United States Ex Rel. Chorches v. American Medical Response, Inc.
865 F.3d 71
2d Cir.2017Background
- Relator Paul Fabula, an EMT at AMR (Aug 2010–Dec 2011), alleges supervisors instructed EMTs to alter electronic Patient Care Reports (PCRs) to show “medical necessity” so runs would be reimbursable by Medicare; supervisors shredded the handwritten drafts and retained falsified electronic records for billing.
- TAC (filed by bankruptcy trustee Ronald Chorches after Fabula’s bankruptcy) alleges multiple specific runs where PCRs were falsified and that supervisors told EMTs revisions were to qualify runs for Medicare.
- District court dismissed the qui tam count for failure to plead submission of false claims with Rule 9(b) particularity and dismissed Fabula’s § 3730(h) retaliation claim (in the SAC) holding refusal to falsify was not protected activity.
- On appeal, Second Circuit held the FCA public-disclosure bar is nonjurisdictional and forfeited here because defendant did not raise it below.
- The court concluded the TAC adequately pleaded a scheme to falsify records and, given that billing records were peculiarly within AMR’s control, pleaded a strong inference that false claims were submitted to Medicare (permissible on information and belief).
- The court also held that Fabula’s refusal to falsify a PCR, under the alleged facts (where his credentials were necessary to complete the PCR and refusal would prevent submission of at least one false claim), qualifies as protected activity under § 3730(h).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TAC satisfied Rule 9(b) as to submission of false claims (presentment) | Chorches: specific scheme plus representative runs + billing details are peculiarly within AMR; pleading on information and belief is allowed and supports a strong inference that claims were presented | AMR: relator failed to identify specific invoices, dates, amounts — thus no particularized presentment as required by Rule 9(b) | Vacated dismissal; TAC met Rule 9(b) where scheme is pleaded with particularity and facts showing billing details are peculiarly within defendant’s control allow plausible inference that false claims were submitted |
| Whether the FCA public-disclosure bar is jurisdictional and/or bars trustee’s claim | Chorches: trustee may pursue the qui tam claim; public-disclosure not raised below | AMR: public-disclosure bar deprives district court of jurisdiction because relator’s earlier pleadings publicly disclosed the allegations | Court: public-disclosure bar is nonjurisdictional (post‑2010 amendment), defendant forfeited the defense by not raising it below; district court had jurisdiction |
| Whether Fabula abandoned his § 3730(h) retaliation claim by not repleading in TAC | Fabula: he may stand on SAC allegations and appeal dismissal; retaliation claim belonged to him (post‑bankruptcy) | AMR: failure to replead in TAC amounted to abandonment | Court: no abandonment — Fabula could stand on SAC and appeal after final judgment |
| Whether refusal to falsify a PCR is protected activity under § 3730(h) | Fabula: his refusal was a lawful act ‘‘in furtherance of . . . efforts to stop’’ FCA violations because it reasonably would prevent submission of a false claim for that run | AMR: mere refusal to participate is not an ‘‘effort to stop’’; protected acts require internal reporting or similar affirmative steps | Court: reversal — refusal to falsify, where it reasonably could prevent submission of a false claim (and was communicated), is protected activity under § 3730(h) |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility and inferences at the motion-to-dismiss stage)
- Wexner v. First Manhattan Co., 902 F.2d 169 (2d Cir.) (permitting pleading on information and belief when facts are peculiarly within defendant’s knowledge)
- Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir.) (scheme allegations + reliable indicia can support inference of presentment)
- Ladas v. Exelis, Inc., 824 F.3d 16 (2d Cir.) (qui tam fraud claims are subject to Rule 9(b))
- U.S. ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80 (2d Cir.) (FCA statutory bars that do not speak in jurisdictional terms are nonjurisdictional)