Hawaii ex rel. Torricer v. Liberty Dialysis-Hawaii LLC, Civ. No. 19-00101 JMS-RT

Decision Date12 January 2021
Docket NumberCiv. No. 19-00101 JMS-RT
Citation512 F.Supp.3d 1096
Parties State of HAWAII EX REL. Lisa TORRICER; United States of America ex rel. Lisa Torricer, Plaintiffs, v. LIBERTY DIALYSIS-HAWAII LLC; Liberty Dialysis-North Hawaii LLC; and Fresenius Medical Care Holdings, Inc., Defendants.
CourtU.S. District Court — District of Hawaii

Eric L. Siegel Kalbian Hagerty, LLP 888 17th Street, N.W. Suite 1000 Washington, D.C., for Plaintiffs.

James F. Bennett Dowd Bennett LLP 7733 Forsyth Blvd. Suite 1900 St. Louis, MO, for Defendants.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS, ECF NO. 58

J. Michael Seabright, Chief United States District Judge

I. INTRODUCTION

Defendants Liberty Dialysis-Hawaii LLC, Liberty Dialysis-North Hawaii LLC, and Fresenius Medical Care Holdings, Inc. (collectively, "Liberty" or "Defendants") move the dismiss the First Amended Complaint ("FAC") filed by Relator Lisa Torricer ("Relator") in this qui tam action. Relator brought the action on behalf of the State of Hawaii under the Hawaii False Claims Act (the "Hawaii FCA"), Hawaii Revised Statutes ("HRS") § 661-25 ; and on behalf of the United States under the federal False Claims Act (the "FCA"), 31 U.S.C. § 3730(b).1

The FAC alleges that, since at least March 2013, Liberty submitted Medicare and Medicaid claims for payment for end-stage renal disease

("ESRD") services even though Liberty had faulty plans of care ("POCs"), and other deficiencies, in violation of Medicare regulations set forth in 42 C.F.R. Part 494 ("Conditions for Coverage for [ESRD] Facilities") and related regulations. Relator alleges that Liberty backdated and falsely completed POC forms by inserting signatures and stability determinations after the fact, and in some cases, submitted claims without documented POCs at all. She contends that, after becoming aware of these deficiencies, Liberty became obligated to return Medicare and Medicaid payments, and concealed the scope of its deficiencies to avoid having to return such overpayments. See generally ECF No. 51 at PageID ## 602-08.

Nevertheless, even assuming at this motion-to-dismiss stage that the allegations of fraud are true, the court concludes after considerable research and review of supplemental briefing that Relator fails to state valid claims for relief. The FCA "is not ‘an all-purpose antifraud statute,’ or a vehicle for punishing garden-variety breaches of contract or regulatory violations." Universal Health Servs., Inc. v. United States ex rel. Escobar , ––– U.S. ––––, 136 S. Ct. 1989, 2003, 195 L.Ed.2d 348 (2016) (" Escobar ") (internal citation omitted). It only imposes liability for a materially false or fraudulent "claim for payment or approval." 31 U.S.C. § 3729(a)(1). Because such claims are not implicated here, the court GRANTS DefendantsMotion to Dismiss with prejudice.

II. BACKGROUND
A. Factual Background

As alleged in the FAC, Liberty Dialysis-Hawaii LLC, Liberty Dialysis-North Hawaii LLC ("Liberty North"), and Fresenius Medical Care Holdings, Inc. ("Fresenius") "jointly own, operate and manage 19 dialysis clinics caring for over 2,000 patients across the State of Hawaii, including but not limited to Defendants’ Siemsen, Sullivan and Home Program Units." ECF No. 51 at PageID # 610. Approximately 80 percent of Liberty Dialysis-Hawaii and Liberty North's patients were covered by Medicare and/or Medicaid during relevant time periods. Id. at PageID # 614-15.2 "In or about 2011, Liberty Dialysis[-]Hawaii and Liberty Dialysis North Hawaii merged with and/or [were] was acquired by Fresenius after Medicare switched to a bundled payment system for ESRD treatment. As a result, Fresenius owns, operates and/or manages all Liberty and Liberty North dialysis clinics." Id. at PageID # 615.

In March of 2013, Relator worked for Liberty as a "Social Worker Assistant tracking [POCs]." Id. at PageID # 608. Previously, she worked for Liberty as a hemodialysis

technician but was placed on "light duty" after an injury in 2010. Id. at PageID # 633. "In early 2012, her light duty included monitoring the [POC] process at Defendants’ Siemsen and Sullivan clinics" and "also included generating missing flow sheets and tracking [POCs] for Home Programs patients." Id.

