U.S. ex rel. Joshi v. St. Luke's Hosp., Inc.

• Decision Date: 06 March 2006
• Docket Number: No. 05-2445.,05-2445.
• Parties: UNITED STATES ex rel. Keshav S. JOSHI, Appellant, v. ST. LUKE'S HOSPITAL, INC.; Mohammed Bashiti, Appellees, United States of America, Movant Below.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 552

441 F.3d 552

UNITED STATES ex rel. Keshav S. JOSHI, Appellant, v. ST. LUKE'S HOSPITAL, INC.; Mohammed Bashiti, Appellees United States of America, Movant Below.

No. 05-2445.

United States Court of Appeals, Eighth Circuit.

Submitted: December 14, 2005.

Filed: March 6, 2006.

Naren Chaganti, argued, Los Angeles, CA, for appellant.

Richard A. Wunderlich, argued, St. Louis, MO (David B. Helms and Andrew S. Buchanan, Burton H. Shostak, on the brief) for appellee.

Before WOLLMAN, BEAM, and RILEY, Circuit Judges.

RILEY, Circuit Judge.

Dr. Keshav S. Joshi (Dr. Joshi) brought a qui tam action against St. Luke's Hospital, Inc. (St.Luke's), and Dr. Mohammed Bashiti (Dr. Bashiti), St. Luke's chief of anesthesiology, pursuant to the False Claims Act (FCA), 31 U.S.C. §§ 3729-3733. Dr. Joshi's complaint alleges that from 1989 to the present, St. Luke's and Dr. Bashiti submitted and conspired to submit false claims to the government seeking payment for anesthesia services, medical supplies, and prescriptions. The district court¹ granted St. Luke's and Dr. Bashiti's motion to dismiss for failure to plead fraud with particularity under Federal Rule of Civil Procedure 9(b). The court also denied Dr. Joshi's motion to amend the complaint, concluding the proposed amendments described incidents that fell outside the statute of limitations period and did not cure the complaint's deficiencies. Dr. Joshi appeals. Finding no error, we affirm.

I. BACKGROUND

In April 2004, Dr. Joshi, an anesthesiologist who practiced from 1989 to 1996 at St. Luke's, brought a qui tam action under the FCA against St. Luke's and Dr. Bashiti, alleging violations of 31 U.S.C. § 3729(a)(1) and (a)(3). In his complaint's Dr. Joshi asserts "he is an `original source' who has direct and independent knowledge of the information" on which his allegations are based. In Count I, Dr. Joshi alleges St. Luke's requested and received Medicare reimbursement from the government for anesthesia services performed by Dr. Bashiti at the reimbursement rate for medical direction of anesthesia services, when St. Luke's was entitled only to the lower reimbursement rate for medical supervision or no reimbursement at all. Dr. Joshi alleges Dr. Bashiti failed both to perform pre-anesthetic evaluations and prescribe anesthesia plans, and Dr. Bashiti falsely certified he supervised or directed the work of several certified registered nurse anesthetists (CRNAs). Dr. Joshi further alleges in Count I St. Luke's sought reimbursement for supervised CRNA work, when in fact such work was unsupervised, in violation of Missouri state law.

In Count II, Dr. Joshi alleges St. Luke's knowingly submitted false claims to the government for services that were not performed and for supplies that were not provided. The complaint alleges "St. Luke's would bill Medicaid and Medicare for an entire box of supplies or an entire prescription, while using only a small portion of said supplies/prescription on the Medicaid/Medicare patient for whom said supplies and prescriptions were billed."

Both counts allege the existence of a conspiracy between "[St. Luke's and Dr. Bashiti], each of them and/or their employees and agents . . . for the purpose of defrauding the United States in violation of 31 U.S.C. § 3729(a)(3) with an intent to increase their pecuniary gain." However, Dr. Joshi's complaint does not identify specifically the date, amount, or content of, or the persons involved in making, any false claims submitted by St. Luke's. Nor does the complaint specify the dates on which supplies or prescriptions were used or billed, the patients who received the supplies or prescriptions, or the type of supplies or prescriptions involved in the alleged fraudulent scheme. Rather, Dr. Joshi alleges "St. Luke's had all the work done by the CRNAs and Dr. Bashiti assigned to itself," and "[t]he medical bills to the government sufficiently identify the time, place, and content of the fraudulent representations."

