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United State v. America at Home Healthcare and Nursing Services, Ltd.

United States District Court, N.D. Illinois, Eastern Division

September 18, 2017

UNITED STATES OF AMERICA and the STATE OF ILLINOIS ex rel. AMY O’DONNELL, Relator/Plaintiff,
v.
AMERICA AT HOME HEALTHCARE AND NURSING SERVICES, LTD., d/b/a ANGELS AT HOME HEALTHCARE, Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN ROBERT BLAKEY UNITED STATES DISTRICT JUDGE

         Relator/Plaintiff Amy O’Donnell filed this qui tam action under the False Claims Act (FCA), 31 U.S.C. § 3729, et seq., and its Illinois counterpart, the Illinois False Claims Act (IFCA), 740 ILCS § 175/1, et seq., on behalf of the United States and the State of Illinois. Relator sues corporate defendants America at Home Healthcare and Nursing Services, Ltd. d/b/a Angels at Home Healthcare (AAH), and AAH’s purported successor, Great Lakes Acquisition Corp. d/b/a Great Lakes Caring. Relator also sues former AAH employees, including Kim Richards. Relator alleges that, starting in 2006, AAH and its former employees billed Medicare and Medicaid fraudulently, and that Great Lakes continued AAH’s fraudulent practices after buying AAH in early 2015.

         A brief procedural background follows below. The Court presumes familiarity with its opinion granting Richards’ prior motion to dismiss. Dkt. 94.

         Relator amended her complaint for the first time in 2016. Dkt. 22. In response to Relator’s amended complaint, all defendants moved to dismiss. Dkt. 55; Dkt. 61. Pursuant to the Court’s standing order on motions to dismiss, the Court advised Relator that she could either amend her complaint for the second time or respond to the motions. Dkt. 54. Relator chose to amend again, so the Court denied the motions without prejudice. Dkt. 68. After Relator filed her second amended complaint in early 2017, the defendants again moved to dismiss. Dkt. 69; Dkt. 76; Dkt. 79. The Court dismissed Richards from the case, but also let Relator replead. Dkt. 94 at 22, 40.

         Relator filed her third amended complaint this July. Dkt. 99. Within days, Richards moved to dismiss the case, arguing that Relator’s allegations failed to satisfy Federal Rule of Civil Procedure 9(b)’s heightened requirements for pleading fraud. Dkt. 101. AAH, Great Lakes, and the other employee defendants later filed a motion to dismiss on similar grounds, which Richards joined. Dkt. 113.

         This Memorandum Opinion and Order addresses only Richards’ motion to dismiss, which is granted with prejudice.

         I. Legal Standard

         Because the FCA and IFCA are anti-fraud statutes, claims under both must meet Rule 9(b)’s heightened pleading requirements. United States ex rel. Gross v. AIDS Research Alliance–Chi., 415 F.3d 601, 604 (7th Cir. 2005). Rule 9(b) demands that claimants alleging fraud “state with particularity the circumstances constituting fraud.” Particularity is analogous to a reporter’s hook: “plaintiff[s] ordinarily must describe the who, what, when, where, and how of the fraud-the first paragraph of any newspaper story.” Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441–42 (7th Cir. 2011) (internal quotation marks omitted). For example, if the alleged fraudulent scheme involves misrepresentation, the plaintiff must state who made “the misrepresentation, the time, place, and content of the misrepresentation, and [how] the misrepresentation was communicated.” United States ex rel. Grenadyor v. Ukrainian Vill. Pharmacy, Inc., 772 F.3d 1102, 1106 (7th Cir. 2014).

         Of course, different cases require different levels of detail for a complaint to satisfy Rule 9(b). Pirelli, 631 F.3d at 442. A plaintiff must, however, inject “precision and some measure of substantiation” into fraud allegations. United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 776 (7th Cir. 2016) (internal quotation marks omitted). As this Court said before, Rule 9(b) is also more significant in cases with multiple defendants. Dkt. 94 at 9–10. Because fair notice is perhaps the “most basic consideration underlying Rule 9(b), the plaintiff who pleads fraud must reasonably notify the defendants of their purported role in the scheme.” Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777–78 (7th Cir. 1994) (citations and internal quotation marks omitted).

         II. Analysis

         A. Particularity

         The Court previously dismissed Richards because Relator’s “sweeping allegations” against her lacked Rule 9(b) particularity. Dkt. 94 at 22. Richards argues that the third amended complaint similarly lacks Rule 9(b) particularity. Dkt. 107. The Court agrees that Relator’s latest effort is equally deficient under Rule 9(b).

         Relator added only two new allegations that specifically address Richards:

• “Defendants AAH Healthcare, [Rachael] Fitzpatrick, and Richards also provided bonuses to marketers such as Defendant [Tami] Shemanske for each certification and recertification of patients for home health services, for the express purpose of incentivizing illegal certifications and recertifications of ineligible ...

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