Singer v. Progressive Care, SC

• Decision Date: 11 August 2016
• Docket Number: No. 11-cv-02679,11-cv-02679
• Citation: 202 F.Supp.3d 815
• Parties: Mark E. SINGER, Plaintiff, v. PROGRESSIVE CARE, SC, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

202 F.Supp.3d 815

Mark E. SINGER, Plaintiff,

v.PROGRESSIVE CARE, SC, et al., Defendants.

No. 11-cv-02679

United States District Court, N.D. Illinois, Eastern Division.

Signed August 11, 2016

Ethan Emery White, Michael Irving Leonard, Leonardmeyer LLP, Chicago, IL, John A. Smietanka, Smietanka Buckleitner

Steffes & Gezon, Grandville, MI, for Plaintiff.

Daniel M. Purdom, Hinshaw & Culbertson, Lisle, IL, Brian Richard Zeeck, Hinshaw & Culbertson LLP, Chicago, IL, James Gregory Schweitzer, Schweitzer Law Office, LLC, Brookfield, WI, for Defendants.

MEMORANDUM OPINION AND ORDER

Andrea R. Wood, United States District Judge

Mark Singer filed this qui tam action pursuant to the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq. , against Dr. Mark Karides, Dr. Irfan Mirza, and Dr. Bozena Witek (collectively, "Individual Defendants"), as well as Progressive Care, SC ("Progressive," and together with the Individual Defendants, "Defendants"). Singer used to serve as the Chief Operating Officer for Progressive, an oncology and hematology medical practice where the Individual Defendants were physicians and shareholders. Singer claims that Defendants violated the FCA by conspiring to submit fraudulent bills to Medicare and then discharged him in retaliation for his complaints about their unlawful billing practices. Defendants have filed a motion to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that the public-disclosure rule acts as a jurisdictional bar to Singer's FCA claims, and pursuant Federal Rule of Civil Procedure 12(b)(6), arguing that Singer has failed to state a claim for relief with respect to any of his causes of action. Defendants also contend that Singer's claims are judicially and equitably estopped due to certain statements he or his representatives made in earlier litigation.

For the reasons explained below, while the Court declines to find that Singer's FCA claims are barred by the public-disclosure rule or that he should be equitably or judicially estopped from bringing his claims, the Court nonetheless must dismiss Singer's FCA claims pursuant to Rule 12(b)(6) for failure to state a claim. Having dismissed all of the claims over which this Court has original jurisdiction, the Court declines to exercise supplemental jurisdiction over Singer's state law retaliation claim.

BACKGROUND

According to Singer, between 2007 and 2009, Defendants engaged in a number of schemes to defraud the United States government through practices that violated Medicaid and Medicare program guidelines.

Singer first alleges that Defendants illegally referred patients in need of positron emission tomography

("PET") scans to an off-site location in which Defendants themselves had a financial interest, the Northwest Regional Cancer Treatment Center ("Northwest"), in violation of the Stark Law, 42 U.S.C. § 1395 et seq. (Am. Compl. ¶ 46, Dkt. No. 14.) The Stark Law prohibits physician "self-referral"—i.e. , the practice of a physician referring a patient to a separate medical facility in which the physician has a financial interest—unless certain conditions have been met. (Id. ¶¶ 31–32, 34.) Under the Stark Law and its related regulations, in order to make referrals to Northwest, Defendants were required (i) to maintain a fully-staffed and operational medical office at Northwest that actually operated at least six of the eight leased hours per day; (ii) to ensure that a physician was actually physically present and seeing non-scheduled PET patients at Northwest at least six hours of each leased day; and (iii) to ensure that a physician was physically present for each and every PET scan performed on Defendants' patients at Northwest. (Id. ¶ 49.) Singer alleges that Defendants were aware of these regulations yet consciously disregarded them. (Id. ¶¶ 50, 54, 61.) He further contends that Defendants had their patients undergo approximately eight or more PET scans

each and every week at Northwest, with approximately 72% of those tests being submitted for payment by Medicare. (Id. ¶¶ 64–65.)

