MARGO K. BRODIE, District Judge.
Plaintiff-Relator Michael Quartararo commenced the above-captioned qui tam action on September 5, 2012, on behalf of the United States of America and the State of New York, against Defendants Catholic Health System of Long Island Inc., doing business as Catholic Health Services of Long Island ("CHS"), St. Catherine of Siena Medical Center (the "Medical Center"), St. Catherine of Siena Nursing Home (the "Nursing Home"), Good Samaritan Hospital Medical Center, and Good Samaritan Nursing Home. (Compl., ¶ 1, Docket Entry No. 1.) Relator filed a Fourth Amended Complaint ("FAC"), the operative complaint, on May 25, 2017, alleging violations of the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA"), and the New York State False Claims Act, N.Y. State Fin. Law § 187 et seq. ("NYFCA"), based on the alleged filing of false Medicare and Medicaid reimbursement claims. (FAC, Docket Entry No. 47.) On November 13, 2017, Defendants moved to dismiss the FAC for failure to state a claim, and for partial summary judgment, pursuant to Rules 12(b)(6) and 56, respectively, of the Federal Rules of Civil Procedure. (Defs. Second Mot. to Dismiss and for Partial Summ J. ("Second Mot."), Docket Entry No. 61; Defs. Second Mem. in Supp of Second Mot. ("Second Mem."), Docket Entry No. 61-6.) For the reasons discussed below, the Court denies Defendants' motion to dismiss and for partial summary judgment.
The Court assumes familiarity with the facts as detailed in its prior March 31, 2017 Memorandum and Order ("March 2017 Decision") and provides a summary of only the pertinent facts.
Medicare and Medicaid are taxpayer-funded health insurance programs offered to individuals based on age or disability. (FAC ¶¶ 20, 22.) Medicare is provided by the federal government and Medicaid is provided by federal, state, and local governments and administered through the states. (Id.) The United States Department of Health and Human Services, through its Centers for Medicare and Medicaid Services, runs both programs in conjunction with the state agencies that oversee Medicaid. (Id.) Individuals may be covered under Medicare, Medicaid, or both. (Id.) New York State maintains a Medicaid program for its citizens. (Id. ¶ 23.) If health care providers
As health care providers, nursing homes are reimbursed for every day they provide care to a Medicaid or Medicare beneficiary.
CHS is a healthcare consortium that operates hospitals and nursing homes. (Id. ¶ 8.) In or about November of 1999, CHS purchased the Nursing Home and the Medical Center from Episcopal Health Services, who had operated the facilities under the names Bishop Jonathan G. Sherman Episcopal Nursing Home ("Episcopal Nursing Home") and St. John's Episcopal Hospital. (Id. ¶ 39.) CHS officially assumed ownership and control of Episcopal Nursing Home in early 2000. (Id. ¶ 41.)
In April of 2007, Relator, who had been working for CHS for about thirty-eight years, was elevated to the position of Licensed Administrator of the Nursing Home. (Id. ¶ 7.) As the Licensed Administrator, Relator was responsible for the general administration of the nursing home, which included "managing, supervising, and coordinating" the various departments at the Nursing Home, as well as "maintaining and developing legally compliant operating protocols, developing and managing budgets, developing financial policies[,] . . . monitoring financial performance. . ., supervising all human resource issues and reporting to the [N]ursing [H]ome's governing body as needed." (Id.)
In June of 2011, the DOH retroactively changed the base year used to calculate Medicaid reimbursement rates for health care providers from 1983 to 2002 for the reimbursement period covering 2009 through 2011. (Id. ¶¶ 35, 51.) The re-basing caused the Nursing Home's reimbursement rate to drop from "approximately $270 per Medicaid patient day to . . . $250 per Medicaid [patient] day." (Id. ¶ 51.) The DOH sought to minimize the impact of the re-basing by providing one-time mitigation payments to affected health care providers that could be used to off-set any potential losses caused by the retroactive application of the lower reimbursement rates. (Id. ¶ 59.) Under this program, the Nursing Home received a $4.5 million mitigation payment.
