United States ex rel. Johnson v. Golden Gate Nat'l Senior Care, L.L.C., Civil No. 08-1194 (DWF/HB)
| Decision Date | 20 April 2020 |
| Docket Number | Civil No. 08-1194 (DWF/HB) |
| Parties | United States of America, ex rel., Ricia Johnson, and Health Dimensions Rehabilitation, Inc., Plaintiffs, v. Golden Gate National Senior Care, L.L.C.; GGNSC Holdings, L.L.C; and GGNSC Wayzata, L.L.C.; all doing business as Golden Living Center - Hillcrest of Wayzata; and Aegis Therapies, Inc., Defendants. |
| Court | U.S. District Court — District of Minnesota |
Jonathan M. Bye, Esq., Ballard Spahr LLP; Lariss Maldonado, Esq., Stinson LLP; and W. Anders Folk, Assistant United States Attorney, United States Attorney's Office, counsel for Plaintiffs Ricia Johnson and Health Dimensions Rehabilitation, Inc.
Amy Slusser Conners, Esq., Jennifer L. Olson, Esq., and Thomas Backer Heffelfinger, Esq., Best & Flanagan LLP; James D. Kremer, Esq., DeWitt Mackall Crounse & Moore S.C.; Robert Salcido, Esq., Akin Gump Strauss Hauer & Feld LLP; and Kevin D. Hofman, Esq., Messerlie & Kramer P.A., counsel for Defendants.
Chad A. Blumenfield and Pamela Marentette, Assistant United States Attorneys, United States Attorney's Office, and Jonathan M. Bye, Esq., Ballard Spahr LLP, counsel for United States of America.
This matter is before the Court on Defendants' Motion for Summary Judgment (Doc. No. 486) and Motion for Attorney Fees (Doc. No. 477). For the reasons set forth below, the Court denies Defendants' motions.
The factual background for the above-entitled matter is clearly and precisely set forth in the Court's December 9, 2016 Memorandum Opinion and Order and is incorporated by reference herein.1 (See Doc. No. 324 ("Phase I Order").) In short, this qui tam action was filed in 2008. Relators Ricia Johnson ("Johnson") and Health Dimensions Rehabilitation, Inc. ("HDR") (collectively, "Relators") allege that Defendants Golden Gate National Senior Care, L.L.C., GGNSC Holdings, L.L.C, GGNSC Wayzata, L.L.C., and Aegis Therapies, Inc. ("Defendants") violated the False Claims Act, 31 U.S.C. §§ 3729-3733 ("FCA"), by submitting false Medicare claims in connection with Defendants' provision of physical and occupational therapy services to nursing home patients.
Relators' complaint distinguishes between two different time periods. As a result, the Court divided the case into two phases.2 (Doc. No. 115.) Phase I focused on a single facility (the "Hillcrest facility")from December 2005 through March 2007. (Id.)3 Phase II, currently before the Court, originally focused on nationwide allegations on dates outside of the Phase I time period.4 Phase II was further phased and ultimately limited to just the Hillcrest Facility from May 2002 through November 2005 and April 2007 through March 2012. (Doc. Nos. 337, 378, 396, 420, 432.)
Relators' Amended Complaint asserts four causes of action under the FCA: (1) false claims for payment to the Government in violation of 31 U.S.C. § 3729(a)(1)(A) ("Count I"); (2) false records in violation of 31 U.S.C. § 3729(a)(1)(B) ("Count II"); (3) conspiracy to defraud the Government in violation of 31 U.S.C. § 3729(a)(1)(c) ("Count III"); and (4) use of false records to avoid or decrease a monetary obligation to the Government in violation of 31 U.S.C. § 3729(a)(1)(G) ("Count IV"). (Am. Compl. ¶¶ 33-44.) With respect to all four counts, Relators' primary contention is that Defendants violated the FCA by submitting Medicare claims while failing to comply with various Medicare requirements. (See generally id.) To this end, Relators assert multiple theories of liability, involving a variety of statutes and regulations.5 (See generally id.)
On March 14, 2016, Defendants moved for summary judgment on Phase I. (Doc. No. 257.) The Court granted Defendants' motion insofar as it dismissed Relators' claims based on their documentation (other than allegations related to documentation of supervision of therapy services provided in the Wellness Center), timekeeping, and certification theories. (Phase I Order at 53-55.) Defendants now move for summary judgment on Relators' remaining claims and theories for Phase II: (1) scope-of-license; (2) skilled services; (3) supervision; (4) group therapy; (5) claims against certain Defendants and conspiracy (Count III); and, (6) reverse FCA allegations (Count IV).6 (Doc. No. 486.) Defendants also move for attorney fees with respect to Relators' nationwide Phase II claims. (Doc. No. 477.)
