HILLMAN, District Judge.
This matter involves a qui tam claim under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., arising out of allegedly fraudulent claims for Medicare funds. Presently before the Court is a motion for partial judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) filed by Defendant, Renal Ventures Management, LLC.
Defendant is a dialysis care services company that provides all forms of dialysis care for patients with end-stage renal disease. (Am. Compl. ¶ 2.) Defendant's services include in-hospital and outpatient hemodialysis, peritoneal dialysis, home dialysis and a transplant referral program. (Id.) Defendant operates numerous dialysis centers in New Jersey, Texas, Iowa, Arkansas, and Pennsylvania. (Id.) Defendant is responsible for "all management, and training, including the acquisition of all equipment, technology, supplies, employee benefits and administrative services, including all back-office operations, which include all billing and collection functions." (Id. at ¶ 3.) One of Defendant's dialysis centers is known as the Renal Center of Sewell, LLC and is located in Sewell, New Jersey. (Id. at ¶ 2.)
Relator Thomas G. Foglia alleges that he was a registered nurse who began employment at Defendant's Sewell, New Jersey dialysis center on March 13, 2007. (Id. at ¶ 1.) Relator's employment was terminated on November 7, 2008, allegedly in retaliation for Relator's complaints about purported illegal conduct by Defendant. (Id. at ¶¶ 1, 40-41.) Relator contends that during his employment he observed a number of violations of state law as set forth herein. (Id. at ¶ 8.)
In the amended complaint, Relator avers that Defendant was required, pursuant to
In addition to the foregoing, Relator contends that Defendant improperly used and billed for a drug called Zemplar, a prescription medication administered by injection, which is a "metabolically active form of Vitamin D used for the prevention and treatment of secondary hyperparathyroidism associated with chronic kidney disease[.]" (Am. Compl. ¶¶ 9, 17, 26.) Relator avers that Zemplar is available as a sterile, colorless aqueous solution for intravenous injection in 2 mcg, 5 mcg or 10 mcg vials, and Defendant purportedly orders and stocks only the 5 mcg vials. (Id. at ¶ 10.) Relator asserts that both the drug manufacturer and the Food and Drug Administration "clinically recommend[] and direct[]" that when the contents of a vial are not completely used, the remaining drug should be discarded. (Id. at ¶ 12.) Relator contends that Defendant has disregarded this recommendation and administers leftover Zemplar to patients rather than using a new vial of Zemplar each time the drug is administered. (See id. at ¶ 26.)
On April 1, 2009, Plaintiff brought suit in this Court individually and in the name of the United States, the State of New Jersey, and the State of Texas under the federal FCA and the qui tam provisions in 31 U.S.C. § 3730(b). On September 23, 2009, the State of Texas declined to intervene in this matter. The United States declined to intervene on September 24, 2009, and the State of New Jersey declined intervention on November 4, 2009. Relator filed an amended, redacted complaint on May 12, 2010. The amended complaint contains four counts: Count I alleges a violation of the federal FCA, Count II alleges a violation of the New Jersey False Claims Act, Count III alleges a violation of the Texas Medicaid Fraud Prevention Act, and Count IV alleges a violation of the
Relator has three theories of liability underlying his false claim allegations. One theory of liability is predicated on Relator's contention that Defendant received government funds but failed to comply with applicable New Jersey regulations concerning adequate staffing of dialysis facilities. A second, related theory of liability is that Defendant receives government funds but failed to comply with certain quality of care drug use standards requiring one time use of vials containing Zemplar. Relator's third theory of liability is also based on Defendant's administration of Zemplar, as Relator contends that Defendant gave patients unused portions of previously-opened vials of the drug but sought reimbursement for each vial that should have been or could have been used based on the prescribed doses. According to Relator, Defendant submitted claims for reimbursement to federal payors, such as Medicare or Medicaid, for up to fifty vials of Zemplar per day when only twenty-nine to thirty-five vials were actually used. (Am. Compl. ¶ 20.)
This Court has jurisdiction over Relator's federal claims under 28 U.S.C. § 1331, and may exercise supplemental jurisdiction over Relator's related state law claim under 28 U.S.C. § 1367.
A Rule 12(c) motion for judgment on the pleadings may be filed after the pleadings are closed. Fed.R.Civ.P. 12(c); Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991). In analyzing a Rule 12(c) motion, a court applies the same legal standards as applicable to a motion filed pursuant to Federal Rule of Civil Procedure 12(b)(6). Turbe, 938 F.2d at 428.
