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United States Ex Rel. Soulias v. Northwestern University

United States District Court, Seventh Circuit

June 27, 2013

United States of America ex rel., Audra Soulias, Plaintiff,
Northwestern University and Northwestern Memorial Hospital, Defendants.


THOMAS M. DURKIN, District Judge.

Plaintiff-Relator Audra Soulias brings this qui tam action on behalf of the United States against Northwestern Memorial Hospital ("NMH"). Soulias alleges that NMH violated the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., by double billing the federal government for services provided to patients in research trials. Soulias also asserts a state law retaliatory discharge claim against Northwestern University (the "University"). Before the Court is Defendants' motion to dismiss Soulias's First Amended Complaint. R. 29. For the reasons set forth below, the Court grants Defendants' motion to dismiss. However, the Court will allow Soulias one final opportunity to adequately plead her claims.


Soulias filed her original complaint under seal on November 9, 2010. Her original complaint contained sixteen paragraphs and alleged a single FCA claim against both NMH and the University, on the theory that NMH bills Medicare and that the University allegedly owned NMH. In wholly conclusory terms, Soulias alleged that NMH improperly billed Medicare and federal grants for the same care for the same patients. She alleged that NMH billed research visits to Medicare, received reimbursement, and then billed the federal grant sponsoring the research trial for those same services at the end of the year. Although her complaint was not entirely clear, Soulias's FCA claim appeared to be based on 31 U.S.C. § 3729(a)(1), which imposes civil liability on any person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval."

After the government investigated and declined to intervene, the original complaint was unsealed in July 2012. At an October 31, 2012 status hearing, NMH's counsel represented that the University does not own or operate NMH, as Soulias had alleged. Soulias's counsel therefore agreed to amend the complaint to drop the University as a defendant. The Court set a November 14, 2012 deadline for Soulias to file her amended complaint. Soulias failed to do so. Thus, on December 12, 2012, the Court set a briefing schedule for a motion to dismiss.

On December 14, 2012, Defendants filed their motion to dismiss. In their motion, Defendants asked the Court to take judicial notice that NMH is not owned or operated by the University. Defendants also argued that Soulias failed to plead her FCA claim with particularity and did not identify any specific false claims. Defendants argued that pleading with particularity is especially important here because it is legal for NMH to bill Medicare for certain services associated with research trials beyond the cost of the trial itself, particularly (i) routine, conventional care performed with a research trial and (ii) services to treat medical complications resulting from a research trial. E.g., Medicare National Coverage Determination Manual § 310.1; Medicare Claims Processing Manual, Ch. 32, § 69.1. As a result, a mere allegation that NMH submits some bills to Medicare for patients enrolled in research trials is not necessarily indicative of double billing.

Soulias's response was due January 14, 2013. Again, Soulias failed to respond in any way. Nonetheless, on February 6, 2013, the Court allowed Soulias leave to file an amended complaint on or before February 13, 2013. The Court cautioned Soulias that she was on notice that "what you may be alleging may be something that is entirely proper" and reminded counsel of his obligation to appropriately investigate the claims before filing a complaint. 2/6/13 Tr. at 10.

Soulias filed her First Amended Complaint on February 14, 2013 (one day after the deadline). In her complaint, Soulias dropped her FCA claim against the University, but kept the University in the case by adding a new state law retaliatory discharge claim. Soulias also added a few additional paragraphs to support her FCA claim. Soulias still does not identify any specific false claims submitted by NMH. Instead, she alleges that there have been "many, many instances" of double billing, and then provides a hypothetical example:

a) [The University] applies for a grant to do, for instance, kidney research. A grant is awarded of $2, 000, 000.
b) The medical services for the grant are conducted by NMH.
c) A patient with a kidney problem, who is one of the patients in the study being funded by the Federal Government, goes to NMH to receive treatment.
d) Under the agreement with the Federal Government, the treatment for the patient should be billed to the research grant. However, due to the billing practices of Defendant NMH, in many instances, the patients' [sic] own private insurance, or Medicare, is billed for treatment that is also paid for by the grant.

First Am. Compl. ¶¶ 10, 15. Soulias also alleges that she complained to NMH about double billing in May 2009 and March 2010 and that certain NMH personnel acknowledged the ...

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