United States v. Vora
| Citation | 488 F.Supp.3d 554 |
| Decision Date | 21 September 2020 |
| Docket Number | CIVIL ACTION NO. 4:20-CV-00066-JHM |
| Parties | UNITED STATES of America, Plaintiff v. Kishor N. VORA, M.D., Owensboro Medical Practice, PLLC, and Owensboro Heart and Vascular, Defendants |
| Court | United States District Courts. 6th Circuit. United States District Court of Western District of Kentucky |
Jessica R. Cusick Malloy, U.S. Attorney Office, Louisville, KY, for Plaintiff.
Casey L. Hinkle, Michael C. Merrick, Andrea N. Aikin, Kaplan Johnson Abate & Bird LLP, Louisville, KY, for Defendants.
This matter is before the Court on Defendants' Motion to Dismiss for Failure to State a Claim. [DN 12]. Fully briefed, this matter is ripe for decision. For the following reasons, Defendants' motion is DENIED IN PART AND GRANTED IN PART .
According to the Complaint, Dr. Kishor N. Vora ("Dr. Vora") is a physician in private practice in Owensboro, Kentucky. [DN 1 ¶ 12]. He is the president and sole member of Owensboro Medical Practice, PLLC, which operates under the assumed name Owensboro Heart and Vascular. [Id. at ¶¶ 9–11].
Dr. Vora began communicating with a sales representative from Natural Molecular Testing Corporation ("NMTC") in January 2012. [Id. at ¶¶ 3, 29]. Prior to these conversations, Dr. Vora had occasionally referred some laboratory tests to NMTC, but NMTC wanted him to refer more tests to the lab, specifically pharmacogenomics tests.1 [Id. at ¶ 28]. The NMTC sales representative enticed Dr. Vora with "financial rewards" if he referred large numbers of pharmacogenomics tests to the NMTC laboratory. [Id. at ¶¶ 30–31]. After significant discussion, Dr. Vora and NMTC ultimately agreed to enter into a "PRIDE Registry Agreement" on April 17, 2012. [Id. at ¶ 18]. The PRIDE Registry Agreement was a "data use agreement," under which Dr. Vora agreed to refer 150 pharmacogenomics tests to NMTC each month in exchange for $150 per referral. [Id. at ¶¶ 20–22].
Dr. Vora referred significantly more pharmacogenomics tests to NMTC while the PRIDE Registry Agreement was in place. Before the agreement, Dr. Vora referred 47 pharmacogenomics tests to NMTC for Medicare beneficiaries in the eleven-month period between March 1, 2011, and January 31, 2012. [Id. at ¶ 28]. In March 2012, the first month Dr. Vora thought the PRIDE Registry Agreement was active, he referred 537 tests for Medicare beneficiaries in a single month. [Id. at ¶ 40]. But the PRIDE Registry was not yet active, and Dr. Vora's orders dropped significantly as a result—he referred only 48 tests to NMTC in April 2012. [Id. at ¶ 50]. During this time, Dr. Vora sent several messages to NMTC stating he would "not ... send any samples" until they finalized the PRIDE Registry Agreement. [Id. at ¶¶ 43–49]. The PRIDE Registry became active in May 2012, and Dr. Vora's test referrals increased again—he referred 1,206 tests to NMTC of Medicare beneficiaries between May 2012 and March 31, 2013. [Id. at ¶¶ 51–52]. NMTC submitted a claim to Medicare for each test. [Id. at ¶ 71].2 During this eleven-month period, NMTC paid Dr. Vora $335,700 through the PRIDE Registry Agreement. [Id. at ¶ 15].
In March 2013, NMTC allegedly notified Dr. Vora it was reducing per-test payment from $150 to $105. [Id. at ¶ 53]. In response, Dr. Vora "significantly reduced the number of orders" he referred to NMTC, and substantially reduced his overall referrals of pharmacogenomics testing to any lab. [Id. at ¶¶ 53–54]. After 2013, he never referred more than 32 total pharmacogenomics tests of Medicare beneficiaries in any year. [Id. at ¶¶ 54–55].
On April 30, 2020, the United States of America ("Government") brought this civil action against Dr. Vora, Owensboro Medical Practice, and Owensboro Heart and Vascular (collectively, "Defendants") for violations of the False Claims Act, 31 U.S.C. §§ 3729 – 3732. The Government alleges that the PRIDE Registry Agreement amounted to an illegal kickback scheme between Dr. Vora and NMTC. [DN 1 ¶¶ 70–72]. As a result, according to the Government, Defendants are liable under two separate theories of False Claims Act ("FCA") liability.
