United States v. Jurik

Citation943 F.Supp.2d 602
Decision Date03 May 2013
Docket NumberNo. 5:12–CV–460–F.,5:12–CV–460–F.
PartiesUNITED STATES of America, Plaintiff, v. Valerie J. JURIK, Mark Curtis, and at Home Assessments, LLC, d/b/a/ Sunstone Medical, LLC, Defendants.
CourtUnited States District Courts. 4th Circuit. Eastern District of North Carolina

OPINION TEXT STARTS HERE

Neal Fowler, U.S. Dept. of Justice, Raleigh, NC, for Plaintiff.

Brandon S. Neuman, Edward Hallett Maginnis, Brandon S. Neuman, Shanahan Law Group, Raleigh, NC, for Defendants.

JAMES C. FOX, Senior District Judge.

On July 24, 2012, Plaintiff United States of America (“government”) filed a complaint [DE–1] in this court, asserting a claim pursuant to the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., as well as state law claims of unjust enrichment and payment under mistake of fact against, among others, Defendants Valerie Jurik (Jurik) and At Home Assessments, LLC (AHA) (collectively, Defendants).1 On October 31, 2012, these Defendants filed a motion to dismiss [DE–18] pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. On December 20, 2012, the government filed its response to Defendants' motion [DE–23], and on January 2, 2013, Defendants filed a reply [DE–24]. Accordingly, the matter is ready for disposition. For the reasons stated below, the motion will be ALLOWED and the claims asserted against Defendants will be DISMISSED without prejudice. The court will permit the government an opportunity to file an amended complaint within 21 days of the date of this order.

I. STANDARD OF REVIEW
A. Rule 12(b)(6)

The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of a complaint, not to resolve conflicts of fact or to decide the merits of the action. Edwards v. City of Goldsboro, 178 F.3d 231, 243–44 (4th Cir.1999). In consideringa motion to dismiss, the court assumes the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). However, the [f]actual allegations must be enough to raise a right to relief above the speculative level’ and have ‘enough facts to state a claim to relief that is plausible on its face.’ Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 616 n. 26 (4th Cir.2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). [A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citations omitted); see also id. at 551–53, 127 S.Ct. 1955 (noting that the previous “rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief” is a “phrase [ ] best forgotten as an incomplete, negative gloss on an accepted pleading standard”). Moreover, a court “need not accept the legal conclusions drawn from the facts” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000) (citation omitted).

When addressing a motion to dismiss under Rule 12(b)(6), a court generally may not look outside the complaint unless it treats the motion to dismiss as a motion for summary judgment. Witthohn v. Fed. Ins. Co., 164 Fed.Appx. 395, 396 (4th Cir.2006). A court may, however, take judicial notice of matters of public record, and may also “consider documents attached to the complaint, as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic.” Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir.2009) (citations omitted); see also Witthohn, 164 Fed.Appx. at 396 (stating that “a court may consider official public records, documents central to plaintiff's claim, and documents sufficiently referred to in the complaint so long as the authenticity of these documents is not disputed”).

B. Rule 9(b)

The elements of a FCA claim “are predicated on fraudulent conduct....” United States ex rel. Davis v. U.S. Training Ctr. Inc., 498 Fed.Appx. 308, 314–15 (4th Cir.2012) (citation omitted); see also United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542, 551–52 (D.C.Cir.2002) (noting that every circuit to consider the issue has held that Rule 9(b) applies to FCA complaints). In pleading fraud or mistake, although [m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally,” a plaintiff “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). [T]he circumstances required to be pled with particularity under Rule 9(b) are the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” United States ex rel. Jones v. Collegiate Funding Servs., Inc., 469 Fed.Appx. 244, 258 (4th Cir.2012) (quotation omitted). Those aspects of a fraud claim that may be pled generally “must still be alleged in accordance with Rule 8—a ‘plausible’ claim for relief must be articulated.” Mayfield v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 674 F.3d 369, 377 (4th Cir.2012). “Dismissal under Rule 9(b) is treated as a failure to state a claim under Rule 12(b)(6).” Jones, 469 Fed.Appx. at 257 (quotation omitted).

