OPINION AND ORDER
Believing that their employer was fraudulently billing Medicare and Medicaid for services that they rendered as. a physician and- neuro-monitoring technician, respectively, Plaintiffs-Relators John and Loreta Kalec (“Dr. Kalee” and “Loreta”), brought a qui tarn action against Defendants Nu-Wave Monitoring, LLC (“NuWave”), and Thomas Boecker and Greg Lesiak (“Defendants Boecker and Lesiak”) as owners and operators of NuWave, alleging that Defendants conspired to submit and submitted fraudulent claims to Medicare and Medicaid in violation of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., and the equivalent provisions of the Illinois False Claims Act (“IFCA”), 740 Ill. Comp. Stat. § 175/1 et seq.
BACKGROUND
NuWave, an Indiana limited liability corporation, provides neuro-monitoring services to hospitals throughout Illinois and Indiana. Neuro-monitoring is a service whereby technicians and doctors monitor a patient’s neurological activity during surgical procedures in an attempt to prevent neurological damage, including brain damage. NuWave provides the monitoring
Neuro-monitoring is a designated health service. In order for the service to be provided, therefore, it must be requested by the surgeon performing the surgery. Dr. James Gottlieb (“Dr. Gottleib”) requested that NuWave perform neuro-mon-itoring services in a large number of his cases from 2009 to the present. NuWave compensated Dr. Gottlieb for these referrals by making him a Director of NuWave and paying him a salary despite the fact that he did not perform any services for NuWave in this capacity.
NuWave is considered a provider of medical services, able to bill both Medicare and Medicaid. Medicare and Medicaid claims for neuro-monitoring services include both a technical and professional component. The technical component is billed by the hospital and includes hospital overhead, the cost of NuWave’s technicians, and the cost of NuWave’s monitoring equipment. NuWave charges most hospitals a five-hour minimum for its technicians’ services regardless of whether the procedure lasts five hours. For a few other hospitals, NuWave directs its technicians to start billing their time an hour before the patient enters the surgical suite and to continue billing their time for fifteen minutes after the patient leaves the room. This billing practice was explained to Loreta and other NuWave technicians in a June 27, 2011 email. These billing practices are in direct violation of Medicare’s policy of reimbursing providers solely for actual time spent monitoring patients. Nonetheless, NuWave submitted invoices to hospitals based on these fraudulent billing practices and the hospitals knowingly used this fraudulent documentation in preparing its claims to Medicare and Medicaid. Medicare and Medicaid paid NuWave, through the hospitals, for the falsely inflated technician time.
The professional component of a Medicare and Medicaid claim compensates the physician for his time spent providing neu-ro-monitoring services. Unlike the technical component, this portion of the claim is prepared and submitted by NuWave. Nu-Wave is required to certify the accuracy of each claim pursuant to 42 C.F.R. §§ 424.32(a)(3), 424.33. While Medicare allows physicians to provide neuro-moni-toring services to multiple patients at one time, it only reimburses doctors for their actual time spent monitoring each patient. See Medicare’s Local Coverage Determination, LCD 2924 (“[m]ore than one patient may be monitored at once; however, claims for physician services must be submitted for the time devoted to each individual patient by the monitoring physician, i.e., not all patients simultaneously.”). Doc. 32 ¶ 24. In other words, if a physician monitors three patients during one six-hour time period, the physician may bill Medicare only for a total of six hours; he may not bill for 18 hours of neuro-monitoring services. The physician must apportion his time for each of the three patients into the six hours.
