JOHN E. STEELE, District Judge.
This matter comes before the Court on Defendants' Joint Motion to Dismiss the Second Amended Complaint (Doc. # 59) filed on May 17, 2011, by defendants Health Management Associates, Inc. (MHA) and Naples HMA, LLC (Naples HMA) (collectively, the defendants). Plaintiff, Relator J. Michael Mastej (relator or Mastej) filed a memorandum in opposition to the motion on May 31, 2011. (Doc. # 60.) Defendants filed a reply in support of their motion. (Doc. # 64.) The United States (the Government), although it declined to intervene (Doc. # 76), filed a statement of interest in response to the motion (Doc. # 65) to which defendants filed a response. (Doc. # 66.)
Mastej brought this qui tam
The defendants assert that the Second Amended Complaint should be dismissed because relator failed to meet the pleadings requirements set forth in the Federal Rules of Civil Procedure. In response, Mastej contends that he has met the pleading requirements and alternatively asserts that he should be granted leave to amend his complaint.
In deciding a motion to dismiss, the Court must accept all factual allegations in a complaint as true and take them in the light most favorable to plaintiff. Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); Christopher v. Harbury, 536 U.S. 403, 406, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002). "To survive dismissal, the complaint's allegations must plausibly suggest that the [plaintiff] has a right to relief, raising that possibility above a speculative level; if they do not, the plaintiff's complaint should be dismissed." James River Ins. Co. v. Ground Down Eng'g, Inc., 540 F.3d 1270, 1274 (11th Cir.2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
The Eleventh Circuit requires that in order to avoid dismissal of a FCA claim, a relator must plead "facts as to time, place, and substance of the defendants' alleged fraud, specifically, the details of the defendants' allegedly fraudulent acts, when they occurred, and who engaged in them." United States ex rel. Seal v. Lockheed Martin Corp., 429 Fed.Appx. 818, 820 (11th Cir.2011); citing United States ex rel. Sanchez v. Lymphatx, Inc., 596 F.3d 1300, 1302 (11th Cir.2010); see also United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1310 (11th Cir.2002); United States ex rel. Shurick v. Boeing Company, 330 Fed.Appx. 781, 783 (11th Cir.2009) ("the complaint must allege facts as to time, place and substance of the defendants's alleged fraud, [and] the details of the defendants allegedly fraudulent acts, when they occurred, and who engaged in them.") Failure to satisfy Rule 9(b) is grounds to dismiss the Complaint. Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir.2005).
Rule 9(b)'s particularity requirement for fraud allegations exists to put defendants on notice as to the exact misconduct with which they are charged and to protect defendants against spurious charges. Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir.2001). The Eleventh Circuit has cautioned that "Rule 9(b) must not be read to abrogate rule 8, however, and a court considering a motion to dismiss for failure to plead fraud with particularity should always be careful to harmonize the directives of rule 9(b) with the broader policy of notice pleading." Friedlander v. Nims, 755 F.2d 810, 813 n. 3 (11th Cir.1985).
The Second Amended Complaint alleges the following:
Defendant HMA is a public company incorporated in Delaware. It has various subsidiaries and operates approximately fifty-six (56) hospitals in fifteen (15) states.
Relator was employed in various capacities by defendant HMA, or one of its subsidiaries, from January 2001 through October 2007. On February 5, 2007, he became Chief Executive Officer (CEO) of the Collier Boulevard Facility. Relator contends that both during and after his employment the defendants participated in three (3) separate schemes to present false claims to the federal government in violation of the FCA.
In the first of these schemes, relator alleges that despite the fact that neither the Collier Boulevard nor Pine Ridge Facilities offered emergency surgery or emergency neurosurgery services, Geoff Moebius (Moebius), the CEO of the Pine Ridge facility, negotiated call coverage contracts with the following neurosurgeons: Dr. Michael Lusk, Dr. John Drygas, Dr. Mark Gerber, and Dr. Rick Bhasin of Neuroscience and Spine Associates.
In the second scheme, relator contends that the defendants conspired to provide improper remuneration and/or enter into prohibited financial relationships with several physicians for the purpose of generating patient referrals, including Medicare and Medicaid patients, to the Collier Boulevard Facility. As part of this scheme, in 2008 the defendants flew Dr. Figlesthaler, Dr. Beretta, Dr. Bertram, and Dr. Hanson in HMA's corporate jet to the Masters Golf Tournament in Augusta, Georgia. The flight was at no cost to the physicians. In addition, the physicians were provided with complimentary car rentals, all-access badges to the tournament, and food and drink. Each of these doctors were flown on a separate flight and accompanied by a hospital administrator who discussed having the physician engage in additional business with the Collier Boulevard Facility.