When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir.2005). A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).
A district court, in weighing a motion to dismiss, asks "`not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 n. 8, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1953, 173 L.Ed.2d 868 (2009) ("Our decision in Twombly expounded the pleading standard for `all civil actions[.]'") (citation omitted). The Third Circuit has instructed district courts to conducted a two-part analysis in deciding a motion to dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009).
First, a district court "must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions." Fowler, 578 F.3d at 210-11 (citing Iqbal,
A court need not credit "`bald assertions'" or "`legal conclusions'" in a complaint when deciding a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir.1997). The defendant has the burden of demonstrating that no claim has been presented. Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.1991)).
In this case, the amended complaint alleges violations of the federal FCA and the false claim statutes of New Jersey and Texas. Because these claims implicate fraud statutes, Relator's allegations with respect to these claims must satisfy the heightened pleading requirements of Fed. R.Civ.P. 9(b). See United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 234 (3d Cir.1998) (noting that Rule 9(b) "requires plaintiffs to plead fraud with particularity, specifying the time, place and substance of the defendant's alleged conduct[,]" and thus "provides sufficient deterrence against overly broad allegations" under the False Claims Act). Accordingly, Relator must plead "with particularity the circumstances constituting fraud[,]" but "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). The Third Circuit has held that "Fed.R.Civ.P. 9(b) requires plaintiffs to plead the circumstances of the alleged fraud with particularity to ensure that defendants are placed on notice of the `precise misconduct with which they are charged, and to safeguard defendants against spurious charges' of fraud." Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir.1989) (quoting Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1179, 84 L.Ed.2d 327 (1985)).
Defendant moves to dismiss the amended complaint insofar as Relator attempts to assert a False Claim Act violation based on a "false certification" theory, as well as any allegation that Defendant submitted false claims to the State of Texas. Defendant contends that the claims based on the "false certification" theory must be dismissed as the Third Circuit has not recognized such a cause of action. (Br. in Supp. of Def.'s Mot. for Protective Order or, in the Alternative, for Partial J. on the Pleadings ("Def.'s Br.") 17.) Defendant alternatively asserts that Relator failed to plead this theory with the requisite specificity. (Id.) Additionally, to the extent Relator alleges that Defendant submitted false claims to the State of Texas, Defendant
Relator responds that he has properly pled his false claim allegations. Relator argues that the complaint states that Defendant submitted false claim information on which payment is based by "failing to adhere to the requirements of federal and state law and violation of public policy concerning the public health, safety or welfare such [as] the staffing requirements set forth in Title 8:43A-24.7(c) ... and Subparagraph d of Title 8:43A-24.7[.]" (Pl.'s Reply to Def.'s Mot. for Protective Order or, in the Alternative, Mot. for Partial J. on the Pleadings ("Pl.'s Opp. Br.") 10-11.) Relator also asserts that the complaint properly pleads that Defendant submits false claims for reimbursement by submitting claims for payment for Zemplar based on the full use of each vial even though Defendant gives patients unused portions of vials and thus does not administer as much Zemplar as Defendant claims. (Pl.'s Opp. Br. 11.) Further, Relator argues that the complaint properly pleads that Defendant's reuse of single dose Zemplar vials violates the quality of care standards notwithstanding Defendant's representation to the government that it complies with the applicable quality of care standards. (Id. at 12.)
Relator also contends that because Defendant did not file a motion to dismiss under Fed.R.Civ.P. 12(b)(6), it waived the right to object to the sufficiency of the allegations in the amended complaint. (Id. at 20.) Relator cites no authority to support this argument, and the Court notes that the Rule 9(b) objection, although not raised in Defendant's answer, was asserted in a motion filed relatively early in this case. See 2 James Wm. Moore et al., Moore's Federal Practice ¶ 9.03[5] (2009) ("If the failure to plead with particularity under Rule 9(b) is not raised in the first responsive pleading or in an early motion, the issue will be deemed waived."). Relator further asserts that even if the Court considers its amended complaint under Fed.R.Civ.P. 9(b), Relator meets the sufficiency requirements and need not identify a specific claim that was made to the government. (Id. at 20-21.) Relator argues that he need only assert "that there was a material nexus between the wrongful conduct and the government's decision to expend funds." (Id. at 29.)
