BARKER v. Columbus Regional Healthcare System, Inc. et al, No. 4:2012cv00108 - Document 39 (M.D. Ga. 2013)

Court Description: ORDER denying 25 Motion to Dismiss. Ordered by Judge Clay D. Land on 10/09/2013. (CGC)
Download PDF
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION RICHARD BARKER, on behalf of the United States of America and the State of Georgia * * Plaintiff, * CASE NO. 4:12-CV-108 (CDL) vs. * COLUMBUS REGIONAL HEALTHCARE SYSTEM, INC., THE MEDICAL CENTER, JOHN B. AMOS CANCER CENTER, REGIONAL ONCOLOGY LLC, THOMAS J. TIDWELL, and COLUMBUS RADIATION ONCOLOGY TREATMENT CENTER, * Defendants. * * * * O R D E R Defendant Thomas J. Tidwell (“Tidwell”) filed a motion to dismiss Plaintiff’s Complaint against him (ECF No. 25). Tidwell argues that Plaintiff has not alleged his claims with sufficient specificity and that the present allegations fail to state a claim upon which relief may be granted. At this stage of the litigation, Plaintiff’s the Court allegations as true. must accept factual The Court finds that those allegations are stated with sufficient particularity to put Tidwell on notice of the claims asserted against him. Moreover, when those allegations are accepted as true, they state a claim for relief that is plausible on its face. Accordingly, Tidwell’s motion to dismiss must be denied. SUMMARY OF PLAINTIFF’S CLAIMS AGAINST TIDWELL This qui tam action alleges that Tidwell submitted false claims to the federal government in violation Claims Act, 31 U.S.C. §§ 3729-3733. of the False Specifically, Plaintiff contends that Tidwell’s sale of his professional association, Tidwell Cancer Treatment Center (“Tidwell Cancer Center”), to Columbus Regional Healthcare System (“Columbus Regional”) violated the Anti-Kickback Statute and the Stark Law. Plaintiff also asserts that claims subsequently submitted to Medicare and Medicaid for services provided by Tidwell during the two-year period that Tidwell continued to practice radiation oncology in affiliation certified Stark with Columbus compliance Law. with Plaintiff Regional the also were false Anti-Kickback maintains that because Statute Tidwell and they the submitted false claims to Medicare, Medicaid, and other federally funded health benefits programs for radiation therapy that he did not perform. Tidwell contends that Plaintiff has not been specific enough in his First Amended Complaint and that this lack of specificity violates Federal Rule of Civil Procedure 9(b), which requires that claims brought under the False Claims Act must state claims. with particularity the circumstances supporting the Tidwell also maintains that Plaintiff’s claims are not 2 plausible and must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. To evaluate Plaintiff’s Plaintiff First has circumstances submitted by Tidwell’s motion, Amended Complaint sufficiently supporting the alleged his Court to with contention Tidwell were false. first determine reviews whether particularity that the the claims The Court then determines whether those factual allegations, taken as true at this stage of the proceedings, state a plausible claim under the False Claims Act. PLAINTIFF’S FIRST AMENDED COMPLAINT Plaintiff alleges the following facts in his First Amended Complaint. In July, 2010, Columbus Regional, through its wholly owned subsidiary, Columbus Radiation Oncology Treatment Center, LLC (“Columbus Radiation”), purchased the Tidwell Cancer Center for $10.5 million. 1st Am. Compl. ¶¶ 113-14, ECF No. 10. At the time of the purchase, Columbus Regional had excess state of the art radiation therapy capacity and did not need Tidwell’s facilities or equipment to meet the needs of patients in the area. did Id. ¶ 114. not meet the According to Plaintiff, Tidwell’s equipment applicable standard of care therapy equipment and was essentially worthless. Over the objections of its accountants, 3 for radiation Id. ¶ 121. Columbus Regional accounted for $9 million of the purchase price as “good will.” Id. ¶ 115. Although Tidwell never became an employee of Columbus Regional, he was supposed to continue to administer the affairs of the Tidwell Cancer Center on a day-to-day basis and practice radiation oncology there until his retirement two years later in December 2012. and non-physician Id. ¶ 116. staff of All other administrative Tidwell Cancer employees of Columbus Regional in 2010. was recruited to Notwithstanding take the over condition Center Id. Tidwell’s of the did become No new physician practice. equipment, Id. the Tidwell Cancer Center and Columbus Regional agreed that Tidwell Cancer Center would federally submit funded professional claims health component technical component. to benefits of Id. Medicare, Medicaid programs radiation and for treatments other both and the for the Some of the patients who were treated under this arrangement are listed in the Complaint, along with the dates of service and the codes. Id. ¶¶ 116, 123. When payments for these claims were received, they were deposited into the Tidwell Cancer Center bank account and then transferred to Columbus Regional’s bank account. Cancer Center December 2012. Plaintiff Tidwell Cancer disbanded upon the Id. ¶ 116. retirement of The Tidwell Tidwell in purchase of Id. alleges that Center was Columbus not 4 a Regional’s good faith commercially reasonable Plaintiff transaction asserts for that fair Columbus market value. Regional paid Instead, Tidwell $10.5 million to obtain referrals from him during the two-year period following the purchase until his retirement and to prevent any referrals by him to Plaintiff maintains any competitors that this of Columbus conclusion is Regional. supported by admissions from agents of Columbus Regional, the manner in which the transaction was accounted