U.S. ex rel. Pogue v. Diabetes Treatment Centers

• Decision Date: 18 December 2002
• Docket Number: No. 01MS50(RCL).,No. 99CV3298.,99CV3298.,01MS50(RCL).
• Citation: 238 F.Supp.2d 258
• Parties: UNITED STATES of America ex rel. A. Scott POGUE, Plaintiff, v. DIABETES TREATMENT CENTERS OF AMERICA, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

238 F.Supp.2d 258

UNITED STATES of America ex rel. A. Scott POGUE, Plaintiff, v. DIABETES TREATMENT CENTERS OF AMERICA, INC., et al., Defendants.

No. 99CV3298.

No. 01MS50(RCL).

United States District Court, District of Columbia.

December 18, 2002.

COPYRIGHT MATERIAL OMITTED

James B. Helmer, Jr., Frederick M. Morgan, Jennifer M. Verkamp, Helmer, Martins & Morgan, Cincinnati, OH, Scott A. Powell, Don McKenna, Hare, Wynn, Newell & Newton, Birmingham, AL, for Relator.

Mark E. Nagle, Doris D. Coles-Huff, Assistant United States Attorneys, Michael F. Hertz, Joyce R. Branda, Jonathan L. Diesenhaus, Laura F. Laemmle, Attorneys, Civil Division, U.S. Department of Justice, Washington, DC, for United States.

Bryan E. Larson, Brian D. Roark, Bass, Berry, and Sims PLC, Nashville, TN, Robert J. Walker, Kathryn Hays Sasser, Walker, Bryant, Tipps & Malone, Nashville, TX, for DTCA.

MEMORANDUM OPINION

LAMBERTH, District Judge.

This case comes before the Court on Diabetes Treatment Centers of America, Inc.'s (DTCA) Motion for Judgment on the Pleadings [612], Relator's opposition [648], DTCA's Reply [702], and the United States' Statement of Interest [649].

Upon consideration of the case, the parties' motions and responses, and the law, DTCA's Motion for Judgment on the Pleadings will be denied.

I. Background

This case is part of the multi-district litigation of False Claims Act qui tam suits against HCA and various related entities. This suit involves allegations of illegal kickbacks to physicians in return for patient referrals to diabetes treatment centers, in violation of the Anti-Kickback and Stark laws. Relator alleges that DTCA opened diabetes treatment centers in hospitals across the country, and recruited physicians to serve as "medical directors." The medical directors' primary responsibility, Relator argues, was the referral of patients to the treatment centers, for which the physicians were paid a referral fee, a scheme Relator alleges violates the Anti-Kickback and Stark laws.

This case originated in the Middle District of Tennessee, and was transferred to this Court under the auspices of the 28 U.S.C. § 1407(a), which provides for transfer of actions pending in different districts to a single district to permit "coordinated or consolidated pretrial proceedings." Before the case was transferred, the defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted. United States ex rel. Pogue v. American Healthcorp., Inc., 914 F.Supp. 1507, 1508 (M.D.Tenn.1996) (Pogue I). The District Court for the Middle District of Tennessee initially granted the motion to dismiss, on the grounds that Relator had failed to allege that any of the claims submitted by Defendant West Paces were false, or that the government had suffered any damages as a result. Id. Relator filed a motion to reconsider, which the Court granted and upon reconsideration reversed its earlier position. It held, as to damages to the government as a result of the claims, that Supreme Court precedent does not require that specific damages be shown to recover under the False Claims Act. Id. at 1508-09 (citing Rex Trailer Co. v. United States, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149 (1956) and circuit and district cases in which Rex Trailer is cited).

In reconsidering whether Relator had failed to allege that the claims submitted or caused to be submitted by the defendants were false, the Court relied on Relator's "implied certification" argument. Relator argued that although the claims were for necessary services rendered, when the claims were submitted "Defendants implicitly stated that they had complied with all statutes, rules, and regulations governing the Medicare Act, including federal anti-kickback and self-referral statutes." Id. at 1509. The Court found that Relator's argument was supported by the recent trend of cases, which hold that non-compliance with laws and regulations render submitted claims "false" for purposes of the False Claims Act, and denied the motion to dismiss. Id. at 1509-11 (citing United States ex rel. Roy v. Anthony, 1994 WL 376271 (S.D.Ohio July 14, 1994); Ab-Tech Constr., Inc. v. United States, 31 Fed. Cl. 429 (1994), aff'd 57 F.3d 1084 (Fed. Cir.1995); United States v. Incorp. Village of Island Park, 888 F.Supp. 419 (E.D.N.Y.1995)).

DTCA's motion for judgment on the pleadings asks the Court to revisit whether the submission of a claim carries with it an implied certification of compliance with underlying laws and regulations and, where those laws and regulations have not been complied with, creates False Claims Act liability. DTCA also advances the argument that Relator failed to plead fraud with particularity, an argument that has also been rejected in this case. The Court will deny DTCA's motion, both because the Court declines to revisit the law of the case, and because the law of the case is correct.

