medicaid Fraud Prevention Act (“TMFPA”) in Counts I and
II,2 and claims McKesson violated the TMFPA’s Retaliation Provision, TEX. HUM. RES. CODE ANN.
§ 36.115, in Count III. In Counts I and II, Williams seeks damages for the United States and State
of Texas, a portion of which she would be entitled to receive under the FCA’s and TMFPA’s qui tam
provisions. In Count III, she seeks compensatory and punitive damages for McKesson’s retaliation.
Per the FCA’s and TMFPA’s procedural rules, the United States and State of Texas filed
notices with this Court (docs. 16, 18) expressing their intentions not to intervene in this matter,
allowing Williams to pursue these claims on her own. The Court, thus, ordered the Complaint
unsealed and served on Defendants. Upon receiving service, Defendants promptly moved to dismiss;
McKesson filed its Motion to Dismiss on October 31, 2013 (doc. 36) while Dr. Larson filed his on
2
As discussed below, Williams does not specify the particular FCA and TMFPA provisions under
which she brings her first two claims against Defendants.
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January 3, 2013 (doc. 40). Though the motions differ in certain respects, both Defendants seek
dismissal of Williams’s Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).3
After Williams responded to both motions (docs. 39, 46), Defendants filed separate replies (docs. 42,
47), rendering the motions ripe for consideration.
II.
LEGAL STANDARDS
A.
Rule 12(b)(6) Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal for failure to state a claim upon
which relief may be granted. FED. R. CIV. P. 12(b)(6). When analyzing Rule 12(b)(6) motions, courts
generally consider “the complaint, its proper attachments, documents incorporated into the
complaint by reference, and matters of which a court may take judicial notice.” Randall D. Wolcott,
M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011). During this review, factual allegations must
be viewed “in the light most favorable to the plaintiffs.” Kopp v. Klien, 722 F.3d 327, 333 (5th Cir.
2013). Courts are not, however, “bound to accept as true a legal conclusion couched as a factual
allegation.” Twombly, 550 U.S. at 555 (2007) (quoting Papasan, 478 U.S. at 286).
Rule 12(b)(6) motions turn on whether the complaint contains “enough facts to state a claim
to relief that is plausible on its face.” Id. at 570. Facially plausible complaints “allege more than labels
and conclusions[;] . . . [the] factual allegations must be enough to raise a right to relief above the
speculative level.” Jabaco, Inc. v. Harrah's Operating Co., Inc., 587 F.3d 314, 318 (5th Cir. 2009)
(quoting Twombly, 550 U.S. at 555). If the allegations raise no entitlement to relief, “this basic
3
Dr. Larson also seeks dismissal pursuant to Rule 12(b)(1), but as mentioned below, the Court does
not address, for now, the Rule 12(b)(1) issues raised in the parties’ briefs.
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deficiency should . . . be exposed at the point of minimum expenditure of time and money by the
parties and the court.” Cuviller v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Twombly, 550
U.S. at 557).
B.
Rule 9(b)’s Heightened Pleading Requirements
In addition to satisfying Rule 12(b)(6)’s standards, the Complaint’s FCA and related TMFPA
claims must also meet Rule 9(b)’s particularity requirements. U.S. ex rel. Willard v. Humana Health
Plan of Texas Inc., 336 F.3d 375, 384 (5th Cir. 2003) (citations omitted); U.S. ex. rel. Foster v. BristolMyers Squibb Co., 587 F. Supp. 2d 805, 827 (E.D. Tex. 2008) (applying Rule 9(b) to TMFPA claim).
Thus, Williams must plead “with particularity the circumstances” surrounding the false or fraudulent
claims alleged. FED. R. CIV. P. 9(b). This, “at minimum,” means Williams must “‘set forth the who,
what, when, where, and how of’” Defendants’ unlawful conduct. U.S. ex rel. Steury v. Cardinal Health,
Inc., 625 F.3d 262, 266 (5th Cir. 2010) (quoting United States ex rel. Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th Cir.1997)). Failure to comply with Rule 9(b)’s requirements
authorizes the Court to dismiss the pleadings as it would for failure to state a claim under Rule
12(b)(6). Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996).
