U.S. v. Solinger

• Decision Date: 12 October 2006
• Docket Number: Civil Action No. 3:03-CV-519-H.
• Citation: 457 F.Supp.2d 743
• Court: U.S. District Court — Western District of Kentucky
• Parties: UNITED STATES of America, et al., Plaintiffs v. Robert E. SOLINGER, et al., Defendants.

457 F.Supp.2d 743

UNITED STATES of America, et al., Plaintiffs v. Robert E. SOLINGER, et al., Defendants.

Civil Action No. 3:03-CV-519-H.

United States District Court, W.D. Kentucky, at Louisville.

October 12, 2006.

Subsequent Order October 24, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John E. Kuhn, Jr. U.S. Attorney Office, John Robert Shelton, Joseph D. Satterley, Paul J. Kelley, Sales, Tillman, Wallbaum, Catlett & Satterley, PLLC, Louisville, KY, for Plaintiffs.

Edward H. Stopher, Quang D. Nguyen, Tiara B. Silverblatt, Boehl Stopher & Graves, LLP, Craig C. Dilger, F. Ryan Keith, Stoll Keenon Ogden PLLC, Lynn K. Fieldhouse, R. Gregg Hovious, Tachau, Maddox, Hovious & Dickens PLC, Kent Wicker, Reed Wicker PLLC, Louisville, KY, Carrie Valiant, William G. Kopit, Epstein, Becker & Green PC, Washington, DC, for Defendants.

MEMORANDUM OPINION

HEYBURN, Chief Judge.

Plaintiff Villafane, et al., bring this qui tam action under the False Claims Act, 31 U.S.C. § 3729, against various Defendants based upon alleged violations of the Fraud and Abuse, Anti-kickback, and prohibited referral provisions of 42 U.S.C. § 1320a-7b(b), 42 U.S.C. § 1395m, and 42 C.F.R. § 411.353. Additionally, Villafane asserts a number of federal and state antitrust violations as well as common law claims.

Defendants have moved for judgment on the pleadings or summary judgment pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1) & (6), 12(c) and 56(b) on all of Plaintiffs claims. The Court has carefully reviewed the memoranda submitted by the parties and has had the benefit of hearing their arguments and their answers to questions at a conference in chambers. The Court will consider each claim in turn.¹

I.

Plaintiff Villafane is a pediatric cardiologist. From 1985 through 2005, he was employed as an Associate Professor of Pediatrics at the University of Louisville School of Medicine (the "Medical School"). Defendants Solinger, Elbl, and Rees (collectively, "the Physician Defendants") are each pediatric cardiologists and professors at the Medical School.² Pediatric Cardiology Associates, P.S.C., ("PCA") is the practice group of the Physician Defendants as well as several other pediatric cardiologists employed by the Medical School. Villafane was a member of PCA from 1986 to 1990. In 1990, Villafane formed his own practice group, Children's Heart Specialists, P.S.C. ("CHS"), and of which he is the sole member. After forming his own group, Villafane remained on the Medical School faculty through 2005.

Defendant Larry Cook is a neonatologist, a professor at the Medical School, and the President of the University of Louisville Research Fund ("the Research Fund"). He is one of several members of Neonatal Associates, P.S.C, ("NNA"), through which he conducts his medical practice. Cook is also the chief of staff of Defendant Norton Hospitals, Inc., d/b/a Kosair Children's Hospital ("Kosair") and a member of its governance and executive committees. Kosair is Kentucky's only full-service pediatric hospital.

The Research Fund collects funds from Medical School faculty through the Professional Practice Plan (the "PPP"). All Medical School full-time faculty members must participate in the PPP, which collects a portion of their professional income. According to the complaint, the Research Fund then distributes funds to the University of Louisville Research Foundation, Inc. (the "Research Foundation"). While a member of the Medical School faculty, Villafane contributed portions of his practice income to the Research Fund as the PPP required. Over the years, Kosair has made substantial payments to the Research Foundation, which allocates the funds among certain faculty salaries for specialists who work for PCA and other private practices. From the years 1998 to 2000, those payments totaled approximately $1.7 million each year. Villafane is not a recipient of any of those monies. Kosair submitted claims to the U.S. government and its agencies, including Medicare, for various reimbursements of those payments. Kosair did not disclose its relationships with the various doctors in its Medicare Hospital Cost Report. The failure to disclose the payments forms the basis of Villafane's FCA claim.