As to the third scheme, Mastej alleges that the defendants agreed with a urology group, Specialists in Urology, not to recruit other urologists in exchange for the group practicing at, and referring patients to, the Pine Ridge and Collier Boulevard Facilities. The Second Amended Complaint does not specifically identify any wrongdoers as to this scheme nor does it describe when these allegations occurred. (Id. at ¶ 73.)
Relator contends that these three schemes violated the Stark Law and/or the Anti-Kickback Statute. Defendants knew that compliance with these laws was a prerequisite to being reimbursed under Medicare, and defendant's certified in their Form CMS-2552, commonly referred to as Hospital Cost Reports, that they were in compliance with federal law.
Count I is brought pursuant to 31 U.S.C. § 3729(a)(1)(A), which imposes liability on a person who "knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval." Id. (Emphasis added). This section of the act requires that false claims actually be submitted to the federal government.
The Eleventh Circuit has repeatedly held that the "central question" in a claim brought pursuant to this section of the statute "is whether the defendant ever presented [or caused to be presented] a `false or fraudulent claim' to the government." Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1326 (11th Cir.2009); quoting Clausen, 290 F.3d at 1311. Because the fraudulent act under this section is the presentation of false claims, the presentment itself must be pled with particularity. In order to plead with sufficient particularity, a complaint must include the "who," "what," "where", "when" and "how" of the alleged fraudulent submission to the government. Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir.2005) see also United States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1357 (11th Cir.2006). Further, Rule 9(b)'s directive that "the circumstances constituting fraud or mistake shall be stated with particularity" does not permit a FCA plaintiff merely to describe a private scheme in detail but then to allege simply and without any stated reason for his belief that the claims requesting illegal payments must have been submitted, were likely submitted or should have been submitted to the Government. United States ex rel. Seal 1 v. Lockheed Martin Corp., 429 Fed.Appx. 818, 821 n. 1 (11th Cir.
A violator of government regulations is ineligible to participate in a government program and when that violator presents claims for payment that the violator knows the government does not owe, the FCA makes that violator liable for its submission of those false claims. United States ex rel. McNutt v. Haleyville Med. Supplies, Inc., 423 F.3d 1256 (11th Cir. 2005). "[W]here the government pays funds to a party, and would not have paid those funds had it known of a violation of a law or regulation, the claim submitted for those funds contained an implied certification of compliance with the law or regulation and was fraudulent." See United States ex rel. Barrett v. Columbia/HCA Healthcare Corp., 251 F.Supp.2d 28, 33 (D.D.C.2003) (citation omitted); see also U.S. ex rel. Compton v. Circle B. Enterprises, Inc., 2010 WL 942293, at *7 (M.D.Ga. Mar. 11, 2010). Nevertheless, "[t]he False Claims Act does not create liability merely for a health care provider's disregard of Government regulations or improper internal policies unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe." United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1311 (11th Cir.2002). Thus, to violate this section of the Act, a defendant must have violated the regulations and submitted claims for which payment is known by the claimant not to be owed a false claim under the Act.
For example, in McNutt the Government alleged the defendant violated the Anti-Kickback Statute, that compliance with the statute was necessary for Medicare reimbursement, and that the defendants submitted claims for reimbursement despite the fact that they were ineligible for the payments demanded on those claims. The Court found the government had pled its claims with sufficient particularity because the allegation was neither general nor speculative because "the government identified specific claims submitted by [the defendants] to Medicare for reimbursement for services, which had been rendered to patients referred by the individuals receiving kickbacks." McNutt, 423 F.3d at 1258. (Emphasis added).
Here, unlike McNutt, relator does not specifically identify a single claim within the various Hospital Cost Reports related to any of the three schemes. He fails to identify a single claim for reimbursement for patients who were referred by the Neuroscience and Spine Associates in Scheme One, the various doctors who attended the Masters Tournament in Scheme Two, or any urologist from Specialists in Urology in Scheme Three. Instead, he summarily concludes that these three schemes necessarily resulted in the defendant's systematic submission of false claims. However, the notion that "a pattern of improper practices of the defendants leads to the inference that fraudulent claims were submitted to the government" has been rejected by the Eleventh Circuit. Corsello, 428 F.3d 1008, 1013. Because the Court should not make inferences about the submission of fraudulent claims, which would "strip[] all meaning from Rule 9(b)'s requirements of specificity" Clausen, 290 F.3d at 1312 n. 21, the Court
Rule 9 can also be satisfied if a Complaint has an "indicia of reliability" that indicates that false claims were in fact submitted to the government. Clausen, 290 F.3d at 1311. For example, in United States ex rel. Walker v. R & F Props. of Lake Cnty., Inc., 433 F.3d 1349, 1360 (11th Cir.2005), the relator alleged personal knowledge regarding the defendants' billing practices. The Court found that this gave rise to a well-founded belief that the defendant submitted actual false or fraudulent claims. The Eleventh Circuit found the allegations reliable because they were grounded in first-hand knowledge that explained why the relator believed a specific defendant submitted false or fraudulent claims to the government. Id.
