United States ex rel. Osheroff v. Healthspring, Inc.

• Decision Date: 05 April 2013
• Docket Number: No. 3:10–1015.,3:10–1015.
• Parties: UNITED STATES of America, ex rel., Marc OSHEROFF, Plaintiff, v. HEALTHSPRING, INC., HealthSpring of Florida, Inc., Leon Medical Centers, Inc., Benjamin Leon, Jr., Defendants.
• Court: U.S. District Court — Middle District of Tennessee

938 F.Supp.2d 724

UNITED STATES of America, ex rel., Marc OSHEROFF, Plaintiff,

v.HEALTHSPRING, INC., HealthSpring of Florida, Inc., Leon Medical Centers, Inc., Benjamin Leon, Jr., Defendants.

No. 3:10–1015.

United States District Court,

M.D. Tennessee,

Nashville Division.

April 5, 2013.

Ellen Bowden McIntyre, Office of the United States Attorney, William Michael Hamilton, Provost, Umphrey Law Firm, LLP, Nashville, TN, Charles S. Siegel, Loren Jacobson, Waters & Kraus, LLP, Dallas, TX, Daniel Hargrove, Waters & Kraus (TX), Jennifer McIntosh, Waters, Kraus & Paul, San Francisco, CA, Jonathan Kroner, Jonathan Kroner Law Office, Miami Beach, FL, Wm. Paul Lawrence, II, Waters & Kraus, LLP, Middleburg, VA, for Plaintiff.

Brian D. Roark, Sarah K. Bogni, Wallace Wordsworth Dietz, Bass, Berry & Sims, David Alexander Fardon, Glenn B. Rose, Harwell, Howard, Hyne, Gabbert & Manner, P.C., Nashville, TN, Catherine S. Christie, William L. Richey, Law Firm of William L. Richey, P.A., Miami, FL, John E. Kelly, for Defendants.

MEMORANDUM

KEVIN H. SHARP, District Judge.

This qui tam action brought by Relator Marc Osheroff attacks certain inducements offered by medical clinics to Medicare beneficiaries in the Miami area. Defendants HealthSpring, Inc., HealthSpring of Florida, Inc., Leon Medical Centers, Inc., and Benjamin Leon, Jr., have filed Motions to Dismiss (Docket Nos. 56 & 57). Those Motions have been fully briefed by the parties, and the Court heard oral argument on the motions on March 12, 2013. For the reasons that follow, the Motions to Dismiss will be granted.¹

I. BACKGROUND

To place the legal issues presented to the Court in context, the Court begins by setting forth the pertinent factual allegations from the controlling complaint. The Court will then discuss another lawsuit filed by Relator, as well as media accounts that appeared in the Miami media relating to the amenities provided by South Florida medical centers.

A.

The relevant facts, drawn from the First Amended Complaint (Docket No. 25), and accepted as true for present purposes, are as follows:

Relator is a resident of Broward County and works there and in Broward and Miami–Dade County as well. Defendant HealthSpring, Inc. is one of the largest managed-care organizations in the United States, and is focused on the Medicare market, and more specifically, the Medicare Advantage market.² Defendant HealthSpring of Florida does business as “Leon Medical Centers Health Plans.” Defendant Leon Medical Centers, Inc. operates medical clinics in Miami–Dade County, and is a medical provider for the HealthSpring Defendants. Defendant Benjamin Leon, Jr. a Director of Healthspring Inc. and Chairman of the Leon Medical Centers, is allegedly responsible for devising the “scheme” at issue in this case.

Relator is an “entrepreneur” who has operated numerous successful businesses in varied fields, ranging from electronics, to motorcycles, to commercial real estate, to medical office buildings. High school educated, and having completed no business or marketing courses, Relator relies upon “informal marketing research” to determine whether a business venture should be explored.

Since 1993, Relator has owned a commercial building, and his tenants have included physicians. He understands medical clinics to be very profitable, and has some experience in the medical clinic field, having founded the Centre of Cosmetic Surgery with a physician partner in 1996.

Sometime in the early 2000s, Relator, along with a physician partner, began to investigate opening an outpatient surgery and rehabilitation center in a medical office building he owned on the campus of what is now called the Jackson North Medical Center. Researching the potential, Relator discovered “that the competition for patients faced barriers created by Defendants' clinics and others, who compete for patients using unlawful inducements,” and that “[o]nce these clinics ‘owned’ the patients by virtue of continued inducements, the patients were removed from the market.” ( Id. ¶ 42). Relator decided to abandon this business venture.

