U.S. Ex. Rel. Alan Siegel v. Roche Diagnostics, Corp.

• Decision Date: 30 December 2013
• Docket Number: No. 11–cv–5378 (ADS)(AKT).,11–cv–5378 (ADS)(AKT).
• Citation: 988 F.Supp.2d 341
• Parties: UNITED STATES of America ex. rel. Alan SIEGEL, Plaintiff, v. ROCHE DIAGNOSTICS, CORP., Roche Holding, AG, Defendants.
• Court: U.S. District Court — Eastern District of New York

988 F.Supp.2d 341

UNITED STATES of America ex. rel. Alan SIEGEL, Plaintiff,

v.ROCHE DIAGNOSTICS, CORP., Roche Holding, AG, Defendants.

No. 11–cv–5378 (ADS)(AKT).

United States District Court,

E.D. New York.

Dec. 30, 2013.

Raymond Nardo, Esq., Attorney for the Qui Tam Plaintiff Alan Siegel, Mineola, NY, Gibbons, P.C., Attorneys for the Defendant Roche Diagnostics, Corp. By: Lawrence S. Lustberg, Esq., Of Counsel, Newark, NJ.

MEMORANDUM OF DECISION AND ORDER

ARTHUR D. SPATT, District Judge.

On November 2, 2011, the Relator Alan Siegel (the “Relator” or the “Plaintiff”), a former sales executive for the Defendant Roche Diagnostics Corporation (“Roche Diagnostics”), filed this qui tam action against Roche Diagnostics and its alleged alter ego, Roche Holding AG. (“Roche Holding”), pursuant to the Federal False Claims Act, 31 U.S.C. § 3729 (the “FCA”).

On November 8, 2013, Roche Diagnostics, but not Roche Holding, moved to dismiss the complaint. Roche Holding has not yet appeared in this action. However, the Plaintiff has not sought to hold Roche Holding in default.

For the following reasons, the motion is granted.

I. BACKGROUND

A. Factual History

Unless stated otherwise, the following facts are drawn from the complaint and construed in a light most favorable to the Plaintiff, the Relator.

The Plaintiff alleges that Roche Diagnostics manufactured and distributed a fluid testing machine known as the cobas6000. (Compl. ¶ 13.) Among other things, the cobas6000 tests for various bodily fluids and stores the resulting data on Compact Discs. According to the Plaintiff, the data is then used by the healthcare provider to bill Medicare, Medicaid, and private insurers. (Compl. ¶ 15.)

In Count I of the complaint, the Plaintiff alleges that, on about July 3, 2008, Pepe Cepeda, the Administrative Director of Laboratories for one of Roche Diagnostic's customers, North General Hospital, alerted Roche Diagnostics that the c501 module of the cobas6000 produced false positive results when testing for the presence of Phencyclidinie (“PCP”). At some point, a Roche Diagnostics representative informed Cepeda that the false positive issue was a “global problem.” (Compl. ¶ 25.)

In Count II of the complaint, the Plaintiff alleges that, or about November 5, 2008, Cepeda alerted Roche Diagnostics that North General Hospital was billed for tests that it did not run with respect to its use of the cobas6000 e601 module. The Plaintiff alleges that “[e]ach time a medical provider billed for Medicare and/or Medicaid for one of these inaccurate tests, it made a “claim” under the [False Claims Act]” for which Roche Diagnostics is liable. (Compl. ¶ 30.)

On January 29, 2009, the Plaintiff wrote to his superiors at Roche Diagnostics, advising them that that overbilling occurred “because of [a] glitch in the 601 software.” (Compl. ¶ 37)

On June 9, 2009, Cepeda sent an email, apparently to a Roche Diagnostics representative, that North General's laboratory “was not in compliance with [Joint Commission on Accreditation of Healthcare Organizations] requirements because the date and time of the cobas printout does not accurately capture when the tests were performed.” (Compl. ¶ 41)

The Plaintiff does not allege that Roche Diagnostics certified the accuracy of the Cumulative Operations List—a list of tests billed—or that it directed providers to use this list to generate its Medicare submissions, instead of a list of tests performed. (Compl. ¶ 38.) Nor does the Plaintiff refer to a single specific claim filed by any Roche Diagnostics customer for reimbursement from the federal government.

B. Procedural History

On November 2, 2011, the Plaintiff filed this qui tam action under seal against Roche Diagnostics and Roche Holding pursuant to the provision of 31 U.S.C. § 3729 of the FCA. On March 19, 2013, the United States of America notified the Court of its decision not to intervene in this matter, at which point, the Court unsealed the complaint.

On November 8, 2013, Roche Diagnostics, but not Roche Holding, moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 12(b)(6) for lack of subject matter jurisdiction and pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. As noted above, Roche Holding has not yet appeared in this action. However, the Plaintiff has not sought to hold Roche Holding in default.