III.
ANALYSIS
Williams’s three-count Complaint primarily alleges that Defendants knowingly submitted
“false” or “fraudulent” reimbursement claims to government-funded Medicare/Medicaid programs
in violation of the FCA and TMFPA. Compl. ¶¶ 36, 37, 41, 42. These claims were “false” or
“fraudulent,” according to Williams, because they sought reimbursement for Dr. Larson’s general
anesthesia services, which Williams believes exceeded the scope of Dr. Larson’s D.M.D. licensure.
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The Complaint further asserts that McKesson, despite being aware of the above facts, knowingly
submitted Dr. Larson’s bills to Medicare/Medicaid “[b]etween 1977 and 2010 (likely up to the
present date).” Id. In Count III, Williams contends that McKesson violated the TMFPA’s retaliation
provision by terminating her employment after raising concerns regarding the legality of Dr. Larson’s
non-dental anesthesia billing. Id. ¶ 47.
Defendants separately move to dismiss Williams’s FCA and TMFPA claims on a number of
grounds. Most persuasively, both argue that the Complaint does not properly allege an essential
element of Williams’s claims—the existence of a false or fraudulent claim submitted to the
government for payment. This, according to Defendants, requires the Court to dismiss the
Complaint’s FCA and TMFPA claims under Rules 12(b)(6) and 9(b). Finding that dismissal is
warranted on these grounds, the Court declines to address the other purported shortcomings of the
FCA and TMFPA claims raised by the Defendants. And as seen below, the Court need not address
the merits of Williams’s TMFPA retaliation claim, because the Court’s dismissal of Williams’s federal
cause of action warrants dismissal of this supplemental state law claim as well.
A.
FCA and TMFPA Claims
Although, Williams does not identify in her Complaint which provisions of the FCA or the
TMFPA that Defendants allegedly violated, Williams maintains that one can reasonably discern from
her pleadings that the FCA and TMFPA provisions at issue are those “related to presentation of false
and fraudulent claims.” Pl.’s Resp. McKesson’s Mot. Dismiss (“Pl.’s McKesson-Resp.”), Doc. 39, at
3. Although the Defendants urge the Court to dismiss the Complaint for failing to specify the
provisions at issue, they do note, based on the pleadings, that “there are only two subsections of the
FCA which Relator arguably intended to allege McKesson violated.”See McKesson’s Mot. Dismiss
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(“McKesson’s Mot.”), Doc. 36, at 13. Defendants identify those subsections as § 3729(a)(1)(A) and
§ 3729(a)(1)(C). Id. The Court agrees that Defendants could reasonably ascertain that Count I of
Williams’ Complaint is based on the false claim presentment provisions of 31 U.S.C. § 3729(a)(1).
The Court further concludes that Count II is based on the analogous state law provisions in TEX.
HUM. RES. CODE ANN. § 36.002.4 Id. at 5. Though the language of the FCA and the TMFPA differ,
the parties agree that Williams’s FCA and TMFPA claims depend on the same operative facts and
legal requirements. See, e.g., id. (“[A]s McKesson [] admit[s], the provisions of the TMFPA mirror
provisions of the FCA.”). As other courts have done in these circumstances,5 the Court evaluates
both of Williams’s claims under the FCA’s well-defined legal requirements.
The FCA’s false presentment provisions generally require relators to establish four elements:
“(1) a false statement or fraudulent course of conduct; (2) that was made or carried out with the
requisite scienter; (3) that was material; and (4) that caused the government to pay out money (i.e.,
that involved a claim).”6 Defendants primarily challenge the first FCA element—the existence of
a false or fraudulent claim. Specifically, they argue first, that Williams has not plausibly alleged a false
4
The false claim provisions under 31 U.S.C. § 3729(a)(1) make unlawful “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; [or] (C) conspires to commit a violation of subparagraph (A), (B), . . .” 31 U.S.C. §
3729(a)(1)(A), (B), & (C). Section 36.002 of the TMFPA details a number of different “Unlawful Acts”
related to false, fraudulent, or misleading representations and claims made in relation to the Texas Medicaid
program. See TEX. HUM. RES. CODE. ANN. § 36.002.