Under the first theory, Dr. Vora is liable under the Anti-Kickback Statute ("AKS") because he "referred pharmacogenomics testing orders to NMTC, at least in part, because NMTC paid renumeration." [Id. at ¶ 26]. Since AKS violations are "false claims" for purposes of the FCA, see 42 U.S.C. § 1320a-7b(g), the Government alleges all 1,206 claims NMTC submitted for reimbursement are "false claims" under the FCA. [DN 1 ¶ 72]. Dr. Vora is liable because he "caused" NMTC to submit the false claims. [Id. at ¶ 73].
Under the second theory, Dr. Vora is liable because certain tests did not comply with Medicare regulations and therefore were "medically unnecessary." Specifically, the Complaint alleges Dr. Vora ordered pharmacogenomics testing without an individualized assessment of need, [id. at ¶¶ 74–82], did not use the pharmacogenomics test results in patient treatment, [id. at ¶¶ 83–110], and used pharmacogenomics testing to predict warfarin responsiveness in patients that did not meet Medicare testing criteria. [Id. at ¶¶ 111–112].
The Government brings four causes of action against the Defendants; each cause of action separately incorporates both theories of liability. Counts I through III are brought under the FCA and allege that the Defendants "knowingly caused to be presented false or fraudulent claims to Medicare for payment or approval," 31 U.S.C. § 3729(a)(1)(A) (Count I), "knowingly made, used, or caused to be made or used, false records or statements material to false or fraudulent claims," 31 U.S.C. § 3729(a)(1)(B) (Count II), and "conspired to commit a violation of [the FCA]." 31 U.S.C. § 3729(a)(1)(C) (Count III). Count IV alleges a common law unjust enrichment claim. [DN 1 ¶ 162].
In response to the Government's Complaint, Defendants moves to dismiss this action for failure to state a claim, contesting all four of the Government's causes of action.
On a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a court "must construe the complaint in the light most favorable to plaintiff[ ]," League of United Latin Am. Citizens v. Bredesen , 500 F.3d 523, 527 (6th Cir. 2007), "accept all well-pled factual allegations as true," id. , and determine whether the "complaint states a plausible claim for relief." Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Under this standard, the plaintiff must provide the grounds for his or her entitlement to relief, which "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plaintiff satisfies this standard only when he or she "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A complaint falls short if it pleads facts " ‘merely consistent with’ a defendant's liability," id. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ), or if the alleged facts do not "permit the court to infer more than the mere possibility of misconduct." Id. at 679, 129 S.Ct. 1937. Instead, the allegations must "show[ ] that the pleader is entitled to relief." Id. at 679, 129 S.Ct. 1937 (quoting FED. R. CIV. P. 8(a)(2) ).
When, as here, a claim is brought under the FCA, the complaint also must satisfy the Federal Rule of Civil Procedure 9(b) heightened pleading standard. Rule 9(b) states "[i]n alleging fraud ... a party must state with particularity the circumstances constituting fraud ... [m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." FED. R. CIV. P. 9(b). A plaintiff must "allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud." Coffey v. Foamex L.P. , 2 F.3d 157, 161–62 (6th Cir. 1993) (internal citations omitted). Additionally, in an FCA action, the plaintiff must "allege specific false claims" actually submitted to the government to satisfy the Rule 9(b) standard, because the fraudulent submission of a claim is "the sine qua non of a False Claims Act violation." United States ex rel. Bledsoe v. Cmty. Health Sys., Inc. , 501 F.3d 493, 504 (6th Cir. 2007).
The Medicare statutory scheme provides the basis for this FCA action. Under Medicare Part B, the portion of Medicare at issue here, the government reimburses health care providers for providing covered medical treatment to Medicare beneficiaries. However, the government does not reimburse for covered services that are "not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." 42 U.S.C. § 1395y(a)(1)(A). The implementing regulations provide additional clarity on what services are "reasonable and necessary." One provision relevant here is 42 C.F.R. § 410.32(a), which states:
[A]ll ... diagnostic laboratory tests must be ordered by the physician who is treating the beneficiary, that is, the physician who furnishes a consultation or treats a beneficiary for a specific medical problem and who uses the results in the management of the beneficiary's specific medical problem. Tests not ordered by the physician who is treating the beneficiary are not reasonable and necessary.
Federal courts have come to refer to such provisions as "conditions of payment" because § 1395y(a)(1)(A) explicitly states the government will not pay for services that do not meet these requirements because they are not "reasonable and necessary." See, e.g., Universal Health...
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