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United States v. Thorek Hospital and Medical Center

April 25, 2008

UNITED STATES OF AMERICA AND STATE OF ILLINOIS EX REL. CHERRY GRANT, PLAINTIFF,
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

MEMORANDUM OPINION and ORDER

This matter is before the court on defendants Thorek Hospital and Medical Center ("Thorek Hospital") and SpecialCare Hospital Management Corporation's ("SpecialCare") motion to dismiss for failure to state a claim pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). For the following reasons, the motion to dismiss plaintiff's second amended complaint is granted with prejudice.

BACKGROUND

This is a qui tam action against defendants Thorek Hospital and SpecialCare under the False Claims Act ("FCA"), 31 U.S.C. § 3729, and the Illinois Whistleblower Reward and Protection Act ("IWRPA"), 740 ILCS § 175/3(a), claiming that defendants engaged in various acts designed to defraud both the United States Government and State of Illinois by submitting fraudulent claims for reimbursements for hospitalization and other services. Plaintiff-relator Cherry 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 met certain requirements.

This is the second motion to dismiss that defendants have filed in this case. This court granted defendants' first motions to dismiss on August 29, 2007, finding that Grant's first amended complaint was deficient under Federal Rules 9(b) and 12(b)(6) because she had failed to plead fraud with the requisite particularity and failed to plead facts sufficient to state causes of action under either the FCA or the IWRPA. See United States ex rel. Grant v. Thorek Hospital and Medical Center, 2007 WL 2484333 (N.D. Ill. Aug. 29, 2007). Specifically, we held that Grant's failure to allege any details regarding any false claims actually submitted to either the United States Government or the State of Illinois was fatal to her FCA and IWRPA causes of action for the submission of false claims. In addition, we held that Grant also failed to allege facts sufficient to state any claim for retaliation. Defendants' motions to dismiss the first amended complaint were granted without prejudice, and Grant was given leave to file an amended complaint consistent with the court's Opinion.

On October 3, 2007, Grant filed a second amended complaint, and defendants again have filed a motion to dismiss that complaint. After reviewing the second amended complaint and the briefing submitted in support of and in opposition to defendants' motion to dismiss, it now is clear that Grant cannot correct the deficiencies in her claims. Despite guidance from this court in our previous Opinion dismissing the first amended complaint, Grant again has failed to adequately plead any cause of action for the submission false claims or retaliation under the FCA or the IWRPA. Therefore, the second amended complaint should be dismissed with prejudice pursuant to Federal Rules 9(b) and 12(b)(6).

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 (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).

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. Counts I and II: False Claims Act and Illinois Whistleblower Reward and Protection Act

In order to plead a cause of action for the submission of false claims under the FCA and IWRPA, Grant must plead with particularity the details of actual claims submitted to the government by Thorek in connection with the alleged fraudulent practices. As set forth in our previous Opinion, a relator who brings a suit under these statutes must at the very least provide some representative examples of the alleged fraudulent activity:

[t]he whole point of relator's case is that defendants submitted [fraudulent] Medicare claims . . . . But which patients? And which claims? And which claims or other documents show defendants falsely certified their compliance with federal law? These questions are absolutely essential to relator's claim of fraud.

Thorek, 2007 WL 2484333, at *2(quoting Petersen v. Community General Hosp., No. 01 C 50356, 2003 WL 262515, at *2-3 (N.D. Ill. Feb. 7, 2003)). Also discussed in our previous Opinion is a case from the First Circuit Court of Appeals which provides insight into what courts should look for: details concerning the dates of the claims, the content of the forms or the bills submitted, their identification numbers, the amount of money charged to the government, the particular goods and services for which the government was billed, the individuals involved ...


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