OPINION
Relator Dr. Gabriel Feldman filed this qui tam action, alleging that the City of New York (the “City”) violated Section 3729(a)(1) of the False Claims Act (the “FCA”), 31 U.S.C. § 3729 et seq., by presenting false claims for payment, and making false statements material to false claims, in connection with the City’s administration of certain Medicaid program benefits. Subsequently, the United States (the “Government”) intervened, and both the Relator and the Government filed amended complaints, which the City moved to dismiss in their entirety. After careful consideration of the parties’ written submissions, as well as their oi"al arguments, the Court, by Order dated April 13, 2011, (a) dismissed the Relator’s Amended Complaint in its entirety, (b) dismissed the two New York common law claims in the Government’s Amended Complaint, and (c) denied the City’s motion seeking dismissal of the Government’s claims arising under the FCA. This Opinion explains the reasons for those rulings.
The pertinent allegations, taken from the Amended Complaints of the Relator and the Government, from documents expressly referenced in those complaints, and from materials in the public record that are subject to judicial notice, are as follows. Medicaid is a joint federal-state program that helps provide medical assistance to low-income individuals. See Social Security Act of 1965, 42 U.S.C. § 1396 (stating that Medicaid was established “[f]or the purpose of enabling each State ... to furnish ... medical assistance on behalf of families ... whose income and resources are insufficient to meet the costs *645 of necessary medical services”). The basic structure of Medicaid is as follows. Each State establishes its own “plan” for the provision of Medicaid services to eligible individuals, 1 and the State directly pays health care providers for services rendered under their plans. See 42 U.S.C. § 1396(a). Though State plans are subject to federal approval and review, each State is responsible for the administration of its own plan. See 42 C.F.R. §§ 430.0 et seq. The federal government then makes quarterly grants to each such State to reimburse the State for the federal share of Medicaid expenditures. See 42 C.F.R. §§ 430.30. This share is determined primarily on the basis of a formula set forth in the Social Security Act, which sets the federal share anywhere from 50% to 83% of total Medicaid expenditures, depending on the per-capita income of the particular State. See 42 U.S.C. § 1396d; see also First Amended Complaint-in-Intervention of Plaintiff-Intervenor the United States of America (“Gov. Am. Compl.”) ¶ 1 (noting that the federal share of Medicaid expenditures made by New York State is roughly 50%).
Federal law also permits States to derive a portion of the non-federal share of Medicaid expenditures from local sources of revenue. 42 U.S.C § 1396a(a)(2); 42 C.F.R. § 433.53. In New York State, local governments such as the City must fund a part of the non-federal portion of the State’s Medicaid expenditures. See N.Y.L. 2005, ch. 58, Pt. C. However, since 2005, New York State has capped the amount in Medicaid expenses that a local social services district, such as the City, can be required to pay for a given year, with the excess to be borne by the State. See id. § l[b].
To obtain reimbursement for the federal share of program expenditures, a State must submit a quarterly expenditure report (the “CMS-64 Report”) stating the amount the State expended on services during the relevant quarter. The CMS-64 Reports are submitted to the Centers for Medicare and Medicaid Services (the “CMS”), the branch of the Department of Health and Human Services (“HHS”) that administers federal aspects of the Medicaid program. See 42 C.F.R. § 430.30. As a general matter, the United States must reimburse the States for the federal share of any expenditure allowable under the State’s plan that is included on a CMS-64 Report, and, accordingly, there is no prescribed limit on the federal government’s Medicaid expenditures. See id. However, under federal rules and regulations, States may only seek reimbursement for expenditures that are incurred in accordance with applicable state statutes and regulations. See OMB Circular A-87 codified at 2 C.F.R. § 225, Appx. A(C)(l)(c). Further, after October 2001, each CMS-64 Report that a State submitted to HHS contained the express certification that the “report only includes expenditures ... that are allowable in accordance with applicable implementing federal, state, and local statutes, regulations, policies.” See Gov. Am. Compl. Ex. C.