During the course of Relator's employment as the Nursing Home's Licensed Administrator, Relator also discovered that CHS had been improperly diverting the Nursing Home's Medicaid funds. (Id. ¶ 65.) Starting in 2007, CHS and the Medical Center began charging the Nursing Home for "medical, administrative, utility and other costs" that the Nursing Home had not incurred or which costs were overinflated. (Id. ¶ 66.) Relator contends that these false payments include charges for a non-existent inhalation therapy department. (Id. ¶ 79.) CHS took the false payments from the Nursing Home's Medicaid and Medicare funds for the Nursing Home's patients. (Id. ¶¶ 67, 75-77.)
In 2008, Relator realized that the Medical Center had overcharged the Nursing Home for laboratory costs and brought it to the attention of John Haight, a CHS executive. (Id. ¶¶ 54, 67.) Haight informed Relator that the Medical Center charged the Nursing Home a fixed-yearly rate, regardless of the actual laboratory charges incurred. (Id.) Relator also discovered that the Medical Center's laboratory rates for the Nursing Home's residents was much greater than the laboratory rates charged for the residents in CHS's other nursing homes and much greater than then-current market rate for such services. (Id.)
In late 2009 and late 2011, CHS had taken $2 million and $1.1 million, respectively, from the Nursing Home's budget to cover "purported workers['] compensation costs," but Relator alleges that the workers' compensation cases originating from the Nursing Home failed to support such large deductions. (Id. ¶¶ 68-69.) When Relator questioned the deductions, he was told that they were not only for the workers' compensation costs incurred in those years, but also to cover workers' compensation costs incurred by the Nursing Home in 2005. (Id.) In two subsequent emails he received, Relator learned that the Nursing Home's workers' compensation costs were disproportionately higher than those of CHS's other nursing homes. (Id. ¶¶ 68-70.) When Relator raised the issue of the Nursing Home's workers' compensation costs with officials of CHS and the Medical Center, he was ignored. (Id. ¶ 68.)
In March of 2012, Relator attended a meeting with other CHS executives and officials, where he raised his concerns regarding the inflated laboratory costs the Medical Center had charged and was continuing to charge the Nursing Home. (Id. ¶ 72.) In response, one executive laughed and told Relator that the Medical Center was "ripping [the Nursing Home] off." (Id.) At a follow-up meeting with Haight and other CHS executives, Relator reasserted his concerns pertaining to the Medical Center's rates for the Nursing Home's residents, and was told that the rates would remain the same for the current fiscal year but "could be addressed in next year's budget." (Id. ¶ 73.) Relator subsequently received an email confirming CHS's position. (Id.) Because Haight and other CHS executives refused to address the rate and charging issues, Relator raised his concerns to a CHS compliance officer. (Id. ¶ 74.) Although the compliance officer said that she would address Relator's concerns, she never took any action. (Id.)
Shortly thereafter, Relator discovered that the Nursing Home was paying a portion of the salary for various staff members at the Medical Center and other CHS nursing homes who spent little to no time at the Nursing Home and had little to no involvement in the Nursing Home's operations. (Id. ¶ 80.) Haight and others acknowledged that the salary charges were improper, but did not take any corrective action. (Id.) When Relator raised the issue a second time, Haight responded that he was free to charge the Nursing Home for the salaries of any CHS staff regardless of how much of their work pertained to the Nursing Home. (Id. ¶ 81.)
Based on Relator's knowledge of the foregoing activities, he commenced the instant action. (Id. at 1-2.)
Relator commenced the action on September 5, 2012, and subsequently amended the complaint three times prior to filing the FAC.
In the March 2017 Decision, the Court dismissed all claims with prejudice except for the implied-false certification misappropriation claims.
On April 13, 2017, Relator moved for reconsideration of the dismissal of the false filing and false retention claims. (Pl. Mot. for Recons. ("Pl. Recons. Mot."), Docket Entry No. 41.) On September 12, 2017, the Court denied Relator's motion for reconsideration on the record. (Minute Order dated September 12, 2017.) The Court determined that it had not overlooked any controlling decisions or factual matters, and rejected Relator's five separate grounds for reconsideration. (Id.) Defendants did not move for reconsideration.
