Troy Olhausen v. Arriva Medical, LLC
21-10366
| 11th Cir. | Apr 22, 2022Background
- Arriva Medical (mail-order diabetic supplies) was acquired by Alere; Arriva held a 2013 CMS DMEPOS competitive-bid contract; Abbott later acquired Alere and closed Arriva.
- Troy Olhausen, former SVP at Arriva, brought an FCA suit alleging Arriva (and parent companies) submitted false Medicare claims.
- Core allegations: Arriva billed Medicare without required Assignment of Benefit signatures and failed to enroll/accredit certain call-center locations (Tennessee, Arizona, Philippines).
- Olhausen also alleged Arriva conspired with Alere and Abbott to submit false claims based on those regulatory violations.
- The district court dismissed for failure to state an FCA claim; Eleventh Circuit assumed falsity but affirmed dismissal because Olhausen failed to plead the FCA scienter element as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Olhausen pleaded the FCA scienter element | Olhausen: defendants knowingly or recklessly submitted false claims (failure to obtain signatures and to enroll locations) | Defendants: their regulatory interpretations were objectively reasonable, so no actual knowledge, deliberate ignorance, or reckless disregard | Court: scienter not pleaded as a matter of law; dismissal affirmed |
| Whether missing beneficiary signatures established knowing false claims | Olhausen: absence of Assignment of Benefit forms shows false claims/intent | Defendants: regulations allow a supplier representative to sign in some contexts and participating suppliers need not obtain assignment for certain items; their interpretation was reasonable | Court: reasonable ambiguity defeats inference of knowledge; scienter not shown |
| Whether failure to enroll/accredit call-center locations established knowing false claims | Olhausen: call centers furnished DMEPOS and thus required enrollment; nondisclosure = false claims | Defendants: rule requires enrollment only for locations that "furnish" DMEPOS; term "furnish" is ambiguous and call centers need not be enrolled | Court: reasonable interpretation that call centers did not "furnish" DMEPOS negates scienter |
| Whether conspiracy to submit false claims was sufficiently alleged | Olhausen: parent companies conspired based on the underlying alleged violations | Defendants: conspiracy claim depends on underlying false-claim scienter, which is absent | Court: conspiracy claim fails because scienter for substantive violations was not adequately pleaded |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016) (FCA scienter standard is rigorous; liability limited where reasonable legal interpretation exists)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (objective reasonableness of an interpretation negates bad-faith/recklessness)
- United States ex rel. v. Mortg. Inv’rs Corp., 987 F.3d 1340 (11th Cir. 2021) (elements of an FCA claim)
- United States ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148 (11th Cir. 2017) (definitions of FCA scienter categories)
- United States ex rel. Purcell v. MWI Corp., 807 F.3d 281 (D.C. Cir. 2015) (reasonable statutory interpretation defeats FCA liability absent authoritative contrary guidance)
- U.S. ex rel. Hixson v. Health Mgmt. Sys., Inc., 613 F.3d 1186 (8th Cir. 2010) (statements based on reasonable statutory interpretation cannot support FCA liability)