Carroll,ex rel., et al. v. Planned Parenthood Gulf Coast Inc. et al., No. 4:2012cv03505 - Document 31 (S.D. Tex. 2014)
Court Description: MEMORANDUM OPINION AND ORDER granting in part and denying in part 25 MOTION to Dismiss Relator's Original Complaint and Memorandum of Law in Support. Amended Complaint due by 5/29/2014. If unable to settle by 6/13/2014, the parties will provide the name and contact information of an agreed upon mediator. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION UNITED STATES OF AMERICA and THE STATE OF TEXAS ex rel PATRICIA M. CARROLL, § § § § § § § § § § § § § § Plaintiffs, v. PLANNED PARENTHOOD GULF COAST, INC. f/k/a PLANNED PARENTHOOD OF HOUSTON AND SOUTHEAST TEXAS, INC., Defendant. CIVIL ACTION NO. H-12-3505 MEMORANDUM OPINION AND ORDER Plaintiff -Relator Patricia M. action against Defendant ("Planned Parenthood") U.S.C. under the Parenthood False Gulf Claims Act qui Coast, ("FCA") , tam Inc. 31 3729 et seq., and the Texas Medicaid Fraud Prevention Act § ("TMFPA"), before Planned Carroll brings this Texas Human Resources Code the court is Defendant's § 36.001 et seq. Motion to Dismiss Original Complaint and Memorandum of Law in Support Dismiss") (Docket Entry No. 25). Pending Relator's ("Motion to For the reasons explained below, Planned Parenthood's Motion to Dismiss will be granted in part and denied in part, and Carroll will be ordered to file an amended complaint within fifteen (15) days. I. Carroll filed this Background qui tam action on behalf of the United States under the FCA and on behalf of the State of Texas under the TMFPA. 1 under 31 U.S.C. § The United States has declined to intervene 3730 (b) (4) ,2 and the State of Texas has declined to intervene under Texas Human Resources Code § 36.104,3 leaving Carroll as the sole plaintiff in this action. Carroll alleges the following relevant facts in her Original Complaint. Carroll was the Accounts Receivable Manager at Planned lOriginal Complaint, Docket Entry No.1. Page citations to exhibits are to the pagination imprinted by the federal court's electronic filing system at the top and right of the document. Page citations to the briefs are to the native page numbers at the bottom of the page in the documents. 2The Government's Election to Decline Entry No. 12; Order, Docket Entry No. 13. Intervention, Docket 3Carroll filed her Original Complaint under seal on December 3, 2012 (Docket Entry No.1) In prior orders the court extended the seal to December 3, 2013. Order Extending the Seal Period, Docket Entry No.8; Order, Docket Entry No. 11; see Tex. Hum. Res. Code. Ann. § 36.102 (c), (d) (West) (providing that" [t]he state may elect to intervene and proceed with the action not later than the 180th day after the date the attorney general receives the petition and the material evidence and information" but that "[t]he state may, for good cause shown, move the court to extend the 180-day deadline"). The State of Texas has not filed any document indicating an intent to intervene in this case. Cf. United States ex reI. Fitzgerald v. Novation, L.L.C., No. 3:03-CV-1589-N, 2008 WL 9334966, at *7 (N.D. Tex. Sept. 17, 2008) (noting that "[u]nder Texas law, the state had two choices: to intervene in the action or to decline to intervene" and that "neither Section 36.102 nor Section 36.104 provide[] the state the option of waiting indefinitely before deciding whether to intervene"). But see The Government's Election to Decline Intervention, Docket Entry No. 12, p. 2 n. 1 ("The State of Texas anticipates filing its notice of declination within the next week."). The court therefore concludes that the State of Texas has declined to intervene. -2- Parenthood from October of 2007 until she resigned in 2012.4 On March of 4, 314.76% 2012, for a ("Huntsville Carroll Planned Health Projection Report. discovered the noticed Parenthood conduct large revenue clinic "while Center"), 115 "a increase" in Huntsville, preparing Upon investigating that she alleges Texas monthly matter the the Carroll violated the FCA and TMFPA. 6 Carroll's allegations concern blood tests performed on youths "confined to Gulf Coast Trade [s] Center" 7 ("Trades Center"), "a private charter school, contracted to the Texas Youth Commission, to provide vocation services to youth involuntarily remanded to Trade Center for care and custody while under court order."B The youths remanded to the Trades Center were eligible for Medicaid benefits 9 and the Trades Center provided the youths' Medicaid numbers to Planned Parenthood. 10 Beginning in 2002 the Trades Center contacted Julio Asendio, a Planned Parenthood HIV Program staff member, when new Medicaid 40r iginal Complaint, Docket Entry No. I, p. 2 Dismiss, Docket Entry No. 25, p. 3. 50 r iginal Complaint, Docket Entry No. 6Id. 7Id. at 1 ~ 2. BId. at 4 ~ II. 9Id. at 5-6, ~~ 20.A-B. 10Id. at 6 ~ 20.C. -3- I, p. 12 ~ ~ 5; Motion to 26. numbers were available. 11 Asendio would go to the Trades Center and take blood and urine samples from the identified youths and return the samples to the Huntsville Health Center.12 Asendio and Brandi Taylor, Director of the Huntsville Health Center, would then create schedules giving the appearance that the services were rendered onsite at the Huntsville Health Center. 