United States District Court, M.D. Tennessee, Nashville Division
TODD J. CAMPBELL, District Judge.
Pending before the Court are Motions to Dismiss filed by Defendant Northwest Hospital (Docket No. 55) and Defendant Community Health Systems, Inc. (Docket No. 57). For the reasons stated herein, Defendant Northwest Hospital's Motion to Dismiss is GRANTED in part and DENIED in part, and Defendant Community Health Systems' Motion to Dismiss is GRANTED.
Plaintiff (also identified as "Relator"), a former employee of Northwest Hospital, brought this action pursuant to the False Claims Act ("FCA"), based upon alleged acts and omissions by Defendants Northwest Hospital and Community Health Systems, Inc. Plaintiff alleges that Defendant Northwest Hospital failed properly to document the number of minutes of outpatient therapy services provided to Medicare patients. Plaintiff contends that this failure resulted in Defendants over-billing Medicare. Plaintiff also asserts that Defendant Northwest Hospital told its employees to retroactively document minutes on patients' charts which Plaintiff claims to violate the FCA. Plaintiff asserts that Defendant Community Health Systems ("CHS"), Northwest Hospital's parent company, knew of and directed this scheme to defraud Medicare. Plaintiff also alleges that she was fired in retaliation for her protected activity under the FCA.
Plaintiff alleges that she worked at Northwest Hospital from February of 2007 until January of 2011 as an occupational therapist. Plaintiff avers that in March of 2010, she was asked by her manager to review outpatient therapy charts to verify that they met Medicare documentation requirements. Plaintiff contends that she reviewed 30 to 50 patient charts and that the majority of those outpatient therapy charts did not contain the documented number of minutes required by Medicare. Plaintiff claims that her manager told her to add the minutes retroactively if the charts were missing them. Plaintiff refused to alter or modify the patient charts.
Plaintiff states that on April 1, 2010, the hospital conducted a training session for all outpatient therapists about Medicare billing procedures and how properly to document their time. The hospital also introduced a new outpatient therapy "Charge Sheet" with a specific place to put the number of minutes and units (15-minute increments) of each therapy procedure. Plaintiff asserts that managers instructed therapists (who had entered the number of units on the charts at the time of the therapy) retroactively to add the numbers of minutes to charts that did not include them and again Plaintiff refused to do so.
Plaintiff argues that she personally witnessed Defendants' failures properly to document the number of minutes for outpatient therapy sessions. She admits that she did not see the bills, but she contends that Defendants "likely" over-billed Medicare for these patients because they billed Medicare "blindly" for the number of units of outpatient therapy provided to Medicare beneficiaries at Northwest Hospital.
Defendant Northwest Hospital argues that Plaintiff's Amended Complaint fails to state a claim for which relief may be granted under the FCA because (1) Plaintiff fails to identify any claim that was actually presented to the federal government, (2) Plaintiff fails to identify any claim that was false, and (3) Plaintiff fails to identify any claim that was knowingly false.
Defendant CHS argues that it is not the "alter ego" of Defendant Northwest Hospital and that it is not responsible for actions or inactions of Northwest Hospital. CHS also contends that Plaintiff has stated no factual allegations which would render CHS liable for any deceptive or fraudulent practice. Both Defendants deny that they retaliated against Plaintiff for any protected activity.
MOTIONS TO DISMISS
For purposes of a motion to dismiss, the Court must take all of the factual allegations in the complaint as true. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Id. 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. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. at 1950. A legal conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).
Complaints alleging False Claims Act violations must also comply with Federal Rule of Civil Procedure 9(b)'s requirement that fraud be pled with particularity. Chesbrough v. VPA, P.C., 655 F.3d 461, 466 (6th Cir. 2011). Rule 9(b) requires that in alleging fraud, a party must state with particularity the circumstances constituting fraud. Malice, intent, knowledge and other conditions of a person's mind may be alleged generally. Id. In complying with Rule 9(b), a relator, at a minimum, must allege the time, place and content of the alleged misrepresentation, the fraudulent scheme, the fraudulent intent of the defendants, and the injury resulting from the fraud. Id. at 467.
FALSE CLAIMS ACT
The FCA penalizes any person who knowingly presents or causes to be presented to an officer or employee of the U.S. government a false or fraudulent claim for payment or approval. Chesbrough, 655 F.3d at 466 (citing 31 U.S.C. § 3729(a)(1)). It also penalizes any person who knowingly makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government. Id. A private individual, known as a realtor, may bring a civil action for a violation of the FCA, also known as a qui tam action, on behalf of the government. 31 U.S.C. § 3730(b)(1). The relator must plead with sufficient particularity that the defendants knowingly presented to the United States government a ...