In New York State, Medicaid is administered by the New York State Department of Health (the “DOH”), which established, and now oversees, an extensive regulatory scheme governing the administration of New York State Medicaid. See N.Y. Pub. Health Law § 201(l)(v); see also 18 N.Y.C.R.R. § 505.14 (“DOH Reg. § 505.14”). One of the programs so administered is the Personal Care Services *646 (“PCS”) program, a Medicaid-funded program designed to provide services to individuals with “disabilities and chronic conditions” who require assistance performing the activities of daily living, such as “eating, bathing, dressing, toileting ... light housework ... meal preparation, transportation, grocery shopping ... and money management.” CMS, The State Medicaid Manual, Pub. No. 45, Ch. 4, § 4480; see also 42 CFR § 440.167; DOH Reg. § 505.14(a)(1) (defining PCS as “assistance with personal hygiene, dressing and feeding; and nutritional and environmental support functions”). In New York State, the PCS Program provides services ranging from a few hours per week, where a beneficiary needs limited assistance with specific functions or tasks, to 24-hour care, where a beneficiary’s physical or cognitive limitations are such that he or she requires constant attention and assistance. See DOH Reg. § 505.14(a).
There are two kinds of 24-hour care available under the PCS Program in New York State. First, a patient in the PCS program may receive “sleep-in” service, which entails continuous care from a single personal care aide who provides daytime and limited nighttime care and which costs approximately $75,000 per year per patient. Gov. Am. Compl. ¶ 17. Second, the PCS program also provides a more intensive level of care, commonly referred to as “continuous 24-hour care” or “split-shift” service, which typically requires two or more aides who provide uninterrupted 24-hour care and which costs approximately $150,000 per year per patient. See id. ¶ 18; see DOH Reg. § 505.14(a)(3).
New York State delegates Medicaid benefit eligibility determinations to local social services districts, such as the City. See DOH Reg. § 505.14(b). The City, in turn, charges the New York City Human Resources Administration (“HRA”) with administration of the PCS program. Gov. Am. Compl. ¶ 18 (also noting that HRA carries out its PCS-related responsibilities through its Community Alternative Systems Agency (“CASA”) system). HRA contracts with a variety of for-profit and not-for-profit vendors, which provide direct services to PCS program beneficiaries within the City. Id. ¶ 20. Once the City determines that an individual qualifies for services under the PCS Program, it issues authorization notices to that individual and to a designated PCS vendor, describing the types and duration of services that are authorized. Id. ¶22. In addition, on a weekly basis, the City electronically transmits to DOH a “weekly authorization list” identifying (a) each individual for whom the City authorized personal care services during the previous week, (b) the level, amount and duration of services authorized, and (c) the vendor designated to provide those services. Id. ¶ 23. Relying exclusively on the City’s weekly authorization lists, DOH grants “prior authorization” for PCS vendors to commence, and bill for, PCS program services authorized by the City. Id. ¶¶ 24, 37 (noting that DOH “prior authorization” is the only means by which PCS vendors can provide, bill, and be paid for PCS program services); see also DOH Reg. § 505.14(b)(5) (“the authorization for personal care services shall be completed prior to the initiation of services.”).
New York Medicaid regulations set forth detailed specifications for how the City must authorize and reauthorize personal care services. See DOH Reg. 505.14 et seq. In particular, the regulations provide that PCS Program benefits may only be provided if the City (a) finds that the services are “medically necessary,” (b) “reasonably expects that the patient’s health and safety in the home can be maintained by the provision of such services,” and (c) determines that the patient’s medi *647 cal condition is sufficiently “stable” that he or she is “self-directing.” Id. § 505.14(a)(4) (defining “stable” as a patient who, inter alia, “is not expected to exhibit either sudden deterioration or improvement” and “self-directing” as a patient who is “is capable of making choices about his/her activities of daily living, understanding the impact of the choice, and assuming responsibility for the results of the choice.”).
Further, under New York State regulations, the City’s determination as to whether to authorize 24-hour PCS Program services “must be based on” four considerations: “(i) a physician’s order”, “(ii) a nursing assessment,” “(iii) a social worker assessment” and “(iv) an assessment of ... the appropriateness and cost-effectiveness of the services.” DOH Reg. § 505.14(b)(3). Finally, in certain situations — when “there is a disagreement between the physician’s order and the social, nursing and other required assessments,” when “there is a question about the level and amount of services to be provided,” or where “the case involves the provision of [split-shift 24-hour care]” — New York State regulations require “a local professional director” (“LPD”) to conduct “an independent medical review of the case” and make “the final determination of the level and amount of care to be provided.” Id. § 505.14(b)(4). The regulations also permit the LPD’s review to be conducted by “a physician designated by the local [LPD]” or “a physician under contract with the local social services department.” DOH Reg. § 505.14(b)(4)®.
