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United States ex rel. Ailabouni v. Advocate Christ Hospital and Medical Center

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

April 23, 2018

UNITED STATES OF AMERICA ex rel. LUAY D.F. AILABOUNI, M.D., STATE OF ILLINOIS ex rel. LUAY D.F. AILABOUNI, M.D., and LUAY D.F. AILABOUNI, M.D., individually, Plaintiffs,
v.
ADVOCATE CHRIST MEDICAL CENTER, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN ROBERT BLAKEY UNITED STATES DISTRICT JUDGE

         Relator/Plaintiff Luay Ailabouni filed this qui tam action under the False Claims Act (FCA), 31 U.S.C. § 3729, et seq., and 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 Advocate Christ Medical Center (ACMC); Advocate Medical Group (AMG); and William Hopkins, M.D. (together, the Advocate Defendants). Relator also sues Cardiothoracic & Vascular Surgical Associates, SC (CVSA); Dean Govostis, M.D.; Wade Kang, M.D.; and Sanjeev Pradhan, M.D. (together, the CVSA Defendants).

         Relator alleges that Defendants defrauded Medicare and Medicaid in various ways through their activities in a teaching hospital. Relator filed his second amended complaint in December 2017. [92]. Defendants moved to dismiss that complaint with prejudice. [97, 99]. For the reasons explained below, this Court partially grants and partially denies the motions.

         This Court presumes familiarity with, and incorporates by reference, its prior opinion dismissing Relator's first amended complaint [87]. Abbreviations in this opinion have the same meaning as in the prior opinion. Because Relator's foundational allegations (about, among other things, Medicare's relationship with teaching hospitals and the residency program operating at ACMC) remain unchanged from his first amended complaint, this opinion does not include a new background section. Likewise, this opinion does not repeat in detail the required elements of each statute at issue. Instead, this Court discusses Relator's new allegations against each individual defendant within the analysis section.

         I. Legal Standard

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must provide a “short and plain statement of the claim” showing that the pleader merits relief, Fed.R.Civ.P. 8(a)(2), so the defendant has “fair notice” of the claim “and the grounds upon which it rests, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint must also contain “sufficient factual matter” to state a facially plausible claim to relief-one that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). This plausibility standard “asks for more than a sheer possibility” that a defendant acted unlawfully. Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). Thus, “threadbare recitals of the elements of a cause of action” and mere conclusory statements “do not suffice.” Limestone Dev. Corp. v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir. 2008).

         In evaluating a complaint under Rule 12(b)(6), this Court accepts all well-pled allegations as true and draws all reasonable inferences in the plaintiff's favor. Iqbal, 556 U.S. at 678. This Court does not, however, accept a complaint's legal conclusions as true. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).

         FCA and IFCA claims must meet Rule 9(b)'s heightened pleading requirements. See 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 resembles a reporter's hook: a plaintiff “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). Ultimately, a plaintiff must always 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).

         II. Analysis

         The FCA and IFCA each prohibit: (1) knowingly presenting, or causing to be presented, a false or fraudulent claim to the government for payment; and (2) knowingly making or using, or causing to be made or used, a false record or statement material to a false or fraudulent claim to the government. See [87] at 10- 11 (citing 31 U.S.C. § 3729; 740 ILCS 175/3).

         Relator alleges violations of both prohibitions. Here, Defendants argue that Relator's new allegations fail to satisfy Rule 9(b)'s particularity requirements and fail to state claims under Rule 12(b)(6).

         A. The CVSA Physicians' Improper Exclusion of Residents

         Relator alleges that:

● Govostis (as the primary surgeon) and Kang (as the assistant surgeon) performed an “Endoleak” surgery on a Medicare recipient at ACMC in December 2010 and falsely reported that no qualified surgical resident was available during the procedure even though Relator, then a fourth-year General Surgery resident, observed the whole procedure. Relator alleges that he should have assisted because an Endoleak “is not a particularly complex operation, ” he previously assisted in more complex surgeries, and ...

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