In 2006, again with a physician partner, Relator began to develop plans for an MRI (magnetic resonance imaging) clinic, having already expended money in MRI hardware and outfitting a facility with high amperage electricity, extra air conditioning, and copper lining in the wall. Relator again researched the market, but backed out because [o]nce Leon ‘owned’ the patients by virtue of continued inducements, those patients were removed from the market,” and “Defendants (and others) could then choose whether to install their own MRI hardware or negotiate a much less profitable arrangement with an office such as Relator's.” ( Id. ¶ 44).

Relator's “research” into the medical clinic field was based primarily upon his talking with people. Specifically, he claims to have spoken to “many people” and “ask[ed] many questions.” ( Id. ¶ 35). Those “people” included Relator's tenants (including physician tenants) and their employees, visitors (including the elderly) who shop at a mall owned by Relator and attached to Palmetto Hospital, his own employees, Miami–Dade business owners, and workers “such as servers, bellhops [and] laborers in the communities where Relator owns and operates his businesses, including elderly workers[.]” ³ ( Id. ¶ 46).

According to Relator, his “research” and some personal observations show that the inducements offered by Defendants “go far beyond gifts of nominal value.” ( Id. ¶ 13). The Leon Clinics are actively marketed as “social centers to which senior and underprivileged patients are chauffeured in free limousine-class vehicles to enjoy free meals, take-away food, personal pampering, bingo, dominoes, raffles, music and dance as part of an expense-free social or entertainment outing of great cost to the clinics and significant value to their patrons.” ( Id.). Happy with those perks, Medicare recipients are “induced” to “patronize the Leon Clinics and enroll in the HealthSpring Medicare Advantage plans at the expense of federal healthcare programs.” ( Id. at 12). Moreover, although Medicare recipients can leave a specific provider's plan, the offering of the perks makes it more likely that they will remain in HealthSpring's Medicare Advantage plan, year after year.

The inducements about which Relator primarily complain include free transportation and free meals by Leon Medical Clinics. Both are allegedly provided to HealthSpring plan participants without any individualized determination of need.

The applicable regulations allow for medically necessary transportation. All of the Leon Medical Clinics are on bus routes, and Miami Dade Transit offers free public transportation on buses that pass each Leon facility on at least an hourly basis. Nevertheless, free “luxury rides” are provided to the clinics, even if there is no medical purpose for the visit, or the visit does not coincide with a medical appoint. The clinics also offer “luxury rides” to other locations as well, including shopping malls.⁴

The vehicles utilized by the clinics “can hold over a dozen passengers,” and “operate as private limousines.” ( Id. ¶ 134). The vast majority of the time, however, the vehicles transport far fewer than twelve individuals, and most often only one or two passengers. Relator became acutely aware of this after he found the clinics' vehicles “clogging his driveway to his medical office building and his shopping mall” in Palmetto. ( Id. ¶ 48).

At some point, “Relator tracked Defendants' vehicles picking up and dropping off at his medical office building in Hialeah, Florida,” and found that in “nearly 180 out of 185 trips, Leon's vehicles carried two or fewer passengers.” ( Id. ¶ 134). For the other five or so trips, Relator's “tracking” found six passengers on one occasion, five passengers on two or three occasions, and four passengers on two or three occasions. ( Id.).

Free transportation is touted on the clinics' website. Both the English and Spanish language versions contain the following description of the services provided:

At Leon Medical Centers we have a sizeable fleet of more than 70 buses that transport patients to and from any LMC service provider, including our Centers, as well as off-site healthcare providers.... Color televisions and wide seating allow our patients to feel as comfortable as possible during their trip.

* * *

... Contact with the Welcome Center alerts employees that a patient is arriving at the hospital for a test or procedure and also allows the Welcome Center employee to request transportation when a patient is leaving the hospital so that the patient receives attention and guidance at all times....

... [A] patient can expect to be phoned by their personal driver prior to arrival. When the driver reaches a patient's home, they take them from their door to the bus, helping them each step of the way....

The forethought and prudence with which Leon Medical Centers has developed its free and unlimited transportation services affords patients with much needed access to care providing the best possible attention and the care necessary to keep them healthy.

( Id. ¶ 137).

In addition to free transportation that allegedly violates the applicable regulations, Relator maintains that the Leon Medical Clinics provide free food that goes far beyond a “nutritional service based upon an underlying medical need,” authorized by Medicare provisions. Free meals are offered “without regard to health or medical need” and “without regard to financial need,” and are provided to Medical beneficiaries whether they are patients or not. ( Id. ¶ ¶ 150–152). No limit “is placed on how many dishes or servings may be taken or the frequency with which patients, enrollees, potential patients and potential enrollees may take meals provided by the clinics.” ( Id. ¶ 153). Nor is an effort marked to track those who are eating, and there is no swiping of an ID card which might show who is...