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United States v. Physicians

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

December 28, 2017

UNITED STATES OF AMERICA ex rel. YOUNG, et al., Plaintiffs,


          John Robert Blakey United States District Judge

         This qui tam action is brought by Allen Young, Sylviette Young, [1] Teresa Dedina, Vianka Calderon, and D'Ander Hooks-Czapansky (collectively, “Relators”) on behalf of the United States against both individuals and corporate entities for different forms of Medicare fraud. [200]. This Court previously dismissed a number of claims and parties from the case, including claims against Defendant Bestmed-Care Services, Ltd. [193]. Relators amended their Complaint [200], and Bestmed-Care moves to dismiss the remaining claim against it [207]. For the reasons explained below, Bestmed-Care's motion is granted.


         A brief procedural background follows below. This Court presumes familiarity with, and incorporates by reference, its opinion granting Bestmed-Care's prior motion to dismiss. [193].

         Relators first amended their complaint in 2016. [98]. In response, many of the numerous Defendants then involved in the case moved to dismiss. [105, 117, 132, 135, 138, 143, 146, 149, 163]. This Court granted the motions but permitted Relators to re-plead most of their claims. [193] at 23-24. Relators filed their second amended complaint in June 2017. [200].

         Relators' present complaint alleges violations of the False Claims Act (FCA), 18 U.S.C. § 3279 et seq. (Counts I, II, III, and V); and violations of the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b (Count IV). The sole claim against Bestmed-Care is Count IV, alleging AKS violations in the form of cross-referring Medicare patients with co-Defendants Suburban Home Physicians and Diana Jocelyn Gumila. [200] at 12-16.

         Bestmed-Care moves to dismiss Count IV for failing to state a claim upon which relief can be granted, and for failing to satisfy Federal Rule of Civil Procedure 9(b)'s heightened requirements for pleading fraud. [207, 208]. As discussed below, Bestmed-Care's motion is granted.

         II. Legal Standard

         Rule 9(b)'s heightened pleading requirements govern Relators' AKS claims. See United States v. A Plus Physicians Billing Serv., Inc., No. 13-cv-733, 2015 WL 8780548, at *2 (N.D. Ill.Dec. 15, 2015); see also United States v. Patel, 778 F.3d 607, 612 (7th Cir. 2015) (The AKS “is designed to prevent Medicare and Medicaid fraud.”). Rule 9(b) requires claimants alleging fraud to “state with particularity the circumstances constituting fraud.” Specifically, claimants “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). Although different cases require different levels of detail to satisfy Rule 9(b), Pirelli, 631 F.3d at 442, claimants must 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).

         To survive a motion to dismiss under Rule 12(b)(6), Relators' complaint must “state a claim to relief that is plausible on its face.” Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir. 2013). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Rule 12(b)(6) limits this Court's consideration to “allegations set forth in the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice.” Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).

         III. Analysis

         A. Particularity

         Relators allege that Bestmed-Care cross-referred Medicare-eligible patients with Suburban Home Physicians in 2011 and 2012, in violation of the AKS, 42 U.S.C. § 1320a-7b(b)(1)(A). [200] at 13-15. To bring their AKS claim, Relators “must allege, with the specificity required by Rule 9(b), ” that Bestmed-Care: (1) knowingly and willfully; (2) offered, paid, solicited, or received; (3) remuneration; (4) in return for purchasing or ordering any item or service for which payment may be made under a federal healthcare program. A Plus Physicians, 2015 WL 8780548, at *2. Here, that standard requires alleging that Bestmed-Care offered or received “remuneration” in return for referring Medicare patients, knowing that such conduct was wrongful. §§ 1320a-7b(b)(1)(A), (b)(2)(A); see Klaczak v. Consol. Med. Transp., 458 F.Supp.2d 622, 626-27, 675-76 (N.D. Ill. 2006).

         In support of their claim, Relators allege that: (1) from December 3, 2011 to April 5, 2012, Suburban Home Physicians referred eight Medicare patients to Bestmed-Care; (2) from April 17, 2012 to December 4, 2012, Bestmed-Care referred 11 Medicare patients to Suburban Home; (3) referring patients constitutes remuneration because of the patients' value in Medicare billings; and (4) the defendants knew their conduct was wrongful because the Stark Act, 42 U.S.C. § 1395nn(a)(1)(A), “prohibits ...

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