5
See, e.g., United States v. Planned Parenthood Gulf Coast, Inc., – F. Supp. 2d –, 2014 WL 1933554,
at *3 (S.D. Tex. May 14, 2014) (applying FCA law to the TMFPA’s “analogous provisions prohibiting
substantially the same conduct in the context of the State's Medicaid program”).
6
United States ex rel. Spicer v. Westbrook, – F.3d –, 2014 WL 1778030, at *7 (5th Cir. May 5, 2014)
(citing United States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009)).
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or fraudulent claim for purposes of Rule 12(b)(6), and second, that Williams has not particularly
stated the circumstances surrounding their allegedly false or fraudulent claims for purposes of Rule
9(b). See McKesson’s Mot., Doc. 36, at 8-9, 14, 19; Larson’s Mem. Supp. Mot. Dismiss (“Larson’s
Mot.”), Doc. 41, at 16-18, 21, 22-25.
1.
Plausibility of False Claim Allegations Under Rule 12(b)(6)
Courts typically analyze the FCA’s first element by asking whether a “legally” or “factually”
false claim for payment has been established.7 A factually false claim is one in which “the prospective
payee has submitted an inaccurate description of goods or services provided, or a request for
reimbursement for goods or services never provided.”8 A legally false claim, on the other hand, usually
involves a prospective payee certifying an item’s “compliance with a statute or regulation as a
condition to government payment” while knowing that item is not in compliance.9
Defendants maintain that the Complaint does not plausibly allege that the reimbursement
claims they submitted to Medicare/Medicaid were factually or legally false. For factual falsity,
Defendants assert that “Williams does not make a single allegation regarding a claim for payment by
[Defendants] that reflects an inaccurate description of the services provided or a request for services
7
United States ex rel. Wall v. Vista Hospice Care, Inc., 778 F. Supp. 2d 709, 717 (N.D. Tex. 2011)
(citation omitted); see also United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1168 (10th
Cir. 2010) (“Under § 3729(a), liability can attach when a government payee submits either a legally or
factually false request for payment.”).
8
Wall, 778 F. Supp. 2d at 718 (citing Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001)).
9
Id. at 717-18 (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899,
902 (5th Cir. 1997)).
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never provided.”10 Larson’s Mot. 17; see also McKesson Mot. 9. Regarding legal falsity, Defendants
argue that the Complaint “contains no allegations concerning an actual certification to the
Government that was a prerequisite to obtaining the government benefit or a single claim for which
[Defendants] certified [their] compliance with federal law.” McKesson Mot. 10 (quotations and
alterations omitted); see also Larson’s Mot. 18. The Court agrees with both of Defendants’ points.
With respect to factual falsity, the alleged circumstances do not “involv[e] an incorrect
description of goods or services provided or a request for reimbursement for goods or services never
provided.”11 More specifically, the Complaint does not assert that Dr. Larson submitted bills and
medical records to McKesson—who sent Medicare/Medicaid reimbursement claims based on these
records—for services he never actually provided. Nor does the Complaint allege that Defendants
incorrectly described the non-dental anesthesiology services Dr. Larson performed and for which he
sought reimbursement for. Instead, the Complaint indicates that Dr. Larson did indeed perform the
services at issue and represented to McKesson, who in turn represented to Medicare/Medicaid, that
he was seeking reimbursement for these precise services. In short, the government is alleged to have
received exactly what it paid for—Dr. Larson’s anesthesia services performed on Medicare/Medicaideligible patients—and as such, the Complaint does not plausibly demonstrate a factually false claim.
