United States ex rel. Lynch v. Univ. of Cincinnati Med. Ctr.

• Decision Date: 20 March 2020
• Docket Number: Case No. 1:18-cv-587
• Parties: UNITED STATES ex rel., DONALD LYNCH, M.D., Plaintiff-Relator, v. UNIVERSITY OF CINCINNATI MEDICAL CENTER, LLC, et al., Defendants.
• Court: United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio

UNITED STATES ex rel., DONALD LYNCH, M.D., Plaintiff-Relator, v. UNIVERSITY OF CINCINNATI MEDICAL CENTER, LLC, et al., Defendants.

Case No. 1:18-cv-587

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

March 20, 2020

Dlott, J.

Litkovitz, M.J.

ORDER AND REPORT AND RECOMMENDATION

I. Introduction

Plaintiff-Relator Dr. Donald Lynch, M.D., filed this action on August 20, 2018, claiming violations of the False Claims Act (FCA), 31 U.S.C. § 3729 et seq. (Doc. 1). Relator named three defendants in the original complaint: University of Cincinnati Medical Center, LLC (UCMC), an Ohio nonprofit corporation; University of Cincinnati Physicians, Inc. (UCP), an Ohio corporation; and UC Health, LLC (UC Health), an Ohio not for profit limited liability company. (Id., ¶ 1). Relator alleges that from December 2015 through the date of the complaint, these three defendants knowingly submitted false claims for payment to the United States related to medical procedures performed by their agents. (Id., ¶ 2). Relator claims that the procedures, Transcatheter Aortic Valve Replacements (TAVRs), were not "reasonable and necessary for the diagnosis or treatment of illness or injury" under 42 U.S.C. § 1395y(a)(1)(A). (Id.). Relator seeks to recover damages and civil penalties from defendants on behalf of the United States for their presentment of allegedly false and fraudulent claims for payment to government medical benefit programs.¹ (Id., ¶ 3).

This matter is before the Court on UCMC and UC Health's motion to dismiss and related memoranda (Docs. 10, 16, 18); UCP's first and second motions to dismiss and related memoranda (Docs. 17, 25, 34, 38); UCMC and UC Health's motion to strike the amended complaint, Relator's motion for leave to file an amended complaint, and related memoranda (Docs. 23, 26, 27, 28, 32); and the United States of America's Statement of Interest and related memoranda (Docs. 35, 39, 40).

II. Preliminary motions

1. Request for oral argument

Defendant UCP includes a request for oral argument in the caption of its motion to dismiss Relator's proposed amended complaint. (Doc. 25). Defendant UCP has not "succinctly explained" the grounds for its request in the body of its motion as required by S.D. Ohio Civ. R. 7.1(b)(2). Further, oral argument is not "essential to the fair resolution of the case." Id. The Court's review of the facts is limited to the allegations of the complaint and attached exhibits, and the parties have thoroughly briefed the applicable legal issues. UCP's request for oral argument is therefore denied.

2. Motion to strike the amended complaint/motion to amend the complaint

Defendants UCMC and UC Health (the UC Health defendants) filed a motion to dismiss the complaint for failure to state a claim for relief on June 14, 2019. (Doc. 10). After the motion was fully briefed (Docs. 16, 18), and after defendant UCP had filed its motion to dismiss the complaint on July 22, 2019 (Doc. 17), Relator filed an amended complaint without first seeking leave of court. (Doc. 20). The proposed amended complaint, which Relator filed on August 12, 2019, seeks to modify the allegations of the complaint; name a fourth defendant, University ofCincinnati Physicians Company, LLC/dba UC Physicians (UC Physicians)²; and add a claim for conspiracy against all defendants under 31 U.S.C. § 3729(a)(1)(C).

The UC Health defendants move to strike the amended complaint. (Doc. 23). They first argue that Relator did not timely file the amended complaint within 21 days after the UC Health defendants served their motion to dismiss (see Doc. 10), and Relator filed the amended complaint without first seeking leave of court as required under Fed. R. Civ. P. 15(a)(2). In addition, they argue that because Relator was precluded from amending his complaint as a matter of course, he was required to seek leave to add UC Physicians as a defendant under Fed. R. Civ. P. 21, which governs amending a complaint to add a new party. (Doc. 23 at 6-8).

Relator filed a memorandum opposing the UC Health defendants' motion to strike the amended complaint on September 16, 2019. (Doc. 26). Relator argues that the amended complaint was timely filed as it relates to his claims against the originally named defendants, and he was not required to seek leave to add UC Physicians as a new defendant under Fed. R. Civ. P. 21. Relator further contends that the motion to strike is moot because he filed a contemporaneous motion for leave to amend the complaint (Doc. 27) with his memorandum in opposition to defendants' motion to strike.

