United States ex rel. Acad. Health Ctr., Inc. v. Hyperion Found., Inc.
Decision Date | 09 July 2014 |
Docket Number | CIVIL ACTION NO. 3:10-CV-552-CWR- LRA |
Court | U.S. District Court — Southern District of Mississippi |
Parties | UNITED STATES OF AMERICA ex rel. ACADEMY HEALTH CENTER, INC. f/k/a ADVENTIST HEALTH CENTER, INC. PLAINTIFF v. HYPERION FOUNDATION, INC., d/b/a OXFORD HEALTH & REHABILITATION CENTER; ALTACARE CORPORATION; HP/ANCILLARIES, INC.; LONG TERM CARE SERVICES, INC.; SENTRY HEALTHCARE ACQUIRORS, INC.; HP/MANAGEMENT GROUP, INC.; HARRY McD. CLARK; JULIE MITTLEIDER; DOUGLAS K. MITTLEIDER; and JOHN DOES 1-200, DEFENDANTS |
Pending before the Court is a series of motions, including a Motion to Dismiss the United States' Complaint in Intervention, Docket No. 66; a Motion to Dismiss Academy's Second Amended Complaint for Lack of Subject Matter Jurisdiction and Failure to State A Claim, Docket No. 68; a Motion for Leave to Amend the Complaint, Docket No. 79; and a Motion to Strike the Affidavit of Melvin Eisele, Docket No. 84. After careful consideration of the briefs and the record, the Court is ready to rule. The Defendants' Motion to Dismiss the United States' Complaint in Intervention will be DENIED. The Motion to Dismiss Academy's Second Amended Complaint for Lack of Subject Matter Jurisdiction and Failure to State A Claim will be GRANTED IN PART and DENIED IN PART. The Motion for Leave to Amend the Complaint will be DENIED. The Motion to Strike the Affidavit of Melvin Eisele will be GRANTED.
This case arises out of a qui tam action brought by relator Academy Health Center, Inc., frequently known as Adventist Health Center, Inc. (hereinafter "AHC"), on behalf of the United States ("Relator"). AHC is a health care provider which, as part of its business, owns and leases skilled nursing facilities to other health care companies to manage them. On October 5, 2005, Hyperion Foundation, Inc. (hereinafter "Hyperion") entered into a lease agreement with AHC to manage the Oxford Health and Rehabilitation Center (hereinafter "Oxford" or "the Facility"), a skilled nursing facility in Lumberton, Mississippi. In turn, Hyperion entered into a management agreement with defendant AltaCare Corporation (hereinafter "Altacare") to manage the facility. As part of the terms, conditions and provisions of the lease agreement, Hyperion assumed the operations of Oxford and all of the rights and authority to operate Oxford and receive and accept payments, including those from Medicare and Medicaid, on behalf of the facility and its residents for services rendered to those residents.
The Relator AHC claims that this case began when Hyperion failed to pay the rent due to AHC, in violation of the lease agreement. AHC performed an initial investigation and determined that the Defendants could not or would not provide the requisite level of care for the residents. As a result, AHC took steps to terminate the lease and evict Hyperion as a tenant.
On July 15, 2008, AHC filed a Motion and/or Affidavit to Remove Tenant in the Justice Court of Lamar County, Mississippi, in an effort to evict Hyperion from the premises and terminate the relationship. The Motion sought to remove Hyperion as tenant by August 1, 2008, but Hyperion requested to continue the eviction hearing until August 6, 2008. On August 5, 2008, Hyperion filed a petition under Chapter 11 of the United States Bankruptcy Code beforethe U.S. Bankruptcy Court for the Southern District of Mississippi. As a result of the bankruptcy filing, the eviction proceeding could not go forward. See 11 U.S.C. § 362(a).