On December 9, 2013, the Plaintiff submitted a memorandum in opposition to the motion to dismiss which withdraws Count I of the complaint relating to the false-positive tests. In support of his memorandum in opposition to the motion to dismiss, the Plaintiff submits, for the first time, certain email correspondence between him and Roche Diagnostic representatives. However, the “Plaintiff may not amend his complaint through motion papers and the Court will not consider th[ese] newly raised [allegations].” Willner ex rel. Willner v. Doar, 12–CV–1955 (RRM)(RER), 2013 WL 4010205, at *5 (E.D.N.Y. Aug. 5, 2013); see also Wright v. Ernst & Young LLP, 152 F.3d 169, 178 (2d Cir.1998) (rejecting a new claim raised for the first time in plaintiff's opposition to a motion to dismiss). Accordingly, at this stage of the litigation, the Court declines to consider these submissions.

II. DISCUSSION

A. Federal Rules of Civil Procedure 12(b)(6) and 9(b)

When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a court must “accept all allegations in the complaint as true and draw all inferences in the non-moving party's favor.” LaFaro v. New York Cardiothoracic Grp., PLLC, 570 F.3d 471, 475 (2d Cir.2009) (citation omitted). The complaint must “contain sufficient factual matter ... to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A complaint that offers only “ ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action,’ ” therefore, “ ‘will not do.’ ” Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Nor will a complaint that contains “naked assertion[s]' devoid of further ‘factual enhancement.’ ” Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

Further, as discussed in greater detail later, because FCA claims “fall within the express scope of Rule 9(b),” Gold v. Morrison–Knudsen Co., 68 F.3d 1475, 1476–77 (2d Cir.1995), relators must “state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b).

B. The False Claims Act

“Pursuant to the FCA, private persons, known as ‘relators,’ may file qui tam actions and recover damages on behalf of the United States.” U.S. ex rel. Mooney v. Americare, Inc., 06–CV–1806 (FB)(VVP), 2013 WL 1346022, at *1 (E.D.N.Y. Apr. 3, 2013). Of relevance here, the FCA imposes liability upon any person who “knowingly presents, or causes to be presented, a false or fraudulent claim” to the Government or “knowingly makes, uses, or causes to be made or used, a false record or statement material” to such a claim. 31 U.S.C. § 3729(a)(1)(A); id. § 3729(a)(1)(B).

“As is apparent, some of the elements are common to both causes of action. In each case, there must have been a ‘claim.’ ... And the defendant must have known that the claim or statement was false or fraudulent.” U.S. ex rel. Pervez v. Beth Israel Med. Ctr., 736 F.Supp.2d 804, 811 (S.D.N.Y.2010).

C. The Fraud Enforcement Recovery Act

The Fraud Enforcement Recovery Act of 2009 (“FERA”), Pub.L. No. 111–21, § 386, 123 Stat. 1617 (2009) amended and reunumbered provisions of the FCA, including the sections at issue in this case. Most of the amendments took effect on May 20, 2009. However, Section 4(f)(1) of FERA provided that the changes to 31 U.S.C. § 3729(a)(2) “shall take effect as if enacted on June 7, 2008, and apply to all claims under the False Claim Act that are pending on or after that date.” Prior to FERA, Section 3729(a)(2), now section 3729(a)(1)(b), established liability where a person “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.”

Here, the Plaintiff fails to identify the provision of the FCA under which he seeks recovery or the dates on which purportedly “false” claims were submitted or “false” statements made. In any event, the FERA amendments are not relevant to the disputed issues in this motion.

D. The Patient Protection and Affordable Care Act (“PPACA”)

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”), provisions of which amended the FCA. As the Plaintiff filed his complaint in November 2011, the FCA, as amended by the PPACA, applies to his claims. See Ping Chen ex rel. U.S. v. EMSL Analytical, Inc., 10 CIV. 7504 RA, 966 F.Supp.2d 282, 293–94, 2013 WL 4441509, at *8 (S.D.N.Y. Aug. 16, 2013). The PPACA amended the FCA's public disclosure provision, codified at 31 U.S.C. § 3730(e)(4), in several key respects. SeePub.L. 111–148, § 10104(j)(2), 124 Stat. 119 (Mar. 23, 2010).

Prior to the PPACA's enactment, § 3730(e)(4) provided that “[n]o court [had] jurisdiction over an action” the allegationsof which had been previously publicly disclosed. A defendant invoking the public disclosure bar therefore challenged a court's subject matter jurisdiction. See Rockwell Intern. Corp. v. U.S., 549 U.S. 457, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007). After the PPACA's enactment, § 3730(e)(4) provides that a “court shall dismiss an action or claim” when the provision applies. Absent a clear statutory statement to the contrary, the Court “holds that the public disclosure provision is no longer jurisdictional in nature, but rather provides a basis for dismissal [on the merits].” Ping Chen ex rel. U.S., 966 F.Supp.2d at 294, 2013 WL 4441509, at *9.

In light of this ruling, the Court is not permitted,...