for on Columbus Regional’s financial records, the lack of value for any tangible assets of Tidwell Cancer Center, the amount of the purchase price, and the conduct of Tidwell and Columbus Regional during the two years following the purchase. Plaintiff contends that these allegations establish a violation of the federal Anti-Kickback Statute and the Stark Law. when Tidwell submitted Moreover, Plaintiff alleges that bills to Medicare and Medicaid, he falsely certified that those bills were not related to services that were provided in violation of either of those statutes when in fact those services were tainted by such violations. Plaintiff also contends that radiation therapy treatments during the two-year period following the purchase could not have been done within the standard of care given the condition of the equipment at the Tidwell Cancer Center, and therefore, billings for those treatments violated the False Claims Act. 5 DISCUSSION To evaluate Tidwell’s motion to dismiss, the Court first looks at the statutory law on which Plaintiff’s claims are based—the False Claims Act, the Anti-Kickback Statute and the Stark Law. alleged The with Court then particularity examines the whether circumstances Plaintiff giving rise has to these claims as required by Federal Rule of Civil Procedure 9(b). The Court concludes by deciding whether the facts alleged, if true, sufficiently state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). I. The False Claims Act, The Anti-Kickback Statute, and the Stark Law Plaintiff’s claims are brought pursuant to the False Claims Act, 31 U.S.C. §§ 3729-33. private citizens to bring The False Claims Act actions on behalf of authorizes the federal government to recover amounts that were paid by the government for false claims that were submitted with knowledge that the claims were false. 31 U.S.C. §§ 3729(a), 3730(b). False claims may include claims that sought payment for services that were not rendered or that were not medically necessary. United States v. R&F Props. of Lake Cnty., Inc., 433 F.3d 1349, 1356 (11th Cir. 2005). False claims may also include claims that certify compliance with laws and regulations concerning proper practices for medical providers, 6 such as the Anti-Kickback Statute and the Stark Law, when in fact those claims are for services that were provided in violation of those rules. 42 U.S.C. § 1320a-7b(g); McNutt ex rel. United States v. Haleyville Medical Supplies, Inc., 423 F.3d 1256, 1259-60 (11th Cir. 2005). The federal kickbacks or Anti-Kickback other payments Statute to induce or prohibits reward the referral or generation of federal health care business. 42 U.S.C. § 1320a-7b(b)(2)(A). made generally Claims submitted that include items or services resulting from kickback violations may be deemed “false” under the False Claims Act. 42 U.S.C. §1320a-7b(g). The Anti-Kickback Statute does include statutory and regulatory “safe harbors.” harbor permits physicians and For example, compensation hospitals if the “personal agreements (1) a services” between written safe non-employee agreement exists between the parties that is signed by the physician and the hospital; (2) the term of the agreement is at least one year; (3) the agreement covers all of the services to be provided by the physician specificity; and (4) sets the forth aggregate the physician’s compensation duties paid to with the consultant physician over the term of the agreement is set in advance, is consistent with fair market value in an arms-length transaction, and is not determined by the volume or value of any referrals or business otherwise generated between the physician and the hospital. 42 C.F.R. §1001.952(d). 7 The Anti-Kickback Statute safe harbors also address space and equipment rental. To obtain the benefit of this safe harbor, the parties must (1) enter into a written lease, (2) that has a term of at least one year, and (3) sets a fair market value payment for the space or equipment that is set in advance and is not determined by the value of referrals. Specifically, for leases of office space, the rented aggregate necessary to space accomplish purposes of the rental. cannot the exceed commercially what is reasonably reasonable business Id. §1001.952(b)(5). The Stark Law generally prohibits physicians from referring Medicare patients for certain designated services to an entity with which the physician U.S.C. § 1395nn(a)(1)(A). such referrals from has a financial relationship. 42 It also prohibits an entity receiving claim for designated services provided as a result of that referral. Id. § 1395nn(a)(1)(B). presenting to Medicare any A physician may not present or cause to be presented a claim for a designated service that the physician knows or should know is for an item or service that is not payable under the statute. Id. § 1395nn(g)(3). The Stark Law also has safe harbors or exceptions for arrangements that do not violate the statute if all of the conditions are met. § 1395nn(3). Id. These exceptions are similar to the safe harbors under The Anti-Kickback Statute. 