St. Luke's and Dr. Bashiti filed a motion to dismiss the complaint for failure to plead fraud with particularity under Rule 9(b). Dr. Joshi opposed the motion, and alternatively, sought leave to amend the complaint by adding specific allegations of fraud. Dr. Joshi proposed to amend Count I by adding a table summarizing anesthesia services performed on four days in November 1995 by CRNAs and Dr. Bashiti at St. Luke's. The table and accompanying allegations indicate the time, surgeon, patient initials, and CRNA who performed anesthesia services. Dr. Joshi alleges this proposed amendment establishes the anesthesia services performed by CRNAs were unsupervised by Dr. Bashiti because Dr. Bashiti performed anesthesia services at the same time on other patients, and Dr. Bashiti falsely certified he either directed or supervised the CRNA work. With regard to Count II, Dr. Joshi, based on "information and belief," proposed to add a table summarizing medications issued to seven patients (identified by their initials) during six days in November 1995. The table and accompanying allegations indicate the patients were administered a particular quantity of medicine and St. Luke's billed the government for a quantity greater than the amount actually administered.

The district court granted St. Luke's and Dr. Bashiti's motion to dismiss, concluding the complaint failed to satisfy Rule 9(b)'s particularity requirement and failed to give St. Luke's and Dr. Bashiti notice of the alleged misconduct to allow them to defend properly against the charge. The court reasoned, "Without any allegations about who specifically participated in these claims and how and when the claims were submitted, [St. Luke's and Dr. Bashiti] are unable to marshal a defense." The court also denied Dr. Joshi's request for leave to amend the complaint, finding Dr. Joshi's claims with new November 1995 data were barred by the applicable six-year statute of limitations² and did not cure the deficiencies of Dr. Joshi's original complaint.

Dr. Joshi appeals, arguing the district court erred in (1) dismissing his complaint, because Joshi satisfied Rule 9(b)'s particularity requirement by alleging each and every invoice for CRNA work was fraudulent; (2) denying Dr. Joshi leave to amend the complaint, because the proposed amendments are timely and would not have been futile; and (3) refusing to allow Dr. Joshi to conduct discovery necessary to satisfy Rule 9(b), because the facts of St. Luke's and Dr. Bashiti's fraudulent conduct are uniquely within the control of St. Luke's and Dr. Bashiti.

II. DISCUSSION

A. Standard of Review

The issues raised in this appeal are governed by two standards of review. First, we review de novo the district court's order granting the motion to dismiss, accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party. Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir.2005) (citation omitted). Second, we review for abuse of discretion the district court's denial of the motion to amend the complaint. Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871 (8th Cir. 2002) (citation omitted). However, we review de novo the underlying legal conclusion of whether the proposed amendments to the complaint would have been futile. In re Acceptance Ins. Cos. Sec. Litig., 423 F.3d 899, 904 (8th Cir.2005) (citation omitted); United States ex rel. Gaudineer &amp Comito, L.L.P. v. Iowa, 269 F.3d 932, 936 (8th Cir.2001).

B. Dismissal of Complaint

Dr. Joshi's complaint alleges violations of the FCA, particularly 31 U.S.C. § 3729(a)(1) and (a)(3), which subjects to civil liability entities that knowingly submit or conspire to submit false claims to the government for payment or approval. See, e.g., Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir.2005) (per curiam). Because the FCA is an anti-fraud statute, complaints alleging violations of the FCA must comply with Rule 9(b). United States ex rel. Kinney v. Stoltz, 327 F.3d 671, 674 (8th Cir.2003). Under Rule 9(b), "the circumstances constituting fraud . . . shall be stated with particularity." Rule 9(b)'s "particularity requirement demands a higher degree of notice than that required for other claims," and "is intended to enable the defendant to respond specifically and quickly to the potentially damaging allegations." United States ex rel. Costner v. URS Consultants, Inc., 317 F.3d 883, 888 (8th Cir.2003) (citing Abels v. Farmers Commodities Corp., 259 F.3d 910, 920-21 (8th Cir.2001)). To satisfy the particularity requirement of Rule 9(b), the complaint must plead such facts as the time, place, and content of the defendant's false representations, as well as the details of the defendant's fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result. See, e.g., Corsello, 428 F.3d at 1012; Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 746 (8th Cir.2002). Put another way, the complaint must identify the "who, what, where, when, and how" of the alleged fraud. Costner, 317 F.3d at 888 (citing Parnes v. Gateway 2000, Inc., 122 F.3d 539, 550 (8th Cir.1997)).

After taking the allegations contained in Dr. Joshi's complaint as true and drawing all reasonable inferences in his favor, we agree with the district court, Dr. Joshi failed to allege with any specificity the particular circumstances constituting St. Luke's and Dr. Bashiti's alleged fraudulent conduct. Absent from the complaint are any mention of (1) the particular CRNAs who allegedly performed patient care and administered anesthesia services unsupervised, (2) when Dr. Bashiti falsely claimed to have supervised or directed CRNAs, (3) who was involved in the fraudulent billing aspect of the conspiracy, (4) what services were provided and to which patients the services were provided, (5) what the content was of the fraudulent claims, (6) what supplies or prescriptions were fraudulently billed and to...