United States of America ex rel. Jolie Johnson and Debbie Helmly v. Bethany Hospice of Coastal Georgia, LLC
4:16-cv-00290
S.D. Ga.Mar 31, 2020Background
- Relators Jolie Johnson and the estate of Debbie Helmly, former employees of Bethany Coastal, sued Bethany Hospice alleging an illegal physician-referral (kickback) scheme that tainted Medicare/Medicaid claims under the False Claims Act (FCA) and Georgia False Medicaid Claims Act (GFMCA).
- Relators allege Bethany Hospice (through CEO Ava Best and CFO Mac Mackey) paid physicians via disguised dividends/bonuses/salaries, below–fair-market-value share transactions, and promised trips in exchange for referrals; they identify four physicians and Dr. Marshall Tanner as examples.
- Relators claim personal access to billing, census, and referral reports and allege Medicare referral rates showing nearly all of certain doctors’ Medicare patients went to Bethany Hospice; they did not attach any example Medicare claims or specific billing records.
- Defendant moved to dismiss under Rules 8 and 9(b), arguing the complaint lacks the required particularity for alleged AKS violations and for alleged submission of false claims to the government.
- The court found plaintiffs failed to plead with the specificity required by Rule 9(b): (1) the AKS allegations omitted key details (precise remuneration, timing, who negotiated/payments, FMV benchmark), and (2) allegations that false claims were actually presented to Medicare lacked sufficient indicia of reliability or a representative sample claim.
- Because relators had multiple chances to amend and still could not cure pleading defects, the court dismissed the Third Amended Complaint with prejudice and closed the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AKS-based kickback scheme was pled with particularity under Rule 9(b) | Relators allege specific doctors received remuneration (dividends, below-FMV shares, trips) and that CEO Best admitted masking payments | Bethany Hospice says allegations are conclusory, lack concrete details (amounts, dates, mechanism, who negotiated/payments) and omit FMV benchmark | Court: Not pled with particularity; allegations too vague and internally inconsistent; dismissal granted |
| Whether relators pleaded actual submission of false claims with particularity | Relators rely on personal access to billing/referral reports and aggregated "Medicare claims data" showing referral concentrations as indicia of reliability | Defendant: No specific claim examples, billing dates, amounts, or patient identifiers; cannot infer presentment from probabilities | Court: Insufficient indicia of reliability; relators must plead representative claims or provide stronger firsthand/billing detail; dismissal granted |
| Whether relators' claimed personal knowledge/participation suffices to substitute for specific claim details | Relators assert firsthand access to billing and meetings where site productivity/referrals were discussed | Defendant: Relators were not sufficiently engaged in Bethany Hospice billing operations and did not witness actual submissions or billing manipulations | Court: Personal knowledge alleged is too vague and not like cases where relators participated directly in submitting or altering claims; insufficient |
| Remedy and ability to amend | Relators previously amended complaints multiple times and argue their factual access justifies leniency | Defendant asks dismissal; emphasizes lack of curable specifics | Court: Given repeated opportunities and persistent deficiencies, dismissal is with prejudice; case closed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain more than legal conclusions to be plausible)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Clausen v. Laboratory Corp. of America, 290 F.3d 1301 (FCA plaintiffs must show indicia of reliability that false claims were actually submitted)
- Matheny v. Medco Health Solutions, 671 F.3d 1217 (relator's first‑hand knowledge can substitute for particularized claim allegations when sufficiently detailed)
- Hopper v. Solvay Pharmaceuticals, 588 F.3d 1318 (Rule 9(b) applies to FCA claims)
- Corsello v. Lincare, 428 F.3d 1008 (must plead who, what, where, when, and how of fraudulent submissions)
- Carrel v. AIDS Healthcare Foundation, 898 F.3d 1267 (court rejects pleading by mathematical probability that false claims were submitted)
- Walker v. R & F Properties of Lake County, 433 F.3d 1349 (relator’s participation in billing can establish sufficient indicia of reliability)