United States District Court, N.D. Illinois, Eastern Division
UNITED STATES OF AMERICA, and THE STATE OF ILLINOIS ex rel. DR. THOMAS PROSE, Plaintiffs,
MOLINA HEALTHCARE OF ILLINOIS, INC. and MOLINA HEALTHCARE, INC., Defendants.
MEMORANDUM OPINION AND ORDER
Virginia M. Kendall Judge.
Thomas Prose (“Relator”) filed this qui
tam lawsuit on behalf of the United States against
Defendants Molina Healthcare of Illinois, Inc.
(“MHIL”) and Molina Healthcare, Inc.
(“MHC”). (Dkt. 1). Relator's two-count
Complaint alleges that MHIL and MHC violated the False Claims
Act (“FCA”) (31 U.S.C. § 3729) and Illinois
False Claims Act (“ILFCA”) (740 ILCS 175/1,
et seq.) by knowingly submitting claims for payment
of services it did not provide. Both the United States and
the State of Illinois declined to intervene in Relator's
lawsuit. (Dkt. 9). MHIL and MHC moved to dismiss under
Federal Rules of Civil Procedure 8(a), 9(b), and 12(b)(6).
(Dkt. 29). Because Relator has failed to plead his FCA and
ILFCA claims with the required particularity, Defendants'
Motion to Dismiss is granted.
the Complaint's well-pleaded facts are taken as true and
any reasonable inferences are drawn in Relator's favor.
Hecker v. Deere & Co., 556 F.3d 575, 580 (7th
is a medical doctor that owns General Medicine P.C.
(“GM”) which provides specialized care for
Medicaid recipients living in Skilled Nursing Facilities
(“SNF”). (Dkt. 1, ¶ 22). GM employs
“board-certified physicians and advanced nurse
practitioners” (“SNFist”) to work in SNFs.
(Id. at ¶ 23). MHIL is a managed care
organization (“MCO”) that has previously
contracted with the Illinois Department of Healthcare and
Family Services (“IDHFS”) and the United States
Department of Health and Human Services for Medicare and
Medicaid Services to administer healthcare services to
Illinois Medicaid recipients. (Id. at ¶ 2).
MHIL is a subsidiary of MHC, a “multi-state healthcare
organization.” (Id. at ¶ 29). Finally,
the Center for Medicare and Medicaid Services
(“CMS”) is the federal agency that manages
Medicaid nationwide. (Id. at ¶ 51).
April 2014, MHIL entered into a risk contract with IDHFS for
capitated payments on a monthly “per-member”
basis. (Id. at ¶ 61). As part of that risk
contract, MHIL was required to provide IDHFS with Encounter
Data Reports (“EDRs”) that outlined Medicaid
covered services on both in-patient and out-patient claims.
(Id. at ¶ 62). The EDRs also included an
attestation that the reported data was accurate, truthful and
in accordance with applicable laws and contracts.
(Id. at ¶ 63). Further, the contract required
MHIL to submit a quarterly report to CMS on “estimated
costs, including MCO services and a quarterly expenditure
report.” (Id. at ¶ 64). To fulfill the
risk contract, MHIL subcontracted with GM to render SNFist
services on behalf of MHIL. (Id. at ¶ 2). MHIL
later breached its contract with GM when it stopped paying GM
after January 2015. (Id. at ¶ 42).
Specifically, MHIL breached the contract in order to
“eliminate the immediate, short-term costs associated
with the program.” (Id. at ¶ 43). GM
continued providing unpaid SNFist services until April 2015.
(Id. at ¶ 42).
parties resolved the breach of contract dispute through an
arbitration process and Relator was accordingly compensated.
(Dkt. 43, ¶ 6). However, during the arbitration process,
Relator learned from deposition testimony that MHIL did not
provide SNFist services in Illinois for at least two years.
(Dkt. 1, ¶ 3). Nonetheless, during those two years, MHIL
still received government payments. (Dkt. 1, ¶ 2).