HRA contracts with the New York County Health Services Review Organization, a not-for-profit organization, to provide local medical directors (“LMDs”), who conduct the review and decision-making functions referenced above. See Gov. Am. Compl. ¶¶ 11, 19-21. The Relator, Gabriel Feldman, has served as an LMD since 2006, and also served as an LMD from 1990 to 1993. First Amended Complaint for Violations of the Federal False Claims Act (“Rel. Am. Compl.”) ¶¶ 21-22.
The City’s authorization of PCS benefits may not be effective for more than six months absent special circumstances, and in no case for more than twelve months. DOH Reg. § 505.14(b) (5)(iii). Further, with certain limited exceptions,
2
all requirements for the initial authorization of PCS benefits must be satisfied before the City may reauthorize benefits.
See
DOH Reg. §§ 505.14(b)(5)(ix), 505.14(a)(6)®. Moreover, the City “must deny or discontinue personal care services” if it finds that they are “no longer medically necessary” or where it “reasonably expects that such services cannot maintain ... the client’s health and safety in his or her home.”
Id.
§ 505.14(b)(5)(v)(c). However, the City may not discontinue or reduce a current beneficiary’s PCS benefits without first (a) finding that there has been a “change in [his or her] condition or circumstances,” (b) notifying him or her of its decision in writing, and (c) providing him or her with an opportunity for a “fair hearing” before a State Administrative Law Judge (“ALJ”), with the recipient’s benefits continuing until the ALJ has issued its decision.
See Mayer v. Wing,
Since 2000, approximately 17,500 individuals have received 24-hour personal care services through the PCS program administered by the City. Gov. Am. Compl. ¶ 2. The Government and the Relator allege that, during this period, the City has systematically authorized and reauthorized “sleep-in” and “split shift” 24-hour care PCS Program services in knowing noncompliance with the State regulatory requirements described above. See id. ¶¶ 41-64 (discussing seven anonymous patients as exemplars of the City’s alleged policy and practice); Rel. Am. Compl. ¶ 16. In particular, the Government and the Relator allege that the City, as a matter of standard practice and as a matter of policy, has unlawfully (a) authorized and reauthorized split-shift 24-hour care without first obtaining an LMD determination as to the need for such care, (b) improperly overruled LMD determinations concerning the appropriate level of care for individuals requesting 24-hour care, and (c) reauthorized 24-hour care without first obtaining and reviewing patient assessments prepared by nurses and social workers, as required under New York law. Gov. Am. Compl. ¶¶ 42-64.
Based on the foregoing allegations, the Government and the Relator each assert two claims under the FCA, 31 U.S.C. § 3729 et seq.: first, a claim for violation of section 3729(a)(1)(A), which prohibits the presentation of false claims for payment, and second, a claim for violation of section 3729(a)(1)(B), which prohibits the making of false statements material to a false claim. Gov. Am. Compl. ¶¶ 65-75; Rel. Am. Compl. ¶¶ 71-81. The Government also asserts two claims under New York common law: for payment under mistake of fact and for negligence. Gov. Am. Compl. ¶¶ 75-81. The City moves to dismiss both Amended Complaints, in their entirety, for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). In addition, the City moves to dismiss the Relator’s Amended Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of standing.
The Court first turns to the City’s contention that the Relator, Dr. Feldman, no longer has standing to prosecute this
qui tam
action given that the Government has now intervened to assert the same causes of action as those found in Feldman’s Amended Complaint. As a general matter, a
qui tam
relator has Article III standing to sue only on behalf of the Government, as an assignee of the Government’s claims.