The federal False Claims Act prohibits the submission of false or fraudulent claims for payment to the United States and authorizes qui tam actions, by which private individuals may bring a lawsuit on behalf of the government in exchange for the right to retain a portion of any resulting damages award. Schindler Elevator Corp. v. U.S. ex rel. Kirk, ___ U.S. ___, 131 S.Ct. 1885, 1889, 179 L.Ed.2d 825 (2011); U.S. ex rel. Wilkins v. United Health Group, Inc., 659 F.3d 295, 298 n. 1 (3d Cir.2011). "The primary purpose of the FCA `is to indemnify the government-through its restitutionary penalty provisions-against losses caused by a defendant's fraud.'" Wilkins, 659 F.3d at
Prior to 2009, the FCA provided in relevant part:
31 U.S.C. § 3729(a)(1)-(2).
On May 20, 2009, Congress enacted the Fraud Enforcement and Recovery Act of 2009 ("FERA"), which amended the FCA and now imposes liability on:
31 U.S.C. § 3729(a)(1). Pursuant to the amendment, Section 3729(a)(2) of the pre-FERA statute was renumbered as Section 3729(a)(1)(B) and expanded liability to anyone who submitted statements which are material to receipt of government funds, even if such statements were not made to induce the government directly to pay the funds.
In this case, Relator filed a complaint on April 1, 2009 — prior to the enactment of FERA — which details conduct that Relator observed from March 12, 2008 through November 7, 2008. The amended complaint is dated December 21, 2009 — following enactment of FERA — and was filed in May 2010. Even though the original complaint was filed prior to the enactment of FERA, FERA contains a retroactivity provision as to Section 3729(a)(1)(B), which states that this clause "`take[s] effect as if enacted on June 7, 2008 and appl[ies] to all claims under [the FCA] that are pending on or after that date.'" Wilkins, 659 F.3d at 303 (citation omitted). Relator cites to Section 3729(a)(1)(B) with respect to certain claims in the amended complaint (see Am. Compl. ¶¶ 27, 30), although he primarily relies on the pre-FERA version of this subsection. (Id. at ¶¶ 27, 30.) Neither party addresses which version of the statute applies in this case.
The word "claim" as phrased in the relevant provision of Section 3729(a)(1)(B) refers to a "defendant's request for payment" and not to "civil actions for FCA violations." United States v. Sci. Applications Int'l Corp., 653 F.Supp.2d 87, 107 (D.D.C.2009); see also United States v. Albinson, No. Civ. A. 09-1791, 2010 WL 3258266, at *9 (D.N.J. Aug. 16, 2010) (Section 3729(a)(1)(B) "applies retroactively in place of unamended § 3729(a)(2) only when a defendant's false claims for payment were pending on or after June 7, 2008."). In this case, the amended complaint
Nonetheless, the Court finds that it need not resolve this issue to decide the present motion because under either the former or amended version of the statute, the analysis will be the same. As stated in U.S. ex rel. Loughren v. Unum Group, 613 F.3d 300, 307 n. 7 (1st Cir.2010), the FERA amendment primarily addressed an "intent requirement" that the Supreme Court found in the pre-FERA Section 3729(a)(2):
U.S. ex rel. Loughren v. Unum Group, 613 F.3d 300, 307 n. 7 (1st Cir.2010). As in Unum Group, this case does not concern whether Defendant caused false statements to be made directly to the government, and the intent requirement addressed by FERA is not relevant here. The Third Circuit, in Wilkins, concluded that it need not decide whether the earlier or amended version of the FCA was applicable to the relators' claims in that case because the claims could not survive under either version of the statute. Wilkins, 659 F.3d at 304-05. The Third Circuit decided the case under the pre-FERA version of the statute, and the Court here will likewise cite to the pre-FERA version of the FCA.
