757 F. Supp. 2d 573
E.D. Va.2010Background
- Qui tam action by United States ex rel. DeCesare asserting FCA and state-law fraud claims against Americare, MedStar, VNSN and Dohmann for alleged home health-care referral kickbacks; government declined intervention and case unsealed in Aug 2010.
- Alleged scheme: VNSN referred VHC patients to participating providers in exchange for a percentage fee; proposal allegedly limited to three agencies and structured to funnel Medicare referrals and payments to each agency.
- Relator alleges 2002 meeting where Dohmann led discussions of the referral network and kickback structure; DeCesare objected to legality and potential conflicts in referrals.
- Relator claims VNSN and Dohmann referred patients, and Americare and MedStar paid fees and submitted fraudulent government claims for those referrals.
- Americare, MedStar, VNSN, Dohmann moved to dismiss; Relator opposed; the court applied Rule 12(b)(6)/Rule 9(b) standards and the Twombly/Iqbal plausibility framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 9(b) sufficiency vs MedStar | DeCesare alleges MedStar’s certifications were false based on VNSN referrals. | Allegations lack specifics (who, when, where) and MedStar personnel or dates of improper payments. | MedStar MTD granted for lack of scienter specifics. |
| MedStar scienter sufficiency | Allegations show certifications were false because VNSN was not legitimate and MedStar paid fees by referrals. | No facts showing MedStar knew certifications were false. | Scienter insufficient; Count 1 and any related claims against MedStar dismissed. |
| Conspiracy (Count 2) as to MedStar | Alleged unlawful agreement and acts to defraud government via false claims. | MedStar not shown to be part of any agreement or share specific intent. | Conspiracy count against MedStar dismissed. |
| Americare Rule 9(b) adequacy | Relator identifies that Americare certified all VNSN-referred patients for government payment. | Need for more precise identification of individuals involved. | Rule 9(b) adequacy upheld; Americare MTD denied. |
| Americare double falsity and participation vs payment | Certifications tied to participation in federal programs with Medicaid/Medicare; alleged materiality. | Some claims rely on a participation/fee structure; asserted lack of materiality. | Court finds materiality and conspiracy allegations survive; Americare MTD denied and related issues proceed. |
| VNSN and Dohmann Rule 9(b), scienter, materiality, conspiracy | VNSN/Dohmann knowingly caused false claims by facilitating referrals for improper payments. | Need more direct admissions of participation; causation disputed. | VNSN/Dohmann MTD denied; claims survive. |
Key Cases Cited
- Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999) (Rule 9(b) there’s a knowledge element and misconduct must be pled with particularity)
- United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899 (5th Cir. 1997) (fraud specifics required under Rule 9(b))
- United States ex rel. Robinson v. Northrop Corp., 149 F.R.D. 142 (N.D. Ill. 1993) (naming individuals in corporate fraud pleadings)
- United States ex rel. Schmidt v. Zimmer, 386 F.3d 235 (3d Cir. 2004) (proximity/causation concepts in conspiratorial FCA claims)
- Mason v. Medline Indus., Inc., 731 F. Supp. 2d 730 (N.D. Ill. 2010) (foreseeability/causation in kickback-driven false claims)
- Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702 (10th Cir. 2006) (causation through actions that permit filing of false claims)
- Harvard Coll. v. Davis, 323 F.Supp.2d 151 (D. Mass. 2004) (participation in claims process and foreseeability of false claims)
- Oliver v. Parsons Corp., 498 F. Supp. 2d 1260 (C.D. Cal. 2006) (double-falsity requirement context)
- A+ Homecare, Inc. v. Medshares Mgmt. Group, 400 F.3d 428 (6th Cir. 2005) (materiality and causation standards under FCA)