United States Ex Rel. Charles Wilkins v. Group

Decision Date30 June 2011
Docket NumberNo. 10–2747.,10–2747.
Citation659 F.3d 295
PartiesUNITED STATES ex rel. Charles WILKINS; Daryl Willis, Appellantsv.UNITED HEALTH GROUP, INCORPORATED; AmeriChoice; AmeriChoice of New Jersey, Inc.
CourtU.S. Court of Appeals — Third Circuit


Ross Begelman, Esq. (argued), Marc M. Orlow, Esq., Begelman, Orlow & Melletz, Cherry Hill, NJ, for appellants.Michael C. Theis, Esq. (argued), Jaasi J. Munanka, Esq., Hogan Lovells US, Denver, CO, William P. Deni, Jr., Esq., Bruce A. Levy, Esq., Ellen Lubensky, Esq., Gibbons, Newark, NJ, for appellees.Tony West, Esq., Assistant Attorney General, Paul J. Fishman, Esq., United States Attorney, Douglas N. Letter, Esq., Teal Luthy Miller, Esq. (argued), Attorneys, Appellate Staff, Civil Division, U.S. Department of Justice, Washington, DC, for amicus curiae United States.BEFORE: FUENTES, SMITH, and GREENBERG, Circuit Judges.


GREENBERG, Circuit Judge.


This matter comes on before this Court on an appeal from an order the District Court entered on May 13, 2010, granting the motion of appellees United Health Group, AmeriChoice, and AmeriChoice–New Jersey (collectively appellees) under Federal Rule of Civil Procedure 12(b)(6) to dismiss Charles Wilkins' and Daryl Willis' (collectively appellants) qui tam action 1 based on the False Claims Act (“FCA”), 31 U.S.C. § 3729, for failure to state a claim on which relief may be granted. Appellants have alleged that appellees, through their participation in federally funded health insurance programs, certified that they were in compliance with all healthcare laws and regulations even though they knowingly violated several Medicare marketing regulations, resulting in their submission of false claims for payment to the federal government. Appellants further alleged that AmeriChoice–NJ violated the FCA by illegally providing kickbacks in violation of the Medicare Anti–Kickback Statute (“AKS”), 42 U.S.C. § 1320a–7b, to a New Jersey medical clinic to induce the clinic to switch its patients to AmeriChoice–NJ's Medicare and Medicaid programs. Moreover, appellants have alleged that AmeriChoice–NJ agents violated the AKS by enticing doctors to provide the names of patients eligible for Medicare and Medicaid programs. Thus, this action involves two distinct types of claims with which we will deal separately.

In addition to involving two distinct types of claims, the action implicates the two medical programs to which we already have referred, Medicare, a federally subsidized health insurance program for the elderly and certain disabled persons, see 42 U.S.C. § 1395c and d, and Medicaid, a cooperative federal-state public assistance program pursuant to which the federal government makes matching funds available to pay for certain medical services furnished to needy individuals, see 42 U.S.C. § 1396. Some elderly poor are “dual eligible” under both programs.2 Though appellants mention both programs in their complaint, this case is essentially a Medicare case arising, as the District Court indicated at the outset of its opinion, “out of alleged fraudulent claims to Medicare.” United States ex rel. Wilkins v. United Health Group, Inc., Civ. No. 08–3425, 2010 WL 1931134, at *1, 2010 U.S. Dist. LEXIS 47080, at *1 (D.N.J. May 13, 2010) (“ Wilkins ”).

The District Court held that appellants' allegations failed to state a plausible claim for relief under the FCA for two reasons: (1) appellants failed to identify a single false claim that appellees submitted to the Government, and (2) the marketing regulations that appellants claimed appellees violated were not relevant to the Government's decision to pay appellees' Medicare claims. In addition, the Court dismissed appellants' AKS claims because they did not include an allegation that appellees certified that they were in compliance with the AKS or that such compliance was a relevant consideration when the Government processed their Medicare claims. Inasmuch as we agree with the Court's disposition of appellants' Medicare marketing regulations claims but disagree with its holding with respect to appellants' AKS claims, we partially will affirm and partially will reverse the Court's May 13, 2010 order and we will remand the case to the District Court for further proceedings.


In view of the procedural posture of this case, we set forth the facts as appellants have alleged them, and decide the appeal on the basis of those allegations and, in doing so, will construe the complaint in the light most favorable to appellants. See Lexington Nat. Ins. Corp. v. Ranger Ins. Co., 326 F.3d 416, 417 (3d Cir.2003).

