United States ex rel. Kalec v. Nuwaye Monitoring, LLC
84 F. Supp. 3d 793
N.D. Ill.2015Background
- NuWave provided intraoperative neuro‑monitoring: on‑site technicians and remote physician monitoring; billed Medicare/Medicaid for technical (hospital) and professional (NuWave) components.
- Plaintiffs-relators Dr. John Kalec (physician) and Loreta Kalec (technician) allege NuWave routinely overstated technician hours (five‑hour minimum or add 1h15m) and double‑billed physician time by counting the same monitoring hours for multiple patients.
- Representative example: June 18, 2010 — Dr. Kalec monitored eight surgeries over ~8 hours, but NuWave allegedly billed 23 physician hours and billed hospitals inflated technician time; NuWave allegedly received reimbursement.
- Plaintiffs sued under the Federal False Claims Act (FCA) and Illinois FCA (IFCA), asserting false‑claim, false‑record, and conspiracy theories, plus a kickback theory based on payments to Dr. Gottlieb for referrals.
- Defendants moved to dismiss under Rules 12(b)(6) and 9(b). The government declined to intervene; hospitals originally named were later dismissed by plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count I (NuWave): improper apportionment of physician time (June 18, 2010 example) | Alleged representative example shows NuWave billed 23 hrs for 8 hrs work; NuWave collected Medicare payments | Complaint fails to tie specific fraudulent transaction to a submitted Medicare claim or show relevant Medicare policy in effect | Denied as to NuWave — pleading adequate under Rule 9(b) (representative example and plausible inference that claims were submitted) |
| Count I (Boecker & Lesiak): individual liability for false claims | Plaintiffs allege owners knew of improper apportionment and denied access to bills | Mere knowledge is insufficient; must allege active role in preparing/submitting false claims or an agreement | Granted as to Boecker & Lesiak — allegations insufficient to show their active participation or conspiracy |
| Count II / Count IV (technician invoices / conspiracy with hospitals) | NuWave prepared inflated technician invoices that hospitals used to submit false Medicare claims; hospitals knew and agreed | Plaintiffs cannot identify any actual false claim submitted to Medicare tied to inflated technician records; dismissal of hospitals undermines inference of unlawful submissions; no particularized agreement alleged | Dismissed as to all defendants for failure to plead specific false claims and lack of particulars about any agreement; conspiracy claim dismissed without prejudice |
| Count V (AKS / kickbacks re: Dr. Gottlieb) | NuWave paid Gottlieb (Director title and salary) to induce referrals; Medicare paid for services stemming from those referrals | Plaintiffs fail to identify specific referrals/patients or any false claim resulting from a kickback | Dismissed without prejudice for failure to plead who, when, and the specific claims linking kickbacks to submitted Medicare claims |
Key Cases Cited
- Gibson v. City of Chicago, 910 F.2d 1510 (7th Cir. 1990) (Rule 12(b)(6) challenges pleadings, not merits)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual content permitting reasonable inference of liability)
- AnchorBank, FSB v. Hofer, 649 F.3d 610 (7th Cir. 2011) (accept well‑pleaded facts and draw inferences for Rule 12(b)(6))
- Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502 (7th Cir. 2007) (Rule 9(b) applies to averments sounding in fraud; must identify who participated in scheme)
- United States ex rel. Lusby v. Rolls‑Royce Corp., 570 F.3d 849 (7th Cir. 2009) (relator need not produce invoices at pleading stage; much knowledge is inferential)
- United States ex rel. Fowler v. Caremark RX, L.L.C., 496 F.3d 730 (7th Cir. 2007) (elements required to plead an FCA claim)