To assert a claim under either subsection of the federal FCA, a relator must allege that the defendant submitted a legally fraudulent or false claim. See U.S. ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir.2008) (citing Mikes, 274 F.3d at 695-96). Two categories of false claims are recognized under the federal FCA: factually false claims and legally false claims. Wilkins, 659 F.3d at 305-06 (citing Conner, 543 F.3d at 1217). A claim is factually false when a government payee "has submitted `an incorrect description of goods or services provided or a request for reimbursement for goods or services never provided.'" Conner, 543 F.3d at 1217 (quoting Mikes, 274 F.3d at 697). A claim is legally false when a government payee has "`certifie[d] compliance with a statute or regulation as a condition to government payment,' yet knowingly failed to comply with such statute or regulation." Id. "A legally false FCA claim is based on a `false certification' theory of liability." Wilkins, 659 F.3d at 305 (citing Rodriguez v. Our Lady
The category of legally false claims is further divided into two categories: express false certifications and implied false certifications. Wilkins, 659 F.3d at 305-06. "Under the `express false certification' theory, an entity is liable under the FCA for falsely certifying that it is in compliance with regulations which are prerequisites to Government payment in connection with the claim for payment of federal funds." Id. (citing Rodriguez, 552 F.3d at 303). Under the "implied false certification" theory, a claimant "seeks and makes a claim for payment from the Government without disclosing that it violated regulations that affected its eligibility for payment." Id. Under either an express or implied false certification theory, to plead a claim a plaintiff "must show that compliance with the regulation which the defendant allegedly violated was a condition of payment from the Government." Id. at 309.
As noted above, the majority of Defendant's argument relies on the district court's decision in Wilkins and focuses on the assertion that the Third Circuit has never adopted the "false certification" theory. However, the Third Circuit recently issued a precedential opinion in Wilkins on express and implied false certification liability. In its opinion, the Third Circuit clarified that it does recognize express false certification liability under the FCA. Wilkins, 659 F.3d at 306 (citing U.S. ex rel. Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir.2009)). Further, in Wilkins the Third Circuit adopted the implied false certification theory of liability under the federal FCA. Id. Subsequent to the decision in Wilkins, Defendant submitted a letter stating that even though the Third Circuit now recognizes the false certification theory, the amended complaint nonetheless fails to state a claim and remains subject to dismissal.
Relator states that the FCA claims in this case are based on both express and implied certification theories of liability. (See Letter from Marc M. Orlow, Esq. 1, July 13, 2011.) Relator contends that Paragraph 16 of the amended complaint specifically sets forth both theories of liability. (Id.) Paragraph 16 states as follows:
(Am. Compl. ¶ 16) (emphasis supplied). This language, Relator argues, in addition to asserting an express certification theory, invokes the implied certification theory because it pleads that "implied certification is a `condition of payment.'" (Letter from Marc M. Orlow, Esq. 2, July 13, 2011.)
The Court rejects Relator's argument that Paragraph 16 asserts an implied certification theory of liability. The phrase "expressly and by implication," as used in Paragraph 16, modifies the phrase "conditions of payment." Thus, Paragraph 16 as phrased asserts that Defendant represented that it was in compliance with New Jersey's regulations regarding quality of care and staffing, and that compliance with such regulations was both an express and implied requirement for Defendant to obtain payment by the federal government.
The theory of implied certification adopted by the Third Circuit, however, does not focus on whether the conditions for payment are express or implied. Rather, the relevant inquiry is whether the defendant's conduct implies compliance with all conditions required for payment and, thus, entitlement to payment. As stated in Wilkins, "an implied false certification theory of liability is premised `on the notion that the act of submitting a claim for reimbursement itself implies compliance with governing federal rules that are a precondition to payment.'" Wilkins, 659 F.3d at 305 (citations omitted). In other words, when a person must meet certain preconditions before he can receive government funds, and such person then accepts the government funds, that person impliedly certifies that he is in compliance with all preconditions for payment.
The language contained in Paragraph 16 of the amended complaint does not allege that Defendant implied that it was entitled to payment. Paragraph 16 clearly alleges that Defendant made an express claim for payment. The paragraph states: "Each claim that Defendant submits for payment contains an express certification that Defendant is in compliance with all Federal and State Regulations related to the operational requirements set forth by the appropriate regulatory authorities, including,
Notwithstanding the foregoing, Relator does assert an implied certification theory of liability in the amended complaint. Paragraph 16 of the amended complaint concerns Relator's claim that Defendant made a claim for government funds but failed to adequately staff its facility in accordance with applicable New Jersey regulations. As noted above, however, Relator also asserts a separate claim concerning Defendant's alleged reuse of Zemplar vials purportedly in violation of government regulations requiring single use of containers for injectable medications, and it is this claim that implicates the implied certification theory. Specifically, as set forth in Paragraph 26 of the amended complaint, Relator alleges: "Defendant's re-use of single dose Zemplar containers for injectable medications violates the quality of care standards that Defendant represents and certifies that it provides, both in an implied and express manner... [.] Defendants [sic] implied and express representations are material conditions to the Government's decision to reimburse or pay for the Zemplar ... [.]" (Am. Compl. ¶ 26) (emphasis supplied). The Court thus construes the amended complaint as asserting both the express certification and the implied certification theories of liability.
