United States v. Anderson, NO. 2:13–cv–00035

CourtUnited States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
Writing for the CourtWAVERLY D. CRENSHAW, JR., CHIEF UNITED STATES DISTRICT JUDGE
Citation271 F.Supp.3d 950
Parties UNITED STATES of America, State of Tennessee, ex rel. Debra Norris, Plaintiffs v. Matthew ANDERSON, David Florence, Cindy Scott, Cookeville Center for Pain Management, Preferred Pain Center of Grundy County, McMinnville Pain Relief Center, and PMC Management, LLC, Defendants
Docket NumberNO. 2:13–cv–00035
Decision Date07 September 2017

271 F.Supp.3d 950

UNITED STATES of America, State of Tennessee, ex rel. Debra Norris, Plaintiffs
v.
Matthew ANDERSON, David Florence, Cindy Scott, Cookeville Center for Pain Management, Preferred Pain Center of Grundy County, McMinnville Pain Relief Center, and PMC Management, LLC, Defendants

NO. 2:13–cv–00035

United States District Court, M.D. Tennessee, Northeastern Division, Cookeville Division.

Filed September 7, 2017


271 F.Supp.3d 952

Ellen Bowden McIntyre, Office of the United States Attorney, Elijah W. Swiney, Philip H. Bangle, Tennessee Attorney General's Office, Robert A. Peal, William J. Harbison, II, Neal & Harwell, PLC, Nashville, TN, for Plaintiffs.

Jason Richard Edgecombe, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Atlanta, GA, Joy Boyd Longnecker, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, J. Alex Little, Raquel L. Bellamy, Bone, McAllester & Norton, PLLC, Nashville, TN, C. Eugene Shiles, Spears, Moore, Rebman & Williams, Chattanooga, TN, Thomas H. Barnard, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, JR., CHIEF UNITED STATES DISTRICT JUDGE

Pending before the Court is a Motion to Dismiss the Amended Complaint in Intervention (Doc. No. 82), filed by Defendants Anderson and PMC Management, LLC ("PMC") (together, "Defendants").1 For the reasons stated herein, the Motion to Dismiss will be granted in part and denied in part as set forth below.

271 F.Supp.3d 953

FACTS

This action arises from alleged false and fraudulent healthcare claims submitted to the United States and the State of Tennessee by Defendants, in violation of the False Claims Act ("FCA") and the Tennessee Medicaid False Claims Act ("TMFCA"), and also alleged violations of the Controlled Substance Act ("CSA") by Defendants. The original Complaint (Doc. No. 1) was filed by Relator Norris on May 3, 2013, against more than 30 Defendants. In late 2015, both the United States and Tennessee filed Notices of Election to Intervene in Part and to Decline to Intervene in Part (Doc. Nos. 30–31). On August 3, 2016, the United States and Tennessee (together, "the Government") filed an Amended Complaint in Intervention against seven Defendants (Doc. No. 77), and that Amended Complaint is the subject of the pending Motion to Dismiss.

The Government alleges that, from Spring of 2012 until January of 2014, Defendant Anderson, acting personally and then through his alter ego company, PCM, masterminded a scheme to falsely obtain money from government health care programs by creating a group of four pain management clinics that he and his management company, PMC, controlled, but that a string of sham physician owners purportedly owned. These clinics then allegedly caused the submission of false claims for payment to Medicare and TennCare. (Doc. No. 77 at 2.) The Amended Complaint in Intervention sets forth six counts: (1) false or fraudulent claims to Medicare; (2) false statements to Medicare; (3) payment by mistake of fact, (4) unjust enrichment, (5) violations of the CSA, and (6) false or fraudulent claims to TennCare.

Anderson and PMC contend that the Amended Complaint in Intervention fails to plead a violation of the FCA with particularity and fails to state a claim upon which relief can be granted against them. They maintain that (1) they were in only a management relationship with the pain clinics and cannot be liable for any alleged violation of Medicare or TennCare by those pain clinics; (2) that the CSA provision upon which the Government relies does not apply to Defendants; (3) that Defendants cannot be liable for the physicians' alleged failures to discharge their supervisory and other responsibilities at the pain clinics; (4) that the Government has not sufficiently pled its common law claims; and (5) that Defendants cannot be liable for the submission of false or fraudulent claims under a "shadow ownership" theory of liability. (Doc. No. 82.)

