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United States v. Thorek Hospital and Medical Center

August 29, 2007

UNITED STATES OF AMERICA AND STATE OF ILLINOIS EX REL. CHERRY GRANT, PLAINTIFFS,
v.
THOREK HOSPITAL AND MEDICAL CENTER AND SPECIALCARE HOSPITAL MANAGEMENT CORPORATION DEFENDANTS.



The opinion of the court was delivered by: Wayne R. Andersen District Judge

INTRODUCTION

This matter is before the court on motions to dismiss by defendants Thorek Hospital and Medical Center ("Thorek Hospital") and SpecialCare Hospital Management Corporation ("SpecialCare") for failure to state a claim pursuant to FED.R.CIV.P. 12(b)(6). For the following reasons, the motions to dismiss plaintiff's complaint are granted.

BACKGROUND

Plaintiff-relator Cherry Grant brought this qui tam action against defendants Thorek Hospital and SpecialCare under the False Claims Act ("FCA") and Illinois Whistleblower Reward Protection Act ("IWRPA"), claiming that defendants engaged in various acts designed to defraud both the United States Government and State of Illinois by securing false federal and state reimbursements for hospitalization and other services. Grant claims to have witnessed this fraudulent activity while she was employed by Thorek Hospital as a charge nurse. During the course of Grant's employment, Thorek Hospital contracted with SpecialCare, a private corporation, to provide drug treatment, therapy, and "detox" services for patients who meet certain requirements.

Grant claims that Thorek Hospital and SpecialCare intentionally admitted patients in the program that did not meet admittance requirements. She also claims that doctors falsely reported that they had treated patients whom they actually did not treat. Finally, Grant claims that Thorek Hospital and SpecialCare falsified forms and encouraged drug users to "raise their scores" by taking additional drugs. This alleged conduct resulted in fraudulent reimbursements, funding, and expenditures by Medicare and Medicaid to Thorek Hospital and SpecialCare.

When Grant became aware of what she perceived as fraudulent activities, she refused to assist doctors when asked to participate. For example, in October 2002, Grant alleges that a doctor at Thorek Hospital asked an employee to falsify medical information. Grant claims to have told the doctor that the employee would not comply. In December 2002, Grant refused to "fudge documents" when instructed to do so by another doctor. The doctor responded to her refusal by saying, "then nobody will have jobs."

On December 29, 2002, Grant was fired from Thorek Hospital "without explanation." Subsequently, she brought this five count suit against defendants Thorek Hospital and SpecialCare. Count I alleges violations of the FCA against Thorek Hospital and SpecialCare. Count II alleges violations of the IWRPA against Thorek Hospital and SpecialCare. Count III alleges unlawful retaliation under the FCA against Thorek Hospital. Count IV alleges unlawful retaliation under the IWRPA against Thorek Hospital, and count V alleges retaliatory discharge in violation of Illinois law against Thorek Hospital. Defendants have filed motions to dismiss all five counts.

DISCUSSION

When resolving a motion to dismiss, we view the allegations of the complaint to be true, and consider all well-pleaded facts and any reasonable inferences from the facts in the light most favorable to the plaintiff. Sherwin Manor Nursing Center, Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir. 1994). Dismissal is proper only if it is clear from the complaint that no set of facts consistent with its allegations would entitle the plaintiff to relief. Hishon v. King & Spalding, 467 U.S. 69, 81 L.Ed. 2d 59, 104 S.Ct. 2229 (1984).

Federal Rule of Civil Procedure 9(b) requires that "in all averments of fraud or mistake, the circumstances of fraud or mistake shall be stated with particularity."

FED.R.CIV.P. 9(b). Rule 9(b) was developed to promote three major purposes: (1) protecting a defendant's reputation; (2) minimizing 'strike suits' and 'fishing expeditions'; and (3) placing the defendant on notice of the claim. United States and Illinois ex. rel. Bantsolas v. Superior Air and Ground Ambulance Transport, Inc., No. 01 C 6168, 2004 WL 609793, at *2 (N.D. Ill., Mar. 22, 2004), quoting Jepson, Inc. v. Makita Corp., 34 F.3d 1321, 1327 (7th Cir. 1994). Generally speaking, this standard of particularity requires that a plaintiff specify the "who, what, when, where, and how" of the alleged fraud. GE Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1078 (7th Cir. 1997). Simple conclusory allegations of fraud do not satisfy the Rule 9(b) standard.

United States ex rel. Gross v. Aids Research Alliance-Chicago, 415 F.3d 601, 604-05 (7th Cir. 2005).

A. False Claims Act and Illinois Whistleblower Reward ...


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