13 Using the provider number of a Dr. Paul Fine, Planned Parenthood's federal tax identification number, and the National Provider Identifier or Texas Provider Identifier of various Planned Parenthood health centers, Asendio billed these services to Medicaid as an "office visit" for STD tests.14 About ten days after the initial visit Asendio would return to the Trades Center and take another blood sample youths. 15 create from the same He would then return to the Huntsville Health Center 16 and another clinic schedule giving the appearance that the llId. ~ 20.D. 12Id. ~ 20.E. 13Id. at 7 ~ 20.Fi see also id. at 10-11 ~ 23. 14Id. at 7 ~ 20.F. 15Id. at 8 ~ 20.G. 16Throughout her Original Complaint Carroll references both the Huntsville Health Center and a "Huntsville HIV Clinic Health Center" or "Huntsville Clinic." See id. at 6-7 ~~ 20.E-F, 10-11 ~ 23, 12 ~ 26. For purposes of the pending Motion to Dismiss, the court will assume that these references are to the same Planned Parenthood clinic location in Huntsville, Texas. -4 - services were rendered on-site at the Huntsville Health Center.17 The second blood-draw would then be billed to Medicaid as an "office visit" for an HIV test. 1S II. Standards of Review Planned Parenthood moves the court to dismiss Carroll's claims pursuant to Federal Rules of Civil Procedure 12(b) (6) for failure to state a claim for which relief may be granted and 9 (b) for "A dismissal for failure to plead fraud with particularity. failure to plead fraud treated as a dismissal with particularity under Rule for failure United States ex reI. Rule 12(b)(6)." to state a Thompson v. 9 (b) claim is under Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997). A. Federal Rule of Civil Procedure 12(b) (6) A motion to dismiss pursuant to Rule 12(b) (6) for failure to state a claim for which relief may be granted tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint cognizable claim." (5th Cir. 2001). because it fails to Ramming v. United States, state a legally 281 F.3d 158, 161 The court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiff's favor. Id. 17Id. at 8 ~ 20.H. IBId. -5- "When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Swierkiewicz v. Sorema N.A., 122 S. Ct. 992, 997 Scheuer v. (1974)). Rhodes, 94 S. Ct. 1683, 1686 (2002) (quoting To avoid dismissal a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 127 S. Ct. 1955, 1974 (2007). Bell Atlantic Corp. v. Plausibility requires "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 "A claim has (2009). facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference defendant is liable for the misconduct alleged." Id. that the "The plausi- bility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." rd. '" [Dlismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief. ,,, Torch Liquidating Trust ex reI. Bridge Associates L. L. C. v. Stockstill, 561 F.3d 377, 384 (5th Cir. 2009) v. City of San Antonio, 43 F.3d 973, 975 (quoting Campbell (5th Cir. 1995)). When considering a motion to dismiss courts generally are limited to the complaint and its proper attachments. Dorsey Equities, Inc., 540 F.3d 333,338 (5th Cir. 2008). may rely upon '" documents incorporated -6- into v. Portfolio However, courts the complaint by reference, and matters of which a court may take judicial notice.'" Id. (quoting Tellabs, Inc. Makor Issues & Rights, v. Ltd., 127 S. Ct. 2499, 2509 (2007)). B. Federal Rule of Civil Procedure 9(b) Rule 9 (b) provides that "[i] n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." under the standard False of Fed. R. Claims Act Rule 9(b)." Civ. P. must 9(b). meet United "[A] the States heightened pleading ex Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009). complaint filed reI. Grubbs Pleading fraud with particularity in this circuit requires "[a]t a minimum. particulars of time, place, and v. contents of the . the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." Benchmark Electronics, Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir. 2003) The Fifth Circuit has explained that [i] n cases of fraud, Rule 9 (b) has long played [a] screening function, standing as a gatekeeper to discovery, a tool to weed out meritless fraud claims sooner than later. We apply Rule 9(b) to fraud complaints with "bite" and "without apology," but also aware that Rule 9(b) supplements but does not supplant Rule 8(a) 's notice pleading. Rule 9(b) does not "reflect a subscription to fact pleading" and requires only "simple, concise, and direct" allegations of the "circumstances constituting fraud," which after Twombly must make relief plausible, not merely conceivable, when taken as true. Grubbs, 565 F.3d at 185-86 (footnotes omitted) S. Ct. at 1955). (citing Twombly, 127 "Malice, intent, knowledge, and other conditions -7- of a person's mind may be Fed. alleged generally." R. Civ. P.9(b). III. Analysis Carroll's Original Complaint alleges claims under 32 U.S.C. § 3729 (a) (1) (A), (B), and (G) ,19 in analogous provisions of the TMFPA. addition to claims under Planned Parenthood argues that Carroll's claims should be dismissed because (1) the Texas Medicaid Provider Procedures Manual ("Texas Provider Manual") permits the conduct of which Carroll complains, (2) Carroll has failed to plead fraud with the particularity required by Rule 9(b), and (3) Carroll's claims are barred in part by the applicable statutes of limitations. A. Applicable Law The FCA prohibits four distinct practices alleged in Carroll's Original Complaint: (1) the knowing presentment of a false claim to the Government, 20 (2) the knowing use of a false record or 19In 2009 Congress passed the Fraud Enforcement and Recovery Act ("FERA"), Pub. L. No. 111-21, 123 Stat. 1617 (2009), which amended and renumbered certain provisions of § 3729. As noted by Planned Parenthood, although Carroll only cites the current version of the statute, some of her claims are subject to the pre-FERA version. Motion to Dismiss, Docket Entry No. 25, pp. 4-5 nn.1-3. 