MOTIONS TO DISMISS

For purposes of a motion to dismiss, the Court must take all of the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. at 1950. A legal conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).

271 F.Supp.3d 954

FALSE CLAIMS ACT

The FCA penalizes any person who knowingly presents, or causes to be presented, to an officer or employee of the U.S. government a false or fraudulent claim for payment or approval. Chesbrough v. VPA, P.C., 655 F.3d 461, 466 (6th Cir. 2011) (citing 31 U.S.C. § 3729(a)(1) ). It also penalizes any person who knowingly2 makes, uses or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government. Id. A private individual, known as a realtor, may bring a civil action for a violation of the FCA, also known as a qui tam action, on behalf of the government. 31 U.S.C. § 3730(b)(1). The relator must serve a copy of the complaint upon the government, which may elect to intervene and proceed with the action. 31 U.S.C. § 3730(b)(2). The complaint is filed in camera and remains under seal for at least 60 days, and shall not be served on the defendant until the court so orders. Id. If the government intervenes and proceeds with the action, it has the primary responsibility for prosecuting the action. If the government elects not to proceed with the action, the relator has the right to conduct the action. 31 U.S.C. § 3730(c)(1) and (3).

Similarly, the TMFCA penalizes any person who knowingly presents or causes to be presented a false or fraudulent claim for payment or approval under the Medicaid program or knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim under the Medicaid program. Tenn. Code Ann. § 71–5–182. In Tennessee, the Medicaid program is administered through TennCare. Tenn. Code Ann. § 71–5–101, etseq.

Complaints alleging FCA violations must comply with Federal Rule of Civil Procedure 9(b)'s requirement that fraud be pled with particularity. Chesbrough, 655 F.3d at 466. Rule 9(b) requires that in alleging fraud, a party must state with particularity the circumstances constituting fraud. Malice, intent, knowledge and other conditions of a person's mind may be alleged generally. Id. In complying with Rule 9(b), a relator or the government, at a minimum, must allege the time, place and content of the alleged misrepresentation, the fraudulent scheme, the fraudulent intent of the defendant and the injury resulting from the fraud. Id. at 467.

When read against the backdrop of Rule 8, it is clear that the purpose of Rule 9 is not to reintroduce formalities to pleading, but it is instead to provide defendants with a more specific form of notice as to the particulars of their alleged misconduct. United States ex rel. Simmons v. Meridian Surgical Partners, LLC, 2013 WL 4098663 at *2 (M.D. Tenn. May 2, 2013) (citing United States ex rel. Bledsoe v. Community Health Systems, Inc., 501 F.3d 493, 503 (6th Cir. 2007) ).

The relator or the government must plead with sufficient particularity that the defendant knowingly presented or caused to be presented to the U.S. government a false or fraudulent claim for payment or approval. McFeeters v. Northwest Hospital, LLC, 2015 WL 328212 at *2 (M.D. Tenn. Jan. 23, 2015). The submission of a false claim for payment converts an improper financial relationship into an act of fraud upon the government and forms the basis of the cause of action. Id. at *4. Therefore, the Sixth Circuit imposes a strict requirement that an FCA complaint

271 F.Supp.3d 955

identify actual false claims. Id. (citing Chesbrough ).

To prevail on an FCA claim under 31 U.S.C. § 3729, a relator or the government must show: (1) a false or fraudulent claim (2) that was material to the decision-making process (3) which the defendant presented or caused to be presented to the government for payment or approval (4) with knowledge that the claim was false or fraudulent. United States v. Celgene Corp., 226 F.Supp.3d 1032, 1037 (C.D. Cal. 2016) ; 31 U.S.C. § 3729(a)(1)(A).

ANALYSIS

1. False Claims Acts

The Government has alleged that, in order to obtain Medicare and Medicaid reimbursements, healthcare providers must submit claim forms with specific information, including identification of the services rendered and for which reimbursement is...

