United States ex rel. Geschrey v. Generations Healthcare, LLC
922 F. Supp. 2d 695
N.D. Ill.2012Background
- Relators Geschrey and Janus, former Generations employees, sue Generations, Odyssey, and the Ponakalas under the FCA, Illinois FCA, and IWRPA; US declines to intervene.
- Generations, a Westchester, Illinois hospice provider with mostly Medicare/Medicaid patients, was acquired by Odyssey after Relators’ departures; Odyssey absorbed Generations’ staff and patient census.
- Hospice payments are per diem; eligibility requires terminal illness and a 6-month life expectancy, with written certifications and elections required for each payment period.
- Relators allege improper enrollments, fraudulent certifications, false documents, billing for services not provided, and retaliation after raising concerns about fraudulent practices.
- Specific allegations include certifications for non-terminal patients, altered nursing notes, and billing for continuous care with inadequate nursing presence; several named and unnamed patient examples are cited.
- The court denies the motions to dismiss Counts I–III, dismisses Count IV (IWRPA) without prejudice, and dismisses Narayan Ponakala without prejudice; leave to amend granted within 28 days; Odyssey’s potential successor liability is analyzed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Counts I & III meet Rule 9(b) and nexus requirements | Relators allege false certifications, false documents, and fraudulent billing tied to government programs. | Defendants argue lack of particularity and no proof of actual submission to the government. | Counts I & III denied; claims pleaded with sufficient particularity and nexus sufficient for pleading stage. |
| Whether Count II (FCA retaliation) survives | Relators were fired in retaliation for raising concerns about fraud and certification practices. | Defendants contend insufficient evidence of protected activity and causation. | Count II survives; Relators alleged protected conduct and evidentiary basis for causation. |
| Whether Count IV (IWRPA) should be dismissed | IWRPA retaliation claim should proceed alongside FCA claims. | Relators did not plead disclosure or refusal scenarios required by IWRPA §§15–20. | Count IV dismissed without prejudice; leave to amend allowed. |
| Whether Narayan Ponakala may be held liable | Ponakala involvement in Generations’ operations supports liability. | Complaint lacks specifics tying Ponakala to fraud/retaliation. | Ponakala dismissed without prejudice; leave to amend permitted. |
| Whether Odyssey can be liable as successor | Odyssey acquired Generations with continuity of operations and notice of potential liability. | Lack of direct involvement by Odyssey in false claims; successor liability contested. | Relators sufficiently alleged successor liability; Odyssey may be liable for Counts I–III. |
Key Cases Cited
- United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th Cir. 2009) (inferential pleading of the fraud in FCA when invoices need not be produced at outset)
- Fanslow v. Chicago Mfg. Ctr., Inc., 384 F.3d 469 (7th Cir. 2004) (internal complaints may be protected; protected activity must show fraud belief and notice)
- Emery v. American Gen. Fin., Inc., 134 F.3d 1321 (7th Cir. 1998) (flexibility in Rule 9(b) pleading when information is outside plaintiff's control)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreens Co., 631 F.3d 436 (7th Cir. 2011) (balancing detail and flexibility in pleading standards under Rule 9(b))
- United States ex rel. Yannacopoulos v. Gen. Dynamics, 652 F.3d 818 (7th Cir. 2011) (analysis of the material-to and false-record concepts under FCA)
- Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502 (7th Cir. 2007) (pleading standard and inferences in fraud cases)
- U.S. ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002) (the FCA requires a presentment of a false claim or false record; not every improper practice constitutes fraud absent presentment)
- Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Tasemkin, Inc., 59 F.3d 48 (7th Cir. 1995) (successor liability considerations in FCA context)
- U.S. ex rel. Fisher v. Network Software Assocs., Inc., 180 F. Supp. 2d 192 (D.D.C. 2002) (notice and continuity in successor liability analysis within FCA context)