II. Discussion

A. The Law of the Case

As noted, the District Court for the Middle District of Tennessee held that Relator's allegations stated a cognizable claim under the False Claims Act, and that Relator plead fraud with adequate particularity. "[A] decision of a court of coordinate status is entitled to be considered `law of the case.'" Hill v. Henderson, 195 F.3d 671, 678 (D.C.Cir.1999) (citing Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988)). Once a prior decision has become the law of the case, it "should not be disturbed by a court of coordinate jurisdiction." Doe v. Roe, 841 F.Supp. 444, 446 n. 7 (D.D.C.1994) (citing United States v. Eilberg, 553 F.Supp. 1, 3 (D.D.C.1981); 18 Federal Practice § 4478 at 790). Adherence to the law of the case doctrine preserves judicial economy. Wilson v. Turnage, 755 F.2d 967, 967-68 (D.C.Cir.1985). It "promotes the finality and efficiency of the judicial process by `protecting against the agitation of settled issues.'" Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988) (citation omitted). The law of the case applies even to a non-final, non-appealable decision; it seeks "to minimize expenditure of judicial resources and energy on matters already decided," and is triggered by a final decision on a particular issue. United States v. Eilberg, 553 F.Supp. 1, 4 (D.D.C.1981) (Flannery, J.). "Perpetual litigation of any issue ... delays, and therefore threatens to deny, justice." Id. at 816 n. 5, 108 S.Ct. 2166. This Court is not in the business of denying justice.

While the law of the case is a prudential rather than a jurisdictional doctrine, and permits a court to revisit an earlier decision if it is proper to do so, we will follow it here. Reconsideration of the law of the case is appropriate where there are "unusual" circumstances, "extraordinary" circumstances, "exceptional" circumstances, to prevent a "grave injustice," and the like. Hayman Cash Register Co. v. Sarokin, 669 F.2d 162, 165 (3d Cir. 1982) ("unusual"); United States v. Eilberg, 553 F.Supp. 1, 3 (D.D.C.1981) (Flannery, J.) ("extraordinary"); Laffey v. Northwest Airlines, Inc., 642 F.2d 578, 585 (D.C.Cir.1980) ("exceptional" and "grave injustice"). No extraordinary circumstances prompt the Court to reconsider the settled question of whether Relator has properly stated a basis for liability as to DTCA. Hayman Cash Register sets out three instances in which reconsideration of the law of the case is proper. First, a successor judge may grant a timely motion to reconsider, if the motion could not have been presented to the original judge. Hayman Cash Register, 669 F.2d at 169. Second, where new evidence is available, revisiting the law of the case is proper. Id. Third, if a supervening rule of law is valid and applicable to the case at hand, it should be applied regardless of the law of the case. Id. at 170. It is on this third ground that DTCA seeks to justify its motion. DTCA urges that the D.C. Circuit's decision in United States ex rel. Siewick v. Jamieson Science and Engineering, Inc., 214 F.3d 1372 (D.C.Cir. 2000), soundly rejects the "implied certification" basis for False Claims Act liability. DTCA also asserts that Siewick joins the majority of circuits in rejecting implied certification. As discussed below, DTCA's reading of Siewick is incorrect, as is its representation of the law of other circuits. Because no grounds exist for this Court to reconsider the law of the case, the Court declines to do so.¹

B. Validity of Implied Certification as a Basis for False Claims Act Liability

Although no grounds exist to review the law of this case as established in United States ex rel. Pogue v. American Healthcorp, Inc., 914 F.Supp. 1507 (M.D.Tenn.1996) (Pogue I), in the interest of thoroughness the Court will review the cases cited by DTCA that are alleged to cast doubt on the validity of the implied certification theory of False Claims Act liability. The District Court for the Middle District of Tennessee accepted Pogue's proposition that "a violation of Medicare anti-kickback and self-referral laws also constitutes a violation of the False Claims Act." Id. at 1509. It found Pogue's allegation that "the government would not have paid the claims submitted by Defendants if it had been aware of the alleged kickback and self-referral violations" sufficient to state a cause of action under the False Claims Act. Id. at 1513; see Fourth Amended Complaint at ¶ 48 (alleging that the Medicare and Medicaid claims submitted or caused to be submitted by the defendants would have been denied had the government known of the violations of the Anti-Kickback and Stark Laws).

DTCA argues that cases decided since Pogue I have rejected the theory on which Relator relies in his complaint. DTCA's "smoking gun" is United States ex rel. Siewick v. Jamieson Science & Engineering, Inc., 214 F.3d 1372 (D.C.Cir.2000). Siewick involved an analysis of whether the statute the defendant was...