United States District Court, E.D. Wisconsin
UNITED STATES OF AMERICA, STATE OF CALIFORNIA, STATE OF COLORADO, STATE OF DELAWARE, STATE OF FLORIDA, STATE OF GEORGIA, STATE OF HAWAII, STATE OF IOWA, STATE OF MARYLAND, STATE OF MICHIGAN, STATE OF NEVADA, STATE OF NEW JERSEY, STATE OF NORTH CAROLINA, STATE OF OKLAHOMA, STATE OF TENNESSEE, STATE OF TEXAS, STATE OF WISCONSIN, and DISTRICT OF COLUMBIA, Plaintiffs, EX REL. JOHN MAMALAKIS, Relator,
ANESTHETIX MANAGEMENT LLC, d/b/a ANESTHETIX OF TEAMHEALTH, TEAM HEALTH HOLDINGS, INC., and DOES 1-100, Defendants.
DECISION AND ORDER
E. JONES, UNITED STATES MAGISTRATE JUDGE
of brief summary, the relator alleges that defendants put in
place a scheme by which anesthesiologists would bill for
providing medical direction, which is billed at a higher rate
and requires more active service, rather than medical
supervision, which is billed at a lower rate and does not
necessarily require on-site presence. See Second Amended
Complaint (“SAC”) ¶¶ 1-9, ECF No. 53.
This scheme was nation-wide in scope and included Wheaton
Franciscan Healthcare-All Saints Hospital in Racine,
Wisconsin, where the relator worked.
decision entered on December 21, 2017, this Court ordered the
relator to file an amended complaint to add the specificity
required by Fed.R.Civ.P. 9(b) because the allegations here
involve fraud. ECF No. 35. On March 19, 2018, the relator
complied and filed his SAC). ECF No. 53. Shortly thereafter,
defendants moved to dismiss, asserting that the relator had
failed to plead his fraud claims with sufficient specificity,
ECF No. 57, and that the Court should compel arbitration for
relator’s employment retaliation claim, ECF No. 59.
Court will grant both motions. As to the motion to dismiss,
defendants argued that the relator’s claims regarding
False Claims Act conspiracy, state-law qui tam violations,
reverse qui tam, and claims involving allegations outside of
All-Saints Hospital should be dismissed and provided
compelling support for these arguments. ECF 58, at 27-29. The
relator did not respond to those arguments, so those claims
are deemed defaulted and are dismissed.
leaves two False Act Claims contained in Count I and Count
III. The general rule for claims asserted under the False
Claims Act is that they are subject to the heightened
pleading requirements of Fed.R.Civ.P. 9(b). Thulin v.
Shopko Stores Operating Co., LLC, 771 F.3d 994, 998 (7th
Cir. 2014). Rule 9(b) requires a “plaintiff to do more
than the usual investigation before filing [a] complaint.
Greater precomplaint investigation is warranted in fraud
cases because public charges of fraud can do great harm to
the reputation of a business firm or other enterprise (or
individual).” Ackerman v. Nw. Mut. Life Ins.
Co., 172 F.3d 467, 469 (7th Cir.1999) (citations
omitted). Indeed, a complaint alleging fraud generally
“must provide the who, what, when, where and how”
of the alleged fraud. United States ex rel. Fowler v.
Caremark RX, LLC, 496 F.3d 730, 740 (7th Cir.2007)
(quotations and citations omitted).
requirement of particularity has been construed as demanding
that a relator may not, as a rule, rely on “information
and belief” pleading; instead, relators are often
required to set out their reasons for believing that the
allegations of fraud are true. Pirelli Armstrong Tire
Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631
F.3d 436, 442-43 (7th Cir. 2011). “The general rule
that fraud cannot be pled based on information and belief is
not ironclad, however: the practice is permissible, so long
as (1) the facts constituting the fraud are not accessible to
the plaintiff and (2) the plaintiff provides the grounds for
his suspicions.” Id. at 443.
that’s the problem with relator’s complaint-it
fails to set out any bases for certain critical allegations,
fails to make certain critical allegations, and fails to
provide the grounds for the relator’s suspicions or to
assert that the underlying facts were inaccessible.
compliance with ECF No. 35, the relator added ten paragraphs
that provided examples of fraud involving specific acts,
individuals, and rough time frames. SAC ¶¶ 103-112.
But nine of the examples are plainly deficient: paragraphs
103, 105, 106, 110 & 112, claim that a bill for medical
direction, rather than medical supervision, was presented,
but provide no support for this claim. Worse, paragraphs 104,
107, 108 & 109, fail even to allege that a bill for
medical direction was presented and claim only that doctors
were not present at the hospital when they should have been.
These allegations fail to support either a claim of false
billing or of false presentment. See United States ex
rel. Presser v. Acacia Mental Health Clinic, LLC, 836
F.3d 770, 778 (7th Cir. 2016) (providing that relators must
present facts that “necessarily le[ad] one to the
conclusion that the defendant ha[s] presented claims to the
111 does provide a basis for the claim that medical direction
was improperly presented, the hearsay statement of a nurse.
Even if this allegation is properly supported, a single
instance of a single doctor engaging in questionable billing
practices does not support the relator’s allegation of
a system-wide scheme to defraud. See United States ex
rel. Kroening v. Forest Pharm., Inc., 155 F.Supp.3d 882,
893 (E.D. Wis. 2016) (explaining that, to satisfy Rule 9(b),
a complaint must contain “representative examples of
the fraud”). Accordingly, the SAC does not comply with
this Court’s order (ECF No. 35) that the relator
provide sufficient examples from which it could be inferred
that defendants had perpetrated a scheme to defraud.
relator’s argument that TeamHealth Medical Director Dr.
Sonya Pease mandated that all doctors engage in improper
billing is not supported by the allegations in the SAC. The
SAC alleges as follows:
At the orientation, Dr. Pease instructed the staff to
document each procedure with the goal of fitting it within
the Medicare guidelines for medical direction. When asked to
be more specific, Dr. Pease explained that the
anesthesiologists would need to sign the anesthesia record
every fifteen minutes indicating that they had checked in on
the patient. The physicians, including Relator, understood
her instruction to mean that they should sign the anesthesia
record as if they were there for regular fifteen minute
intervals, even if they were not actually present at these
regular intervals. . . .
Accordingly, TeamHealth at All Saints converted the entire
anesthesia program to 100% medical direction across the board
– no procedure or operation was performed in which the
anesthesiologist was regularly present, and most procedures
were performed by the CRNAs.
SAC ¶¶ 56 & 57.
relator provides no examples of any other doctor construing
Dr. Pease’s statements as a requirement to bill
fraudulently. Indeed, the natural reading of Dr.
Pease’s statements is that she wanted to ensure that,
when billing for medical direction, charting was performed in
a manner consistent with Medicare billing requirements, which