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5 practice notes
  • United States ex rel. Morsell v. Symantec Corp., Civil Action No. 12-800 (RC)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • 30 Marzo 2020
    ...v. Lederman , No. 04-cv-2483, 2014 WL 1910096 at *9 (E.D.N.Y. May 13, 2014) (quotation omitted); see also United States v. Anderson , 271 F. Supp. 3d 950, 959 (M.D. Tenn. 2017). To establish unjust enrichment, "the government must show that it (1) conferred a benefit on [Symantec] that (2) ......
  • Progressive Health & Rehab Corp. v. Strategy Anesthesia, LLC, Case No. 2:16–cv–1151
    • United States
    • U.S. District Court — Southern District of Ohio
    • 25 Septiembre 2017
    ..."placeholder" motion for class certification as premature. See Mey v. N. Am. Bancard, LLC, 2014 WL 6686773 at * 2 (E.D. Mich. 2014) ; 271 F.Supp.3d 950 Beaudry v. Telecheck Svs., Inc., 2010 WL 2901781 at *2 (M.D. Tenn. 2010) ; and, Minniti v. Eilers, 302 F.R.D. 655 (S.D. Fla. 2014). A court......
  • United States ex rel. Kramer v. Doyle, 1:18-cv-373
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • 21 Abril 2022
    ...or unlicensed services or created incentives tied to providing specific services. Cf. United States ex rel. Norris v. Anderson, 271 F.Supp.3d 950, 955 (6th Cir. 2017) (doctor told staff to use fraudulently high billing code); SouthEast Eye, 2021 WL 5150687, at *15 (identified optometrists r......
  • U.S. & Tenn. ex rel. Alt v. Anesthesia Servs. Assocs., PLLC, Case No. 3:16-cv-0549
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • 31 Diciembre 2019
    ...described in some detail the defendant's participation in the presentation of false claims. See U.S. ex rel. Norris v. Anderson, 271 F. Supp. 3d 950, 995 (M.D. Tenn. 2017) (Crenshaw, C.J.) (allowing FCA claims to proceed based on allegations of indirect conduct in causing claims to be submi......
  • Request a trial to view additional results
5 cases
  • United States ex rel. Morsell v. Symantec Corp., Civil Action No. 12-800 (RC)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • 30 Marzo 2020
    ...v. Lederman , No. 04-cv-2483, 2014 WL 1910096 at *9 (E.D.N.Y. May 13, 2014) (quotation omitted); see also United States v. Anderson , 271 F. Supp. 3d 950, 959 (M.D. Tenn. 2017). To establish unjust enrichment, "the government must show that it (1) conferred a benefit on [Symantec] that (2) ......
  • Progressive Health & Rehab Corp. v. Strategy Anesthesia, LLC, Case No. 2:16–cv–1151
    • United States
    • U.S. District Court — Southern District of Ohio
    • 25 Septiembre 2017
    ..."placeholder" motion for class certification as premature. See Mey v. N. Am. Bancard, LLC, 2014 WL 6686773 at * 2 (E.D. Mich. 2014) ; 271 F.Supp.3d 950 Beaudry v. Telecheck Svs., Inc., 2010 WL 2901781 at *2 (M.D. Tenn. 2010) ; and, Minniti v. Eilers, 302 F.R.D. 655 (S.D. Fla. 2014). A court......
  • United States ex rel. Kramer v. Doyle, 1:18-cv-373
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • 21 Abril 2022
    ...or unlicensed services or created incentives tied to providing specific services. Cf. United States ex rel. Norris v. Anderson, 271 F.Supp.3d 950, 955 (6th Cir. 2017) (doctor told staff to use fraudulently high billing code); SouthEast Eye, 2021 WL 5150687, at *15 (identified optometrists r......
  • U.S. & Tenn. ex rel. Alt v. Anesthesia Servs. Assocs., PLLC, Case No. 3:16-cv-0549
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • 31 Diciembre 2019
    ...described in some detail the defendant's participation in the presentation of false claims. See U.S. ex rel. Norris v. Anderson, 271 F. Supp. 3d 950, 995 (M.D. Tenn. 2017) (Crenshaw, C.J.) (allowing FCA claims to proceed based on allegations of indirect conduct in causing claims to be submi......
  • Request a trial to view additional results

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