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U.S. v. ARI SQUIRE AND ACCUCARE

December 12, 2005.

UNITED STATES OF AMERICA, Plaintiff,
v.
ARI SQUIRE and ACCUCARE, INC. Defendants.



The opinion of the court was delivered by: MATTHEW KENNELLY, District Judge

MEMORANDUM OPINION AND ORDER

The United States has sued Ari Squire and AccuCare, Inc. for violations of the False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq., payment by mistake, unjust enrichment, and common law fraud. AccuCare has been held in default. Squire has moved to dismiss the claims against him. For the reasons stated below, the Court grants Squire's motion in part and denies it in part.

Facts

  Medicare is a federal program that defrays the cost of certain health care services for the elderly. The program is administered by the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services.

  Medicare Part A pays for institutional care, including hospital, nursing home, and home health care. To implement this component of Medicare, the CMS enters agreements with health care providers, who provide health care services, and with fiscal intermediaries, who process and pay interim claims from health care providers and review and audit providers' annual cost reports. Compl. ¶¶ 6-9. During any given year, health care providers submit interim reimbursement claims to the fiscal intermediary, and at the end of the year, they submit an annual cost report detailing their total Medicare-related costs and overhead expenses. By comparing the interim reimbursement claims and the annual cost reports, the fiscal intermediary determines whether health care providers have been overpaid and owe a refund or whether they have been underpaid and are owed further reimbursement. Id. ¶¶ 11-12.

  To pay claims based on interim reimbursement claims or annual cost reports, the fiscal intermediary must process the payments. To facilitate this process, CMS had established Medicare bank accounts with commercial banks around the country. These accounts are used only to process Medicare payments, and they are governed by "tripartite agreements" between the banks, the fiscal intermediaries, and the United States. Pl. Resp. at 7.

  Once a claim has been approved, there are two mechanisms for payment, depending on whether the provider is paid electronically or by check. Under either system, the fiscal intermediary notifies the bank to make a payment to the provider for a particular amount. At the end of each business day, the bank adds up its payment requests and then issues a "draw-down request," reflecting the day's total payment requests, to the Federal Reserve Bank. The bank then draws down the Medicare trust funds held by the Federal Reserve Bank for the fiscal intermediary's payment requests for the day. Pl. Resp. at 7-8.

  The United States alleges that from January 1998 through 2001, Ari Squire was the president and chief executive officer of AccuCare, a health care provider under the Medicare program, and that Palmetto Government Benefits Administrators was AccuCare's fiscal intermediary. Compl. ¶¶ 8; 18-19. The government's claims against Squire and AccuCare are based on the 1998 and 1999 cost reports AccuCare filed with Palmetto and the 2000 and 2001 cost reports AccuCare allegedly failed to file with Palmetto. Squire is claimed to have signed the certifications on both the 1998 and 1999 cost reports. Id. ¶ 18.

  1. 1998 cost report

  The government alleges that Squire fraudulently sought and received reimbursement for several fraudulent expenses on AccuCare's 1998 Cost Report, including:
• salary expenses for ghost consultant MaryAnn Zaborsky, who was not an employee of AccuCare and never performed any work for AccuCare;
• excessive owner compensation for Ari Squire, for whom a full-time salary was charged to Medicare even though he also worked for seven other companies during 1998;
• excessive administrator compensation for Annette Heneghan, for whom a full-time salary was charged to Medicare even though she spent at least ten percent of her time working for AccuHome Health in 1998;
• improper related party expenses for Over-Time Premium Finance Company, a company owned by Squire's father Morris;
• legal expenses incurred by AccuHome Health and Diamond Health Systems, two other companies owned by Squire;
• charitable contributions to Ida Crown Jewish Academy in 1998;
• excessive staff wages in 1998 for staff, for whom full-time salaries were charged to Medicare even though some worked only part-time for AccuCare and others worked only for Squire's other businesses;
• the cost of Squire's leased vehicle, the entire cost of which was charged to Medicare even though Squire worked at three other companies in 1998.
Id. ¶¶ 22, 24, 26, 28, 30, 33, 35-36, 39-40. 2. 1999 cost report
  The government also alleges that Squire fraudulently sought and received reimbursement for several ineligible expenses on AccuCare's 1999 Cost Report, including:
• salary expenses for ghost consultant MaryAnn Zaborsky, who was not an employee of AccuCare and never performed any work for AccuCare;
• excessive owner compensation for Ari Squire, for whom a full-time salary was charged to Medicare even though he also worked for five other companies in 1999;
• excessive administrator compensation for Annette Heneghan, for whom a full-time salary was charged to Medicare even though she spent at least ten percent of her time working for AccuHome Health in 1999;
• improper related party expenses for Green Tree Industries, a company owned by Squire's father Morris;
• charitable contributions to Ida Crown Jewish Academy in 1999;
• excessive staff wages in 1999 for staff, for whom full-time salaries were charged to Medicare even though some worked only part-time for AccuCare and others worked only for Squire's other businesses;
• interest on unnecessary borrowing for AccuCare due to Squire's decision to divert money from AccuCare to his other business ventures;
• the cost of purchasing stock and/or patient lists from Nurses to You;
• late fees and penalties incurred in paying AccuCare bills late.
Id. ¶¶ 23, 25, 27, 29, 34, 37, 38, 41-42.

  3. 2000 and 2001 cost reports

  The government alleges that AccuCare received interim payments from Medicare at the outset of 2000 and 2001 but failed to file cost reports in 2000 and 2001 reconciling its interim payments for these years with the actual Medicare-related costs it had incurred. Id. ¶ 43.

  Discussion "Whether a complaint sufficiently states a claim turns on whether it meets the general rules of pleading a claim for relief." Brown v. Budz, 398 F.3d 904, 908 (7th Cir. 2005). In making this determination, the Court must take the factual allegations in the government's pleadings, including the complaint, briefs, and attached exhibits, as true, and we draw any reasonable inferences ...


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