In the spring of 1990 Villafane became a shareholder of PCA. However, Villafane was not offered shareholder status in PCA's affiliated entity, CVS³, to which, Villafane alleges, portions of the PCA revenues were diverted. Villafane left PCA before the end of the year and proceeded to establish CHS. Immediately thereafter, the PPP was amended to bar recognition of new faculty practice groups and to prevent any departmental entity from contracting with a new practice group unless certain conditions were met.

In 1991, Villafane sued PCA and the Physician Defendants after learning he had been excluded from Kosair's on-call schedule. The suit was settled in 1994, resulting in a mutually agreeable schedule. In November 2000, Villafane learned that Kosair had implemented its on-call rotation schedule to direct patients from outside Louisville to Elbl, Rees, Solinger, and PCA. According to Kosair, it did this because Villafane did not have offices in some of the surrounding areas.

In early 2000, the Division of Pediatric Cardiology (the "Division") of the Medical School began searching for a new chief. In particular, they were seeking candidates with a subspecialty in electrophysiology. Although Villafane was the Division's Director of Electrophysiology and the only member of the Division who was an eleetrophysiologist, he was excluded from the search committee. Ultimately the Medical School hired a PCA employee to be chief of the division. In 2002, PCA also hired an electrophysiologist, who also received appointment as Director of Electrophysiology in the Division and as Director for Arrhythmia Service at Kosair.

In March 2000, Kosair completed and closed a review of several Villafane cardiac catherization laboratory ("cath lab") complications. Only a month later, Dr. Elbl sent a letter to the Kosair Medical Director concerning cardiac cath lab complications in Villafane's lab from 1994 through 1999. In December of 2000, certain PCA members made formal complaints about the quality of Villafane's catheterizations. In January 2001, Kosair informed Villafane that it would not seek review of his cath lab procedures. Shortly afterwards, Kosair's Governance and Medical Executive Committees re-credentialed Villafane staff privileges.

In April, one of Villafane's patients died in the cath lab while undergoing diagnostic procedures. In May, while the patient's death was undergoing a "root cause analysis", Villafane's legal counsel advised Kosair of concerns about its financial relationships with PCA and NNA. Following this communication, Kosair undertook a peer review of Villafane, which resulted in the revocation of Villafane's privileges and his being banned from the premises of all Norton facilities beginning in October 2001. In February 2002, a Kosair hearing panel reviewed Villafane's privileges, and recommended that the majority of Villafane's privileges be reinstated. Nevertheless, the Kosair Governing Board declined to reinstate any of Villafane's privileges. During this same time period, Villafane hired a pediatric cardiologist in his private practice, whom Cook declined to recommend her for a Medical School clinical appointment. As a consequence, she was denied staff privileges at University Hospital. Kosair formally terminated Villafane on May 7, 2002. In the spring of 2003, Villafane pre-applied for Kosair privileges. Kosair declined to reinstate his privileges and noted his "lack of remorse" over the incidents that led to his dismissal. During this time, Villafane remained on the paid Medical School faculty.

Villafane originally filed his verified complaint on August 29, 2003. As provided under the qui tam statute, the file was sealed while the government investigated the claims to determine whether it would intervene as a party. See 31 U.S.C. 3730(b) (2006). Numerous extensions of the time for intervention followed. Almost two years later, on June 22, 2005, the government notified the Court and Villafane that it declined to intervene as a party plaintiff pursuant to 31 U.S.C. § 3730(b)(4)(B). In August, 2005, Villafane obtained and substituted new counsel. Between December 2005 and March 2006 all of Defendants either filed answers or motions to dismiss. By July 14, 2006, all parties had filed numerous responses and replies to the various motions. On October 5, 2006, the Court and the parties discussed the pending issues for over two hours.

This Court reviews a motion for judgment on the pleadings under the same standard as review under Rule 12(b)(6); the Court must "construe the complaint in the light most favorable to the plaintiff, accept all of the complaint's factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of the claims that would entitle relief." Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir.1998). Where a defendant challenges subject matter jurisdiction under Rule 12(b)(1), the plaintiff "bears the burden of establishing jurisdiction." United States ex rel. Jones v. Horizon Healthcare Corp., 160 F.3d 326, 329 (6th Cir.1998); United States ex rel McKenzie v. BellSouth Telecomms., Inc., 123 F.3d 935 (6th Cir.1997).⁴

II.

Count I of the complaint asserts a qui tam action under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733 (2006). Defendants first raised a jurisdictional defense to the FCA claims.

The FCA creates liability for any person who "(1) knowingly presents, or causes to be presented, to [the Government] ... a false or fraudulent claim for payment or approval; (2) 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; [or] (3)...