See, e.g., United States ex rel. Kelly v. Boeing Co.,
Here, the City argues that dismissal of Feldman’s Amended Complaint is *649 required because “[it] is entirely duplicative in relevant respects of the Government’s Complaint-in-Intervention.” Memorandum in Support of the City of New York’s Motion to Dismiss the Relator’s Complaint (“Def. Rel. Mem.”) at 14. Comparing the two Amended Complaints, the City accurately notes that the Government asserts the same causes of action under the FCA as Feldman (as well as two additional causes of action under New York common law), and that the two Amended Complaints are predicated on nearly identical factual allegations of wrongdoing — viz. that the City systematically authorized PCS benefits without complying with New York State regulations governing the process by which applications for PCS benefits are required to be assessed. See Gov. Am. Compl. ¶¶ 65-75; Rel. Am. Compl. ¶¶ 71-81. In response, Feldman completely fails to specify any material difference between his Amended Complaint and that of the Government’s. See Memorandum of Law of the Relator in Opposition to the City of New York’s Motion to Dismiss his Amended Complaint (“Rel. Mem.”) at 6-8.
Upon its own, independent review of the two Amended Complaints, the Court can identify no material aspect of the Relator’s Amended Complaint not covered by the Government’s Amended Complaint. The Court concludes that Feldman’s Amended Complaint is superseded in its entirety by the Government’s Amended Complaint and therefore dismisses Feldman’s Amended Complaint for want of standing. The Court notes, however, that this dismissal in no way diminishes Feldman’s continuing statutory rights delineated in § 8730 of the FCA, including, most notably, his entitlement to 15-25% of any monetary award recovered by the Government in this action. See 31 U.S.C. § 3730(d).
The Court now turns to assessing the legal sufficiency of the Government’s two claims under the False Claims Act. Section 3729(a)(1) of the FCA renders it unlawful for a “person”
3
to “knowingly present[ ], or cause[ ] to be presented ... a false or fraudulent claim for payment” to the United States. 31 U.S.C. § 3729(a);
see also United States ex rel. Kirk v. Schindler Elevator Corp.,
As to the first ground, the Government’s Amended Complaint alleges that the City routinely submitted to DOH weekly authorization lists that listed individuals for whom the City had unlawfully and fraudulently authorized and reauthorized PCS benefits. 4 See Gov. Am. Compl. *650 ¶¶ 37-40, 46, 53, 61. The complaint further alleges that DOH relied on the information contained in the City’s weekly authorization lists to create the quarterly CMS-64 Reports submitted by the State to HHS to obtain the federal share of the State’s PCS expenditures. See Gov. Am. Compl. ¶¶ 5, 38-40.
The City argues that because the City’s initial decisions to reduce or terminate PCS benefits are subject to review and reversal by a State ALJ in a “fairness hearing,” this breaks the causal link between the City’s actions and DOH’s submissions of claims to the United States. See Declaration of Bryce L. Friedman, dated February 14, 2011 (“Friedman Deck”) Ex. A (State ALJ decision overturning the City’s initial decision to deny PCS benefits to “Patient D” in the Government’s Amended Complaint); see also Gov. Am. Compl. ¶ 49. However, State ALJs do not have jurisdiction to review the City’s authorization of PCS benefits. See DOH Reg. § 505.14(b)(5)(v). Accordingly, the City identifies no intervening act between its submission of weekly authorization lists to DOH and DOH’s submission of claims for payment to the United States when the City approves PCS benefits in the first instance. Moreover, the fact that a State ALJ intervenes in a certain subset of cases to authorize benefits where the City denied such benefits in the first instance does nothing to interrupt causation in those (presumably far more numerous) cases where the City approved PCS benefits on its own accord. It should also be noted that the Government replies in its Memorandum of Law that it “[does not] seek[ ] to hold the City liable ... for cases where an administrative law judge has granted personal care services.” Memorandum of Law of the United States in Opposition to the City of New York’s Motion to Dismiss the First Amended Complaint-in-Intervention (“Gov. Mem.”) at 17.
The City nonetheless argues that simply because the City does not directly submit the CMS-64 Reports to HHS, proximate causation cannot be shown as a matter of law.
See
Memorandum in Support of the City of New York’s Motion to Dismiss the United States of America’s First Amended Complaint-in-Intervention (“Def. Gov. Mem.”) at 15-16. The argument borders on the frivolous. It is well-established that the FCA “reaches claims that are rendered false by one party, but submitted to the government by another.”
