Opinion
Case No. 01-8158-CIV-RYSKAMP.
November 15, 2002
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS THE AMENDED COMPLAINT
THIS CAUSE comes before the Court pursuant to Defendant Dellerson Anesthesia Group, P.A. d/b/a Palm Beach Anesthesia Associates's ("PBAA") Motion to Dismiss the Amended Complaint, filed August 28, 2002 [DE 36], and Defendants JFK Medical Center a/k/a Columbia/JFK Medical Center LP d/b/a Columbia JFK Medical ("JFK") and HCA, Inc., f/k/a HCA — The Health Care Company's ("HCA") Motion to Dismiss the Amended Complaint, filed September 3, 2002 [DE 37]. This motion is now ripe for adjudication.
I. BACKGROUND
On February 22, 2001, the Relators filed suit on behalf of the United States and the State of Florida against Defendants JFK, HCA, and PBAA, alleging violations of the Federal False Claims Act, 31 U.S.C. § 3729(a)(1)-(a)(5) and § 3729(a)(7) ("FCA"), and the Florida False Claims Act, Fla. Stat. §§ 68.081 et seq. HCA is the owner of JFK, having purchased JFK's assets on or about July 15, 1995. (Am. Compl. ¶ 25.) On January 2, 2002, the United States and the State of Florida both gave notice that they declined to intervene in this action. On July 1, 2002, the United States has filed a Statement of Interest in this matter in accordance with 31 U.S.C. § 1367(a) and is therefore not barred from any possible future claims that might otherwise be estopped by this Court's dismissing Relators' Amended Complaint with prejudice [DE 27].
On July 16, 2002, the Court dismissed the Complaint on the grounds that it failed to allege fraud with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure [DE 28]. The Court granted Relators leave to amend the Complaint, and Relators filed an Amended Complaint on August 5, 2002 [DE 30]. All Defendants have moved to dismiss the Amended Complaint for failure to allege fraud with particularity.
Relator Carroll founded Intercostal Medical, Inc., a pain management specialty distribution company, in 1995. (Am. Compl. ¶ 7.) In June of 1999, Carroll purchased Palm Beach Pain Medicine, Inc. (PBPMI) from Defendant Dellerson Anesthesia Group, P.A., d/b/a Palm Beach Anesthesia Associates (PBAA). (Id.) Carroll alleges that, as a result of purchasing PBPMI, he gained access to billing records of pain management procedures performed by PBPMI and PBAA physicians at JFK Medical Center from 1996 forward. (Id.) Relator Nicholas was the manager of the JFK outpatient surgery department and the JFK pain center from August of 1995 through August of 1999, when she began employment at PBPMI. (Id. ¶¶ 9, 22.) Nicholas alleges that, while employed at JFK Medical Center, she discovered that pain management procedures were being billed as operating room procedures even though they were not performed in operating rooms. (Id. ¶ 11.) Relators also base their allegations on their communications with Dr. Gorfine, a former PBAA employee. Relators allege that Dr. Gorfine "repeatedly made comments to [them] in the year 2000 and thereafter . . . as to how much money he determined that JFK was making on its pain center through its relationship with PBAA/PBPMI." (Id. ¶ 34.)
The Amended Complaint asserts allegations under the Federal False Claims Act, 31 U.S.C. § 3729, et seq. and the Florida False Claims Act, Fl. Rev. Stat. § 68.081, et seq. Relators essentially allege that Defendants engaged in a conspiracy to defraud the government by billing routine pain management services as operating room services, thereby receiving greater Medicare and Medicaid reimbursements. The Amended Complaint also alleges that JFK performed unnecessary sedations and overbilled the use of fluoroscopy dye to obtain greater reimbursement monies. (Id. ¶¶ 24, 59.) Finally, the Amended Complaint alleges that JFK made false statements on HCFA-1500 forms by claiming that the procedures in question were medically necessary. (Id. ¶¶ 62-64.) The Amended Complaint seeks to hold HCA liable under respondeat superior theory. (Id. ¶ 72.)
