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United States ex rel. Wagner v. Care Plus Home Health Care, Inc.

United States District Court, N.D. Oklahoma

May 14, 2018

UNITED STATES OF AMERICA, ex rel. SANDRA WAGNER, Plaintiff,
v.
CARE PLUS HOME HEALTH CARE, INC.; PRASAD ITTY; and KUMAR GOVIND, Defendants.

          OPINION AND ORDER

          GREGORY K. FRIZZELL, CHIEF JUDGE.

         Before the court is the Motion for Leave to Amend Relator's Complaint [Doc. #58] of plaintiff United States of America ex rel. Sandra Wagner. For the reasons discussed below, the motion is granted in part and denied in part.

         I. Factual Background

         Defendant Care Plus Home Health Care, Inc. is a certified home health agency 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.

         While 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. #60-1, ¶ 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. #60-1, ¶ 129].

         Wagner 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.[1] The Complaint asserted 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]. Defendants moved 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].

         In an order of December 11, 2017, this court granted defendants' motion to dismiss as to Wagner's claims for presentation of a false claim in violation of § 3729(a)(1)(A), making or using a false record or statement to cause a claim to be paid in violation of § 3729(a)(1)(B), and reverse fraud in violation of § 3729(a)(1)(G) premised on allegations that defendants knowingly brought on, and retained, ineligible patients. See [Doc. #56]. However, the court denied defendants' motion to dismiss with regard to Wagner's claims for presentation of a false claim in violation of § 3729(a)(1)(A), making or using a false record or statement to cause a claim to be paid in violation of § 3729(a)(1)(B), and reverse fraud in violation of § 3729(a)(1)(G), to the extent premised on allegations that defendants falsified OASIS information and medical records. [Id.] Wagner seeks leave to amend the Complaint to provide additional supportive factual allegations as to the claims that were dismissed. See [Doc. #58].

         II. Motion to Amend Standard

         Federal Rule of Civil Procedure 15(a) permits a party to amend its pleading once as a matter of course within twenty-one (21) days of service or, if the pleading is one to which a responsive pleading is required, within 21 days of service of the responsive pleading or motion. Fed.R.Civ.P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2).

         Although leave to amend should be freely given “when justice so requires, ” Fed.R.Civ.P. 15(a)(2), “denial of a motion to amend may be appropriate where there has been shown ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.'” Steadfast Ins. Co. v. Agric. Ins. Co., No. 05-CV-126-GKF-TLW, 2014 WL 1901175, at *4 (N.D. Okla. May 13, 2014) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). “‘[T]he grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.'” Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (alteration in original) (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971)).

         III. Overview of the False Claims Act

         “The FCA ‘covers all fraudulent attempts to cause the government to pay out sums of money.'” U.S. ex. rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir. 2008) (quoting United States ex rel. Boothe v. Sun Healthcare Grp., Inc., 496 F.3d 1169, 1172 (10th Cir. 2007) (quotation omitted in original)). The relevant sections of the FCA are as follows:

(a) Liability for certain acts -
(1) In general. - Subject to paragraph (2), any person who -
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
***
(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an ...

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