POCs are developed as part of several "conditions for coverage" set forth in 42 C.F.R. Part 494. Under 42 C.F.R. § 413.210(a) (titled "Conditions for payment under the [ESRD] prospective payment system"), "[t]o qualify for payment, ESRD facilities must meet the conditions for coverage in part 494 of this chapter." In particular, 42 C.F.R. § 494.90 provides, in part, that an "interdisciplinary team" consisting of a nurse, physician, social worker, and dietician "must develop and implement" a POC that specifies needed services. See also 42 C.F.R. § 494.80 (defining members of the interdisciplinary team). Under § 494.90(b), the completed POC must "be signed by team members, including the patient ... or, if the patient chooses not to sign the [POC], this choice must be documented on the [POC], along with the reason the signature was not provided."3

The FAC also highlights other conditions for coverage in Part 494, including sections requiring compliance with applicable laws and regulations (§ 494.20); patient assessments, including periodic assessments of a patient's stability ( § 494.80(d) ); home care conditions (§ 494.100); and medical records (§ 494.170). See ECF No. 51 at PageID ## 621-27.

Relator alleges that, as part of her duties, focusing on records from 2012 and 2013 at "Siemen, Sullivan, and Home Programs," she documented whether components of POCs had been completed, were not timely completed, or were never completed. Id. at PageID # 634. She noted entries where POCs sometimes were printed or faxed for physicians’ signatures after their due dates, indicating that physicians’ signatures were "manually added" after the fact. Id. at PageID # 635.

On March 7, 2013, the Hawaii Department of Health's Office of Health Care Assurance ("OHCA") conducted an annual Medicare certification survey to assess compliance with Part 494's conditions for coverage. Id. at PageID # 636. OHCA discovered that some patients did not have current POCs, and cited Defendants for noncompliance with § 494.90. Id. at PageID # 636-37. OHCA then "ordered the Siemsen unit to self-audit all [POCs]." Id. at PageID # 640.

As a result, a Liberty nurse manager "ordered the unit clerks to backdate ESRD Team members’ signatures on [POCs] that had been signed but left undated," id. at PageID # 637, and "to mark patients’ status on [POCs] as ‘stable’ or ‘unstable’ if a stability determination had not been made." Id. at PageID # 636-37. "Relator learned from direct review of patient records and conversations with other employees that Team members had been backdating medical records for years to conceal noncompliance." Id. at PageID # 638. The nurse manager "warned Relator that the Government would terminate Medicare certification if it learned the severity of Defendants’ noncompliance. She also told Relator that they would not report the noncompliance she uncovered because it would jeopardize certification and require them to return Government overpayments." Id. at PageID # 639. The FAC alleges that after a clerk told a manager that she "was uncomfortable making stability determinations," the nurse manager told her that "backdating signatures and making stability determinations after-the-fact did not constitute falsifying medical records." Id.

Relator alleges that, as part of the audit, she was "ordered ... to backdate Team members’ [POC] acceptance signatures to make the records ‘compliant.’ " Id. at PageID # 641. She was ordered "to falsify records to retain Medicare certification and Government overpayments." Id. at PageID # 642. Relator alleges that when she "could not bring herself to backdate signatures or attempt to make stability determinations," she was told to use "the date the last Team member signed." Id. She was again told that "there was nothing wrong with backdating [POCs]." Id. at PageID # 643. And so Relator "researched the applicable regulations herself ... and learned that Defendants were required to abide by the conditions of coverage set forth in 42 C.F.R. [P]art 494 to qualify for Government reimbursement." Id.

Relator "maintained personal work journals at her desk to document deficiencies," and recorded numerous deficiencies in initial POCs, three-month POCs, and annual POCs for "Siemsen/Sullivan patients," all with missing components or signatures. Id. at PageID ## 644-45. On March 26, 2013, Relator called her union representative to express concerns. Id. at PageID # 647. She also "contacted someone at a federal agency" (an agency "that fielded calls regarding Medicare fraud, waste, and abuse"), and the Fresenius compliance hotline on March 28, 2013. Id. Nothing resulted from those complaints.

In April 2013, Relator began working on a similar audit for Home Programs, and notified her supervisor about similar POC problems with those programs. Id. at PageID # 649. She discovered that many of the Home Program POCs were not completed timely, were missing required entries, and lacked signatures. Id. at PageID ## 650-51. Many were missing required "flowsheets." Id. at PageID ## 651-52. "By ordering Relator and other employees and RNs to obtain necessary information and signatures on a backlog of flow sheets, some nearly a year old, [Liberty] attempted to ‘correct’ past noncompliance." Id. at PageID # 652. The FAC alleges that "Defendants’ various attempts to conceal noncompliance," made it "difficult if not impossible, for the Government to discover millions of dollars of overpayments it made for patients’ thrice-weekly treatments going back at least as far as 2011." Id. at PageID # 652.

Relator claims that in June 2013 she discovered her work journals were missing, implying that someone affiliated with Liberty is responsible for confiscating them. Id. at PageID ## 652-53. She alleges that she has...

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