II. LEGAL STANDARD FOR MOTIONS TO DISMISS
Rule 8(a) of the Federal Rules of Civil Procedure requires a "short and plain statement of the claim" that "will give the defendant fair notice of what the plaintiff's claim is and the ground upon which it rests." When examining a Motion to Dismiss, this Court considers whether the plaintiff has alleged facts sufficient to state a claim for relief, and a Motion to Dismiss may be granted when the plaintiff can prove no set of facts to support his claim for relief. Connolly v. Gibson, 355 U.S. 41, 45-48 (1957). When considering a motion to dismiss, the Court must accept all the plaintiff's allegations as true. Scheur v. Rhodes, 416 U.S. 232, 236 (1974). This Court need not accept facts that are internally inconsistent, facts that run counter to facts which the court may take judicial notice of, conclusory allegations, unwarranted deductions, or mere legal conclusions.See Campos v. Immigration and Naturalization Service, 32 F. Supp.2d 1337, 1343 (S.D. Fla. 1998).Despite the leniency of the general standard, Rule 9(b) requires that "the circumstances constituting fraud or mistake shall be stated with particularity." This rule serves to notify defendants in fraud actions as "to the `precise misconduct with which they are charged' and protecting defendants `against spurious charges of immoral and fraudulent behavior.'" Medalie v. FCS Sec. Corp., 87 F. Supp.2d 1295, 1306 (S.D. Fla. 2000) (quoting Durham v. Business Management Assocs., 847 F.2d 1505, 1511 (11th Cir. 1988)). In the Eleventh Circuit, Rule 9(b) is satisfied if a plaintiff pleads the following:
(1) precisely what statements were made in what documents or oral representations or what omissions were made, and
(2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and
(3) the context of such statements and the manner in which they mislead the plaintiff, and
(4) what the defendants obtained as a consequence of the fraud.Brooks v. Blue Cross and Blue Shield of Fla., 116 F.3d 1364, 1371 (11th Cir. 1997), reh'g denied 116 F.3d 1495 (11th Cir. 1997) (quotation omitted). See also Leonard v. Stuart-James Co., 742 F. Supp. 653, 659 (N.D. Ga. 1990) (motion to dismiss granted where complaint failed to allege "specifically when, where, by whom or specifically what the representation was.").
The Rule 9(b) standard applies to FCA claims. See Clausen v. Laboratory Corporation of America, Inc., 290 F.3d 1301, 1308 (11th Cir. 2002); Cooper v. Blue Cross and Blue Shield of Florida, Inc., 19 F.3d 562, 568 (11th Cir. 1994). The purpose of Rule 9(b) is to provide defendants with sufficient notice of the acts which Relators claim are fraudulent and to allow defendants the opportunity to form adequate responses to the allegations.See Butler v. Magellan Health Services, Inc., 74 F. Supp.2d 1201, 1215 (M.D. Fla. 1999); King v. Jackson County Hosp. Corp., No. 5:99CV73-SPM, 2001 U.S. Dist. LEXIS 21706, (N.D. Fla. Aug. 17, 2001).
III. DISCUSSION
Defendants argue that Relators' Amended Complaint still fails to state a claim upon which relief may be granted because it fails to allege fraud with particularity pursuant to Rule 9(b). The Court will address each of the Defendants' arguments for failure to state a claim in turn.
A. The Amended Complaint Fails to Allege With Specificity When Fraudulent Billing Occurred
In its Order dismissing the Complaint, the Court noted that Relators failed to state specifically when the alleged fraudulent billing occurred. Rule 9(b) requires Relators to "allege the details of the defendants [sic] allegedly fraudulent acts, when they occurred, and who engaged in them." Clausen, 290 F.3d at 1308 (citing Cooper, 19 F.3d at 568); see also Brooks, 116 F.3d at 1371 (Relators must state "the time and place of each such statement and the person responsible for making" the fraudulent statement).
The Complaint merely alleged that "[f]rom approximately 1993 until the present, JFK Medical Center . . . had engaged in fraudulent billing practices of its pain management patients." (Compl. ¶ 22.) The Amended Complaint is no improvement. It merely states that Defendants submitted false claims to the government from January 1995 through December 2000. (Am. Comp. ¶ 96.) Relators' Amended Complaint still fails to specify the dates when the fraudulent claims were made. Providing a six-year time span is not sufficiently particular to satisfy the Rule 9(b) particularity requirements.
B. The Amended Complaint Fails to Identify with Specificity Patients Who Were Billed Inflated Charges and Provide Claim Forms
In its prior order, the Court noted the Relators' Complaint failed to identify patients billed for inflated charges or provide some support for such allegations (possibly through use of claims forms submitted to the government). Relators must provide concrete instances of fraudulent billing to satisfy the Rule 9(b) particularity requirements. In Clausen, the Eleventh Circuit upheld a motion to dismiss a fraudulent billing complaint because the plaintiff
failed to identify a single claim that was actually submitted pursuant to the allegedly fraudulent schemes identified in the [complaint]. Essentially, Plaintiff has set out the process by which Defendants could have produced false claims, but provides no facts that this process did in fact result in the submission of false claims.290 F.3d at 1305.
