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U.S. EX REL. GROSS v. AIDS RESEARCH ALLIANCE-CHICAGO

April 26, 2004.

SANFORD M. GROSS, Relator, BRINGS THIS ACTION ON BEHALF OF THE UNITED STATES OF AMERICA John Ashcroft, Attorney General of the United States, and Scott Lassar, United States Attorney for the Northern District of Illinois Plaintiffs,
v.
AIDS RESEARCH ALLIANCE-CHICAGO, ROBERTA LUSKIN-HAWK, THOMAS KLEIN, ROSS SLOTTEN, NEEL FRENCH, PATRICIA DIXON and CATHOLIC HEALTH PARTNERS Defendants



The opinion of the court was delivered by: WILLIAM J. HIBBLER, District Judge

MEMORANDUM OPINION AND ORDER

On November 13, 2002, relator, Sanford Gross, filed a qui tam action against Defendants, AIDS Research Alliance-Chicago, Roberta Luskin-Hawk, Thomas Klein, Ross Slotten, Neel French, Patricia Dixon, and Catholic Health Partners (collectively, "Defendants"), alleging that they violated the False Claims Act ("FCA"), 31 U.S.C. § 3729, et seq. Defendants moved to dismiss the complaint, and Gross subsequently withdrew it. On April 15, 2003, Gross filed an amended complaint, which Defendants again moved to dismiss. Upon Defendants' motion, this Court dismissed Gross's amended complaint without prejudice for failing to meet the pleading requirements of Federal Rule of Civil Procedure ("FRCP") 9(b). See United States ex rel Gross v. AIDS Research Alliance-Chicago, et al, No. 01 C 8182, 2003 WL 22508153 (N.D. Ill. Nov. 3, 2003) (hereinafter Gross 7). After obtaining leave from the Court, Gross filed a second amended complaint on November 24, 2003. Currently pending before this Court is Defendants' Motion to Dismiss Gross's Second Amended Complaint pursuant to Federal Rule of Civil Procedure 9(b), 12(b)(1), and 12(b)(6). For the reasons explained below, Defendants' motion is GRANTED.

I. FACTUAL BACKGROUND

  Beginning in December 1998, Gross participated as a patient in a year-long study jointly sponsored by the Food and Drug Administration ("FDA") and the National Institutes of Health ("NIH") to investigate the effectiveness of a combination of drugs on HIV patients ("the Study"). NIH awarded Defendant AIDS Research Alliance-Chicago ("AIDS Research Alliance") approximately $3,700,000 to conduct the Study. The remaining Defendants worked with AIDS Research Alliance in the administration and oversight of the Study. Defendants were required to adhere to a number of federal regulations, namely 21 C.F.R. § 50, 56, and 312, and 45 C.F.R. § 46 and 74, which are aimed at protecting the rights and safety of human subjects involved in clinical investigations and research. Gross alleges that Defendants did not comply with these regulations because they failed to monitor the administration of the Study, maintain adequate records, and refrain from scientific misconduct. In addition, Gross alleges that Defendants' failures were reckless and/or intentional.

  Defendant AIDS Research Alliance is a private, not-for-profit 501(c)(3) organization. AIDS Research Alliance was the site of the Study and admits, for the purposes of this motion, that it was responsible for submitting to the government certain written reports as part of its compliance with the research grant, such as Financial Service Requests and PHS Form 398.*fn1 Gross alleges that AIDS Research Alliance, in violation of Study regulations, failed to record or report the adverse effects Gross experienced as a participant in the Study from April 1999 to December 1999. Furthermore, Gross claims that AIDS Research Alliance mismanaged the Study by allowing Gross's insurance carrier to be billed for Study-related expenses, losing files of Study participants and records of the Study, and instructing Gross to vary the daily dose amount of the Study drug while never requesting Gross's daily dose records of the drug.

  Defendant Catholic Health Partners ("CHP") is a health network of hospitals, research institutes, and satellite medical offices. CHP acted as the Institutional Review Board for the Study and was responsible for preparing and submitting initial and continuing review records and consent forms to the government to certify of its compliance with the Study's regulations. Gross cites misconduct on the part of CHP and the other Defendants for allowing his viral load to increase unchecked during the Study and failing to inform him of the increase.