Mason v. Medline Indus., Inc.,
*651
Turning to the City’s contention that the Government has failed to allege the submission of a claim “that is false or fraudulent” in the sense those terms are used in § 3729(a)(1) of the FCA, the Court notes that the Second Circuit, in delineating the contours of what renders a claim “false” under the FCA, has distinguished between claims that are “factually false” and those that are “legally false.”
See United States ex rel. Mikes v. Straus,
Here, the Government’s Amended Complaint alleges that the City caused DOH to submit legally false claims to the United States, in the form of CMS-64 Reports containing both express and implied false certifications of compliance with applicable federal and state Medicaid regulations. In response, the City argues, first, that an FCA cause of action premised on a certification theory must allege a false representation of compliance with a
“federal
statute or regulation or a prescribed contractual term.”
See Mikes,
Next, the City notes that for the City to be liable for a legally false claim, the certification in question must be made “as a condition to governmental payment.”
Mikes,
*652
With greater force, the City then argues that the Government has failed to adequately allege an “express false certification” because the Government can identify no “particular” statute to which the CMS-64 Reports certify compliance.
See Mikes,
But such a certification may still, in context, certify, at a minimum, compliance with certain core, specific legal requirements and therefore be sustained under the alternative theory of implied certification. As the Government notes, DOH Reg. § 505.14 provides: (1) that PCS benefits may be authorized “only if’ an LMD determines, inter alia, that particular services are “medically necessary;” (2) that “authorization for personal care services shall be completed prior to the initiation of services;” and (3) that PCS benefit determinations “must be based on” particular documents, including a physician’s order, a nursing assessment, and a social assessment. DOH Reg. §§ 505.14(a)(4), (b)(2) & (b)(5). The Government further notes that 2 C.F.R. § 225 — the federal regulation specifically governing the terms by which the United States will reimburse States under cost-sharing arrangements for benefit programs such as Medicaid — states that “[t]o be allowable under Federal awards, [a State’s] costs must ... [b]e authorized” in accordance with State law. Id. App’x A(C)(I)(e). Because State regulations require that certain procedures be followed before PCS benefits may be authorized, and federal regulations require that States must follow their own regulatory procedures in order to be eligible for Medicaid reimbursement payments, the Court concludes that the very act of submitting a claim for reimbursement for PCS benefits via the CSM-64 Report constitutes, at a bare minimum, an implied certification that those benefits were authorized in accordance with governing State and federal law.
In response, the City argues that
Mikes
imposed still a further requirement in the case of implied false certifications, to wit, that “a medical provider” could only be liable under the FCA for making an implied false certification of compliance with an applicable law where “the underlying statute or regulation ...
expressly
states ... that payment ... is precluded” in the event of the defendant’s noncompliance therewith,
It was against the background of these unusual circumstances that the Second Circuit made the statement that a medical provider’s claim under the theory of “implied false certification” was limited to situations in which “the underlying statute or regulation ... expressly states ... that payment ... is precluded.” Id. at 700. In so doing, however, the Second Circuit restricted its holding to FCA claims brought against “a medical provider.” See id. (because “courts are not the best forum to resolve issues regarding levels of care ..., we think a medical provider should be found to have implicitly certified compliance with a particular rule as a condition of reimbursement in limited circumstances”); cf. Conner at 1216 (a general certification does not constitute an implied representation of perfect compliance with all relevant Medicare regulations). 5
It is clear, therefore, that
Mikes
does not directly control this case so far as the theory of implied false certification is concerned. Moreover, none of the concerns expressed in
Mikes
regarding an over-broad theory of implied false certification are present in the instant case. Indeed, in contrast to the City’s repeated contention that the allegations at issue in this case relate to trivial “paperwork” regulatory requirements,
see
Def. Gov. Mem. at 2, 7-8, the allegations in the Government’s Amended Complaint describe the very
*654
type of wrongdoing that the FCA was intended to prevent.
