16 F.4th 192
6th Cir.2021Background
- Plaintiff Cathy Owsley, a Quality Assurance nurse at Care Connection, reviewed OASIS patient-assessment forms and alleged Fazzi Associates (an outsourced coder) routinely "upcoded" patients’ diagnoses without medical support.
- Owsley claims she reported fraudulent changes to supervisors at Care Connection and Envision, but they took no remedial action and instructed nurses to accept Fazzi’s edits or quit.
- Owsley alleges Fazzi’s altered OASIS data were used to prepare requests for anticipated payment (RAPs) and residual claims to Medicare (and similar Indiana claims), inflating government reimbursements.
- She sued Fazzi, Envision, Care Connection, Gem City, and Ascension under the False Claims Act and an Indiana statute; the United States declined to intervene.
- The district court dismissed all claims for failure to plead fraud with particularity under Fed. R. Civ. P. 9(b); Owsley appealed. The Sixth Circuit affirmed the dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint satisfied Rule 9(b) / FCA requirement to identify false claims | Owsley alleged a detailed scheme and personal knowledge of widespread OASIS upcoding that resulted in false claims | Complaint fails to identify any specific claims or representative claim submitted to the government; nurses signed off on coding and lacked knowledge | Affirmed dismissal: detailed scheme allegations insufficient without at least one specific or representative false claim identified |
| Sufficiency of alternative pleading (personal-knowledge inference) | Alleged personal knowledge of billing practices and specific instances of upcoding support inference particular claims were submitted | The alleged instances lack dates, claim amounts, or submission details to tie them to specific government claims | Held insufficient: personal-knowledge allegations did not identify particular claims or dates to meet Prather/Ibanez standard |
| Claims against Gem City and Ascension (personal-knowledge) | Owsley argued the scheme extended to other agencies where Fazzi coded | Owsley worked only at Care Connection and lacked regular review of other agencies’ OASIS forms | Dismissed as to Gem City and Ascension for lack of personal knowledge |
| Denial of leave to amend | Owsley sought further amendment informally | She neither moved formally nor proffered a proposed amended complaint | Denial not an abuse of discretion |
Key Cases Cited
- United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750 (6th Cir. 2016) (describing representative-claim alternative based on personal knowledge of billing practices)
- United States ex rel. Hirt v. Walgreen Co., 846 F.3d 879 (6th Cir. 2017) (relator must identify at least one false claim with particularity)
- United States ex rel. Sheldon v. Kettering Health Network, 816 F.3d 399 (6th Cir. 2016) (liability attaches to the claim; plaintiffs must identify specific false claims)
- United States ex rel. Ibanez v. Bristol-Meyers Squibb Co., 874 F.3d 905 (6th Cir. 2017) (requiring identification of a representative claim actually submitted)
- Sanderson v. HCA-The Healthcare Co., 447 F.3d 873 (6th Cir. 2006) (cannot allege a scheme in detail but merely assume claims were submitted)
- United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634 (6th Cir. 2003) (notice requirement to identify representative claim)