As a preliminary matter, Defendants contend that Relators' Phase II claims fail because Relators have no evidence beyond impermissible and unsupported speculation to support their theories of liability. Defendants contend that unlike Phase I, Relator Johnson did not personally participate or observe others participating in allegedly fraudulent conduct in the Wellness Center during Phase II. (See Def. Memo. at 1-3.) Notwithstanding, Defendants argue that Relators "elected not to pursue Phase II discovery" as to the Hillcrest facility. (Id. at 3.) Defendants assert that because Relators noticed no depositions during Phase II related to who staffed the Wellness Center in any month, how many patients typically used the Wellness Center on a month or quarterly basis, who was responsible for supervising the therapists' daily activities monthly, what the monthly scheduling process was for the Wellness Center or any other fact relevant to their allegations, their claims are based on mere speculation and conjecture which cannot defeat summary judgment. (See generally Def. Memo.) Defendants go so far as to claim that "the fact that the case is not worth the Relators' time tends to indicate that it is not worth the Court's or the jury's time either." (Doc. No. 505 ("Reply") at 5.)
Relators note that the Court found sufficient evidence to support their theories of liability with respect to Phase I and argue that there is sufficient evidence for a jury to conclude that Defendants' alleged fraudulent conduct also occurred during the Phase II time period. (Doc. No. 500 ("Rel. Opp.") at 3.) Relators argue that there is no evidence that the manner in which Defendants operated the Wellness Center during Phase I"magically became fraudulent on December 1, 2005 and magically stopped being fraudulent on March 30, 2007, as they were dates selected by the Court in order to phase discovery in the case."7 (Doc. No. 500 ("Rel. Opp.") at 3.) To this end, Relators reference the Court's finding that Defendants' alleged improper conduct was not limited to Relator Johnson, and assert that the knowledge of multiple corroborating witnesses covers the breadth of the Phase II time period.8 (Id. at 4-6 (citing Phase I Order at 13-15, 18-21, 27-29, 31-33).) Accordingly, Relators argue that jurors are entitled to apply their common sense to conclude that absent evidence of any change, the fraudulent conduct allegedly occurring during the Phase I time period was occurring before and after it as well. (Id.)
After reviewing the testimony of witnesses that worked in the Wellness Center during both the Phase I and Phase II time periods, the Court finds that it is not limited to the Phase I time period. Therefore, the Court finds that much of the evidence that precluded summary judgment during Phase I also applies to the Phase II time period and is very much worth the Court's time to address. As discussed below, the Court finds that Relators have presented sufficient evidence to create genuine issues of material fact thatpreclude summary judgment. Notwithstanding, the Court observes that prevailing at the summary judgment phase is not tantamount to prevailing at trial where the standard is much higher.
Before addressing Relators' remaining theories and claims, the Court revisits the requirements to sustain a claim under the FCA.
Under the FCA's qui tam provisions, relators—private citizens acting as whistleblowers—may sue on behalf of the Government to recover damages for submission to the Government of materially false claims for payment. 31 U.S.C. §§ 3729, 3730; see, e.g., United States ex rel. Donegan v. Anesthesia Assocs. of Kan. City, PC, 833 F.3d 874, 876 (8th Cir. 2016). "The FCA attaches liability, not to the underlying fraudulent activity, but to the claim for payment." U. S. ex rel. Onnen v. Sioux Falls Indep. Sch. Dist. No. 49-5, 688 F.3d 410, 414 (8th Cir. 2012) (quoting U.S. ex rel. Costner v. URS Consultants, Inc., 153 F.3d 667, 677 (8th Cir. 1998)). As such, a viable FCA claim generally requires a relator to establish that the defendant presented a claim for payment to the Government, that the claim was false or fraudulent, and that the defendant knew the claim was false or fraudulent. U.S. ex rel. Simpson v. Bayer Healthcare (In re Baycol Prods. Litig.), 732 F.3d 869, 875 (8th Cir. 2013). In addition, an FCA violation requires proof that a false or fraudulent claim or statement was material to the Government's decision to pay a claim. Universal Health Servs., Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989, 2001 (2016); U.S. ex rel. Vigil v. Nelnet, Inc., 639 F.3d 791, 797 (8th Cir. 2011).
The FCA defines "knowing" as having "actual knowledge" or acting "in deliberate ignorance of or "reckless disregard of the truth or falsity of the information." 31 U.S.C. § 3729(b)(1)(A). It does not require "proof of specific intent to defraud." Id. at § 3729(b)(1)(B). As in this case, an FCA claim may arise when a defendant certifies compliance with statutory, regulatory, or contractual requirements but allegedly does not comply with such requirements. See, e.g., Escobar, 136 S. Ct. at 1995-96; Donegan, 833 F.3d at 876-77; U.S. ex rel. Ketroser v. Mayo Found., 729 F.3d 825, 827 (8th Cir. 2013). A defendant does not knowingly present a false claim when: (1) the requirement at issue is "ambiguous"; (2) the defendant acted pursuant to an "objectively reasonable" interpretation of the requirement; and (3) no formal government guidance warned the defendant away from its...
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