USA ex rel Michael S. Lord v. North American Partners In Anesthesia, LLP
3:13-cv-02940-MEM
M.D. Penn.Jun 20, 2017Background
- Relator Michael S. Lord, a CRNA employed by NAPA-PA, filed a qui tam FCA suit alleging NAPA and related entities submitted Medicare claims mischaracterizing CRNA-supervised cases as medically directed, and that PMC knew of and failed to stop the practice.
- Relator alleged: (1) NAPA’s billing and documentation practices caused false Medicare claims (Counts I–II); (2) he suffered retaliation for reporting the conduct (FCA §3730(h), Count III); and (3) state-law employment and contract claims (Counts IV–VII).
- The United States declined to intervene. Relator later withdrew state Counts IV–VI as duplicative of federal whistleblower claims.
- PMC moved to dismiss all claims against it for failure to meet Rule 9(b) (fraud particularity) and Rule 12(b)(6) standards; NAPA defendants filed a separate motion.
- The complaint alleges PMC was informed of NAPA’s conduct by relator and took no corrective action, but does not allege PMC submitted claims to Medicare or had a contract with relator.
- Court’s disposition: granted PMC’s motion in full; all claims against PMC dismissed with prejudice. Counts IV–VI dismissed as withdrawn against all defendants; PMC dismissed from the action entirely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PMC may be liable under the FCA for presenting or causing presentation of false claims (Counts I–II) | Lord alleges PMC knew of NAPA’s billing scheme and thus caused or assisted in submission of false claims. | PMC argues it did not submit Medicare claims for NAPA physicians, CMS rules limit billing to service provider, and Lord fails to plead PMC’s individual role with Rule 9(b) particularity or causation. | Dismissed with prejudice: allegations amount to mere awareness, not that PMC knowingly caused or materially assisted submission of false claims; Rule 9(b) not satisfied as to PMC. |
| Whether PMC is liable for making/using false records to get false claims paid (Count II theory) | Lord alleges PMC knew false attestations and documentation were used and failed to stop it. | PMC argues only NAPA submitted attestations/claims; Lord does not allege PMC made/used false records to obtain payment. | Dismissed with prejudice: insufficient allegations that PMC made/used false records or caused others to do so with requisite intent. |
| Whether relator states an FCA retaliation claim under §3730(h) against PMC (Count III) | Lord contends he was an agent/employee of NAPA-PA (an independent contractor to PMC) and so §3730(h) protects him against PMC’s retaliation. | PMC argues Lord was not its employee, contractor, or agent; no employment/agency relationship alleged; §3730(h) generally targets employer-type defendants. | Dismissed without leave to amend: no plausible employment/contractor/agency relationship to support §3730(h) liability against PMC. |
| Whether relator states a breach-of-contract claim against PMC (Count VII) | Lord seeks damages for breach of his employment agreement and related harms. | PMC notes the employment agreement is with NAPA-PA, not PMC; no contract between Lord and PMC alleged. | Dismissed without leave to amend: no contract between Lord and PMC; claim fails as a matter of law. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008) (pleading requires more than labels and conclusions)
- U.S. ex rel. Wilkins v. United Health Group, 659 F.3d 295 (3d Cir. 2011) (elements of FCA §3729(a)(1) and distinction between factual and legal falsity)
- Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153 (3d Cir. 2014) (Rule 9(b) in FCA context: scheme allegations plus reliable indicia that claims were submitted)
- United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235 (3d Cir. 2004) (liability under the FCA can extend to those who "knowingly caused" false claims to be filed)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (false-record liability requires making a false record to get a false claim paid)
- Hedges v. United States, 404 F.3d 744 (3d Cir. 2005) (movant bears burden on Rule 12(b)(6))