20See 31 U.S.C. § 3729 (a) (1) (A) (2009), which makes liable whoever "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval." As noted by Planned Parenthood, a portion of Carroll's presentment claims are subject to the pre-FERA version of § 3729 (a) (1) (A), then codified at § 3729(a) (1) (2006). Motion to Dismiss, Docket Entry No. 25, (continued ... ) -8- statement to get a false claim paid,21 (3) the knowing concealment 20 ( ... continued) pp. 4-5 nn.2-3; see United States ex reI. Spicer v. Westbrook, No. 12-10858, 2014 WL 1778030, at n.5 (5th Cir. May 5, 2014) (describing the FERA amendments to the FCA's presentment provision). The amendments to this provision "apply to conduct on or after the date of enactment," which was May 20,2009. FERA § 4 (f), 123 Stat. at 1625. Courts in the Fifth Circuit have interpreted "conduct" in this context to refer to the defendant's underlying conduct giving rise to the plaintiff-relator's cause of action. See, e.g., Spicer, 2014 WL 1778030, at n.5 ("The amendment to § 3729 (a) (1) was effective May 20, 2009. Spicer appears to allege that the conduct relevant to Count One occurred prior to that date."); United States ex reI. Dekort v. Integrated Coast Guard Sys., 705 F. Supp. 2d 519, 532 (N. D. Tex. 2010) ("As the conduct alleged in the Fifth Amended Complaint occurred well prior to May 20, 2009, with the exception of the amendments to § 3729 (a) (2), none of the amendments apply to this case.") i United States ex reI. Gonzalez v. Fresenius Med. Care N. Am., 748 F. Supp. 2d 95, 107 (W.D. Tex. 2010) ("In this case, Relator filed the complaint in September, 2006, and the action is focused on conduct of defendants from well before the enactment of FERA."), aff'd, 689 F.3d 470 (5th Cir. 2012). Accordingly, the pre-FERA version appl ies to Planned Parenthood's conduct before May 20, 2009. For purposes of the pending Motion to Dismiss, however, it is irrelevant whether Carroll's presentment claims are analyzed under the pre- or post-FERA version of the statute. Cf. United States ex reI. Bennett v. Medtronic, Inc., 747 F. Supp. 2d 745, 764 n.17 (S.D. Tex. 2010) (" [I]n this litigation, there is no material difference between pre- and post-FERA versions of § 3729 (a) (1) [because Defendant] does not contest that the reimbursement claims were presented to the government.") . 21See 31 U.S.C. § 3729 (a) (1) (B) (2009), which makes liable whoever "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." Planned Parenthood argues that the pre-FERA version of the statute (then codified at § 3729(a) (2)) applies to a portion of Carroll's false-record claims. Motion to Dismiss, Docket Entry No. 25, pp. 4-5 nn.1-3; see Bennett, 747 F. Supp. 2d at 764 n.17 (describing the FERA amendments to the FCA's false-record provision). "The FERA amendments to this provision apply to all claims pending on or after June 7, 2008." Spicer, 2014 WL 1778030, at n.6 (citing FERA § 4(f), 123 Stat. at 1625). The Fifth Circuit has consistently interpreted the term "claims" in this context to refer to cases pending before the court on or after June 7, 2008. (continued ... ) -9- or knowing and improper avoidance or decrease of an obligation to pay the Government,22 and (4) the knowing use of a false record or 21 ( ... cont inued) See id. ("This suit was originally filed on August 13, 2010. Accordingly, the amended version of this provision, § 3729(a) (1) (B), applies.") i United States ex reI. Patton v. Shaw Servs., L.L.C., 418 F. App'x 366, 369 (5th Cir. 2011) ("Because Patton filed suit on September 8, 2008, his complaint was 'pending' after the effective date of new provision § 3729 (a) (1) (B) .") i United States ex reI. Steury v. Cardinal Health, Inc., 625 F.3d 262, 267 (5th Cir. 2010) ("Steury's complaint was pending on June 7, 2008. We therefore assess Steury's claim under the current § 3729 (a) (1) (B) .") i see also United States ex reI. Davis v. Lockheed Martin Corp., No. 4:09-CV-645-Y, 2010 WL 4607411, at *5-6 (N.D. Tex. Nov. 15, 2010) (holding that under the Fifth Circuit's opinion in Steury, "the FERA amendment applies to the entirety of the case raising claims under the false-records provision even if the payment request was made before June 7, 2008"). But see Bennett, 747 F. Supp. 2d at 762-64 (interpreting "claims" as a defined term under the FCA meaning "claims 'for money or property' from the government" and citing cases reaching the same conclusion) i Gonzalez, 748 F. Supp. 2d at 107-08 (interpreting "claim" as a defined term and noting that "Congress [chose] to use the word 'case,' rather than 'claim' in § 4(f) (2) [,] indicating that Congress was aware of the distinction and would have used the word "case" in (f) (1) had it intended the amendments to (a) (2) to apply retroactively to pending FCA civil actions rather than pending claims for money or property"). For purposes of the pending Motion to Dismiss, however, it is irrelevant whether Carroll's false-record claims are analyzed under the pre- or postFERA version of the statute. Cf. Bennett, 747 F. Supp. 2d at 764 n.17 (" [T] he differences between the pre- and post-FERA versions of § 3729 (a) (2) do not affect this litigation [because Defendant] does not dispute that the government paid or approved the reimbursement claims [and] the Fifth Circuit required 'material' false statements before the FERA amendments" (citing United States ex reI. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458, 470 (5th Cir. 2009»). 22See 31 U.S.C. § 3729 (a) (1) (G) (2009), which makes liable whoever "knowingly conceals or knowingly and improperly avoids or decreases an obligation to payor transmit money or property to the Government." This language was added by the 2009 FERA amendments, providing the revised § 3729 (a) (1) (G) with both a fraudulentconcealment and a false-record provision applicable to reverse false claims. -10- statement material to an obligation to pay the Government. 23 The TMFPA contains analogous provisions prohibiting substantially the same conduct in the context of the State's Medicaid program. 24 "In determining whether liability attaches under the FCA, this court asks '(1) whether there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to payout money or to forfeit moneys due (i.e., that involved a 23See 31 U.S.C. § 3729 (a) (1) (G) (2009), which makes liable whoever "knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to payor transmit money or property to the Government. Planned Parenthood alleges that the pre-FERA version of the statute (then codified at § 3729(a) (7)) applies to a portion of Carroll's reverse false claim allegations. Motion to Dismiss, Docket Entry No. 25, pp. 4-5 nn.2-3. However, Carroll's claim under § 3729(a) (1) (G) appears to be based predominantly on her allegations concerning a May 4, 2012, letter that Planned Parenthood submitted to the State of Texas and Medicaid managed care organizations ("MCOs"). Original Complaint, Docket Entry No.1, p. 16 ~ 35. This conduct occurred after the enactment of FERA. Moreover, Planned Parenthood has not explained how application of the pre-FERA version would affect the court's analysis of the pending Motion to Dismiss. Accordingly, the court will apply the post-FERA version of the statute in addressing Carroll's claim under § 3729 (a) (1) (G) . II 24The parties focus primarily on the FCA in their briefing and have not argued that a different standard applies to claims brought under the TMFPA. The court will therefore address the FCA and TMFPA claims together using the standard applicable to FCA claims. Cf. Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 6031, 120 Stat. 4, 72-73 (2005) (permitting states with false-claims laws that meet certain requirements generally comparable to the FCA to retain ten percent more of any amount recovered under those laws); Bill Analysis, Tex. S.B. 362, 80th Leg., R.S. (2007), available at http://www.capitol.state.tx.us/tlodocs/80R/analysis/pdf/SB00362I. pdf (declaring the purpose of the 2007 TMFPA amendments to be compliance with the requirements of the Deficit Reduction Act, thus allowing the state to qualify for the additional ten percent recovery) . -11- claim) .'11 475 Gonzalez v. Fresenius Med. Care N. Am., 689 F.3d 470, (5th Cir. 2012) applies to anyone (quoting Longhi, 575 F.3d at 467). who 'knowingly assist[s] government to pay claims grounded in fraud, whether that person ha[s] government. '" causing' 'without regard to United States ex reI. Riley v. St. Luke's Episcopal For FCA purposes the terms "knowing" and "knowingly"-(A) mean that a person, with respect to information(i) § acts in deliberate ignorance of the truth or falsity of the informationj or (iii) (B) has actual knowledge of the informationj (ii) 31 U.S.C. the direct contractual relations with the Hospital, 355 F.3d 370, 378 (5th Cir. 2004). (1) in "The FCA acts in reckless disregard of the truth or falsity of the informationj and require no proof of specific intent to defraud. 3729(b) (1) .25 The requisite intent is thus the knowing presentation of what is known to be falsej "which means that a lie is actionable but not an error." Riley, 355 F. 3d at 376. In United States v. Southland Management Corp., 326 F.3d 669, 682 (5th Cir. 2003) (en banc) (Judge Jones concurring), the Fifth Circuit explained that "[t]he FCA is not an appropriate vehicle for policing technical compliance with administrative regulations. The FCA is a fraud prevention statute j violations of [agency] regulations are not fraud unless the violator knowingly lies to the government about them." United States ex reI. Lamers v. City of Green Bay, 168 25The 2009 FERA amendments reordered this section but did not effect any substantive change. See 31 U.S.C. § 3729(b) (2006). -12- F.3d 1013, 1019 (7th Cir. 1999). Innocently made faulty calculations or flawed reasoning cannot give rise to liability. United States ex reI. Wang v. FMC Corp., 975 F.2d 1412, 1420-21 (9th Cir. 1992). Further, where disputed legal issues arise from vague provisions or regulations, a contractor's decision to take advantage of a position can not result in his filing a "knowingly" false claim. See United States ex reI. Siewick v. Jamieson Science & Engineering, Inc., 214 F.3d 1372, 1378 (D.C. Cir. 2000) i Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1478-79 (9th Cir. 1996). The statute's definition of "knowingly" innocent mistakes or negligence. B. excludes liability for Id. at 681. Application of Law to the Facts 1. Carroll's Original Complaint contains enouqh facts to allege that Planned Parenthood knowingly filed false claims. Planned Parenthood argues that Carroll has failed to state a claim in her Original Complaint because the Texas Provider Manual permits the conduct of which she complains. 