Defendants repeatedly violated these Medicare and Medicaid regulations by bill
Defendants Boecker and Lesiak, owners and operators of NuWave, knew that Nu-Wave was not properly apportioning their physicians’ neuro-monitoring time and that NuWave was falsely inflating its technicians’ time. Suspecting such, Dr. Kalec asked Defendants Boecker and Lesiak whether NuWave was properly billing Medicare and Medicaid. Both Defendants responded that NuWave’s billing practices were not Dr. Kalec’s concern. Dr. Kalec demanded to see the bills submitted for his services and was denied. Thereafter, Defendants Boecker and Lesiak pressured Dr. Kalec to resign in 2011.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago,
Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). This “ordinarily requires describing the ‘who, what, when, where, and how’ of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case.” AnchorBank,
ANALYSIS
The FCA and IFCA prohibit knowingly presenting, or causing to be presented to the government, a false or fraudulent
To adequately plead a violation of § 3729(a)(1)(A), a plaintiff must allege “(1) a false or fraudulent claim; (2) which was presented, or caused to be presented, by the defendant to the United States for payment or approval; (3) with the knowledge that the claim was false.” United States ex rel. Fowler v. Caremark RX, L.L.C.,
The FCA “is an anti-fraud statute and claims under it are subject to the heightened pleading requirements of Rule 9(b).” Thulin v. Shopko Stores Operating Co., LLC,
I. Count I
Count I alleges that Defendants violated the false claim, false record and conspiracy provisions of § 3729(a)(1) by failing to properly apportion Dr. Kalec’s time performing neuro-monitoring services and then falsely submitting requests for payment based on his fraudulent time records. Defendants move to dismiss Count I for failure to comply with Rule 9(b)’s heightened pleading requirements. Specifically, Defendants argue that Plaintiffs fail to allege that Defendants submitted a claim to Medicare for Dr. Kalec’s June 18, 2010 services or that the Medicare policy regarding apportionment of time was in effect during the relevant time period. In addition, Defendants argue that Plaintiffs fail to adequately allege Defendants Boecker or Lesiak’s role in submitting a false claim to Medicare, sufficient specifics of NuWave’s billing practices, and the creation of the fraudulent bill. Finally, Defendants suggest that to the extent that
First, the Court rejects Defendants’ argument that the Complaint fails to allege that NuWave submitted a claim to Medicare for Dr. Kalec’s June 18, 2010 neuro-monitoring services. The Complaint alleges that “NuWave routinely billed Medicare for neuro-monitoring services performed by the same physician simultaneously for multiple patients, without apportioning the total monitoring time among such patients.” Doc. 32 ¶ 25. The Complaint continues, “[f]or example, on June 18, 2010, Dr. Kalec performed neuro-monitoring services for 8 surgeries over an approximate 8 hour period of time,” nevertheless, “NuWave [ ] billed for 23 hours of neuro-monitoring services for Dr. Kalec’s services fortune 18, 2010.” Doc. 32 ¶ 26. Plaintiffs allege that “NuWave collected all amounts paid by Medicare for these claims.” Doc. 32 ¶ 27. In other words-, Plaintiffs allege that the Defendants routinely fraudulently billed Medicare by improperly apportioning its doctors’ time and cite Dr. Kalec’s June 18, 2010 services as a representative example of this fraudulent billing practice.
Taking these allegations as true, as the Court must, the Court can reasonably infer that NuWave submitted a claim to Medicare for the entirety of Dr. Kalec’s June 18, 2010 services. See United States ex rel. Lusby v. Rolls-Royce Corp.,
The Court finds the Defendants’ argument as to Defendants Boecker and Lesiak to be more persuasive. Plaintiffs only allegations against Defendants Boecker and Lesiak in Count I are that the individual Defendants knew that NuWave was not properly apportioning its physicians’ time and that they denied Dr. Kalec access to NuWave’s bills. While Rule 9(b) allows knowledge to be alleged generally, mere knowledge of a fraud is insufficient to sustain an FCA cause of action. Lisitza,
Plaintiffs attempt to salvage their claim by asserting in its response brief that Defendants Boecker and Lesiak, as owners and operators of NuWave, certified the accuracy of the claims submitted to the
For these reasons, the Court denies Defendants’ motion to dismiss Count I as to NuWave, but grants the motion as it relates to Defendants Boecker and Lesiak.
II. Count II
Count II of Plaintiffs’ Complaint alleges that Defendants violated the false claim, false record, and conspiracy provisions of § 3729(a)(1) by submitting falsely inflated invoices for NuWave’s technicians’ time to hospitals knowing that the hospitals would use these false invoices to prepare their Medicare claims. Defendants move to dismiss Count II arguing that Plaintiffs fail to plead at least one example of a false claim that was submitted to Medicare. Defendants contend that Plaintiffs cannot provide such an example because none of the named hospitals submitted a false claim, which Plaintiffs conceded when they dismissed the named hospitals from this suit.