As noted above, "to plead a claim upon which relief could be granted under a false certification theory, either express or implied, a plaintiff must show that compliance with the regulation which the defendant allegedly violated was a condition of payment from the Government." Wilkins, 659 F.3d at 309. Courts must distinguish between conditions of participation in government programs and conditions of payment of government funds. Id. As noted in Wilkins, "`[c]onditions of participation... are enforced through administrative mechanisms, and the ultimate sanction for violation of such conditions is removal from the government program,' while `[c]onditions of payment are those which, if the government knew they were not being followed, might cause it to actually refuse payment.'" Id. (citing Conner, 543 F.3d at 1220).
With respect to Relator's claim that Defendant violated the federal FCA by accepting federal funds notwithstanding its staffing deficiencies and other isolated violations of New Jersey law,
Thus, in this case, as in Wilkins, the fundamental flaw in Relator's claim concerning staffing violations is that Relator "does not cite to any regulation demonstrating that a participant's compliance" with Title 8, Chapter 43 of the New Jersey Administrative Code "is a condition for its receipt of payment from the Government." Wilkins, 659 F.3d at 310. Nor does Relator "cite examples, in case law or otherwise, of the Government seeking recovery of Medicare payments for services that a provider actually performed on the basis that its lack of compliance" with the New Jersey regulations "rendered those services fraudulent." Id. As such, Relator's federal FCA claim based on an alleged failure to comply with Title 8 Chapter 43A of the New Jersey Administrative Code is legally insufficient and is subject to dismissal.
Relator's FCA claim based on Defendant's alleged reuse of Zemplar vials is similarly deficient. Relator alleges that Defendant was required to discard unused portions of Zemplar vials and not administer remaining portions of the drug to another patient. (Am. Compl. ¶ 12.) Unlike his claim concerning insufficient staffing, where he described the dates and details of the alleged violations of the New Jersey Administrative Code, Relator's claim here fails to set forth with any specificity even a single occasion on which a vial containing leftover Zemplar was administered to a patient.
Even assuming that the amended complaint does contain such facts, however, Relator fails to cite a particular rule or regulation that prohibits the reuse of Zemplar. The amended complaint states only that "[i]t is clinically recommended and directed by the manufacturer and Food and Drug Administration" that unused portions of Zemplar be discarded. (Id.) More importantly, Relator fails to cite any rule, regulation, contract, or other facts to demonstrate that the single vial use of injectable drugs was a condition precedent to the receipt of government funds. The only assertion in this regard is Relator's wholly conclusory allegation that "Defendants [sic] implied and express representations are material conditions to the Government's decision to reimburse or pay for the Zemplar[.]" (Am. Compl. ¶ 26.) The amended complaint contains no facts to support Relator's contention that the government, had it been aware of Defendant's alleged reuse of Zemplar vials, may have refused payment of federal funds to Defendant. Accordingly, the Court concludes that Relator's federal FCA claim concerning Defendant's alleged reuse of Zemplar vials is subject to dismissal for failure to state a claim.
In so finding, the Court notes Relator's argument that Defendant was prohibited as of 2001 from using leftover Zemplar.
Additionally, the Court notes Defendant's argument that Relator's express certification claim fails on the ground that Relator does not aver a specific claim for payment. (Def.'s Br. 17.) After briefing on the motion to dismiss was closed, the parties submitted letters to the Court disputing whether allegations of a specific claim for payment are necessary at the pleading stage. The Third Circuit in Wilkins noted that "we have never held that a plaintiff must identify a specific claim for payment at the pleading stage of the case to state a claim for relief," but "a plaintiff, at the pleading stage, must identify representative examples of specific false claims that a defendant made to the Government in order to plead an FCA claim properly... under the more particular pleading standards of Rule 9(b)." Wilkins, 659 F.3d at 308 (citation omitted) (emphasis in original). Having found that Relator's claims under either an express or implied certification theory fail because the amended complaint does not assert facts concerning the preconditions for payment of federal funds, the Court need not address whether Relator's express certification claims should also be dismissed for failure to allege representative examples of specific false claims.