26 Planned Parenthood alleges that " [b]ecause the youth located at the Trades Center were eligible Medicaid recipients, there is nothing that prohibits [Planned Parenthood] from billing Medicaid for preventative testing services that were actually provided." 27 However, Carroll alleges that although the services were provided, Planned Parenthood was not eligible to bill Medicaid for those services. 28 She alleges that Medicaid will not reimburse 26Motion to Dismiss, Docket Entry No. 25, pp. 6-12. 27Id. at 7. 280riginal Complaint, Docket Entry No.1, p. 7 ~ 20.F, pp. 8-9 ~~ 21.A-Di see also Plaintiff's Response to Defendant's Motion to Dismiss ("Response"), Docket Entry No. 30, pp. 3-10. -13- --.- .... - - -..-.- ........ ~- ---- Planned Parenthood for services rendered off-site by a non- physician29 and that in order to obtain reimbursement for blood draws at the Trades Center, Planned Parenthood staff created schedules giving the appearance that the youths had visited the Huntsville Health Center and billed Medicaid using a place of service ("paS") code indicating that the services were rendered at Planned Parenthood's "office."30 Carroll's Original Complaint specifically alleges that Planned Parenthood MSM/HIV staff knew that Trade Center was an ineligible site for their provider type, which is the reason the Place of Service code was falsified to reflect Place of Service code II-office, when claims were created for billing. Planned Parenthood cannot bill school (PaS 03) or prison services (PaS 09) to Medicaid for reimbursement. Claims billed by Planned Parenthood with Place of Service codes 03 or 09 would be denied by TMHP and no benefits paid. Planned Parenthood purposely changed the Place of Service to fraudulently secure Title XIX funds on claims that were ineligible. 31 Carroll further alleges that only physicians are eligible to use the billing codes that Planned Parenthood used to obtain reimbursement for the blood draws and that the staff member who performed the blood draws was neither a physician nor supervised by a physician. 32 Thus, Planned Parenthood's contention that the services were provided does not defeat Carroll's allegation that Planned Parenthood was not entitled to reimbursement for those ~ 290riginal Complaint, Docket Entry No. 20.H. 30Id. at 6-8 ~~ I, p. 7 ~ 20.C-H. 31Id. at 7 ~ 20.Fi 32Id. at 8 ~ see also id. at 8-9 20.H, 9 ~ 21.D. -14- ~~ 21.A-C. 20. F, p. 8 services and that it falsified its records in order to obtain reimbursement for which it was not eligible. Planned Parenthood also argues that the Texas Provider Manual "provides little guidance as to which POS code to use or which, among several options, would be applicable to the services provided here. H33 Planned Parenthood points to the Centers for Medicare and Medicaid Services' ("CMS H) definition of the term "office H34 to argue that "it would be a reasonable interpretation that the Trade Center is a where 'location. provides health [services]' and, [Planned Parenthood] therefore, routinely services provided at Trade Center were properly described with a POS code 11.H35 However, Carroll alleges that Planned Parenthood knew that the "office H billing code was the incorrect code for services performed at the Trades Center and used it anyway in order to obtain payments for which it was ineligible. 36 add [ed] the names of the She alleges that "Planned Parenthood Trade Center youths to its clinic 33Motion to Dismiss, Docket Entry No. 25, p. 8. 34\\Office H is defined to mean a "[1] ocation, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, State or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides heal th examinations, diagnosis, and treatment of illness or injury on an ambulatory basis.H CMS Place of Service Code Set ("CMS POS Codes H), Exhibit A-3 to Motion to Dismiss, Docket Entry No. 25-1, p. 51; Place of Service Codes for Professional Claims ("CPT POS Codes H), attached to Response, Docket Entry No. 30-2, p. 1. 35Motion to Dismiss, Docket Entry No. 25, p. 9 (quoting CMS POS Codes, Exhibit A-3 to Motion to Dismiss, Docket Entry No. 25-1, p. 51). 360riginal Complaint, Docket Entry No. I, pp. 6-11 ~~ 20.F-23. -15- schedule, as if they actually visited the clinic [and t]heir home addresses are Center."37 The lists of POS codes produced by both parties include a code for all shown services Parenthood has not on the rendered schedule at a explained the as patient's being home. 38 the Trade Planned inconsistency in listing the Trades Center as the patient's home in its clinic schedules and also billing Medicaid for services provided at the Trades Center as if they had been performed at Planned Parenthood's "office." Moreover, a determination of whether Planned Parenthood reasonably interpreted the term "office" to apply to services rendered at the Trades Center, in light of Carroll's allegations to the contrary, depends on credibility determinations that are improper in the context of a 12 (b) (6) motion to dismiss. 