The Amended Complaint attempts to identify specific instances of fraud by including several exhibits. First, Relators introduce a Medicare Part B Explanation of Medicare Benefits ("EOMB"), indicating that a patient received an epidural billed as an operating room service for a charge of $2,935.00. (Pl. Ex. A.) This procedure was performed on January 26, 2000, however, six months after Relator Carroll purchased PBPMI. Moreover, the epidural was administered by Dr. Ghosh, one of Carroll's employees. Exhibit B, also an EOMB form, indicates that a patient received an epidural billed as an operating room service for a charge of $2,935.00. (Pl. Ex. B.) Yet the procedure was performed on January 12, 2000, also after Carroll acquired PBPMI. Exhibits A and B provide no factual basis for Relators' allegations because they describe procedures performed after Relators took control of PBPMI, and, in the case of Exhibit A, describe a procedure performed by one of Carroll's own physicians. The exhibits merely state that JFK billed $2,935.00 for epidurals as operating room services. There is no indication that the "operating room services" designation is fraudulent, and the exhibits do not state what the actual charges should have been. The exhibits provide no factual bases for allegations of fraud.
Exhibits C and D indicate that the JFK Pain Center performed pain management procedures billed as operating room services on a variety of dates from 1994-2000. The exhibits provide the name of the service, the date it was provided, as well as the patient's date of birth, altered social security number, and JFK medical record number. Exhibits C and D, in and of themselves, provide no evidence of fraud. The exhibits say nothing about the locations or conditions under which the procedures were performed. They do not specify the costs of the procedures, much less demonstrate how the charges were inflated. Relators have identified patients who could have been used to perpetuate a fraudulent overbilling scheme, but have provided no facts to buttress their claims that Defendants actually used these patients for that purpose. Exhibits C and D therefore fail to state a factual basis for Relators' claims.
Exhibit E indicates that various patients received pain procedures while they were inpatients at JFK, but provide no indication of the cost of the procedures or the conditions under which the procedures were performed. Again, Relators have identified patients that could have been used to facilitate a fraudulent practice, but Relators have failed to allege any facts that would indicate that Defendants actually used the patients in the furtherance of fraud. Relators provide no explanations of Exhibits F and G, and examination of the documents provides no indication of the presence of fraud. Indeed, without explanation, the relevance of Exhibits F and G is doubtful.
The Amended Complaint continues to fail to identify specific patients or claims that represent instances of fraud. That Defendants could have used specific patients for fraudulent purposes does not necessarily mean they actually used the patients for fraudulent purposes. Such conclusory allegations of fraud are insufficient under Rule 9(b), as they do not state the "precise misconduct" Defendants committed with respect to those particular claims. Medalie, 87 F. Supp.2d at 1306 (quoting Durham, 847 F.2d at 1511).
C. The Amended Complaint Fails to State a Factual Basis for the Alleged Conspiracy
In its Order dismissing the Complaint, the Court noted that Relators failed to give a factual basis for the alleged conspiracy among Defendants to defraud the government. In their Complaint, Relators gave no evidence of an agreement and failed to specify who was a part of the alleged agreement. Relators also failed to specify the date on which the Defendants entered the agreement.
Relators must allege a factual basis for the legal conclusion that a conspiracy existed. See Rindley v. Gallagher, 890 F. Supp. 1540, 1557 (S.D. Fla. 1994). See also Lombard's Inc. v. Prince Manufacturing, Inc., 753 F.2d 974, 975 (11th Cir. 1985) (failure to identify the specific participants in the conspiracy warrants dismissal of the claim). When allegations of a civil conspiracy are "vague and would require speculation of the part of Defendants and the Court," such claims are subject to dismissal. See Sonnenreich v. Phillip Morris, 929 F. Supp. 416, 420 (S.D. Fla. 1996). See also Primerica Financial Services, Inc. v. Mitchell, 48 F. Supp.2d 1363, 1369 (S.D. Fla. 1999) ("Although Rule 9(b) does not list conspiracy as a cause of action which must be pled with particularity, a complaint will be dismissed where the allegations are conclusory and vague.").