United Health provides access to health care services and resources and AmeriChoice and AmeriChoice–NJ are United Health subsidiaries offering Medicare Advantage (“MA”) plans.3 Under MA plans, AmeriChoice and AmeriChoice–NJ provide individuals enrolled in Medicare with health care services and submit claims to the Government for reimbursement based on the number of patients enrolled in their Medicare programs.4 Organizations which provide services under Medicare do so pursuant to contracts with the Centers for Medicare and Medicaid Services (“CMS”), a division of the Department of Health and Human Services charged with administering the Medicare and Medicaid programs. See 42 C.F.R. § 422.503(a). Each month, as participants offering MA plans, appellees certify to CMS that they continue to comply with all of the CMS MA guidelines including MA marketing regulations and the AKS.

Wilkins and Willis began employment with United Health Group and AmeriChoice in 2007, Willis as a general manager for Medicare/Medicaid marketing and sales and Wilkins as a sales representative. In April 2008, United Health terminated Wilkins' employment in reaction to his complaints concerning what he perceived were United Health's illegal practices which are the basis for this action. Similarly, at some point during 2008, United Health, after demoting Willis for his conduct in making complaints to his supervisors about what he perceived were United Health's illegal practices, went further and terminated his employment.

On July 10, 2008, appellants filed this qui tam action under seal in the District Court alleging that appellees' sales representatives violated the FCA by offering physicians illegal kickbacks and violating MA marketing rules while accepting payments from government funded health insurance programs. Specifically, appellants alleged that: (1) United Health used marketing flyers that CMS did not approve beforehand; (2) its licensed sales agents engaged in marketing activities in the waiting rooms of clinics and doctors' offices; (3) non-licensed individuals engaged in marketing activities; (4) United Health commonly used an excessive number of sales representatives at presentations in an attempt to “overwhelm the public;” (5) sales representatives asked persons to raise their hands at presentations if they were eligible for both Medicare and Medicaid; (6) marketing personnel chased people in supermarkets to ask them whether they were dual eligible; (7) United Health used brokers to engage in door-to-door solicitation; (8) United Health sales agents gave out prizes at Medicare presentations in excess of $15 in value contrary to CMS guidelines; (9) AmeriChoice's sales representatives paid $27,000 to a medical clinic, Reliance Medical Group, to switch certain eligible beneficiaries to its Medicare and Medicaid plans; (10) United Health's sales representatives offered payments to physicians in exchange for the physicians providing appellees with the names of potential new enrollees eligible for Medicare and Medicaid; (11) United Health failed to maintain and implement a compliance program.5 App. at 39–46.

After appellants filed this action the Government investigated their claims, and, during the investigation, in accordance with the FCA's requirements the case remained under seal. On May 26, 2009, after the Government finished its investigation, it notified the parties that it would not intervene in the case. See 31 U.S.C. § 3730(b)(4)(B).6 On August 5, 2009, appellants filed an amended complaint which pleaded an FCA claim predicated on the allegations we discuss above and nine claims based on violations of state law.7 Notwithstanding the seeming specificity of appellants' complaint, they do not identify any specific claim for payment that United Health made to the federal Government in violation of the FCA. The complaint, however, does allege that CMS makes advanced monthly payments to United Health for each enrollee in its plans and that United Health certifies each month its “continued compliance with all of the CMS [Medicare Advantage] Guidelines and based on such certification, United Defendants continues [sic] to receive the monthly capitation payment.” Am. Compl. at 10. 8 Thus appellants contend that appellees, by submitting claims for payment to CMS while failing to comply with the Medicare laws and regulations, including the AKS, presented false claims to the Government in violation of the FCA.

After the Government declined to intervene, appellees moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted and Federal Rule of Civil Procedure 9(b) for failure to plead fraud with particularity.9 The District Court granted appellees' motion for failure to state a claim and therefore did not address appellees' alternative argument for dismissal that appellants failed to plead their claims with the particularity that Rule 9(b) requires. The Court dismissed the complaint because appellants did not identify “even a single claim for payment to the Government.” Wilkins, 2010 WL 1931134, at *4, 2010 U.S. Dist. LEXIS 47080, at *13. Moreover, the Court held that United Health's failure to comply with marketing guidelines and...

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