37Id. at 7 ~ 20.E; see also id. at 4 ~ 11. 38CMS POS Codes, Exhibit A-3 to Motion to Dismiss, Docket Entry No. 25-1, p. 51; CPT POS Codes, attached to Response, Docket Entry No. 30-2, p. 1. "Home" is defined to mean a "[l]ocation, other than a hospital or other facility, where the patient receives care in a private residence." Id. Arguing that the Trades Center is not a "prison," Planned Parenthood asserts that "[t] he Texas Workforce Commission confirms that it licenses the Trade Center as a private charter school." Motion to Dismiss, Docket Entry No. 25, p. 11 n. 8. There is a POS code for services rendered at a "school," which is defined to mean "[a] facility whose primary purpose is education." CMS POS Codes, Exhibit A-3 to Motion to Dismiss, Docket Entry No. 25-1, p. 51; CPT POS Codes, attached to Response, Docket Entry No. 30-2, p. 1. Thus, Planned Parenthood appears to contend that the Trades Center is a "school" by definition but an "office" for purposes of billing Medicaid, although it considered the Trades Center a "home" for purposes of creating the schedules to support its Medicaid billing. As noted above, whether this interpretation is reasonable involves credibility determinations that are improper in the context of a 12 (b) (6) motion to dismiss. -16- Planned Parenthood also argues that even if it did use incorrect billing codes, such conduct could not have been material to the government's decision whether to reimburse the claims because use of the correct billing codes would have resulted in "reimburse [ment] § 3729 (b) (4) at the same rate by Medicaid.,,39 ("[T]he term 'material' means See 31 U.S.C. having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property."); Longhi, 575 F.3d at 468-70 ("All . is that the that is required under the test for materiality . false or fraudulent statements have the potential to influence the government's decisions."); see also Bennett, 747 F. Supp. 2d at 764 n.17. However, Carroll alleges that Planned Parenthood is only eligible for reimbursement if it uses the code corresponding to an "office visit. ,,40 Carroll alleges that even if the reimbursement rate is generally the same for services provided at an "office" or a "school" by other providers, it would not be the same for Planned Parenthood in this case. 41 The court concludes that Carroll has adequately pleaded factual content that allows the court to draw the reasonable inference that Planned Parenthood knowingly filed false claims. 39Motion to Dismiss, Docket Entry No. 25, pp. 18-19; see also id. at 10. 4°Original Complaint, Docket Entry No.1, p. 7 Response, Docket Entry No. 30, pp. 3-8. ~ 20.F; see also 41Id. Indeed, Carroll alleges that she attempted to bill the services using the code for "school," and the claim was denied. Response, Docket Entry No. 30, pp. 3-4. -17- Carroll also alleges that at least some of the services provided at the Trades Center were not medically necessary. She alleges (1) that the youths were already tested before they entered the Trades Center 42 and (2) that the HIV test could have been performed on the initial blood draw without a second visit to the Trades Center, a second blood draw, and a second reimbursement from Medicaid. 43 Planned Parenthood contends, however, that '" [r] outine HIV testing is covered as a preventative or screening benefit'" for which '" [m] edical necessity is not required.'" 44 In support, Planned Parenthood points to the Centers for Disease Control and Prevention's Revised Recommendations for HIV Testing of Adults, Adolescents, and Pregnant Women in Health-Care Settings ("CDC Recommendations"), referenced in the appendix to the Texas Provider Manual. 45 Carroll contends that the CDC Recommendations do not apply to family planning clinics like Planned Parenthood. 46 The court need not now resolve this issue, however, because Carroll has adequately alleged that Planned Parenthood knowingly filed false claims through the use of incorrect billing codes or provider 420riginal Complaint, Docket Entry No.1, p. 6 Response, Docket Entry No. 30, p. 10. ~ 430riginal Complaint, Docket Entry No.1, p. 7 20.Ei see also ~ 20.E. 44Motion to Dismiss, Docket Entry No. 25, p. 8 (quoting Appendix C to the Texas Provider Manual, Exhibit 1 to Motion to Dismiss, Docket Entry No. 25-1, p. 7). 45Id. 46Response, Docket Entry No. 30, pp. 8-10. -18- numbers regardless of whether medical necessity was a prerequisite to reimbursement. 2. Carroll has pleaded her with particularity. 3729(a) (1) (A) § and (B) claims Planned Parenthood argues that Carroll has failed to meet Rule 9(b) 's particularity requirement for any of the alleged fraudulent schemes identified in the Complaint, as she fails to provide any particulars regarding dates, places, claims, or patient charts that were involved in the alleged fraud, any specific fraudulent conduct on the part of any individual, and in some cases, fails to even identify how the alleged conduct violates any applicable rule or regulation concerning reimbursement. 