Defendants move to dismiss the FAC and for partial summary judgment, and restate the same arguments previously advanced in their motion to dismiss the TAC. Defendants assert three arguments in support of their motion to dismiss the remaining misappropriation claims: (1) that there is no legal obligation on how to spend Medicaid and Medicare funds other than providing the "prescribed levels of care" as defined by the Public Health Law and DOH regulations; (2) that no "siphon[ing]" of funds could occur from the Nursing Home because all the entities are part of the same legal entity; and (3) that the alleged misappropriation could not have impacted the per diem rates or calculation of the remediation payment. (Second Mem. 1-2.) In support of their motion for partial summary judgment, Defendants argue that the alleged improper misappropriation expenses identified by Plaintiff were legitimate expenses. (Id. at 15-22.) Defendants do not deny that all of these arguments were raised previously. Rather, they contend that the Court can reconsider these arguments because the March 2017 Decision "did not reject [or] . . . address[]" them.
Plaintiff contends that the law of the case doctrine bars reconsideration of Defendants' previously raised arguments. (Pl. Opp'n to Defs. Second Mot. ("Pl. Opp'n"), Docket Entry No. 62; Pl. Mem. in Supp. of Pl. Opp'n ("Pl. Mem.") 5, Docket Entry No. 62-13.) Plaintiff argues that there are no exceptional circumstances requiring reconsideration of the previously denied arguments, (id. at 9), and that Defendants fail to even address the reasoning of the March 2017 Decision, (id. at 1). Moreover, Plaintiff argues that Defendants misled the Court as to the scope of the now pending motion at the pre-motion conference, and have failed to even "address[] . . the specific pleading concerns raised in the . . . prior decision." (Id. at 2.) Plaintiff also argues that Defendants had "a full and fair opportunity to move for reconsideration" of the March 2017 Decision but failed to do so. (Id. at 10.)
The law of the case doctrine "posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages of the same case." Arizona Premium Fin. Co. v. Employers Ins. of Wausau, of Wausau Am Mut. Co., 586 F. App'x 713, 716 (2d Cir. 2014) (quoting Arizona v. California, 460 U.S. 605, 618 (1983)). To prevent the parties from re-litigating previously decided issues, the doctrine "counsels a court against revisiting its prior rulings in subsequent stages of the same case absent cogent and compelling reasons such as an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Jackson v. New York State, 523 F. App'x 67, 69 (2d Cir. 2013) (quoting Ali v. Mukasey, 529 F.3d 478, 490 (2d Cir. 2008)). A court should therefore be "`loathe' to revisit an earlier decision `in the absence of extraordinary circumstances. . . .'" N. River Ins. Co. v. Philadelphia Reinsurance Corp., 63 F.3d 160, 165 (2d Cir. 1995); see also Prisco v. A & D Carting Corp., 168 F.3d 593, 607 (2d Cir. 1999) ("[T]he decision whether or not to apply law-of-the-case is . . . informed principally by the concern that disregard of an earlier ruling not be allowed to prejudice the party seeking the benefit of the doctrine." (citations omitted)). Although prudential and discretionary, the doctrine may be raised by a court sua sponte. See United States v. Lacouture, 721 F. App'x 1, 4 (1st Cir. 2018) (citing United States v. Wallace, 573 F.3d 82, 90 n.6 (1st Cir. 2009)); United States v. Anderson, 772 F.3d 662, 669 (11th Cir. 2014); F.T.C. v. Consumer Health Benefits Ass'n, No. 10-CV-3551, 2012 WL 1890242, at *4 (E.D.N.Y. May 23, 2012).
The Court has already considered Defendants' arguments in the March 2017 Decision and declines to do so again. Although the March 2017 Decision did not expressly address Defendants' current arguments,
The Court finds that Plaintiff has provided sufficient allegations and evidence for viable implied-false certification misappropriation claims. Defendants have not argued that the new allegations and evidence fail to meet the Court's directions in the March 2017 Decision. Defendants instead reiterate their prior arguments, and conclusorily argue that "[t]he fact that the [R]elator has supplied evidence that authentic and proper reimbursement claims were submitted to the government cannot cure the defect of the [m]isappropriation [c]laims." (Second Mem. 7.) Because Plaintiff has cured the previously identified defects, and Defendants only offer the same previously rejected arguments, the Court finds that the FAC and the attached submissions sufficiently state implied-false certification misappropriation claims.
For the foregoing reasons, the Court denies Defendants' motion to dismiss and for partial summary judgment as to the misappropriation claims.
SO ORDERED.