In regards to legal falsity, the Complaint fails to plausibly allege that Defendants falsely
certified “compliance with a federal statute, regulation, or contract that is a prerequisite to obtaining
10
The Court does not consider, for now, Dr. Larson’s argument and supporting documentation
purportedly showing that he “was qualified and credentialed to perform the services at issue.” Larson’s Mot.
16.
11
Mikes, 274 F.3d at 697 (citing Robert Fabrikant & Glenn E. Solomon, Application of the Federal
False Claims Act to Regulatory Compliance Issues in the Health Care Industry, 51 ALA. L. REV. 105, 111 (1999)).
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the government benefit.”12 Because “claims for services rendered in violation of a statute [or
regulation] do not necessarily constitute false or fraudulent claims under the FCA,”13 it is not enough
for Williams to allege simply that the reimbursement claims at issue covered services Dr. Larson
rendered in violation of a statute or regulation. Rather, she must plausibly allege that “the
government expressly conditioned payment on compliance with the underlying statute or
regulation,” and that Defendants falsely certified their compliance with this underlying law.14
Here, Williams has not plausibly alleged that payment of the Medicare/Medicaid claims at
issue was expressly conditioned on Defendants’ compliance with a particular statute or regulation.
In conclusory fashion, the Complaint states that “[i]n order to be reimbursed under either Medicare
or Medicaid, health care providers must represent to both that they are certified, licensed and
qualified providers.” Compl. ¶ 14. Similarly, Williams asserts in her brief that Dr. Larson “knew that
as a prerequisite, Medicare/Medicaid required him to be properly certified before performing
anesthesia procedures in non-dental cases and submitting bills for such procedures.” Pl.’s Resp.
Larson’s Mot. Dismiss, Doc. 46, at 7-8. But nowhere does Williams cite any legal authority to show
that Dr. Larson’s licensure compliance was a precondition to payment, much less an express
precondition. Without more, these conclusory assertions fail to plausibly establish that the
12
United States ex rel. Bennett v. Medtronic, Inc., 747 F. Supp. 2d 745, 765 (S.D. Tex. 2010) (citing
United States ex rel. Graves v. ITT Educ. Servs., Inc., 284 F. Supp. 2d 487, 497 (S.D. Tex. 2003), aff'd, 111
Fed.Appx. 296 (5th Cir. 2004)).
13
Thompson, 125 F.3d at 902.
14
United States ex rel. Steury v. Cardinal Health, Inc., 735 F.3d 202, 207 & n. 3 (5th Cir.2013)
(internal citation omitted). Williams has not clarified whether she is basing her FCA/TMFPA claims on an
express or implied certification theory. But since she has not alleged that Defendants expressly told
Medicaid/Medicare that Dr. Larson’s services were in compliance with the underlying law at issue, Williams
is presumably relying on the implied–certification theory.
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reimbursement claims at issue were “legally” false.15
Ignoring the numerous cases interpreting the FCA’s “false or fraudulent claim” language,
Williams weakly urges that the FCA, as a whistleblower statute, should be broadly construed. Pl.’s
McKesson-Resp. 8. Williams reasons, albeit with no apposite authority,16that the Defendants’
reimbursement claims are “false or fraudulent” because the provider of the services for which
reimbursements is sought—Dr. Larson—violated an unidentified licensure regulation while
performing those services. Id. at 8-9. But as the Fifth Circuit has made clear, the FCA “does not
create liability merely for a health care provider’s disregard of [g]overnment regulations . . . unless,
as a result of such acts, the provider knowingly asks the [g]overnment to pay amounts it does not
owe.”17 Hence, Dr. Larson’s alleged violation of licensure provisions does not, alone, render the
Medicare/Medicaid bills at issue “false or fraudulent” under the FCA or TMFPA. As such, the Court
finds that Williams has failed to plausibly allege a “false or fraudulent” claim as required by the FCA
and TMFPA, and thus, dismissal is warranted under Rule 12(b)(6).
