United States District Court, N.D. Oklahoma
UNITED STATES OF AMERICA, ex rel. SANDRA WAGNER, Plaintiff,
CARE PLUS HOME HEALTH CARE, INC.; PRASAD ITTY; and KUMAR GOVIND, Defendants.
OPINION AND ORDER
GREGORY K. FRIZZELL, JUDGE.
the court is the Motion to Dismiss for Failure to State a
Claim [Doc. #39] of defendants Care Plus Home Health Care,
Inc., Prasad Itty, and Kumar Govind (collectively,
“defendants”). For the reasons set forth herein,
the motion is granted in part and denied in part.
Care Plus Home Health Care, Inc. is a certified home health
agency purportedly owned and operated by individual
defendants Prasad Itty and Kumar Govind. Plaintiff Sandra
Wagner was formerly employed by Care Plus, first as an
independent contractor registered nurse from May 2006 to
January 2013, and then as the Office Director of Nursing from
January 2013 until her termination in February 2015.
employed as the Office Director of Nursing, Wagner alleges
that she “determined that Defendants' business
practices were designed to fraudulently maximize billing,
primarily to Medicare.” [Doc. #2, ¶ 28].
Specifically, Wagner asserts that she witnessed two types of
fraudulent conduct by defendants: (1) continuing to provide
services to patients who were not eligible for home health
services under the Medicare guidelines, and billing Medicare
for such unnecessary and/or ineligible services; and (2)
falsifying required documentation and medical records to
increase Medicare billings and avoid reimbursement of
Medicare overpayments. Wagner estimates that defendants'
alleged scheme has been ongoing since 2010, and resulted in
losses to the United States in the amount of approximately
$1, 490, 000 per year. [Doc. #2, ¶ 133].
initiated this qui tam action against defendants on
behalf of the United States pursuant to False Claims Act, 31
U.S.C. §§ 3729 et seq. The Complaint
asserts three causes of action: (1) presentation of false
claims in violation of 31 U.S.C. § 3729(a)(1)(A); (2)
making or using a false record or statement to cause a false
or fraudulent claim to be paid in violation of 31 U.S.C.
§ 3729(a)(1)(B); and (3) making or using a false record
or statement to avoid an obligation to pay (refund) money to
the government in violation of 31 U.S.C. §
3729(a)(1)(G). See [Doc. #2].
move to dismiss count I pursuant to Fed.R.Civ.P. 12(b)(6) and
all counts pursuant to Fed.R.Civ.P. 9(b). See
generally [Doc. #39].
Standard for Motion to Dismiss
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
a court must determine whether the plaintiff has stated a
claim upon which relief can be granted. A complaint must
contain “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The plausibility
requirement “does not impose a probability requirement
at the pleading stage; it simply calls for enough fact to
raise a reasonable expectation that discovery will reveal
evidence” of the conduct necessary to make out the
claim. Id. at 556. “[A] plaintiff's
obligation to provide the grounds of his entitlement to
relief requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Id. at 555 (quotations omitted).
The court “must determine whether the complaint
sufficiently alleges facts supporting all the elements
necessary to establish an entitlement to relief under the
legal theory proposed.” Lane v. Simon, 495
F.3d 1182, 1186 (10th Cir. 2007) (quoting Forest
Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir.
addition to Fed.R.Civ.P. 12(b)(6), because liability under
the False Claims Act requires a false or fraudulent claim,
the requirements of Fed.R.Civ.P. 9(b) must also be satisfied.
See U.S. ex rel. Sikkenga v. Regence Bluecross Blueshield
of Utah, 472 F.3d 702, 727 (10th Cir. 2006). Pursuant to
Fed.R.Civ.P. 9(b), “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances
constituting fraud or mistake. Malice, intent, knowledge, and
other conditions of a person's mind may be alleged
parties disagree as to the level of particularity required by
Fed.R.Civ.P. 9(b) relative to claims under the False Claims
Act. Citing Sikkenga, defendants argue that
Wagner's first two causes of action-presentation of false
claims in violation of 31 U.S.C. § 3729(a)(1)(A) and
making or using a false record or statement to cause a false
or fraudulent claim to be paid in violation of 31 U.S.C.
