United States v. Genesis Glob. Healthcare

• Decision Date: 20 September 2021
• Docket Number: Civil Action 4:18-cv-128
• Parties: UNITED STATES OF AMERICA, et al., Plaintiffs, v. GENESIS GLOBAL HEALTHCARE, et al., Defendants.
• Court: U.S. District Court — Southern District of Georgia

UNITED STATES OF AMERICA, et al., Plaintiffs, v. GENESIS GLOBAL HEALTHCARE, et al., Defendants.

Civil Action No. 4:18-cv-128

United States District Court, S.D. Georgia, Savannah Division

September 20, 2021

ORDER

R STAN BAKER UNITED STATES DISTRICT JUDGE

This is a qui tam action in which Jerry Cohn Jr., M.D., and Sharon Bell bring suit as Relators on behalf of the United States under the False Claims Act (the “FCA”) and on behalf of the state of Georgia under the Georgia False Medicaid Claims Act (the “GFMCA”).^[1] Relators bring suit against Defendants Genesis Vascular of Pooler, LLC (“GVP”);^[2] Genesis Global Healthcare, LLC (“Genesis Global”); Genesis Healthcare Management, LLC (“Genesis Management”); Genesis Vascular, LLC; Statesboro Cardiology, P.A.; James O'Dare Barbara O'Dare; Donald Geer; Sean Yanes; Dr. Abraham Lin C3 of Bulloch, Inc.; Dr. Stanley J. Shin; Alexis M. Shin, as trustee of the Stanley J. Shin Family Trust (the “Trust”); Dr. Todd Newson; Dr. Howard Gale; Dr. Leonard Talarico; Pooler Property Holdings, LLC; Dr. David Nabert; and Dr. Todd Becker for alleged violations of the FCA and the GFMCA. (See doc. 32.) Specifically, in the Amended Complaint, Relators allege that Defendants violated the FCA and GFMCA by participating in an illegal fraud scheme with the purpose of inducing patient referrals to a medical clinic owned and operated by Defendants and then billing federal and state healthcare programs for false claims generated by that scheme. (See generally id.)

Presently before the Court are Motions to Dismiss the Amended Complaint filed by Defendants Gale and Becker, (docs. 72, 73); Defendants C3 of Bulloch, Abraham Lin, David Nabert, the Trust, Stanley J. Shin, and Statesboro Cardiology, (doc. 74); Defendants Pooler Property Holdings and Talarico, (doc. 75); Defendant Geer, (doc. 80); and Defendants Genesis Global, Genesis Management, Genesis Vascular, Barbara O'Dare, and James O'Dare, (doc. 81).^[3]While Defendants filed separate Motions to Dismiss, most of their arguments for dismissal are nearly identical: that the Amended Complaint failed to plead with sufficient particularity that Defendants engaged in an illegal fraud scheme or possessed the requisite scienter; that the Amended Complaint improperly commingled Defendants and failed to sufficiently allege each Defendant's participation in the alleged fraud scheme; that the Amended Complaint amounts to an improper shotgun pleading; and that the Amended Complaint failed to state any claim under the FCA or GFMCA. (See generally docs. 72, 73, 74-1, 75-1, 80, 81.) Relators filed Responses to each Motion to Dismiss, (docs. 87, 88, 89, 96, 98), and Defendants filed Replies, (docs. 99, 100, 101, 102, 105).

BACKGROUND

I. Applicable Law

A. The False Claims Act

The FCA permits private persons (or “relators”) to file a form of civil action (known as qui tam) on behalf of the United States against any person who: (1) “knowingly presents, or causes to be presented, a false or fraudulent claim” to the government (the “presentment” provision); (2) knowingly makes, uses, or causes to be made or used, a false statement to cause the government to pay a claim (the “make-or-use” provision); or (3) knowingly makes or causes to be made a false record or statement to decrease an obligation to pay the government (the “reverse false claim” provision). 31 U.S.C. § 3729(a)(1)(A), (B), (G); see also United States ex rel. Clausen v. Lab'y Corp. of Am., Inc., 290 F.3d 1301, 1307 (11th Cir. 2002); United States ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591 Fed.Appx. 693, 696 (11th Cir. 2014). The FCA also prohibits any person from “conspir[ing] to commit a violation” of the presentment, make-or-use, or reverse false claim provisions. 31 U.S.C. § 3729(a)(1)(C).

Concerning scienter, the FCA defines “knowledge” and “knowingly” as either “actual knowledge, ” “deliberate ignorance, ” or “reckless disregard.” United States ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148, 1155 (11th Cir. 2017) (quoting 31 U.S.C. § 3729(b)). The FCA's scienter requirement is “rigorous.” Universal Health Servs., Inc. v. United States, 136 S.Ct. 1989, 2002 (2016). While the FCA does not require “‘specific intent to defraud,' relators proceeding under the false certification theory must allege that the defendant knew or should have known that its conduct violated regulations or statutes.”^[4] Wallace, 2020 WL 4500493, at *16 (citing Phalp, 857 F.3d at 1154-55).