8 II. Federal Rule of Civil Procedure 9(b) Federal Rule of Civil Procedure 9(b) requires that a party asserting a claim under the False Claims Act state with particularity the circumstances constituting the basis for the “false claim.” United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1308-09 (11th Cir. 2002). finds that Plaintiff has done so here. The Court He has specifically alleged the parties (the “who”), the transaction (the “what”), the date (the “when”) and the location (the “where”) of the conduct that Statute and he the contends Stark violates the Law. federal Plaintiff Anti-Kickback further alleged specifically why none of the safe harbors or exceptions to those statutory Tidwell services prohibitions knowingly covered violations of applies. submitted by billings those federal law And Plaintiff that billings alleged certified were not that that the tainted by when in fact they allegedly were. Plaintiff also provided specific examples of such billings, with patient names, dates of service, and types of service. While Plaintiff may not have alleged every tainted bill, he clearly alleges that this conduct occurred over the two-year period following Columbus Regional’s purchase of Tidwell Cancer Center and prior to Tidwell’s retirement. Furthermore, for the two- year period after the sale of Tidwell Cancer Center, Plaintiff alleges that the radiation therapy equipment was so substandard 9 that no radiation therapy could have been provided by Tidwell within the applicable standard of care. Consequently, any billings during that time for such radiation therapy were either for services that were not provided or for services that were not medically necessary. Tidwell may quarrel with the truthfulness of these allegations, but this is not the stage where Plaintiff must come forward with proof. come. That time will This case is not analogous to those cases in which the plaintiff simply submitted. alleges generally that false claims were Without the benefit of discovery, it is difficult to imagine how Plaintiff here could have been any more specific in his allegations. The Court finds that Plaintiff has complied with Federal Rule of Civil Procedure 9(b). III. Federal Rule of Civil Procedure 12(b)(6) Tidwell seeks to dismiss Rule 12(b)(6) as implausible. Plaintiff’s claims pursuant to The thrust of his argument is not that if Plaintiff proves everything he alleges, he still cannot prevail under incredulous allegations. another the that applicable anyone Tidwell’s example of what law. could Motion Tidwell possibly to Twombly believe Dismiss and simply (ECF Iqbal finds it Plaintiff’s No. have 25) is wrought—a compulsion to file a motion to dismiss in every case. The Supreme Court’s statement in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which was reaffirmed in Ashcroft v. Iqbal, 556 10 U.S. 662 (2009), did not seem startling: dismiss, a complaint must contain to survive a motion to sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” at 678. include Twombly, 550 U.S. at 570; accord Iqbal, 556 U.S. The additional explanation that the complaint must sufficient factual allegations “to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, likewise did not suggest that the Supreme Court intended to rewrite Rule 12(b)(6) or abandon notice pleading; and the Court’s observation that “a formulaic recitation of the elements of a cause of action” does not suffice, id., did not seem to foreshadow a sea-change in the legal standard governing motions to dismiss. But many lawyers (and judges) have interpreted the Supreme Court’s decisions in Twombly and Iqbal as ushering in a new era for motions practice in federal court. Since Twombly was decided, many lawyers have felt compelled to file a motion to dismiss in nearly every case, hoping to convince the Court that it now has the authority to divine what the plaintiff may plausibly be able to prove rather than accepting at the motion to dismiss stage that the plaintiff will be able to prove his allegations. close resemblance to summary These motions, which bear a judgment motions, view every factual allegation as a mere legal conclusion and disparagingly label all attempts to set out the elements of a cause of action 11 as “bare recitals.” They almost always, either expressly or, more often, implicitly, attempt to burden the plaintiff with establishing a reasonable likelihood of success on the merits under the guise of the “plausibly stating a claim” requirement. While these cautious lawyers, who have been encouraged by Twombly and Iqbal, have parsed the Twombly decision to extract every helpful syllable, they often ignore a less well known (or at least less frequently cited) admonition from Twombly: “[O]f course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotation marks omitted). Finding the Twombly/Iqbal urge irresistible, many lawyers fail to appreciate the distinction between determining whether a claim for relief is “plausibly stated,” the inquiry required by Twombly/Iqbal, and divining whether actual proof of that claim is “improbable,” a feat impossible for a mere mortal, even a federal judge. This Court obviously understands that not all motions to dismiss suffer from this Twombly/Iqbal compulsion, but many do, and the present one certainly does. 12 Accordingly, it is denied. CONCLUSION For the reasons stated in this Order, Defendant Tidwell’s Motion to Dismiss (ECF No. 25) is denied.1 add, however, that its ruling today The Court hastens to does not suggest that Plaintiff’s allegations are true or even that Plaintiff will ultimately be able to prove them. The law requires the Court at this stage to accept those factual allegations as true. Having done so for the moment, the Court has found that a plausible claim has been stated under the law. Plaintiff will have the burden of producing evidence to support these allegations, and Tidwell will have an opportunity to contest that evidence. Today’s Order simply allows the parties to proceed to the next step with neither a final validation nor repudiation of the claims by the Court. IT IS SO ORDERED, this 9th day of October, 2013. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 1 Although this Order focuses specifically on Plaintiff’s federal claims, the Court, based upon the same rationale expressed herein, also denies Tidwell’s motion to dismiss Plaintiff’s state law claims to the extent those claims apply to Tidwell. 13