§ 3729(a)(1)(B)-require identification of specific false
claims actually submitted to the government. [Doc. #39, pp.
9-10; Doc. #44, pp. 1-3]. In opposition, Wagner cites a more
recent Tenth Circuit decision, U.S. ex rel. Lemmon v.
Envirocare of Utah, Inc., 614 F.3d 1163 (10th
Cir. 2010), for the proposition that billing details are not
always necessary to satisfy Fed.R.Civ.P. 9(b), as the Rule
requires only that FCA claimants allege “the specifics
of a fraudulent scheme and provide an adequate basis for a
reasonable inference that false claims were submitted as part
of that scheme.” [Doc. #42, p. 5 (emphasis omitted)
(quoting Lemmon, 614 F.3d at 1172)]. Thus, it is
necessary for the court to examine the Tenth Circuit's
discussion of Rule 9(b) in both Sikkenga and
Sikkenga, the court considered whether a relator had
adequately pled a FCA cause of action alleging that the
Medicare carrier for the State of Utah obtained unmerited
renewals of its contract with Medicare by fraudulently
manipulating its Contractor Performance Evaluation Program
scores, resulting in every claim made for administrative
costs under the contracts being fraudulent.
Sikkenga, 472 F.3d at 707. The district court
dismissed the FCA claim on the basis that the relator
“failed to identify particular claims that were
allegedly false under Federal Rule of Civil Procedure 9(b),
” and the relator appealed. Id. at 726.
reviewing the district court's dismissal of the FCA cause
of action, the Tenth Circuit first noted that “[Fed. R.
Civ. P. 9(b)'s] heightened pleading requirements apply to
actions under the FCA, ” and generally stated of the
rule's heightened requirements: “[a]t a minimum,
Rule 9(b) requires that a plaintiff set forth the ‘who,
what, when, where and how' of the alleged fraud.”
Id. at 726-27 (quoting Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)).
Thus, to satisfy the general pleading requirements of Rule
9(b), a pleading must “set forth the time, place, and
contents of the false representation, the identity of the
party making the false statements and the consequences
thereof.” Id. at 727 (quoting Koch v. Koch
Indus., 203 F.3d 1202, 1236 (10th Cir. 2000)).
to claims under the False Claims Act, the Tenth Circuit
articulated the Rule 9(b) pleading requirement as follows:
“Underlying schemes and other wrongful activities that
result in the submission of fraudulent claims are included in
the ‘circumstances constituting fraud and mistake'
that must be pled with particularity under Rule 9(b).”
United States ex rel. Karvelas v. Melrose-Wakefield
Hosp., 360 F.3d 220, 232 (1st Cir. 2004). However,
unless such pleadings are “linked to allegations,
stated with particularity, of the actual false claims
submitted to the government, ” id., they do
not meet the particularity requirements of Rule 9(b). We
agree with our sibling circuit, that:
Rule 9(b)'s directive that ‘the circumstances
constituting fraud and mistake shall be stated with
particularity' does not permit a False Claims Act
plaintiff merely to describe a private scheme in detail but
then to allege simply and without any stated reason for his
belief that claims requesting illegal payment must have been
submitted, were likely submitted or should have been
submitted to the Government. United States ex rel.
Clausen v. Lab. Corp. of Am., Inc., 290 F.3d
1301, 1311 (11th Cir. 2002).
Id. at 727 (alteration to citations). Thus, in
Sikkenga, the Tenth Circuit concluded:
We conclude that [relator's] complaint falls woefully
short of adequately pleading that false or fraudulent claims
were submitted by [defendant]. As stated by the First
Circuit, to satisfy Rule 9(b)'s requirements:
[A] relator must provide details that identify particular
false claims for payment that were submitted to the
government. In a case such as this, details concerning the
dates of the claims, the content of the forms or the bills
submitted, their identification numbers, the amount of money
charged to the government, the particular goods and services
for which the government was billed, the individuals involved
in the billing, and the length of time between the alleged
fraudulent practices and the submission of claims based on
those practices are the types of information that may help a
relator to state his or her claims with particularity. These
details do not constitute a checklist of mandatory
requirements that must be satisfied for each allegation
included in a complaint. However, like the Eleventh Circuit,
we believe that “some of this information, for at least
some of the claims must be pleaded in order to satisfy Rule
Id. at 727-28 (alteration in original) (quoting
Karvelas, 360 F.3d at 232-33 (footnotes omitted)).
