MEMORANDUM AND ORDER
Pending before the Court are defendant Corpus Christi Bay Area Surgery, Ltd.’s (“CBAS”) Motion to Dismiss (Instrument # 45) and defendants Columbia/HCA Healthcare Corporation, CHC Holdings, Inc., Columbia Hospital Corporation of Bay Area, Columbia Hospital Corporation of Corpus Christi, and Columbia Surgieare Specialty Hospital’s (collectively “the Columbia defendants”) Motion to Dismiss Plaintiffs Second Amended Complaint (Instrument # 61). CBAS’s motion to dismiss concerns the same issues that are presented in the Columbia defendants’ motion to dismiss, as well as an additional two issues related solely to CBAS. Since the Court’s consideration of the Columbia defendants’ motion to dismiss is dispositive of the whole case, the Court does not need to consider the two remaining issues in CBAS’s motion to dismiss. After considering the parties’ submissions, the second amended complaint, the argument of counsel, and the relevant law, the Court concludes that the motions to dismiss should be GRANTED.
*401 Factual Background
Relator James M. Thompson, M.D. (“Thompson”) brought this qui tam 1 action pursuant to the federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq. (West Supp.1996), predicated on alleged violations of the Medicare anti-kickback statute, 42 U.S.C. § 1320a-7b (West 1991), and the Stark laws, 42 U.S.C. § 1395nn (West 1992 & Supp.1996), which relate to physicians’ referrals of Medicare patients. The government has declined to proceed with this case under 31 U.S.C. § 3730 (West Supp.1996). Therefore, Thompson is pursuing this case with his own counsel on behalf of the government.
Thompson is a medical doctor who engages in private practice in Corpus Christi, Texas. Columbia/HCA Healthcare Corporation (“Columbia/HCA”) has owned or controlled, directly or through subsidiary corporations or affiliated corporations, partnerships, and other business entities, various healthcare providers throughout the United States since 1988 and in Corpus Christi since 1990. CHC Holdings, Inc. is a subsidiary of Columbia/HCA. Columbia Hospital Corporation of Bay Area (“CHC-Bay Area”) is a subsidiary of Columbia/HCA and is the general partner of Bay Area Healthcare Group, Ltd. which is the owner and operator of several hospitals in Corpus Christi. Columbia Hospital Corporation of Corpus Christi is a subsidiary of Columbia/HCA and the general partner of Corpus Christi Imaging, Ltd. Columbia Surgicare Specialty Hospital is an outpatient hospital located in Corpus Christi. CBAS is the owner and operator of Corpus Christi Bay Area Surgery, an outpatient surgical facility located on the premises of Bay Area Medical Center in Corpus Christi which is operated by a subsidiary of Columbia/HCA.
Thompson contends that the defendants have created investment arrangements and provided financial inducements to physicians for patient referrals in violation of the Medicare anti-kickback statute and Stark laws which has resulted in violations of the FCA. The following is a list of prohibited inducements and financial arrangements which Thompson has alleged:
(1) Offering physicians in a position to refer patients an exclusive opportunity not available to other qualified investors to invest in “partnerships” to own defendants’ hospitals, and receive profits therefrom;
(2) Offering loans or providing assistance in obtaining bank loans to invest in these “partnerships;”
(3) Repayment of capital investments disguised as “consultation fees;”
(4) Free and below market rent for offices near defendants’ hospitals;
(5) Expense-paid vacations and educational opportunities for physicians and medical technicians in a position to refer patients;
(6) Payments to physicians and medical technicians in positions to influence referrals based on the number or amount of patient-days used, or procedures scheduled;
(7) Creating lucrative financial arrangements with physician-owned entities which induce physicians to practice at defendants’ hospitals;'
(8) Making payments to physicians and physicians’ groups in the form of “rent” for vacant space, or space “rented” at an excessive rate;
(9) Forgiveness of the cost of above-standard leasehold improvements to space occupied by physicians in defendants’ Medical Office Budding;
(10) Income guarantees to physicians who agree to practice at the defendants’ hospitals.