Relator further alleges violations of the New Jersey False Claims Act and the Texas Medicaid Fraud Prevention Act. (Am. Compl. ¶¶ 33-35, 36-38.) Relator contends that Defendant maintains, operates and manages nine dialysis centers in the State of New Jersey and ten centers in the State of Texas. (Id. at ¶¶ 34, 37.) Relator alleges that Defendant's conduct constituted the making of false claims to the State of New Jersey because Defendant "services patients in their centers in New Jersey who are beneficiaries of Medicaid and/or other programs in which the State is a payor." (Id. at ¶ 35.) Similarly, Relator avers that Defendant's conduct constituted the making of false claims to the State of Texas because Defendant "services patients in their centers in Texas who are beneficiaries of Medicaid and/or other programs in which the State is a payor." (Id. at ¶ 38.)
Defendant moves to dismiss the claim under the Texas Medicaid Fraud Prevention Act because none of the factual allegations of the complaint support any wrongful conduct vis-a-vis the State of Texas. With respect to the New Jersey False Claims Act cause of action, Defendant does not expressly seek dismissal of this claim, although it generally seeks dismissal of Relator's "qui tam claims based upon a false certification theory ... [.]" (Proposed Order ¶ 4.) It thus appears that Defendant, through this statement, seeks dismissal of
The Court finds that the causes of action under either the New Jersey or Texas statutes are deficient, particularly in light of the heightened pleading standard for these claims of fraud under Fed. R.Civ.P. 9(b). Relator does not specify which provisions of the New Jersey False Claims Act or the Texas Medicaid Fraud Prevention Act were allegedly violated by Defendant. Certain provisions of the New Jersey statute are essentially identical to the pre-FERA version of the federal FCA. See N.J.S.A. § 2A:32C-3(a), (b). It appears, based on the factual recitation in the amended complaint, that Relator's claims are based on these provisions.
The only allegations in the amended complaint concerning Texas are that Defendant operates ten centers in the state and services patients in Texas who are beneficiaries of Medicaid funds. (Am. Compl. ¶¶ 2-3, 37-38.) The amended complaint alleges no facts demonstrating that Defendant made false statements or misrepresentations, or concealed or failed to disclose information, in seeking to obtain an unauthorized payment or benefit under the Texas Medicaid program. Moreover, Relator was employed at Defendant's Sewell, New Jersey location, and the specific facts in the complaint relate to his observations in Sewell, New Jersey. Relator cannot support an allegation that Defendant violated the laws of other states based solely on an alleged violation of New Jersey regulations at a New Jersey facility.
Relator's claim under the New Jersey False Claims Act is likewise deficient. Although the amended complaint details alleged violations of New Jersey regulations,
Consequently, the amended complaint is devoid of sufficient facts to place Defendant on notice of the precise violations of the New Jersey and Texas fraud statutes with which it is charged. These state claims in the amended complaint are dismissed.
Having determined that dismissal of Relator's FCA claims in Counts I, II and III is warranted, the Court must determine whether the dismissal should be with prejudice. Fed.R.Civ.P. 15(a)(2) provides that the Court should "freely give leave" to amend the complaint "when justice so requires." Defendant seeks dismissal with prejudice, arguing that amendment of the complaint would be futile because Relator has provided disclosures and responded to Defendant's discovery requests and has still failed to provide further specification concerning the alleged false claims in this case. (Reply Br. in Further Supp. of Def.'s Mot. for Partial J. on the Pleadings 2.) Relator has not sought to amend the complaint in light of the arguments raised in the motion for judgment on the pleadings.
Although Relator does not move to amend the complaint, the Third Circuit has held that "if a complaint is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile." Phillips v. Cty. of Allegheny, 515 F.3d 224, 236 (3d Cir.2008) (citations omitted). The record at this time does not demonstrate that amendment of the complaint would be inequitable or futile and, consequently, leave to amend will be granted.
Defendant's Motion to Dismiss will be granted insofar as Defendant seeks dismissal of the claims in the amended complaint based on the false certification theory and the state law claims concerning false or fraudulent claims, but denied to the extent Defendant seeks dismissal of such claims with prejudice. An Order consistent with this Opinion will be entered.