Lemmon, the Tenth Circuit again reviewed a district
court's dismissal of False Claims Act causes of action on
the basis that the relator “failed to ‘[t]ie
those allegations to an identifiable, plausible ‘false
claim' within the meaning of the False Claims Act.”
Lemmon, 614 F.3d at 1167 (alteration in original).
To determine whether the relator's complaint satisfied
Rule 9(b), the court applied the following standard:
Rule 9(b) supplements 8(a) in setting forth the pleading
requirements under the FCA. Rule 9(b) states that “[i]n
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a
person's mind may be alleged generally.” Our
pre-Twombly cases required plaintiffs pursuing
claims under the FCA to plead the “who, what, when,
where and how of the alleged [claim].”
Sikkenga, 472 F.3d at 727. This language has been
read to require plaintiffs to identify the time, place,
content, and consequences of the fraudulent conduct. See,
e.g., Koch, 203 F.3d at 1236 (quoting Lawrence
Nat'l Bank v. Edmonds, 924 F.2d 176, 180 (10th Cir.
1991)). Though Twombly and Iqbal clarified
9(b)'s requirements, the Rule's purpose remains
unaltered. Namely, “to afford defendant fair notice of
plaintiff's claims and the factual ground upon which
[they] are based . . . .” Id. (quoting
Farlow v. Peat, Marwick, Mitchell & Co., 956
F.2d 982, 987 (10th Cir. 1992)); see also 5A Wright
& Miller § 1298 (collecting cases in support of the
proposition that “the most basic consideration for a
federal court in making a judgment as to the sufficiency of a
pleading for purposes of Rule 9(b) . . . is the determination
of how much detail is necessary to give adequate notice to an
adverse party and enable that party to prepare a responsive
pleading.”). Thus, claims under the FCA need
only show the specifics of a fraudulent scheme and provide an
adequate basis for a reasonable inference that false claims
were submitted as part of that scheme. See,
e.g., United States ex rel. Duxbury v. Ortho Biotech
Prods., 579 F.3d 13, 29 (1st Cir. 2009); United
States ex rel. Lusby v. Rolls-Royce Corp., 470 F.3d 849,
854-55 (7th Cir. 2009); United States ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009).
Lemmon, 614 F.3d at 1171-1172 (alterations in
original) (emphasis added).
court is not blind to the apparent tension observed by some
between Sikkenga and Lemmon. See U.S.
ex rel. Polukoff v. St. Mark's Hosp., No.
16-cv-00304-JNP-EFJ, 2017 WL 237615, at *5 (D. Utah Jan. 19,
2017) (“The standard adopted in Lemmon is not
compatible with some of the language found in
Sikkenga. . . . Thus, Lemmon tacitly
overruled language from Sikkenga requiring specific
allegations regarding the bills submitted to the
government.”); Brief for the United States as Amicus
Curiae at 10 and 14, U.S. ex rel. Nathan v. Takeda
Pharmaceuticals North America, Inc., 134 S.Ct. 1759 (2014)
(No. 12-1349), 2014 WL 709660 (although recognizing dispute
was not “clearly defined, ” noting “[t]here
is, however, at least some continuing uncertainty as to
whether a qui tam complaint satisfies Rule 9(b) if
it contains detailed allegations giving rise to a reasonable
inference that false claims were submitted to the government,
but does not identify specific requests for payment”).
the court is persuaded by decisions adopting a more nuanced
approach. See U.S. ex rel. Chorches v. Am. Med.
Response, 865 F.3d 71 (2d Cir. 2017); U.S. ex rel.
Prather v. Brookdale Senior Living Cmtys. Inc., 838 F.3d
750 (6th Cir. 2016). In Prather, citing
Sikkegna, the Sixth Circuit counted the Tenth
Circuit among those circuit courts applying a
“heightened pleading standard” to FCA claims
which generally required allegations of the actual submission
of a specific request for payment to the government.
Prather, 838 F.3d at 768-69 and 772. The Sixth
Circuit cited Lemmon, however, as evidence of the
Tenth Circuit's ...