Thompson contends that these alleged inducements and relationships constitute violations of 42 U.S.C. § 1395nn and 42 U.S.C. § 1320a-7b, which in turn leads to violations of the FCA when the defendants seek Medicare reimbursement. Additionally, Thompson alleges that the defendants have filed false certifications with Medicare which rendered all of the defendants’ claims under Medicare false or fraudulent. Thompson *402 also alleges that the defendants have filed claims for services which were not medically necessary. The defendants have fairly categorized Thompson’s claims into three groups: (1) the alleged violations of the Medicare referral laws rendered all of the Medicare claims submitted by the defendants to be false or fraudulent under the FCA; (2) the defendants’ submissions of specific forms to the government which contained false certifications qualified as fraudulent claims under the FCA; and (3) a certain percentage of the Medicare claims submitted by the defendants were for services that were not medically necessary. The defendants have filed motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) arguing, inter alia, that violations of the Medicare referrals laws do not support a claim under the FCA and Thompson has not alleged supportable claims that some of the services rendered were not medically necessary.
Rule 12(b)(6) Standard
Federal Rule of Civil Procedure 12(b) provides that cases can be dismissed for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Furthermore, if a motion asserting such a defense is presented along with matters outside the pleadings, the motion is to be treated as a motion for summary judgment under Rule 56, and the parties are to be given a reasonable opportunity to present all material pertinent to a motion for summary judgment. Fed.R.Civ.P. 12(b). Motions to dismiss for failure to state a claim are viewed with disfavor and are rarely granted.
Kaiser Alum. & Chem. Sales, Inc. v. Avondale Shipyards, Inc.,
FCA Claims Predicated on Violations of Medicare Laws
The basis of Thompson’s case is that the defendants have filed Medicare claims with the government in violation of the FCA. The relevant portion of the FCA provides that:
(a) Liability for certain acts.—Any person who—
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a» false or fraudulent claim paid or approved by the Government;
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person,----
31 U.S.C.A. § 3729 (West Supp.1996). In order to state a claim under the FCA, a plaintiff must show that (1) the ■ defendant presented to the government a claim for payment; (2) the claim was false or fraudulent; (3) the defendant knew the claim was false; and (4) the government suffered damages as a result of the false or fraudulent claim.
Young-Montenay, Inc. v. United States,
The Medicare anti-Mckbaek statute prohibits (1) the solicitation of renumeration in return for referrals of Medicare patients, and (2) the offer or payment of renumeration to induce such referrals. 42 U.S.C.A. § 1320a-7b (West 1991). While the anti-kickback statute and related regulations provide certain exceptions and “safe-harbors,” the applicability of these are not at issue in the instant motions to dismiss. See, e.g., 42 U.S.'C. § 1320a-7b(b)(3) (statutory exceptions); 42 C.F.R. § 1001.952 (safe harbor regulations).
The first Stark law was enacted by Congress in 1989 and became effective in 1992. The initial Stark law, commonly referred to as “Stark I,” prohibited doctors from referring Medicare patients to an entity for clinical laboratory services if the referring doctor had a non-exempt “financial relationship” with such entity. 42 U.S.C.A. § 1395nn (West 1992). The Stark laws define a “financial relationship” as a doctor’s (1) ownership or investment interests in the entity, or (2) a compensation arrangement with the entity, subject to certain statutory exceptions. 42 U.S.C.A. § 1395nn(a)(2) (West 1992 & Supp.1996). Under Stark I, financial relationships between doctors and hospitals were largely excluded from the scope of the statute. 42 U.S.C.A. §§ 1395nn(b)(4) (excluding financial arrangements with hospitals unrelated to clinical laboratory services) and (d)(3) (excluding ownership or investment interests in hospitals) (West 1992). In 1995, Congress amended the statute, which is now referred to as Stark II, to expand the scope of “designated health services” for which referrals are prohibited from clinical laboratory services to include, inter alia, hospital inpatient and outpatient services. 42 U.S.C.A. §§ 1395nn(a)(l) and (h)(6) (West Supp.1996). Since Thompson’s claims concern events starting in 1990, both Stark I and Stark II will be applicable in this action.
The main issue for resolution is whether Medicare claims filed for services which were rendered in violation of the anti-kickback statute and/or Stark laws are
a fortiori
false claims under the FCA. The defendants rely on
United States v. Shaw,
In
Shaw,
the defendant had previously been convicted for bribery in connection with applications for housing loans. In the civil action, the government contended that the bribery scheme corrupted the loan process and caused the loan applications to be false or fraudulent claims because the applications included the implicit false representation that they were free of corruption.