  Defendant Roberta Luskin-Hawk was a Principal Investigator of the Study and a member of the administrative staff of AIDS Research Alliance and the faculty of CHP. As Principal Investigator, Luskin-Hawk was responsible for submitting to the government a DAIDS Investigator of Record Agreement, PHS Form 398, PHS Form 2590, and FDA Form 1572.*fn2 However, Gross alleges that Luskin-Hawk falsely certified compliance with the Study's regulations when she omitted the adverse effects of the Study in her submissions to the government. Gross also claims that Luskin-Hawk mismanaged the Study by allowing Gross's insurance carrier to be billed for Study-related expenses and losing control of Study records.

  Defendants Thomas Klein, Ross Slotten, and Neel French were the participating physicians in the Study and responsible for submitting to the government a DAIDS Investigator of Record Agreement, FDA Form 1572, CPCRA Form 704, and Study records.*fn3 Gross alleges that these Defendants, like Luskin-Hawk, falsely certified compliance with the Study's regulations because they failed to include the adverse effects of the Study in their reports to the government. Gross claims that these Defendants also mismanaged the Study by losing files of Study participants, failing to keep track of Gross while he was a Study participant, and conducting incomplete examinations of Study participants.

  Defendant Patricia Dixon was the Research Clinician and Nurse Coordinator for the Study and responsible for submitting to the government CPCRA Form 704 and Study records.*fn4 Gross alleges that Dixon falsely certified compliance with the Study's regulations when she failed to record or report the adverse effects of the Study experienced by Gross. He alleges that Dixon also mismanaged the Study by allowing Gross's insurance carrier to be billed for Study-related expenses, losing files of Study participants, conducting incomplete examinations of Study participants, and instructing Gross to vary the daily dose amount of the Study drug.

  According to Gross, despite the aforementioned violations, Defendants certified their compliance with the applicable federal regulations. Therefore, Gross contends that Defendants' failure to comply with the regulations in addition to their false certification of compliance amount to a false claim under the FCA.

 II. PROCEDURAL BACKGROUND

  A. The Court's Rulings In Gross I

  Earlier in this litigation, this Court considered Defendants' Motion to Dismiss Gross's (first) Amended Complaint. The Court determined that Defendants were entitled to dismissal because Gross's complaint failed to meet the requisite level of specificity required under FRCP 9(b) to state a claim under the False Claims Act ("FCA"). Gross I, 2003 WL 22508153, at *2. The Court stated: "[i]n order to meet the requirements of FRCP 9(b), a plaintiff must plead the `who, what, when and where of the fraud." Id. (quoting United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003)). Accordingly, Gross was required to "plead `the identity of the person making the representation, the time, place and content of the misrepresentation and the method by which the misrepresentation was communicated.'" Gross I, 2003 WL 22508153, at* 1 (quoting Uni-Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992)).

  Upon review of his complaint, the Court found that Gross failed to meet these requirements in the following ways. First, in his Amended Complaint, Gross made the conclusory allegation that Defendants knowingly failed to submit required forms to the government in order to maintain their funding. The Court found these allegations deficient under the heightened pleading standards of FRCP 9(b) because Gross did not allege any specific facts concerning the dates Defendants submitted these forms. See Gross, 2003 WL 22508153, at *2. In addition, Gross insufficiently alleged that Defendants, in their administration of the Study, failed to comply with the governing regulations because Gross did not precisely detail what the failures were, who committed them, and on what date. Id. at *3. Gross also failed to plead sufficient facts to demonstrate that Defendants had a motive to deceive the government when they certified compliance with the Study's regulations. Id. The Court found Gross's conclusory allegation that Defendants knowingly certified compliance insufficient to meet the pleading requirements of FRCP 9(b). On these grounds, the Court dismissed Gross's FCA claims against the individual Defendants. In addition, the Court dismissed Gross's claim that Defendants conspired to submit a false claim, because he failed to plead even the contours of the alleged conspiracy. Therefore, the Court granted Defendants' Motion to Dismiss Gross's (first) Amended Complaint.

  The Court dismissed Gross's Amended Complaint without prejudice, and Gross subsequently obtained leave from the Court to file a second amended complaint against Defendants. In his Second Amended Complaint, Gross attempts to address the deficiencies ...


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