The Amended Complaint alleges that PBAA and JFK made false statements and representations of material facts to obtain money under Medicare and Medicaid "and conspired among themselves to do so." (Am. Compl. ¶ 66.) Relators contend that JFK and HCA orally agreed to keep the alleged fraud secret. (Id. ¶ 101.) HCA's subsequent failure to take corrective action to stop the alleged overbilling, along with its retention of OSI, provide additional evidence of the existence of a conspiracy.
The Amended Complaint presents no factual basis for its allegation that Defendants entered into a conspiracy to defraud the government. Relators provide no evidence of the agreement. The Amended Complaint provides no information about what OSI is, the role OSI plays in financial oversight, or the role OSI played in an alleged conspiracy. The Amended Complaint implies a conspiracy to submit false claims from the fact that neither Defendant took corrective action to halt the alleged fraud. This is not a specific allegation of conspiracy as contemplated in the caselaw. That neither JFK or HCA complained of the alleged overbilling does not state a sufficient factual basis to support allegations of a conspiracy.
D. The Amended Complaint Fails to Allege Specifically Which Defendants Participated in Which Particular Conduct
In its prior Order, this Court noted that Relators' Complaint failed to identify which Defendants engaged in what fraudulent acts. Rule 9(b) requires Relators to identify with specificity the individuals involved in the alleged fraud. See Jacobs v. Osmose, Inc., No. 01-CV-944, 2002 U.S. Dist. LEXIS at *12 (S.D. Fla. Jan. 2, 2002); Lombard's, 753 F.2d at 975 (when specific participants of the conspiracy are unidentified the complaint must be dismissed). Regarding corporate defendants, the complaint should specify "who their representatives were who took part in the alleged unlawful enterprise." Coates v. St. Louis Clay Products Co., 3 F.R.D. 289, 292 (E.D. Mo. 1943).
The Complaint merely alleged fraudulent behavior on the part of "the Defendants" or "the Defendant corporations." The Amended Complaint still fails to alleged with specificity which corporate representatives engaged in the alleged fraudulent billing. The Amended Complaint merely states that
the defendant hospital, utilizing its nurses, chief financial officer, chief operating officer and clerk staff personnel in applying its charge master as if the pain management procedure were performed in an operating room when they were not, took part in the alleged lawful enterprises hereinabove including the conspiracy with the defendant physicians of the Dellerson group/PBAA/PBPMI.
. . . .
Taking part in this unlawful process were those individuals in a corporate position at JFK Medical Center to include the CFO, the COO and those financial personnel by position who were responsible for correcting or generating a charge master which wrongfully and excessively identified pain management procedures referred to above as having been performed in the operating room when they were not.
(Am. Compl. ¶¶ 91, 96.) These vague allegations are insufficient to allow Defendants JFK and PBAA to determine who was involved in the alleged fraud and what acts the individuals allegedly committed in furtherance of the fraudulent scheme. Although the Amended Complaint names specific JFK executives, it neglects to describe their alleged fraudulent acts. Furthermore, broad references to "nurses," "clerk staff personnel," "financial personnel," and "defendant physicians" are not sufficiently detailed to conform to Rule 9(b) pleading requirements. The Amended Complaint does not satisfy Rule 9(b) because it does not state which Defendant committed what acts of fraud.
Relators claim that HCA should be held liable for JFK's alleged fraud based on respondeat superior theory. Relators note that HCA maintains offices at or near JFK, HCA and JFK have had overlapping employees in the past, and HCA retained OSI to analyze JFK's revenue generating procedures. Relators assert that these factors compel the conclusion that HCA has operational control over JFK.
The Amended Complaint provides no concrete basis for holding HCA liable for JFK's alleged fraud. Relators provide absolutely no information about the OSI, the apparent nefarious "link" between HCA and JFK. As Relators are unable to allege sufficient facts to state a claim of fraud against JFK, they are therefore entirely unable to maintain a respondeat superior claim against JFK's corporate parent. These conclusory allegations are insufficient as a matter of law to hold HCA liable for the actions of any other defendants.
IV. CONCLUSION
Having considered the motions and the pertinent part of the record, and being otherwise fully advised in the premises, it is hereby
ORDERED AND ADJUDGED that Defendant PBAA's Motion to Dismiss [DE 36], filed August 28, 2002, and Defendants' JFK Medical Center and HCA's Motion to dismiss [DE 37], filed September 3, 2002, are GRANTED as discussed herein. Relators' Amended Complaint is DISMISSED WITH PREJUDICE. This motion to dismiss is not granted with prejudice to the United States in accord with False Claims Act, 31 U.S.C. § 3730(b)(1).
DONE AND ORDERED.