MHIL's contract with IDHFS required MHIL to continually
provide SNFist services and to disclose any changes in
contracted providers to the federal government. (Id.
at ¶¶ 35-36). Relator brought this lawsuit, on
behalf of the federal and state government, to recover the
government's payments to MHIL. (Dkt. 29, ¶ 2).
state a claim upon which relief can be granted, a complaint
must contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). “Detailed factual
allegations” are not required, but the plaintiff must
allege facts that, when “accepted as true ...
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007)). In analyzing whether a complaint
has met this standard, the “reviewing court [must] draw
on its judicial experience and common sense.”
Iqbal, 556 U.S. at 679. Where the well-pleaded facts
do not permit the court to infer more than the mere
possibility of misconduct, the complaint has not shown that
the plaintiff is entitled to relief. (Id.).
FCA, as an anti-fraud statute, is subject to the heightened
pleading requirements of Rule 9(b) of the Federal Rules of
Civil Procedure. United States ex rel. Presser v. Acacia
Mental Health Clinic, LLC, 836 F.3d 770, 775 (7th Cir.
2016). Complaints sounding in fraud have an elevated pleading
standard: “In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud
or mistake.” Fed.R.Civ.P. 9(b). To meet the
particularity standard, a plaintiff must assert in their
complaint the “who, what, when, where, and how”
of the alleged fraud. United States ex rel. Lusby v.
Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009).
Plaintiffs need to “use some … means of
injecting precision and some measure of substantiation into
their allegations of fraud.” Pirelli Armstrong Tire
Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631
F.3d 436, 442 (7th Cir. 2011); see also U.S. ex rel.
Grenadyor v. Ukrainian Vill. Pharmacy, Inc., 772 F.3d
1102, 1106 (7th Cir. 2014) (The complaint must demonstrate
the “...[T]ime, place, and content of the
misrepresentation, and the method by which the
misrepresentation was communicated to the plaintiff.”).
individuals, as “relators” are allowed to
prosecute qui tam actions on behalf of the United
States government for fraud. 31 U.S.C. § 3730; see
State Farm Fire & Cas. Co. v. United States ex rel.
Rigsby, 137 S.Ct. 436, 440, (2016). A Relator who
successfully prosecutes a qui tam action is entitled
to receive a portion of the recovery. 31 U.S.C. §
3730(d)(1)-(2); see United States ex rel. Conner v.
Mahajan, 877 F.3d 264, 267 (7th Cir. 2017).
sufficiently demonstrate liability under the FCA, a Relator
must establish that (1) the defendant made a statement or
submitted a claim in order to receive money from the
government; (2) the statement or claim was false; and (3) the
defendant knew it was false. 31 U.S.C. § 3729(a).
However, Rule 9(b)'s requirement does not require a
plaintiff to produce actual copies of the allegedly
fraudulent documents or statements. Leveski v. ITT Educ.
Servs., 719 F.3d 818, 839 (7th Cir. 2013). Since the
IFCA mirrors the FCA, the same standard applies in analyzing
both Counts I and II. Grenadyor, 772 F.3d at 1109;
see also United States ex rel. Absher v. Momence
Meadows Nursing Ctr., Inc., 764 F.3d 699, 704 (7th Cir.
Relator fails to sufficiently plead his false claims counts
with particularity pursuant to Rule 9(b). See Borsellino
v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir.
2007). Relator asserts that MHIL and MHC knowingly violated
the FCA by not providing a SNFist program and failing to
report it to IDHFS or CMS. (Dkt. 1, ¶ 74). However, a
mere violation of a regulation is not sufficient to give rise
to a false claim. Grenadyor, 772 F.3d at 1107.
Relator points to arbitration deposition testimony from
GM's contract dispute as evidence of FCA liability. (Dkt.
1, ¶ 3). The testimony, however is void of any specific
falsified claim, and more significantly, Re-lator fails to
clearly point to any ...