B. The Anti-Kickback Statute and the Stark Act

Because compliance with the Anti-Kickback Statute (“AKS”) and the Stark Act is a “condition of payment for Medicare and Medicaid, claims submitted for services rendered in violation of these statutes can form the basis of liability under the F[CA].” United States v. Marder, 208 F.Supp.3d 1296, 1316 (S.D. Fla. 2016) (citation omitted) (alteration in original). The AKS prohibits: (1) knowingly soliciting or receiving remuneration in exchange for “referring an individual to a person for the furnishing . . . of any . . . service for which payment may be made in whole or in part under a Federal healthcare program, ” 42 U.S.C. § 1320a-7b(b)(1); and (2) knowingly offering or providing remuneration for the purpose of inducing the recipient to purchase a good or service for which payment may be made under a federal health care program, such as Medicare and Medicaid, 42 U.S.C. § 1320a-7b(b)(2); see also United States v. Ruan, 966 F.3d 1101, 1144 (11th Cir. 2020) (describing Medicare and Medicaid as “common examples” of a “federal health care program” under the AKS). AKS defines “remuneration” as “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind.” Ameritox, Ltd. v. Millennium Labs, Inc., 803 F.3d 518, 521-22 (11th Cir. 2015) (quoting 42 U.S.C. § 1320a-7b(b)).

“To violate the AKS, the defendant must act ‘knowingly and willfully.'” United States ex rel. Heller v. Guardian Pharmacy, LLC, 1:18-cv-03728-SDG, 2021 WL 488305, at *14 (N.D.Ga. Feb. 10, 2021) (quoting 42 U.S.C. § 1320a-7b(b)). While a defendant must “act with knowledge that his conduct was unlawful, ” United States ex rel. McFarland v. Fla. Pharm. Sols., 358 F.Supp.3d 1316, 1329 (M.D. Fla. 2017) (quoting United States v. Starks, 157 F.3d 833, 838-39 (11th Cir. 1998)), “a person need not have actual knowledge of [the AKS] or specific intent to commit a violation of [the AKS]” in order to do so, 42 U.S.C. § 1320a-7b(h). Furthermore, though the AKS does not define “willfully, ” the Eleventh Circuit Court of Appeals has interpreted “willfully” to mean that “the act was committed voluntarily and purposely, with the specific intent to do something the law forbids.” United States v. Vernon, 723 F.3d 1234, 1256 (11th Cir. 2013). However, a “person need not be aware of the specific law or rule that his or her conduct may be violating.” Id. Indeed, the Eleventh Circuit has held that the AKS “is not a highly technical tax or financial regulation that poses a danger of ensnaring persons engaged in apparently innocent conduct. Rather, the giving or taking of kickbacks for medical referrals is hardly the sort of activity a person might expect to be legal.” Id. (internal quotations and citations omitted).

In comparison to the AKS, the Stark Act prohibits a physician who has a “financial relationship” with an entity from referring Medicare and Medicaid patients to that entity to receive “designated healthcare services.” See 42 U.S.C. § 1395nn(a)(1)(A); see also United States v. Halifax Hosp. Med. Ctr., No. 6:09-cv-1002-Orl-31TBS, 2013 WL 6017329, at *4 (M.D. Fla. Nov. 13, 2013) (“[The Stark Act] . . . prohibit[s] physicians from referring their Medicare and Medicaid patients to business entities in which the physicians or their immediate family members have a financial interest.”). The Stark Act also prohibits a healthcare entity from “present[ing] or caus[ing] to be presented” Medicare or Medicaid claims “for designated health services furnished pursuant to a referral prohibited under [42 U.S.C. § 1395nn(a)(1)(A)].” 42 U.S.C. § 1395nn(a)(1)(B).

C. The Georgia False Medicaid Claims Act

Similar to the FCA, the GFMCA imposes liability on any person who: (1) “[k]nowingly presents or causes to be presented to the Georgia Medicaid program a false or fraudulent claim for payment or approval;” (2) “[k]nowingly makes, uses, or causes to be made or used a false record or statement to a false or fraudulent claim;” or (3) “[k]nowingly makes . . . or causes to be made . . . a false record or statement material to an obligation to pay or transmit property or money to the Georgia Medicaid program, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay . . . money to the Georgia Medicaid program.” O.C.G.A. § 49-4-168.1(a)(1), (2), (7). The GFMCA also holds liable any person who conspires to commit a violation of the GFMCA's presentment, make-or-use, or reverse false claim provisions. O.C.G.A. § 49-4-168.1(a)(3).

“Although Georgia courts have had very little occasion to address the provisions of the GFMCA, ” the Georgia Court of Appeals “has noted that ‘[t]he statutory language in the GFMCA . . . mirrors the language in the [FCA].” Hill v. Bd. of Regents of the Univ. Sys. of Ga., 829 S.E.2d 193, 198 (Ga.Ct.App. 2019); see also Jordan v State, 785 S.E.2d 27, 31 (Ga.Ct.App. 2016) (“We have found no Georgia appellate cases addressing claims made under the GFMCA, although the body of federal law interpreting the almost-identical [FCA] is extensive.”). Thus, “[Georgia] courts generally look to federal case law to decide issues under the GFMCA.” Murray v. Cmty. Health Sys. Pro. Corp., 811 S.E.2d 531, 537 (Ga.Ct.App. 2018); see also Reddick v. Jones, No....