Shaw,
In Equifax, the defendant was a corporation in the business of collecting and provid *404 ing information for business decisions. Equifax, 557 F.2d at 459. At times, agencies of the United States contracted with Equifax to gather information on prospective employees. Id. In collecting such information, Equifax allegedly employed detective-like agencies, which was a violation of the Anti-Pinkerton Act. Id. The Fifth Circuit construed the claims against Equifax to be “that Equifax misrepresented its qualification for government employment and thus made a false claim.” Id. at 461.
In discussing the FCA, the Fifth Circuit recited that, “The False Claims Act Vas not designed to reach every kind of fraud practiced on the Government.’ ”
Id.
at 460 (quoting
United States v. McNinch,
The defendants contend that these two cases are consistent with their position that no FCA claim exists when the government is not required to pay more than it would have paid except for the fraud.
United States v. Azzarelli Constr. Co.,
The most recent case on this issue, however, is
United States ex rel. Pogue v. American Healthcorp, Inc.,
The
Ab-Tech
case involved an FCA claim against a plaintiff who had entered into a financial arrangement with a non-minority-owned enterprise without getting approval from the Small Business Administration (“SBA”), as the plaintiff was required to do as a participant in the SBA program. The government contended that the plaintiff had violated the FCA by submitting payment vouchers for services. The Federal Claims Court held that “[t]he payment vouchers represented an implied certification by [the plaintiff] of its continuing adherence to the requirements for participation in the [SBA] program.”
Ab-Tech,
[B]y deliberately withholding from SBA knowledge of the prohibited contract arrangement with [the unapproved entity], [the plaintiff] not only dishonored the terms of its agreement with that agency *405 but, more importantly, caused the Government to pay out funds in the mistaken belief that it was furthering the aims of the [SBA] program. In short, the Government was duped by [the plaintiffs] active concealment of a fact vital to the integrity of that program. The withholding of such information—information critical to the decision to pay—is the essence of a false claim.
Id.
The
United States v. Incorporated Village of Island Park
case involved an FCA claim against defendants who had violated Housing and Urban Development regulations by obtaining grant funds from the government and falsely stating that persons would not be excluded from the defendants’ program on the basis of race.
Island Park,
Thompson also relies upon the Fifth Circuit’s language in
Peterson
that “[a] claim is within the purview of the False Claims Act if it is grounded in fraud which might result in financial loss to the Government. Simply stated: ‘This remedial statute reaches beyond “claims” which might be legally enforced, to all fraudulent attempts to cause the Government to pay out sums of money.’ ”
Peterson,
Peterson is different, from the instant case, however, because the services rendered in Peterson were not services for which reimbursement from Medicare was allowed. In the instant ease, the services rendered were services covered by Medicare. 3 Therefore, Peterson clearly involved false Medicare claims, while the instant case does not.
In Equifax, the Fifth Circuit held that there is no indication that the FCA is intended to be used as a private enforcement device for the Anti-Pinkerton Act. By the same reasoning, the FCA would not be intended to be used as a private enforcement device for the Medicare Anti-Kickback statute and Stark laws. Despite the rash of district court decisions outside the Fifth Circuit that hold to the contrary, this Court must follow Fifth Circuit law that still requires that a claim itself be false or fraudulent in order for liability under the FCA to exist. Thompson has. not stated a claim unless he has sufficiently alleged that the defendants have submitted claims that are false or fraudulent (i.e., claims or claim amounts that the government would not have had to pay but for the fraud). Allegations that medical services were rendered in violation of Medicare anti-fraud statutes do not, by themselves, state a claim for relief under the FCA.
*406 FCA Claims Predicated on False Certifications
Thompson has asserted that the Health Care Financing Administration (“HCFA”) Form 2552s which were filed by the defendants contained fraudulent certifications. The HCFA Form 2552, which is filed by hospitals which participate in the Medicare program, contains a notice which states that:
Misrepresentation or falsification of any information contained in this cost report may be punishable by criminal, civil and administrative action, fine and/or imprisonment under federal law. Furthermore, if services identified in this report were provided or procured through the payment directly or indirectly of a kickback or were otherwise illegal, criminal, civil and administrative fines and/or imprisonment may result.
Thompson claims that the compliance certificate also requires the hospital administrator to execute a statement certifying that he is familiar with the laws and regulations regarding the provision of healthcare services and that the services identified in the cost report were provided in compliance with the anti-fraud statute. Thompson contends that the defendants filed false certifications which enabled them to participate in the Medicare program when they were not legally entitled to because of their violations of the Medicare anti-fraud statutes.