The UC Health defendants filed a combined reply in support of their motion to strike the amended complaint (Doc. 20) and response in opposition to Relator's motion for leave to file his amended complaint (Doc. 27). (Doc. 28). The UC Health defendants oppose the motion for leave to amend under Fed. R. Civ. P. 15(a)(2), asserting that neither the original complaint nor the proposed amended complaint can withstand their motion to dismiss; therefore, amendment would be futile. (Doc. 28 at 2; see Saint Torrance v. Firstar, 529 F. Supp. 2d 836, 844-45 (S.D.Ohio 2007)). They argue that the complaint fails to state a claim for relief under the FCA, and the proposed amendment does not cure the defect. They incorporate their arguments from their motion to dismiss the original complaint (Doc. 10) and identify three deficiencies they addressed in the motion which the proposed amended complaint purportedly does not cure. First, the UC Health defendants argue that Relator's claim is premised on their alleged failure to comply with a "nonbinding guidance document," which is not a cognizable theory of liability under the FCA. (Doc. 28). Second, they contend that Relator has not alleged with particularity that they "actually presented any false or fraudulent claims for payment to the government." (Id.). Third, defendants argue that Relator has not established that their "alleged noncompliance was material to the government's decision to pay the claim." (Id., citing Doc. 10 at 14). The UC Health defendants urge the Court to review the alleged "legal insufficiencies" of the proposed amended complaint, deny plaintiff's motion for leave to amend based on futility of the amendment, and dismiss the case under Fed. R. Civ. P. 12(b)(6). (Id. at 6).

Relator argues in reply that the Court should grant him leave to amend the complaint because the proposed amendment would not be futile. (Doc. 32). Relator argues that his FCA claim is premised on the violation of substantive rules which carry the force of law; the complaint as amended specifically alleges that the UC Health defendants have presented false claims; and the amended complaint adequately pleads materiality.

The Court will deny the UC Health defendants' motion to strike the amended complaint (Doc. 23) as moot and grant plaintiff leave to file the proposed amended complaint (Doc. 27-1). Relator did not unduly delay seeking leave to amend, there is no evidence of bad faith on Relator's part, defendants will not be unduly prejudiced by the amendment, and the amendment would not be futile. Coe v. Bell, 161 F.3d 320, 341-42 (6th Cir. 1998) (citing Brooks v. Celeste,39 F.3d 125, 130 (6th Cir. 1994)). The amended complaint adds little of substance to the claims asserted in the original complaint against the UC Health defendants and does not impact resolution of their motion to dismiss the original complaint. Further, defendant UCP has filed a motion to dismiss the amended complaint, and the motion is fully briefed.³ (Doc. 25). The Court therefore grants Relator's motion for leave to amend the complaint under Fed. R. Civ. P. 15(a). (Doc. 27). The Court will resolve the UC Health defendants' motion to dismiss the original complaint (Doc. 10) and UCP's motion to dismiss the amended complaint (Doc. 25).

3. Motion for leave to file a reply in support of the United States' Statement of Interest (Doc. 40).

The United States filed a Statement of Interest in this case in response to the UC Health defendants' motion to dismiss (Doc. 10). (Doc. 35). The United States asserts that it filed the Statement of Interest to "correct misstatements of law in Defendants' motion and Reply (Docs. 10, 18), which were adopted by reference in Defendant [UCP's] Motion to Dismiss and Joinder (Doc. 25), and futility arguments set forth in [the UC Health defendants'] subsequent briefing. (Doc. 28)." (Doc. 35. at 1, n.1). The United States asserts that it remains "the real party in interest in this action" despite opting to not intervene. (Id., n.2, citing United States ex rel. Eisenstein v. City of New York, 556 U.S. 928, 933-35 (2009)). The United States submits its statement under the authority of 28 U.S.C. § 517, which gives the United States Attorney General the authority to send "any officer of the Department of Justice [DOJ] . . . to any State or district in the United States to attend to the interests of the United States in a suit pending in a court of the United States. . . ." (Doc. 35 at 1). The United States contends it has "a substantialinterest in the correct interpretation and application of the FCA," which is "the Unites States' principal civil remedy for fraud on the government," in this and similar cases.⁴ (Id.).

The UC Health defendants filed a response to the Statement of Interest on November 21, 2019, urging the Court to disregard the Statement because neither 28 U.S.C. § 517 nor 31 U.S.C. § 3730 authorize the United States to file the Statement. (Doc. 39). To the extent the Court allows the United States to submit its Statement of Interest, the UC Health defendants have presented arguments responding to the merits of the United States' position. (Id.).

The United States moved for leave to file a reply to the UC Health defendants' response on December 13, 2019 and attached a proposed reply. (Docs. 40, 40-1).

The Sixth Circuit Court of Appeals has acknowledged the United States has a right to take "only a...