See Rainwater v. United States,
Furthermore, even if the Mikes court’s further limitation on FCA claims brought against medical providers were to be extended to govern the instant case, the Government’s Amended Complaint would still have adequately pled a false claim that meets this requirement, on the basis of the City’s implied certification of compliance with State Medicaid regulations. The City contends that the Mikes standard would not be met in this case because federal regulations do not “explicitly] precondition” payment of federal Medicaid matching funds on the State’s compliance with DOH Reg. § 505.14. See Reply Memorandum in Further Support of the City of New York’s Motion to Dismiss the United States of America’s First Amended Complaint-in-Intervention (“Def. Gov. Reply”) at 7. However, the underlying regulations to which the CMS-64 impliedly certify compliance clearly and unequivocally condition the State’s entitlement to PCS benefit reimbursement payments on the State’s following its own regulatory requirements for authorizing those benefits. Because State and federal Medicaid regulations leave no doubt that federal reimbursement payments to New York State are conditioned on the State complying with DOH Reg. § 505.14, the Court concludes that, even if this case were otherwise controlled by Mikes, which it is not, the Government has still adequately pled that the CMS-64 Reports were “false” under the FCA in that they contained an “implied false certification” of compliance with applicable State and federal Medicaid Regulations, viz. DOH Reg. § 505.14 and 2 C.F.R. § 225, Appx. A(C)(1).
The Court next turns to the City’s third main argument for dismissing the FCA claims,
viz.
that the Government’s Amended Complaint has failed to plausibly allege that the City submitted its false claims “knowing of their falsity” — meaning with “actual knowledge,” “deliberate ignorance,” or “in reckless disregard.”
See
FCA § 3729(b). The Government contends that its allegation that the City sys
*655
tematically authorized PCS benefits in violation of the State Medicaid regulations raises a plausible inference that the City acted in “deliberate indifference” or in “reckless disregard” of the fact that those violations would result in the submission of false claims to the United States. Gov. Mem. at 20. The City responds by arguing that the Government’s asserted inference is not plausible because the City must pay for a portion of the costs associated with PCS benefits. Def. Gov. Mem. at 20 (stating that “it simply makes no sense ... that the City knowingly ... rip[ped] itself off);”
see also Shields v. Citytrust Bancorp, Inc.,
The City’s argument is, however, flawed in several respects. To begin with, in 2005 the State enacted the “Local Share Cap,” which places a maximum limit on the amount each local social services district, such as the City, has to pay in Medicaid expenses for a given year, with the excess to be borne by the State.
See
L. 2005, ch. 58, Pt. C., § l[b];
see also City of New York v. Novello,
More generally, assessing a municipality’s “economic self-interest” requires a broader perspective than simply focusing on narrow fiscal concerns. The Government’s Amended Complaint alleges that the City regularly authorized PCS benefits in violation of State Medicaid regulations, thus allowing certain of its residents to wrongfully receive personal care services. While the City is required by State law to fund a portion of the State’s Medicaid expenditures, including those for PCS benefits, the majority of such expenditures are covered by the State and the United States. See, e.g., New York State Division of the Budget, 2010-2011 Enacted Budget Financial Plan 66 (Aug. 20, 2010). It is altogether plausible to characterize the City’s alleged misconduct — providing its residents with undeserved access to very valuable federal benefits, the cost of only a small portion of which the City must bear — as economically (and politically) self-interested, broadly defined. The Court therefore concludes that a finder of fact could reasonably infer from the Government’s allegations that the City “knowingly” caused the submission of false claims.
On the basis of the foregoing, the Court holds that the Government has plausibly pled that the City violated § 3729(a)(1)(A) of the FCA by “knowingly” causing the presentation of a false claim to the United States
The Court next considers the Government’s cause of action arising under § 3729(a)(1)(B) of the FCA, which makes it a violation of federal law to “knowingly make[], use[], or cause[] to be made or used, a false record or statement material to a false or fraudulent claim.” FCA § 3729(a)(1)(B);
see also id.
§ 3729(b)(4) (defining “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property”). This provision establishes a “double falsity” requirement: the Government must allege both (i) a
*656
false record or statement, and (ii) a false claim.
7
See United States ex rel. Pervez v. Beth Israel Med. Ctr.,
Accordingly, the Court concludes that the Government has adequately stated a claim under § 3729(a)(1)(B) of the FCA.
