United States District Court, N.D. Illinois
The opinion of the court was delivered by: PHILIP REINHARD, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Xandra Jarl, brings this action for damages and
other relief pursuant to the False Claims Act, 31 U.S.C. 3729 et.
seq. against defendant, Apria Healthcare (actually Apria
Healthcare, Inc. according to defendant). Plaintiff alleges
defendant "knowingly submitt[ed] false claims" for Medicare
payments to the United States Government and "discriminated
against plaintiff' by demoting her for "repeatedly inform[ing]
other employees of the defendant's "fraudulent billing
practices". Defendant moves to dismiss Counts I and III for
failure to state a claim on which relief can be granted.
Fed.R.Civ. P. 9 (b) and 12(b) (6). Plaintiff, in her response to the
motion to dismiss, concedes that Count III should be dismissed.
She also requests, alternatively, for leave to file an amended
complaint should Count I be dismissed. The court takes the facts
from plaintiff's complaint and all reasonable inferences are
drawn in plaintiff's favor.
Plaintiff was employed by defendant at the Chicagoland Billing
Center located in Machesney Park, Illinois, beginning about July
2000. About June 2003, plaintiff became aware that defendant was
billing "various insurance companies, including Medicaid and
Medicare" without the assignment of benefits (forms) being signed
(by patients). Defendant's computer records show that signed
assignment of benefits were received. Defendant received payment
for billing where the assignment of benefits had not been signed.
Plaintiff repeatedly informed ten of defendant's employees in
various offices, some of whom held management positions, of the
billing practices. On one occasion, an employee told plaintiff
not to worry about the missing assignment of benefits unless the
company was audited. Plaintiff was demoted to an entry level
position about September 23, 2003. Plaintiff suffered a dramatic
pay decrease and consequently suffered clinical depression and
anxiety. Plaintiff took a short-term disability leave. At the
expiration of the short-term leave, intolerable working
conditions forced plaintiff's resignation.
Plaintiff claims that defendant submitted improper bills for
payment to the United States Government in violation of the
Federal Claims Act which states any person who "knowingly
presents, or causes to be presented, to an officer or employee of
the United States Government . . . a false or fraudulent claim
for payment of approval" (31 U.S.C. 3729(a)(1)) and any person
who "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" (31 U.S.C. 3729(a)(2)), is liable to
the United States Government for a civil penalty
(31 U.S.C. 3729(a)). Plaintiff further claims that defendant's action to
demote plaintiff violated 31 U.S.C. 3730(h) which states that
"[a]ny employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated
against in the terms and conditions of employment by his or her
employer because of lawful acts done by the employee on behalf of
the employee or others in furtherance of an action under this
section . . . shall be entitled to all relief necessary to make
the employee whole."
Fed. Rule Civ. P. 9(b) applies to False Claim Act fraud claims;
therefore, the plaintiff's complaint must plead fraud with
particularity, alleging in the complaint the "who, what, when
where and how". See, e.g., U.S. ex. rel. Garst v.
Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003);
U.S. ex. rel. Robinson v. Northrop Corp., 149 F.R.D. 142 (N.D.
Ill. 1993). Plaintiff fails to meet this standard.
Plaintiff's identification of who is alleged to be perpetrating
the fraud is not adequate. Plaintiff alleges that "employees of
defendant's St. Louis facilitate (sic) were manipulating
defendant's computer system". Plaintiff does not in any way
identify other employees who were allegedly engaged in fraudulent
activities. A plaintiff pleading fraud must "reasonably notify
the defendants of their purported role in the scheme." Midwest
Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1020 (7th Cir.
1992). "The identity and/or role of the individual employee
involved in the alleged fraud must be specified in the complaint,
since such information is within the relator's knowledge."