On September 30, 2009, Relator AHC filed its original Qui Tam Complaint and Other Relief in the bankruptcy proceeding, under seal, pursuant to Title 11, 28 U.S.C. §§ 157 and 1334(a)-(b). AHC provided a copy of the complaint and a confidential disclosure statement of all material evidence and information to the Attorney General of the United States and the U.S. Attorney for the Southern District of Mississippi, as required by the False Claims Act. See 31 U.S.C. § 3730(b)(2). On November 20, 2009, Relator AHC filed its First Amended Qui Tam Complaint and Other Relief, under seal, to allege new information and facts in support of its cause of action. The Relator duly provided the Complaint to the Government. On March 22, 2010, the bankruptcy court granted the United States Trustee's Motion to Dismiss Hyperion from bankruptcy due to Hyperion's failure to submit a disclosure report and its failure to file all monthly operating statements with the court and retained jurisdiction over the settlement agreement between Hyperion and AHC. On October 4, 2010, the bankruptcy court entered an agreed order transferring the qui tam proceeding originally brought in the bankruptcy action to this court. Docket No. 11
On December 3, 2012, after extensive investigation, the Government filed a Notice of Election to Intervene in Part and to Decline in Part in this action. The Government notified the Court of its decision to "intervene[] in that part of the action which alleges that defendants Hyperion, AltaCare, Long Term Care Services, Inc. ("LTCS") and Douglas K. Mittleider, made, caused to be made, and/or conspired to make false claims and false statements material to falseclaims to Medicare and Medicaid, for nursing home services at the Oxford Health & Rehabilitation Center facility in Lumberton, Mississippi." Notice of Election, Docket No. 32 at 2. The Government declined to intervene in the remainder of the Complaint.
AHC filed its Second Amended Complaint (hereinafter "Complaint") on February 11, 2011. Docket No. 7. The Complaint alleges that, from October 5, 2005 through at least May 1, 2012, Defendants made or caused to be made false or fraudulent claims and statements to the federal Medicare program and the federal-state Mississippi Medicaid program, for nursing home services purportedly provided to residents of Oxford which services were in fact non-existent, grossly deficient, materially substandard and/or worthless. Below is a summary of the allegations related to AHC's claims.
The Complaint alleges that "[t]he defendants exploited the residents of the Facility by receiving federal funds intended for care of the residents and willfully failing to utilize those funds toward resident care." It contends that the defendants have "abused the residents of the Facility by engaging in the willful or negligent infliction of physical pain, injury or mental anguish on the residents and/or the willful deprivation of services which are necessary to maintain the mental and physical health of the residents." SAC, ¶ 35. AHC alleges "financial abandonment," in that the Defendants have diverted funds intended for resident care to entities controlled by Douglas Mittleider. That mismanagement includes rationing items and supplies needed for the basic care of the residents, including reusing towels, oxygen bottles, garbage andlaundry bags, and medical tubing, increasing the risk of infection through repeated use. Hyperion has also had to hold paychecks to its employees because it did not have sufficient funds in its bank accounts to cover them; kept the Facility chronically short-staffed to lower costs; and closed part of the Facility, leaving the 120-bed facility with only 90 operational beds. Id.
AHC conducted an evaluation of the Facility in September 2008. The AHC evaluation found that Hyperion failed to provide a nursing home administrator or certified dietary manager for much of the period of evaluation; at least one laundry dryer was inoperative; several areas of the Facility had widespread mold and mildew; the bathroom tiles had a strong smell of urine, which indicated infrequent cleaning; old and mismatched furniture; and all of the showers had missing tiles, mold and mildew, and no privacy curtains or dividers. The Facility had received five Life Safety Code violations, while the average number of deficiencies for nursing homes in Mississippi at that time was 1.2, and the nation was 4.0. AHC indicates that these findings were reported to the Defendants. SAC, ¶ 36.
A state survey agency completed a survey and inspection of the Facility in February 2009, and found that the Facility was still not in substantial compliance with several conditions of participation. For example, during the February survey, "an astounding 20 out of 20 female residents surveyed" stated there were still no shower curtains or screens to provide privacy, and that "[t]he practice of the staff members was to bring in several females at a time to the shower area and undress and completely disrobe them in the shower areas in groups." The women surveyed stated that "they did not want to be nude in front of others and did not want to see others nude." SAC, ¶ 37.
A second AHC evaluation dated March 19, 2009, found that the Facility was still out of compliance with federal and state regulations. The Facility still had "inadequate equipment, old, worn and mismatched furniture, unsecured sprinkler heads, 'three of four shower areas were closed to residents,' and the 200 wing [of the building] was still being used for scavenged parts and storage." The evaluation found that many of the toilets in the 200 wing of the building had no connection to the wall or broken handle, making it impossible to flush dirty toilets. There were also "widespread moisture and mold problems, roaches in the 200 Hall, and many of the 200 Hall rooms were missing mattresses and had broken air conditioning units." These findings were reported to the Defendants. SAC, ¶ 38.
A state survey dated November 24, 2009, found that the facility was still not in substantial compliance. The survey reported that a resident suffered a fall during a transfer from a wheelchair to his bed because a certified nurse assistant transferred the resident to the bed without aid, despite the fact that the resident's...
To continue reading
Request your trial