47 However, Carroll's Original Complaint identifies the individual who performed the services issue,48 at that individual's qualifications,49 what services were provided,50 where those services were provided,51 where and by whom the billing was performed,52 the time between each blood draw,53 who created the supporting schedules,54 what the schedules contained,55 why the schedules are 47Motion to Dismiss, Docket Entry No. 25, p. 14. p. 8 , , 480riginal Complaint, Docket Entry No. 1, pp. 6-7 20.H, p. 10 23. 49Id. at 1 5OId. at 1 51Id. at 1 , , , " , , ," ," 52Id. at 7-8 53Id. at 8 54Id. at 7-8 55Id. at 7 2, 6 20.D, 8 2, 6-8 2, 4 , 20.H, 9 20.D-H. 11, 6-8 ", 20.F-H, 10-11 20.H. 20.F-H. 20.E-F. -19- 20.D-H. 23. , ", 21.D, 10-11 20.D-F, 23. relevant, 56 the codes used to bill Medicaid, 57 and the physician whose provider number was used to obtain reimbursement. 58 She explains why the services were ineligible for reimbursement 59 and identifies the amount of money that Planned Parenthood obtained through its allegedly fraudulent course of conduct. 60 describes her interactions with several Carroll also identified individuals after she brought her claims to the attention of Planned Parenthood management. 61 The court therefore concludes that Carroll has adequately pleaded "the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." Benchmark, 343 F.3d at 724. 3. Carroll has not pleaded her particularity. § 3729 (a) (1) (G) claim with As noted above, Carroll's claim under § 3729(a) (1) (G) is based predominantly on her allegations concerning a May 4, 2012, letter that Planned Parenthood submitted to the State of Texas and S6Id. 57Id. at 7 ~ 20.F, 8 ~ 20.H, 9 ~ 21.C, 15 ~ 33. s8Id. at 9 ~ 21.D, 11 ~ 23. 59Id. at 6-9 No. 30, pp. 3-10. ~ ~~ 20.E-21.Di see also Response, Docket Entry 6°Original Complaint, Docket Entry No. I, p. 8 ~ 20.1, p. 10 23. 61Id. at 9-15 ~~ 23-32. -20- Medicaid Carroll MCOs. 62 acknowledges concerning the letter sent out on May 4, that "her pleadings 2012, do not clearly describe her claim regarding the failure of Planned Parenthood to report and return overpayments. ,,63 She "requests 15 days after the court rules on this matter to replead adding clarification" with regard to the May 4,2012, granted. letter. 64 Carroll's request will be Accordingly, Planned Parenthood's Motion to Dismiss will be granted as to Carroll's claim under § 3729(a) (1) (G), and Carroll will be ordered to file an amended complaint within fifteen days of this Memorandum Opinion and Order stating with particularity the facts concerning the May 4, 2012, letter that form the basis of her claim under C. § 3729 (a) (1) (G) . Carroll's Claims Are Not Time-Barred Planned Parenthood argues that Carroll's claims are barred in part by the FCA's six-year statute of limitations. 65 that the statute of limitations Suspension of Limitations Act is suspended Carroll argues by the Wartime ("WSLA") 66 In a prior opinion the court addressed the applicability of the WSLA to civil FCA claims. 62Id. at 16 ~ See United States v. BNP Paribas SA, 35. 63Response, Docket Entry No. 30, p. 14. 64Id. at 14; see also id. at 23. 65Motion to Dismiss, Docket Entry No. 25, pp. 19-20. 66Response, Docket Entry No. 30, pp. 14-23. -21- 884 F. Supp. 2d 589, 597-609 explained in BNP Paribas, For the reasons (S.D. Tex. 2012). the court concludes that (1) the WSLA applies in civil FCA cases to suspend the statute of limitations when the United States is at war, as of September President 18, had met 2001, the (2) the United States was at war and formal (3) neither requirements Congress for nor the terminating the WSLA's suspension of limitations when the claims at issue in this case were presented for payment. See id.; see also United States ex reI. Carter v. Halliburton Co., 710 F.3d 171, 177-81 (4th Cir. 2013). In Carter the Fourth Circuit held that the WSLA applies to suspend the FCA's statute of limitations United States declines to intervene in the case. 81 ("[W]hether the suit relator is irrelevant . even when the 710 F.3d at 180- is brought by the United States or a . because the suspension of limitations in the WSLA depends upon whether the country is at war and not who brings the case."); see also 18 U.S.C. WSLA suspends offense" "any statute of § 3287 (declaring that the limitations applicable involving fraud against the United States). to any The court finds the reasoning in Carter persuasive and concludes that the WSLA applies to suspend the FCA's statute of limitations in this case. Planned Parenthood also argues that Carroll's claims under the TMFPA are barred in part because the State of Texas has declined to intervene under Texas Human Resources Code § 36.104.67 67Motion to Dismiss, Docket Entry No. 25, p. 20. -22- Before May 4, 2007, § 36.104 provided that U[i]f the state declines to take over the action, the court shall dismiss the action. H Act of June 2, 1997, 75th Leg., R.S., ch. 1153, Tex. Gen. Laws 4324, 4346 (amended 2007) Hum. Res. Code Ann. § 36.104(b) 4.08, sec. 36.104, 1997 § (current version at Tex. (West Supp. 2013)). On May 4, 2007, the statute was amended to allow a qui tam relator to proceed without the participation Act of May 4, intervene. sec. State's 36.104, 2007, 2007 Tex. Gen. if the State 80th Leg., Laws 27, version at Tex. Hum. Res. Code Ann. § 28 R.S., declines ch. 29, (amended 2013) 36.104(b) § to 4, (current (West Supp. 2013)). However, the amendment Uappli[ed] only to uconduct that occur [ed] on or after the effective date of [the] ActH and U[c]onduct that occur [ed] before the effective date of [the] Act is governed by the law in effect at the time the conduct occurred, and that law is continued in effect for that purpose. H Id. § 6. There is a split of authority on the interpretation of the word Uconduct H in the 2007 amendment to interpreted "conduct H intervene. United F. Supp. to mean States 2d 472,521-22 ex (S.D. the reI. Tex. § 36.104. State's King 2011) v. One court has election Solvay not S.A., to 823 ("The 2007 amendments apply 'only to conduct that occurs on or after the effective date of [the] Act. The 'conduct' discussed in section 36.104 is the State of Texas's election not to intervene. H) , order vacated in part on reconsideration, No. H-06-2662, 2012 WL 1067228 (S.D. Tex. March 28, 2012). Two courts have applied the law as it -23- existed on the date that the plaintiff-relator filed suit. See United States ex reI. Lisitza v. Johnson & Johnson, 765 F. Supp. 2d 112, 130-31 (D. Mass. 2011) ("At the time relators filed suit, the State of Texas qui tam statute required dismissal of their claims if the State did not intervene within 60 days of being served with the Complaint. As Texas has never moved to intervene, the Texas claims will be dismissed.") i United States ex reI. Foster v. Bristol-Myers Squibb Co., 587 F. Supp. 2d 805, 818 (E.D. Tex. 2008) ("According to Texas law in effect when Foster filed suit, 'if the state declines to take over the [qui tam] action, the court shall dismiss the action. '" § 36.104 (b) (quoting Tex. Hum. Res. Code (Vernon 1997))) . However, most courts have interpreted "conduct" to refer to the defendant's underlying conduct giving rise to the plaintiffrelator's cause Bergman v. of action. Abbot Labs., (E.D. Pa. Jan. 30, 2014) No. See, e.g., 09-4264, United States 2014 WL 348583, ex reI. at *17-18 (noting a case "allowing claims under the Texas statute to proceed without intervention if filed after the date of the amendment, but only as they pertain to conduct occurring after the date of amendment" plaintiff-relator's fraudulent conduct TMFPA that United States ex reI. claims occurred as and dismissing a "applie[d] before Streck v. Allergan, May fraudulent 4, Inc., to allegedly 2007" 894 F. (citing Supp. 2d 584, 604 (E.D. Pa. 2012))); Streck, 894 F. Supp. 2d at 604-05 (E.D. Pa. 2012) (holding that the 2007 amendments to the TMFPA allow a -24- plaintiff-relator to proceed without the State only with regard to fraudulent amendment) acts i that occurred after the effective date of the United States v. HCA Health Servs. of Oklahoma, Inc., No. 3:09-CV-0992, 2011 WL 4590791, at *5 (N.D. Tex. Sept. 30, 2011) ("Because the alleged conduct occurred in 2002, the 2002 version of the TMFPA governs this action. H ) United States ex rel. Wall v. i Vista Hospice Care, Inc., 778 F. Supp. 2d 709, 724 (N.D. Tex. 2011) (dismissing TMFPA claims " [b]ecause all of the conduct that plaintiff-relator] complains of occurred before [May 4, [the 2007]H) i United States ex rel. Conrad v. GRIFOLS Biologicals Inc., No. RDB 07-3176, 2010 WL 2733321, at *7 (D. Md. July 9, 2010) plaintiff-relator's concession that intervene in this false claims action, claims] must be dismissed as Texas i did not [plaintiff-relator's TMFPA to any allegations of occurred prior to May 4, 2007 H) *7 & nn.9-10 "[b]ecause (noting the fraud that Fitzgerald, 2008 WL 9334966, at (applying the law in effect when the complained-of conduct occurred to the plaintiff-relator's TMFPA claims). Because the court has already concluded that Carroll has adequately alleged a cause of action under the FCA for the conduct that is the subject of her TMFPA claims, the court need not resolve this issue of law at this time. As noted above, the parties have focused primarily on the FCA in their briefing and have not argued that a different standard applies to claims under the TMFPA. Thus, even if the court were to adopt Planned Parenthood's interpretation of the 2007 amendments to the TMFPA, all of the conduct of which -25- Carroll complains and the evidence supporting her allegations would still be relevant to her FCA claims. The court therefore declines to decide whether the pre- or post-amendment version of § 36.104 applies to Carroll's TMFPA claims arising from Planned Parenthood's allegedly fraudulent conduct before May 4, 2007. IV. Conclusions and Order For the reasons explained above, Defendant's Motion to Dismiss Relator's (Docket Original Entry No. Complaint 25) and Memorandum of is GRANTED IN PART Law in Support and DENIED Carroll shall file an amended complaint within fifteen IN PART. (15) days stating with particularity the facts concerning the May 4, 2012, letter giving rise to her claim under 31 U.S.C. § 3729 (a) (1) (G) . The parties have indicated that mediation would be appropriate in this case. 68 Accordingly, if the parties are not able to settle this case within the next thirty (30) days, they shall provide the court with the name, address, telephone and facsimile numbers, and e-mail address of an agreed upon mediator. successful, the court will schedule an If mediation is not initial pretrial and scheduling conference. SIGNED at Houston, Texas, on this the 14th day of May, 2014. SIM LAKE UNITED STATES DISTRICT JUDGE 68Joint Discovery/Case Management Plan Under Rule 26(f), Federal Rules of Civil Procedure, Docket Entry No. 27, p. 3 ~ 15. -26-
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