Northrop Corp., 149 F.R.D. at 145. Plaintiff may not know the
identity of the employees in the St. Louis facility, but
plaintiff must be able to identify the role of the employees
alleged to have perpetrated fraud. Where the Plaintiff does
identify employees, they are employees she informed about the
billing practices. Plaintiff does not allege these employees
engaged in fraud. Plaintiff's response to defendant's motion to
dismiss states that naming a "sliver of employees in but one
facility" is sufficient to identify the alleged perpetrators of
fraud. The court disagrees.
With respect to what the allegedly fraudulent conduct was,
plaintiff states that signed assignment of benefits (forms) "are
required for proper billing." Plaintiff states that she knows of
"65 individuals whose insurance companies were improperly billed"
and alleges upon information and belief that "there are hundreds,
if not thousands more instances of improper billing." Plaintiff
further alleges upon information and belief that employees of
defendant's St. Louis facility manipulated defendant's computer
system "so that the computer showed that signed [assignment of
benefits] had been received and that billing would be proper."
Pleadings based on information and belief may be acceptable if
the complaint adduces "specific facts supporting a strong
inference of fraud" or the conclusion that a fraud has been
perpetrated is a reasonable inference from the specific facts
pleaded. See Northrup Corp. at 146, citing U.S. ex rel. Stinson,
Lyons, Gerlin & Bustamante v. Blue Cross, 755 F.Supp. 1055, 1052
(S.D.Ga. 1990). Plaintiff's allegation of what the fraudulent
conduct was fails because plaintiff did not plead sufficient
facts to identify the circumstances of the fraud. Because the
facts pleaded are not specific, the facts do not support a strong
inference of fraud which is required for pleadings based on
information and belief. While the plaintiff is not required to
plead a wealth of evidentiary detail, the court notes that
plaintiff's response to defendant's motion to dismiss states that
plaintiff "can and will connect her allegations of fraudulent
billing specifically to Medicare and Medicaid patients." This
statement indicates that plaintiff may have sufficient facts to
properly plead the alleged fraud.
Plaintiff identifies the time at which she became aware of the
alleged fraud as "during approximately June of 2003", but
plaintiff does not allege when the alleged fraud occurred. While
"[r]ule 9(b) does not require a plaintiff to provide precise
dates and times, down to the nanosecond. . . . [s]imply saying
that conduct occurred before or after a specified date is not
enough." ABC-NACO, Inc. v. DeRuyter, 1999 U.S. Dist. LEXIS 11025
(N.D. Ill. 1999). The court notes that plaintiff's response to
defendant's motion to dismiss states that defendant will learn of
exact dates through plaintiff's disclosures and the discovery
process. Where plaintiff is aware of exact dates, or at least
more precise dates, plaintiff should provide such dates in her
As to where the allegedly fraudulent activity occurred, the
plaintiff's identification of the "St. Louis facilitate" (sic) is
adequate for allegations concerning activity at that facility.
Plaintiff's reliance on Kirksey v. R.J. Reynolds Tobacco Co.,
168 F.3d 1039 (7th Cir. 1999) for pleading requirements is
misplaced. Kirksey does not address pleading requirements
relative to Rule 9(b). Plaintiff is correct that she need only
plead a short statement, in plain English, of the legal claim;
however, such statement must contain facts sufficient to support
her claim of fraud.
Plaintiff also fails to state a claim upon which relief can be
granted. Plaintiff alleges defendant violated the Federal Claims
Act, 31 U.S.C. § 3729(a)(1) and (2). Plaintiff does not allege
defendant knowingly presented a false or fraudulent claim for
payment or approval or that defendant made, used or caused to be
made or used a false record or statement to get a false or
fraudulent claim paid or approved by the Government. Plaintiff
concludes that defendant submitted "improper" bills to Medicare
and Medicaid. Plaintiff does not even plead that conduct alleged
gives rise to liability under the Federal Claims Act.
For the foregoing reasons, the court grants defendant's motion
to dismiss Count I and Count III. Plaintiff is given 21 days to
file an amended complaint as to Count I.
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