Singer next alleges that Defendants engaged in FCA violations with respect to their administration of the drug Procrit

to patients. Procrit is prescribed for cancer patients. (Id. ¶ 71.) Due to Procrit's risk of causing serious health problems, the Federal Drug Administration ("FDA") has regulated its use: Procrit may only be used to treat a limited number of conditions, such as chemotherapy-induced anemia, and even then only after blood tests have been performed to determine the suitability of Procrit for the particular patient's care. (Id. ¶ 75.) FDA regulations also require the use of Procrit to be terminated immediately when the patient completes the recommended dosage for the particular medical condition for which it was specifically prescribed. (Id. ) Patients receiving Procrit must be examined and tested by a physician before the drug is administered, and doctors are required to administer additional blood-testing before each dose given to the patient. (Id. ) According to Singer, Defendants knew about these regulations as well but intentionally disregarded them. (Id. ¶ 76.) Specifically, Singer claims that Defendants would administer Procrit to their patients before undertaking the FDA-mandated, pre-use testing, and would then perform blood-testing after the fact so that patient records would falsely reflect compliance with FDA regulations. (Id. ¶ 82.) Singer further alleges that Defendants prescribed and administered Procrit to approximately 60 to 80 patients each and every month, and submitted false claims for payment by Medicare for approximately 72% of all of those patients. (Id. ¶ 92.)

Notably, although Singer claims that approximately 72% of Defendants' bills were submitted for payment by Medicare, he does not plead any specific examples of the allegedly fraudulent practices regarding PET scans

and Procrit injections. He instead asserts that all billing records that would identify the fraudulent submissions are in the exclusive control of Defendants. (Id. ¶¶ 68, 94–95.)

Finally, Singer alleges that Defendants billed for alleged consultations in time increments much higher than the time actually spent with individual patients. (Id. ¶¶ 103–04.)

In addition to his allegations of fraud in connection with Defendants' practices regarding PET scans

, Procrit injections, and billing, Singer asserts that Defendants retaliated against him after he informed them that their actions were illegal and unsafe. (Id. ¶¶ 100, 104.). He claims that he warned Defendants "that he would pursue [them] by way of a whistleblower action" and that they were "going to be rocked by the feds," and that he ultimately sought another employee's assistance in bringing an FCA action. (Id. ¶¶ 128–29.) According to Singer, he was subsequently terminated in retaliation for these internal complaints. (Id. ¶ 120.)

Based on this alleged misconduct, Singer asserts claims against Defendants under the provisions of the FCA prohibiting any person from (i) knowingly presenting, or causing to be presented, a false claim or fraudulent claim for payment or approval, 31 U.S.C. § 3729(a)(1)(A) (Count I); (ii) knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, 31 U.S.C. § 3729(a)(1)(B) (Count II); and (iii) conspiring to commit the aforementioned violations, 31 U.S.C. § 3729(a)(1)(C) (Count III). In addition, he asserts claims for retaliation under both the FCA, 31 U.S.C. § 3730(h)(1) (Count IV), and Illinois common law (Count V).

DISCUSSION

Defendants have moved to dismiss the Amended Complaint on several grounds. First, they argue that Singer's FCA claims regarding the alleged Starks Law violations are barred by the FCA's public-disclosure rule. Second, Defendants seek to have all of Singer's claims dismissed as insufficiently pleaded pursuant to Rule 12(b)(6). Finally, Defendants argue that Singer's claims are barred by the doctrines of equitable estoppel and judicial estoppel. The Court addresses each of these arguments in turn.

I. The FCA's Public-Disclosure Bar

To combat fraud, the FCA imposes civil liability on any party who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" or "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim" paid by the government. 31 U.S.C. §§ 3729(a)(1)(A)–(B). The FCA provides for a qui tam enforcement mechanism, which allows a private party (also known as a "relator") to bring a lawsuit on behalf of the government to recover money that the government paid as a result of fraudulent claims. See 31 U.S.C. § 3730(b). To encourage private citizens to come forward with knowledge of fraudulent activity, the FCA entitles prevailing relators to receive a share of the funds they recover. See 31 U.S.C. §§ 3730(d)(1)–(2). A qui tam action would serve no purpose, however, if "the government is already aware that it might have been defrauded and can take responsive action." Glaser v. Wound Care Consultants, Inc. , 570 F.3d 907, 915 (7th Cir.2009). Accordingly, a qui tam suit is barred when the allegations in the complaint are based on information that is already known to the government. This "public-disclosure" bar provides that "[n]o court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions... unless... the person bringing the action is an original source of the information." 31 U.S.C. § 3730(e)(4).¹

Defendants in this case argue that the public-disclosure bar precludes the Court from considering Singer's PET scan

claims.² According to Defendants, Singer's claims are parasitic of a previous lawsuit filed by Adrian Bianco, a former Progressive shareholder, in Cook County Chancery Court ("Bianco Suit"). Bianco sued Progressive, the Individual Defendants, and Singer for a number of causes...