The defendants maintain that even if the certifications were false due to violations of the anti-kickback statute or Stark laws, there is not a violation of the FCA since the cost reports themselves are not false or fraudulent claims. In other words, the defendants believe that the filing of a false certification does not, standing alone, support a claim under the FCA—the false certification does not render the related claims false or fraudulent. The defendants cite a Florida district court case to support their position that a false statement is not coterminous with a false claim.
United States v. Hill,
Federal Rule of Civil Procedure 9(b)
In his Second Amended Complaint, Thompson has alleged that due to the kickbacks provided by the defendants and the prohibited financial relationships between the defendants and various doctors, claims have been submitted to the government for services that were not medieally necessary. This is the only allegation by Thompson which asserts that the defendants’ claims were actually false or fraudulent. The defendants have sought to have Thompson’s claims dismissed since the only support he has provided for this allegation is a statistical study which concluded that forty percent of the services rendered by the payor of kickbacks are for services which are not medically necessary. The defendants’ argument on this issue relates to the pleading requirements of Federal Rule of Civil Procedure 9(b).
Rule 9(b) imposes a heightened pleading requirement for allegations of fraud. The rule provides that averments of fraud shall be stated “with particularity.” Fed. R.Civ.P. 9(b). According to the Fifth Circuit, “[a]t a minimum, Rule 9(b) requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.”
Shushany v. Allwaste, Inc.,
*407
Because a determination of adequate “particularity” depends on the facts of each case, the Fifth Circuit “has never articulated the requirements of Rule 9(b) in great detail.”
Shushcmy,
With respect to Thompson’s contention that the defendants violated the FCA by filing claims for services which were not medically necessary, the Court finds that Thompson has not satisfied the requirements of Rule 9(b). Thompson has alleged that:
In reasonable probability, based upon statistical studies performed by the Govemment and others, a substantial percentage of the Medicare claims presented based on services rendered by physicians who
(1) had received financial inducements to refer patients to Defendants’ healthcare providers, or
(2) were in prohibited financial relationships with the Defendants’ healthcare providers,
were for services not medically necessary. Plaintiff alleges that, in reasonable probability, approximately 40% of such claims were for services not medically necessary.
Instrument # 29 at ¶ 160. The defendants argue that Thompson’s reliance on governmental statistics does not take the place of specific allegations regarding the submission of claims for services that were not medically necessary by the defendants in this case. Thompson has not met his pleading burden with respect to his allegation that the FCA was violated due to the submission of claims for services that were not medically necessary since he has not alleged that any specific physicians referred patients for such services or that any specific claims were filed for such services. Thompson did not assert that the defendants were submitting claims for services which were not medically necessary until the filing of his Second Amended Complaint, which was after the defendants filed their initial motions to dismiss. So while leave could be granted for Thompson to replead in compliance with Rule 9(b), the Court declines to do so since this allegation appears to be a last minute effort by Thompson to otherwise avoid dismissal of the case based on the statutory violations of Medicare. Consequently, Thompson’s claims based on the submission of Medicare claims for services which were not medically necessary should be dismissed.
Conclusion
In accordance with the foregoing, Thompson’s claims under the FCA based on violations of the Medicare anti-fraud statutes and the filing of false HCFA Form 2552s should be dismissed for failure to state a claim and Thompson’s claims based on the submission of claims for services which were not medically necessary should be dismissed for failure to state a claim since Thompson has failed to comply with the pleading requirements of Fed.R.Civ.P. 9(b). Accordingly, the Court hereby
ORDERS that the defendants’ motions to dismiss are GRANTED.
Notes
. The term
"qui tam
” is short for
“qui tam pro domino rege quam pro se imposo sequitur,"
which is interpreted as "who brings the action as well for the king as for himself."
United States ex rel. Kelly v. Boeing Co.,
. It appears from the record that the defendants in Pogue are in some way related to some of the defendants in the instant case.
. Thompson has alleged that some of the claims filed by the defendants were for services which were not medically necessary. As discussed infra, Thompson’s claim based on the services not being medically necessary are to be dismissed for failure to comply with the pleading requirements for fraud under Fed.R.Civ.P. 9(b). Consequently, Thompson’s case does not include allegations that the services rendered were not proper.