II. PLAINTIFF'S COMPLAINT

The following facts are alleged in the complaint. The United States Department of Veterans Affairs (“VA”) operates several Prosthetics and Sensory Aids Service units, including one at the Durham VA Medical Center (Durham PSAS). The Durham PSAS provides prosthetic and orthotic services, sensory aids, medical equipment, and support services for veterans. This includes the VA's Home Improvements and Structural Alternations (“HISA”) program, which provides funds to help defray the costs associated with structural modifications of homes to accommodate wheelchairs or other special needs of veterans. Mark Curtis (Curtis) was the Durham PSAS' HISA program manager during the time period relevant to this action.

The VA utilizes a United States Government Purchase Card (“USGPC”), a type of credit card that allows authorized purchasing representatives to make purchases up to $25,000.00 for HISA and other VA programs. Curtis was authorized to use the USGPC for HISA and other VA program purchases.

The VA prohibits charging the USGPC for HISA home modification work until the work has been completed, which includes submission of a paper invoice, photos of the modification, and a statement of completion signed by the veteran for whom the work was performed.2 The VA also prohibits charging the USGPC for VA purchases, including durable medical equipment (“DME”), before submission of a proper invoice and completion of the work.3

Defendant Jurik is the president and largest shareholder of Defendant AHA, a company that conducted a large part of its business with the Durham PSAS. The government alleges that, in letters sent to Defendant AHA authorizing agreed work, it was stated that an invoice, a statement of completion of work by the veteran for whom the work was performed, and photos of the completed work would be required prior to payment for the work.4

The government alleges that employees of Defendant AHA, at the express direction of Defendant Jurik, often submitted purchase orders and directly charged the USGPC for VA purchases prior to completing the required work. The government alleges that Defendant AHA needed the payments up front to purchase the supplies and equipment and complete the contracted work.5

The government generally alleges that Defendants submitted numerous false claims and made, or caused to be made or used, numerous corresponding false records material to these false claims. The government specifically alleges that Defendants obtained at least 32 payments through unauthorized USGPC charges or false invoices for: (1) HISA work in which the veterans' homes were not modified (or were not modified according to the agreement between Durham PSAS and Defendant AHA); and (2) other Durham PSAS services not provided, including DME.6 The government alleges that approximately thirteen of the 32 veterans so identified died while waiting for AHA to perform the work for which payment had already been made, and that other veterans declined the services or had the work completed by another company.7 The government alleges that Defendants have not repaid such claims.

The government alleges that a USGPC purchase made before completion of the associated HISA home modification was a false and fraudulent claim. The government further alleges that submission of invoices were often false—due to the fact that such invoices were for work not completed and Defendant AHA was not entitled to payment—and submission of a false invoice was a false and fraudulent claim by Defendants.

The government also alleges that Defendants created or caused to be made or used false records or statements material to these false claims, and that these false records and statements were created to avoid an obligation to repay funds to the VA. It is unclear whether such records or statements are alleged to be false because of the reasons stated above (that is, because they were submitted prior to completion of agreed work), or because some other falsification or manipulation of these records or statements occurred.

The government alleges that Defendants continually failed to notify Durham PSAS that it had received payment for work that it had not completed, and in many cases could not complete because the veteran died or declined the work. 8

The court also recognizes the sample purchase order attached to the motion to dismiss.9 That purchase order states...

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2 cases
  • United States ex rel. Badr v. Triple Canopy, Inc.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • June 19, 2013
    ...I's doubts by rejecting claims predicated on the implied certification theory. See United States v. Jurik, No. 5:12–CV–460, 943 F.Supp.2d 602, 610, 2013 WL 1881318, at *5 (E.D.N.C. May 3, 2013) (dismissing FCA claims where the government “concedes no affirmative certification of compliance ......
  • United States ex rel. Rector v. Bon Secours Richmond Health Corp., Civil Action No. 3:11-CV-38
    • United States
    • U.S. District Court — Eastern District of Virginia
    • April 14, 2014
    ...have [rejected] claims predicated on the implied certification theory." Badr, 2013 WL 3120204, at *10; see also United States v. Jurik, 943 F. Supp. 2d 602, 610 (E.D.N.C. 2013); United States ex rel. McLain v. KBR, Inc., No. 1:08CV499 (GBL/TCB), 2013 WL 710900, at *6 (E.D. Va. Feb. 27, 2013......

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