As described above, the hospitals submit claims to Medicare for the technical component of the neuro-moni-toring services, including NuWave’s technicians’ time. To assist the hospitals, NuWave submits documentation of the technicians’ time. The hospitals then prepare a claim based on that documentation to submit to Medicare. Plaintiffs’ Complaint references a blank NuWave billing form and an internal NuWave email, which allegedly demonstrate Nu-Wave’s policies of falsely inflating its technicians’ time, whether by billing a minimum of five hours of technician time per surgical procedure (billing form) or adding an hour and fifteen minutes of technician time (email). Doc. 32, Exs. A, B. However,
the FCA does not create liability merely for a health care provider’s disregard of Government regulations or improper internal practices unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe.
United States ex rel. Dolan v. Long Grove Manor, et al., No. 10 C 368,
Nothing in Plaintiffs’ Complaint provides 'sufficient indicia of reliability such that the Court can reasonably infer that a false claim for payment was actually made. As in Count I, Plaintiffs cite the June 18, 2010 surgeries as a representative example of false claims being submitted to Medicare. The problem Plaintiffs face with using this example is that the alleged fraud in Count II stems from NuWave’s policy of falsely inflating its technicians’ time. While the Court can take notice of the time each surgery took to complete and extrapolate from there the time the technician spent with the patient, the Complaint is lacking in details regarding what NuWave submitted to the hospitals for the technician component for each of those surgeries. Neither Plaintiff is alleged to have been a technician who worked on any of the eight surgeries allegedly resulting in a false claim. As such, neither Plaintiff can attest to how many hours the technicians worked, how many hours the technicians claimed that they worked, or how many hours the technicians were ultimately paid for their work for any of the eight surgeries. Notably, Loreta, who was a technician employed by NuWave and in a position to provide an example of a false claim, does not allege any occasion in which her time was falsely inflated, or that she was ever paid in excess of the number of hours that she actually worked. Further, the email relied on by Plaintiffs for establishing one of NuWave’s fraudulent billing practices was sent in 2011, well after the June 18, 2010 surgeries. The Court is therefore unable to infer that the fraudulent billing practice outlined in the email was in effect at the time of the June 18, 2010 surgeries. The Complaint additionally fails to allege that any of the surgeries took place in any hospital subject to the five hour minimum billing for technician time or that the five hour minimum billing policy was in effect at the time of the June 18, 2010 surgeries. In sum, Plaintiffs are unable to “link specific allegations of deceit to specific claims for payment.” Dolan,
For these reasons, Plaintiffs fail to adequately plead a violation of the false claim provision of the FCA as to NuWave under Rule 9(b). Plaintiffs also fail to plead a violation of the false claim provision of the FCA as to Defendants Boecker and Lesiak for the reasons identified in Count I, and these claims are dismissed without preju-' dice.
III. Count IV
Count IV alleges that the Defendants and the twenty-nine named hospitals con
By failing to respond to Defendants’ motion to dismiss Defendants Boecker and Lesiak from Count IV, Plaintiffs forfeit the issue. Copeling v. Ill. State Toll Highway Auth., No. 12 C 10316,
As to NuWave, Plaintiffs allege that the hospitals knew that NuWave was falsely inflating their technicians’ time on their invoices, and that NuWave knew that the hospitals were submitting claims to Medicare based on the falsely inflated technician time-cards. However, knowledge is not enough to sustain a conspiracy claim. Rather, “[fjacts must be alleged to suggest the existence of an agreement to violate the law.” Lisitza,
IY. CountV
Count V alleges that Defendants violated the false claim, false record, and conspiracy provisions of the FCA by paying Dr. Gottlieb for referrals in violation of the Anti-Kickback Statute (“AKS”) and then submitting claims for reimbursement to Medicare arising from those illegal referrals. Defendants move to dismiss Count V arguing that Plaintiffs have failed to identify at least one representative example of a false claim submitted in connection with a kickback, or the particulars of the kickback scheme. Again, Defendants argue that Plaintiffs have failed to adequately allege Defendants Boecker’s and Lesiak’s involvement in the kickback scheme. Plaintiffs respond by essentially reciting the allegations contained in the Complaint and summarily concluding that these allegations sufficiently plead an FCA cause of action based on an alleged kickback scheme. The Court disagrees.