15
See United States ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 269 (5th Cir. 2010) (“[E]ven
if a contractor falsely certifies compliance (implicitly or explicitly) with some statute, regulation, or contract
provision, the underlying claim for payment is not ‘false’ within the meaning of the FCA if the contractor is
not required to certify compliance in order to receive payment.”).
16
The only FCA case Williams cites here is United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180
(5th Cir. 2009), which is clearly distinguishable. Grubbs involved a scheme to bill Medicare/Medicaid for
services never rendered, whereas the bills submitted in this case were for services Dr. Larson did render.
17
United States ex rel. Wilard v. Humana Health Plan of Texas, Inc., 336 F.3d 375, 381 (5th Cir. 2003);
see also United States ex rel. Wright ex rel. Wright v. Comstock Res., Inc., 456 F. App'x 347, 353 (5th Cir. 2011)
(unpublished) (citing Mikes,274 F.3d at 699; Thompson, 125 F.3d 899, 902 (5th Cir.1997)) (“[T]he FCA is
not a ‘blunt instrument’ for enforcing federal statutes. . . .”); United States v. Southland Mgmt. Corp., 326 F.3d
669, 674-75 (5th Cir. 2003) (“It is only those claims for money or property to which a defendant is not
entitled that are ‘false.’”).
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2.
Sufficiency of False Claim Allegations Under Rule 9(b)
The Complaint similarly fails to satisfy Rule 9(b)’s particularity requirements for its FCA and
TMFPA claims. As mentioned, “[a]t minimum, Rule 9(b) requires that a plaintiff set forth the who,
what, when, where, and how of the alleged fraud [or false claim].”18 Of course, this rule “is context
specific” and must be applied in a way “that effectuates [the goals of] Rule 9(b) without stymieing
legitimate efforts to expose fraud.”19
The Complaint’s primary failure here is that it does not state with particularity how
Defendants’ claims were false. The Complaint highlights general Medicare/Medicaid rules related
to reimbursement that Dr. Larson’s out-of-scope services apparently violated,20 and seemingly asserts
that Defendants’ claims were false or fraudulent because they related to these unlawful services.
Under these circumstances, “[t]he elements of the [underlying Medicare/Medicaid] violation must
also be pleaded with particularity under Rule 9(b).”21 The Complaint, however, does not even
identify which Medicare/Medicaid statutes, rules, or regulations Defendants’ allegedly violated, much
less state with particularity how Defendants violated these rules. Without more particularity,
Defendants are left without notice of how their actions are unlawful—precisely what Rule 9(b) was
18
United States ex rel. Stephenson v. Archer Western Contractors, LLC, 548 F. App’x 135, 139 (5th Cir.
2013) (unpublished) (quoting Thompson, 125 F.3d at 903).
19
Grubbs, 565 F.3d at 190.
20
See Compl. ¶ 14 (“In order to be reimbursed under either Medicare or Medicaid, health care
providers must represent to both that they are certified, licensed and qualified providers.”); id. ¶ 15 (“The
amounts of reimbursement made under Medicare and Medicaid are based on the type of services being
provided, who provides services, and the length of time the services are rendered and/or supervised.”).
21
United States ex rel. Nunnally v. W. Calcasieu Cameron Hosp., 519 F. App'x 890, 894 (5th Cir. 2013)
(unpublished) (noting how the defendant’s alleged violation of the Anti-Kickback Statute in submitting
“false” claims pursuant to the FCA must also be pled with particularity under Rule 9(b)).
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designed to avoid.22
Similarly, the Complaint does not clarify what false or fraudulent claims Defendants
supposedly submitted, when Defendants submitted these claims, and how they were falsely prepared.
According to the Complaint, UTHSC doctors, including Dr. Larson, submit charge–invoices and
medical records to McKesson after performing services on patients, and McKesson then generates
a bill that it sends to Medicare/Medicaid for repayment. Compl. ¶ 17. These allegations seem to
suggest that the bills McKesson submits to Medicare/Medicaid represent the “false claims” at issue.
