Jack Carrel v. AIDS Healthcare Foundation, Inc., 898 F.3d 1267

Background

AIDS Healthcare Foundation (AHF) contracted with Florida to test for HIV and match HIV-positive individuals to care; AHF received ~50% of revenue from federal healthcare programs (Medicare, Medicaid, Ryan White).
AHF paid referral incentives: $100 bonuses to Linkage Coordinators (employee Julio Rodriguez) for referring patients who completed follow-up at AHF clinics; AHF also gave small incentives to patients.
Three former employees (relators) sued under the False Claims Act, alleging the referral and patient incentives violated the Anti‑Kickback Statute and rendered federal reimbursement claims false. Two representative claims identified two “John Doe” patients allegedly referred by Rodriguez and billed to Ryan White.
District court dismissed most claims for failure to plead false claims with particularity under Rule 9(b), leaving only the two John Doe representative claims; after discovery, district court granted summary judgment to AHF based on the Anti‑Kickback Statute’s employee exemption and denied leave to amend.
Eleventh Circuit affirmed: held the employee exemption covers payments to an employee for referrals because the Ryan White Act treats referrals as compensable services; also held the remaining broader allegations failed Rule 9(b) particularity, and the motion to amend was waived.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether employee payments for referrals fall within Anti‑Kickback Statute's employee exemption	Payments to employees for per‑referral incentives are unlawful kickbacks that nullify related federal claims	Employee exemption (42 U.S.C. §1320a‑7b(b)(3)(B)) covers any amount paid by an employer to an employee for employment in provision of covered items/services; Ryan White defines referrals as covered services	Held: Exemption applies; referrals are compensable under Ryan White, so payments to Rodriguez were lawful employment compensation
Whether relators pleaded submission of false claims with particularity under Rule 9(b)	Broad institutional facts and a spreadsheet showing government funding sources suffice to infer that unlawful referrals led to false claims	Relators failed to identify specific false claims or provide indicia of reliability tying incentives to billed government claims	Held: Dismissal of non‑representative claims affirmed for lack of particularity; mere speculation or general practices insufficient
Whether representative John Doe claims showed fraud	The John Doe instances reflect unlawful paid referrals billed to Ryan White	Referrals at issue were performed by an employee and are covered services under Ryan White, so not unlawful	Held: John Doe claims not actionable because employee exemption applies
Whether district court abused discretion by denying leave to file fourth amended complaint	New discovery supports amendment to plead specific false claims and defeat employee‑exemption defense (Medicare/Medicaid differences)	Motion inadequately briefed; relators failed to identify new facts and thus waived meaningful appellate review	Held: Argument waived for cursory briefing; denial affirmed

Key Cases Cited

Universal Health Servs. v. United States ex rel. Escobar, 136 S. Ct. 1989 (Supreme Court 2016) (False Claims Act liability for presenting or causing submission of false claims)
United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301 (11th Cir. 2002) (Rule 9(b) requires particularized allegations and indicia of reliability tying conduct to actual false claims)
Corsello v. Lincare, Inc., 428 F.3d 1008 (11th Cir. 2005) (cannot infer submission of false claims from improper practices alone)
United States v. Starks, 157 F.3d 833 (11th Cir. 1998) (Anti‑Kickback convictions where payments were not for covered services and recipients were not bona fide employees)
United States ex rel. Matheny v. Medco Health Solutions, Inc., 671 F.3d 1217 (11th Cir. 2012) (insider allegations of personal involvement can satisfy Rule 9(b) when tied to specific false submissions)