The AKS prohibits the paying of remuneration to any person to induce that person to refer an individual for a service which may be paid for under a federal health care program. 42 U.S.C. § 1320a-7b(b)(2). While the AKS itself does not provide for a private right of action, courts within this jurisdiction have recognized FCA claims based on violations of the AKS. See Dolan,
Plaintiffs’ Complaint sets forth a bare outline of a scheme to violate the FCA through violating the AKS. Plaintiffs generally allege that Dr. Gottlieb “requested that NuWave perform neuro-monitoring services in a very large number of his cases from 2009 to present.” Doc. 32 ¶ 72. Plaintiffs further allege that NuWave compensated Dr. Gottlieb for these referrals by giving him a paid position as a Director of NuWave, despite the fact that Dr. Gott-
These allegations fail, however, to meet the particularity requirements of Rule 9(b). Specifically, Plaintiffs fail to identify a single patient that was referred by Dr. Gottlieb. As a result, Plaintiffs fail to specifically link the alleged kickback scheme to an actual claim that was submitted to Medicare. See United States ex rel. Grenadyor v. Ukrainian Vill. Pharm.,
V. Count VI
Count VI of Plaintiffs’ Complaint alleges that Defendants violated the IFCA by engaging in the same conduct alleged in Counts I, II, TV, and V through submitting false claims to Medicaid, a partially state-funded medical assistance program. Defendants generally move to dismiss Count VI for the reasons stated in the prior Counts. Plaintiffs respond with the same arguments advanced in the prior Counts. The language of the IFCA mirrors that of the FCA. As such, FCA caselaw applies with equal force to IFCA claims. See U.S. ex rel. Kennedy v. Aventis Pharm., Inc.,
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss [63] is granted in part and denied in part. Plaintiffs are granted leave to amend their Complaint within 14 days of the entry of this Order.
Notes
. The United States and the State of Illinois declined to intervene in the matter. [16]
. Plaintiffs' Amended Complaint [32] ("Complaint”) joined numerous hospitals as Defendants. Plaintiffs subsequently voluntarily dismissed the hospital Defendants. [62] Thus, the only remaining Defendants are NuWave Monitoring, LLC, Thomas Boecker, and Greg Lesiak.
.The facts in the background section are taken from Plaintiffs' Complaint and are presumed true for the purpose of resolving Defendants' motion to dismiss. See Virnich v. Vorwald,
. Defendants’ argument that Dr. Kalec is responsible for any improper claims submitted to the government is not an attack on the sufficiency of the pleadings but a substantive defense to the stated cause of action. As such, the Court declines to address the argument further at this stage of the litigation.
. For these reasons, the Court also rejects Defendants’ argument that' Plaintiffs’ claim does not adequately provide the details of
. There are a multitude of possible reasons, aside from the one advanced by Defendants, to support Plaintiffs’ decision to dismiss the hospitals. The fact of the hospitals’ dismissal does not mean that the hospitals or the remaining Defendants acted lawfully. The Court rejects this argument and declines to address it further.
. Count IV is titled "Violations of the False Claims Act, 31 U.S.C. § 3729, et seq., Through a Conspiracy.” Count IV contains essentially the same factual allegations as those set forth in Count II. Count IV alleges that “[b]y causing the submission of bills to Medicare based on improperly inflated time, through their conspiracy, Defendants” committed violations of the false claim and false record provisions of the FCA, as well as alleging a violation of the conspiracy provision of the FCA. It is thus unclear whether Count IV is intended to allege violations of the false claim and false record provisions of the FCA, or is intended to solely allege a violation of the conspiracy provision of the FCA. Because Count IV is based on the same factual
. Defendants also argue that by dismissing the hospitals from the suit, Plaintiffs concede that the hospitals have not acted unlawfully, and that if the hospitals havé not acted unlawfully, then Defendants have not acted unlawfully. As the Court states supra in n. 5, there are a multitude of possible reasons, aside from the one .advanced by Defendants, which could have caused Plaintiffs to dismiss the hospitals from this suit. This fact does not mean that the hospitals or the remaining Defendants acted lawfully. An FCA' conspiracy requires an agreement between two parties, not two defendants. For these reasons, the Court rejects this argument.