The contents of these bills, however, is never mentioned in the Complaint, so the Court cannot
determine what, if any, false statements are made therein. Likewise, the Complaint does not identify
any particular dates in which these false bills were sent, instead asserting generally that false claims
were submitted “[b]etween 1977 and 2010 (and likely up to the present date).” Id. ¶¶ 36, 41.
Further, the Complaint does not explicitly identify the bills McKesson sent to
Medicare/Medicaid as the “false” claims at issue. Instead, Williams attaches a spreadsheet to her
Complaint as Exhibit A and contends that this represents “[a] sample of the fraudulent claims
submitted by” Defendants. Id. ¶¶ 35, 40. But beyond this conclusory description, Exhibit A is not
explained in any way—not even in Williams’s brief. From what the Court can discern, Exhibit A
appears to be a spreadsheet related to services Dr. Larson performed over a certain period of time,
with information that includes invoice numbers, date of service, the location of the services, the
provider (Dr. Larson for each entry), charges, insurance payors (some of whom are
22
See Grubbs, 565 F.3d at 190 (“Rule 9(b)'s objectives [include] ensuring the complaint provides
defendants with fair notice of the plaintiffs' claims, protects defendants from harm to their reputation and
goodwill, reduces the number of strike suits, and prevents plaintiffs from filing baseless claims then attempting
to discover unknown wrongs.’”).
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Medicaid/Medicare, some of whom are not) and other payment-related information. Most
importantly, Williams does not point to a single falsity on Exhibit A’s thirty–four pages. In fact,
Exhibit A lists Dr. Larson as “DMD” under the provider entries, which seemingly contradicts the
Complaint’s assertion that Dr. Larson routinely billed patients as an M.D. See id. ¶ 24. At the very
least, these conflicting and undetailed assertions leave Defendants without adequate notice of what
particular false claims they must defend against and how these claims were purportedly false.
Lastly, Dr. Larson’s purportedly false statements also lack particular details. Dr. Larson
allegedly signed off and coded bills as an M.D. at certain times “so as to ensure payment” would be
made. Id. ¶ 24. But the Complaint never indicates when any of these false statements were made. At
one point it alleges that Dr. Larson “routinely” signed records falsely, id., but it never provides a
single date as Rule 9(b) requires. The Complaint also does not explain how Dr. Larson’s false
representations were connected to the reimbursement claims McKesson apparently submitted. As
mentioned, the entries in Exhibit A list Dr. Larson as D.M.D., so it is not clear why he would sign
off as M.D. on other records when the “false claims” allegedly contained in Exhibit A list him as
D.M.D. For all these reasons, the Complaint falls well short of alleging the particular details required
by Rule 9(b) for purposes of establishing a false or fraudulent claim under the FCA and TMFPA.
B.
TMFPA Retaliation Claim
The Complaint’s third and final claim concerns Williams’s allegations that McKesson
terminated her employment in retaliation for her internal FCA/TMFPA reporting. McKesson moves
to dismiss this TMFPA retaliation claim based on certain legal deficiencies in Williams’s Complaint.
McKesson also argues that the Court should follow “the general approach of federal courts, . . . [and]
dismiss the supplemental state law claims if the underlying federal claims are dismissed.” McKesson’s
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Mot. 22 n.9. While Williams argues that she has met all pleading requirements for her TMFPA
retaliation claim, she does not respond to McKesson’s request to dismiss the supplemental state claim
if her FCA claim is dismissed. See Pl.’s McKesson-Resp. 11–13. Rather than address the merits of
Williams’s TMFPA retaliation claim, the Court grants McKesson’s unopposed request to dismiss this
pendant state law claim in light of the Court’s dismissal of Williams’s federal law claim.