Relator contends that he has asserted an adequate indicia of reliability, and therefore has met the pleading requirements of Rule 9. He alleges that he began his tenure with HMA as Vice President of Acquisitions and Development where he attended monthly operations meetings that included the Chief Executive Officer, Chief Operating Officer, Regional Senior Vice Presidents, Divisional Vice Presidents, and corporate department heads. (Doc. # 58, ¶¶ 58-59.) Prior to his employment with HMA, relator held a number of positions within the health care industry, including Medicare/Medicaid auditor for Michigan Blue Cross, a reimbursement specialist with Humana, and Chief Executive Officer of several hospitals and medical centers. (Id. at ¶ 56.) Relator contends that his specialized experience provides the indicia of reliability required to meet Rule 9's heightened pleading requirement.
The Court first notes that relator makes no allegations that he had any familiarity, through his various roles with the defendants and subsequent to his tenure with the defendants, with the billing practices of the defendants. Thus, unlike Walker, relator has not pled any facts that indicate that he had any specific knowledge through his various positions as to the actual submission of claims. Nonetheless, even if the Court were to infer that a CEO has personal knowledge of billing, the Court would still find that plaintiff's Complaint lacks the requisite indicia of reliability.
According to the Second Amended Complaint, Mastej ended his tenure with the defendants in October, 2007. However, the first alleged false Hospital Cost Report was not submitted until on or about May 30, 2008, seven (7) months after relator was employed by the defendants. Thus, relator had no specific knowledge as to the alleged fraudulent claims that were submitted.
Count II is brought pursuant to 31 U.S.C. 3729(a)(1)(B), which creates liability for a defendant who "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." Unlike Section 3729(a)(1)(A), this Section does not have a presentment clause. The Supreme Court noted that "[t]he inclusions of an express presentment requirement in subsection [(a)(1)(A) ], combined with the absence of anything similar in subsection [ (A)(1)(B) ], suggests that Congress did not intend to include a presentment requirement in subsection [(A)(1)(B) ]." Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 128 S.Ct. 2123, 170 L.Ed.2d 1030 (2008). Thus, the Eleventh Circuit has held that this section "does not demand proof that the defendant presented or caused to be presented a false claim to the government or that the defendant's false record or statement itself was ever submitted to the government." Hopper, 588 F.3d at 1327. Instead, a relator must show "that (1) the defendant made a false record or statement for the purpose of getting a false claim paid or approved by the government; and (2) the defendant's false record or statement caused the government to actually pay a false claim, either to the defendant itself, or to a third party." Id. Further, while subsection (a)(1)(B) relieves a plaintiff of the presentment requirement, the text of the subsection which proscribes false statements "to get a false or fraudulent claim paid or approved by the Government" suggests that "Congress intended this subsection to impose liability for false statements that actually cause the government to pay amounts it does not owe." Id.; see also United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir.2004).
In Hopper, the plaintiff alleged that the defendant utilized a sophisticated marketing plan to induce physicians to prescribe a drug for purposes not approved by the Federal Drug Administration (FDA), and this conduct resulted in the submission for reimbursement by Government Healthcare Programs even though the defendants were not eligible for reimbursement. Hopper, 588 F.3d at 1323. The complaint further alleged that the defendants provided kickbacks to physicians and other healthcare providers in order to induce them to prescribe the drug for purpose that were not approved by the FDA. Id. The Eleventh Circuit rejected the relator's position that this section is an attempt provision that imposes liability for statements made with the intent to defraud the government, whether or not the government actually pays the false claim. It reasoned that although a defendant need not show that false statements themselves were presented to the government, or that the defendant need not personally submit a false claim, the relator must show that the government paid a false claim to prove a violation. Id. Therefore, a relator must allege with particularity, pursuant to Rule 9(b), that the false statements ultimately led the government to pay amounts it did not owe. Id. at 1329. Ultimately, however, the Court did not analyze whether the Complaint had alleged with particularity the payment of a false claim because it found the Complaint was otherwise deficient; it failed to allege that the defendants intended for the government to rely on their false statements in deciding whether to pay a false claim.