The Court turns next to the Government’s claims arising under New York common law, for negligence and for payment under mistake of fact. The City first contends that it cannot be held liable on the Government’s negligence claim because the authorization of PCS benefits is a “discretionary municipal act” for which it enjoys absolute immunity under New York law. As set forth in
McLean v. City of New York,
Here, DOH Reg. § 505.14 sets the basic standard by which the City, through an LMD, must determine whether a particular individual merits PCS benefits. In determining an applicant’s eligibility for PCS benefits, the LMD must find that the services are “medically necessary,” that the services can “maintain ... the patient’s health and safety in [his or her] home,” and that the patient’s medical condition is sufficiently “stable.” See DOH Reg. § 505.14(a)(4). As applying such standards necessarily entails the exercise of reasoned judgment, the authorization of PCS benefits is clearly, as a general matter, a “discretionary municipal act.”
The Government argues, however, that since DOH Reg. § 505.14 also sets forth several specific documents upon which this discretionary determination must be based, the City’s alleged failure to collect and consider these documents involved ministerial acts not within the scope of its absolute immunity. But as the New York Court of Appeals held in
Lauer,
ministerial acts must involve not only obligatory procedures, but obligatory
outcomes
as well.
See
Finally, the Court considers the Government’s other common law claim, for payment under mistake of fact. Under New York common law, the voluntary payment doctrine precludes a party from recovering voluntary payments “made with full knowledge of the facts” if the party’s ignorance of its contractual rights and obligations resulted from a “lack of diligence.”
See Spagnola v. Chubb Corp.,
Generally, however, “[p]ayment by mistake ... only lies against a defendant to whom a benefit (money) was actually paid.”
United States ex rel. Purcell v. MWI Corp.,
Here, the best the Government can muster is the contention that the City eventually derived financial benefit from the Government’s PCS benefit reimbursement payments because “Medicaid funds bring [benefits] to the local economy.” However, the Government cannot point to a single case (New York or otherwise) involving a claim for payment under mistake of fact in which a municipality was held liable for payments it improperly secured for its individual residents. Responding to an identical argument to that asserted by the Government here, the Court in
United States v. Incorporated Village of Island Park,
The leap that is required to allow a cause of action for erroneous payment of funds to lie against the [municipal] Defendants based on their receipt of these indirect and unquantifiable benefits [coming in the form of subsidies to its residents] is one that this court is not willing to make.
For the foregoing reasons, the Court hereby reaffirms its Order dated April 13, 2011(a) dismissing Dr. Feldman’s Amended Complaint in its entirety, (b) granting the City’s motion as to the Government’s Amended Complaint in part, by dismissing the Government’s common law claims for negligence and payment under mistake of fact, and (c) otherwise denying the City’s motion to dismiss the Government’s Amended Complaint.
SO ORDERED.
Notes
. "Within broad Federal rules, each State decides eligible groups, types and range of services, payment levels for services, and administrative and operating procedures.” 42 C.F.R. § 430.0.
. The regulations state that "[r]eauthorization of [certain limited "nutritional and environmental support” services] shall not require a nursing assessment if the physician’s order indicates that the patient’s medical condition is unchanged.” DOH Reg. §§ 505.14(b)(5)(ix), 505.14(a)(6)(i).
. Municipal corporations constitute “persons” under the False Claims Act,
see Cook County, Ill. v. United States ex rel. Chandler,
. The Government Amended Complaint also notes that the City: (1) assesses requests for PCS benefits; (2) makes threshold eligibility *650 determinations; (3) makes determinations as to the level and amount of services to be provided; and (4) contracts with vendors to provide City-approved PCS services. See Am. Compl. ¶¶ 19-24.
. Analogously, federal Courts of Appeals have dealt with this issue of constraining FCA liability within reasonable bounds by adopting a "materiality
requirement”
— i.e., requiring that the false claim be "material” to the government's funding decision.
See, e.g., United States ex rel. Cantekin v. Univ. of Pittsburgh,
. Buttressing the Court’s sense of the highly material nature of these documents under New York law is the fact that these three documents are among the most, if not the most, critical aspects of the administrative record reviewed by ALJs in fairness hearings. See Declaration of Bryce L. Friedman, dated February 14, 2011 at Exs. A, C & D.
. Section 3729(a)(1)(B) of the FCA, enacted in 2009, served to "legislatively overrule” the Supreme Court’s decision in
Allison Engine Co. v. United States ex rel. Sanders,