The Fifth’s Circuit’s “‘general rule is to dismiss state claims when the federal claims to which
they are pendent are dismissed.’”23 And “the Supreme Court has for nearly half a century cautioned
federal courts to avoid ‘needless decisions of state law.’”24 The Supreme Court has also stated “that
when the single federal-law claim is eliminated at an ‘early state’ of the litigation, the district court
has ‘a powerful reason to choose not to continue to exercise jurisdiction.’”25 Ultimately, “[a] district
court has ‘wide discretion’ in deciding whether it should retain jurisdiction over state law claims once
all federal claims have been eliminated.”26
Here, the Court agrees with McKesson that it should exercise its discretion and dismiss
Williams’s pendent state law claim in light of its dismissal of the underlying FCA claim that vests this
Court with jurisdiction. Given that this case is only at the pleadings/motion to dismiss stage, the
23
Enochs v. Lampasas Cnty., 641 F.3d 155, 161 (5th Cir. 2011) (quoting Parker & Parsley Pet. Co. v.
Dresser Indus., 972 F.2d 580, 585 (5th Cir. 1992)).
24
Id. (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966)) (internal alterations
omitted).
25
Parker & Parsley, 972 F.2d at 585 (quoting Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343 (1988)).
26
Enochs, 641 F.3d at 161 (quoting Guzzino v. Felterman, 191 F.3d 588, 595 (5th Cir. 1999)).
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Court has a sound reason not to exercise jurisdiction over Williams’s pendent state law claim.27 Thus,
dismissal of Williams’s TMFPA retaliation claim, without reaching the merits, is warranted in these
circumstances.28
IV.
CONCLUSION
For the foregoing reasons, the Court concludes that the Complaint’s FCA and TMFPA
claims fail to meet the pleading standards set forth by Federal Rules of Civil Procedure 12(b)(6) and
9(b). In addition, the Court declines to exercise jurisdiction over Williams’s pendent state law
retaliation claim. Therefore, dismissal of the Complaint’s three claims is warranted.
Having dismissed each count of the Complaint, the Court now must decide whether to
provide Williams with an opportunity to replead her dismissed claims. A “[d]ismissal with prejudice
for failure to state a claim is a decision on the merits [that] essentially ends the plaintiff’s lawsuit.”
Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977). This “drastic remedy” should be used
sparingly, because federal policy dictates that cases should be decided “on the basis of the substantive
rights involved rather than on technicalities,” and as such, plaintiffs must be given an opportunity
to state a claim. Id.; 5B Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND
PROCEDURE: CIVIL § 1357 (3d ed. 2004). Here, while it remains unclear whether Williams will be
able to come forth with additional facts to overcome the pleading deficiencies stated herein, the
Court reserves judgment for now to allow her an opportunity to replead. Though Williams has
27
Id.
28
Note, however, that if Williams adequately repleads her FCA claim—which, for now, the Court
dismisses without prejudice—the Court will then consider the substantive grounds upon which McKesson
seeks dismissal of Williams’s TMFPA retaliation.
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amended twice before, this is the Court’s first opportunity to judge the sufficiency of the pleadings.
For these reasons, the Court finds that Williams should be given a chance to re-plead in an attempt
to overcome the deficiencies stated herein.
Accordingly, the Court GRANTS both Defendants’ Motions to Dismiss (docs. 36, 40) and
DISMISSES WITHOUT PREJUDICE Counts I, II, and II of the Second Amended Qui Tam
Complaint (doc. 27). The Court further ORDERS that if Williams wishes to file a third amended
complaint in an effort to overcome the deficiencies warranting dismissal stated herein, she must do
so within thirty (30) days from the date of this Order. These re-pleadings shall be accompanied by
a synopsis no longer than ten (10) pages explaining why the amendments overcome the foregoing
deficiencies found by the Court.29 If Defendants wish to respond, they must do so within fourteen
(14) days of Williams’s filing of her amended pleadings and accompanying synopsis. Such response(s)
shall be no longer than ten (10) pages in length. No further briefing will be permitted.
SO ORDERED.
Dated: July 9, 2014.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
29
The parties shall only address the specific deficiencies that led to dismissal of Williams’s three
claims. Should Williams overcome these deficiencies, the Court will then address the alternative grounds
raised in Defendants’ motions, and if necessary, request further briefing from the parties.
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