Here, relator fails to plead both requirements of this claim. First, Mastej fails to show that the defendants acted with the purpose of getting a false claim
Secondly, the Second Amended Complaint fails to plead the actual payment by the government with the requisite specificity. Relator merely alleges that the Government paid on these claims, but does not provide the dates, amounts, or any other identifying detail of any of these alleged payments. Furthermore, because the relator was not employed by the defendants when these reimbursements would have been received, the Second Amended Complaint does not have the indicia of reliability to excuse this failure. Plaintiff's conclusory allegations that the Government paid these claims is not sufficient to meet the requirements of Rule 9. Accordingly, defendants' motion to dismiss Count II is granted.
Count III is brought pursuant to 31 U.S.C. § 3729(a)(1)(G), which states that the U.S. government may "recover a civil penalty from any person who `knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government.'" United States v. Pemco Aeroplex, Inc., 195 F.3d 1234, 1236 (11th Cir.1999). This section, commonly referred to as the "reverse-false-claim provision," was added in 1986 "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." Cullins v. Astra, Inc., 2010 WL 625279 (S.D.Fla. Feb. 17, 2010) quoting S. Rep. No. 99-345, at 18; 1986 U.S.C.C.A.N. 5266, 5283. In a Section 3729(a)(1)(G) action, "`the defendant's action does not result in improper payment by the government to the defendant, but instead results in no payment to the government when a payment is obligated.'" Hoyte v. Am. Nat'l Red Cross, 518 F.3d 61, 63 n. 1 (D.C.Cir.2008) (quoting United States ex rel. Bain v. Ga. Gulf Corp., 386 F.3d 648, 653 (5th Cir.2004)). A plaintiff must demonstrate the following five (5) elements to prevail on a reverse-false-claim action: (1) a false record or statement and (2) the defendant's knowledge of the falsity; (3) that the defendant makes, uses, or causes to be made or used a false statement; (4) for the purpose to conceal, avoid, or decrease an obligation to pay money to the government; and (5) materiality of the misrepresentation. Cullins, 2010 WL 625279 at *5; see also United States v. Bourseau, 531 F.3d 1159, 1164 (9th Cir.2008) (collecting cases).
Here, Mastej simply makes legal conclusions that defendants violated this section of the Act but makes no specific allegations to support the claim. The Complaint fails to allege any amounts owed to the government by the defendants or otherwise provide any other information
Count IV, which asserts that the defendants conspired to defraud the government in violation of section 3729(a)(1)(C) of the FCA, also requires compliance with Rule 9(b). Corsello, 428 F.3d at 1014. To state a claim under section 3729(a)(1)(C) a plaintiff must demonstrate "(1) that the defendant conspired with one or more persons to get a false or fraudulent claim paid by the United States; (2) that one or more of the conspirators performed any act to effect the object of the conspiracy; and (3) that the United States suffered damages as a result of the false or fraudulent claim." Id. quoting United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Provident Life & Accident Ins. Co., 721 F.Supp. 1247, 1259 (S.D.Fla.1989).
Plaintiff's bare legal conclusions of conspiracy are wholly unsupported by specific factual allegations of any agreement or an overt act. See Corsello, 428 F.3d at 1014. The relator fails to describe, in specific detail, an act that furthered the object of a conspiracy. As discussed above, relator makes no specific allegations that any Medicare or Medicaid patient was referred to the defendants by the various physicians identified in the Second Amended Complaint. Nor does relator identify any specific claims included in the alleged fraudulent submissions that resulted from the alleged referrals. The Second Amended Complaint does little to put defendants on notice as to the specific basis of the conspiracy claim. Thus, defendant's motion to dismiss Count IV is granted.
Although the Court finds that relator failed to plead his allegations with sufficient particularity, the Court will provide Mastej the opportunity to amend his Complaint.
Accordingly, it is now
1. Defendants' Joint Motion to Dismiss the Second Amended Complaint (Doc. # 59) is
2. Mastej may file an Amended Complaint within twenty-one (21) days of the signing of this Opinion and Order.
3. Within twenty-eight (28) days of this Opinion and Order, the parties shall file a Joint Case Management Report with new scheduling dates.
This matter comes before the Court on Relator's Motion for Reconsideration and/or Motion for Limited Discovery Related to False Claims (Doc. # 80) filed on March 9, 2012. Defendants, Health Management Associates, Inc. and Naples HMA LLC (collectively, defendants) filed an opposition on March 22, 2012. (Doc. # 83.) For the reasons set forth below, the motion is denied.
This matter is a qui tam action brought by Mastej asserting violations of the False Claims Act, 31 U.S.C. 3729 et seq. through violations of the Stark Law and the Anti-Kickback
Reconsideration of a court's previous order is an extraordinary remedy and, thus, is a power which should be used sparingly. Am. Ass'n of People with Disabilities v. Hood, 278 F.Supp.2d 1337, 1339 (M.D.Fla. 2003) (citing Taylor Woodrow Constr. Corp. v. Sarasota/Manatee Airport Auth., 814 F.Supp. 1072, 1072-73 (M.D.Fla.1993)). "A motion for reconsideration should raise new issues, not merely readdress issues litigated previously." PaineWebber Income Props. Three Ltd. P'ship v. Mobil Oil Corp., 902 F.Supp. 1514, 1521 (M.D.Fla. 1995). The motion must set forth facts or law of a strongly convincing nature to demonstrate to the court the reason to reverse its prior decision. Taylor Woodrow, 814 F.Supp. at 1073; PaineWebber, 902 F.Supp. at 1521. "When issues have been carefully considered and decisions rendered, the only reason which should commend reconsideration of that decision is a change in the factual or legal underpinning upon which the decision was based." Taylor Woodrow, 814 F.Supp. at 1072-73.
A motion for reconsideration does not provide an opportunity to simply reargue — or argue for the first time — an issue the Court has once determined. Court opinions "are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure." Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282, 288 (N.D.Ill.1988). "The burden is upon the movant to establish the extraordinary circumstances supporting reconsideration." Mannings v. Sch. Bd. of Hillsborough Cnty., 149 F.R.D. 235, 235 (M.D.Fla.1993). Unless the movant's arguments fall into certain limited categories, a motion to reconsider must be denied.
Under Rule 59(e), courts have "delineated three major grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; (3) the need to correct clear error or prevent manifest injustice." Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689, 694 (M.D.Fla.1994).
Relator first asserts that because the defendants were not in compliance with the Anti-Kickback Statute and Stark Law, all claims submitted to the government were false. Therefore, relator need only
Second, relator complains that the Court's finding that the Second Amended Complaint does not have an "indicia of reliability" to excuse his failure to meet the pleading requirements of Rule 9(b) was incorrect with respect to Scheme One.
There is no basis for the Court to reconsider its finding. Relator makes no allegations that there has been an intervening change in law or the availability of new evidence. Further, he cannot demonstrate that the Court's determination was clear error. The Court's decision that relator's Second Amended Complaint lacked an indicia of reliability was based on relator's failure to allege that "he had any familiarity, through his various roles with the defendants and subsequent to his tenure with the defendants, with the billing practices of the defendants" or "that he had any specific knowledge through his various positions as to the actual submission of claims." (Doc. # 78, p. 14.) The Court continued that "even if the Court were to infer that a CEO has personal knowledge of billing, the Court would still find that relator's Complaint lacks the requisite indicia of reliability." (Id.) (Emphasis added). The Court's conclusion was not based on the fact that relator was not employed as a CEO during the relevant time frame. The Court's consideration of Mastej's tenure as a CEO was an alternative basis for the Court's determination.
Nevertheless, relator acknowledges that he was not employed as a CEO when the first Annual Hospital Cost Report was submitted but contends that because he was employed when interim claims
Alternatively, relator seeks reconsideration of the Magistrate Judge's December
As a last resort, relator requests that the Court permit him to engage in limited discovery. Specifically, relator requests that the Court require defendants to "confirm via written interrogatories that Medicare and Medicaid claims were submitted between 2007 and 2010 for the following doctors and groups: Dr. Michael Lusk, Dr. John Dygas, Dr. Mark Gerber, Dr. Rick Bhasin, Dr. Gary Colon, Dr. Paul Dernbach, Neuroscience and Spine Associates, Dr. Aldo Bertta, Dr. William Figlesthaler, Dr. Morton Bertram, and Dr. Hanson." (Doc. # 80, p. 8.) Relator further requests that the Court require defendants to produce a spreadsheet of all Medicare and Medicaid claims submitted by the relevant doctors and groups between 2007 and 2010.
Rule 9(b)'s very purpose is to protect from discovery defendants facing inadequately pled fraud claims. See Friedlander v. Nims, 755 F.2d 810, 813 n. 3 (11th Cir.1985) ("The particularity rule serves several purposes. Its clear intent is to eliminate fraud actions in which all the facts are learned through discovery after the complaint is filed.") (internal citations omitted). The Court finds no basis to permit limited discovery in this matter.
Accordingly, it is now
Relator's Motion for Reconsideration and/or Motion for Limited Discovery Related to False Claims (Doc. # 80) is