United States ex rel. Sharma v. Miraca Life Scis., Inc.

472 F.Supp.3d 429

UNITED STATES of America, and the States of California and North Carolina, EX REL. Girishwar SHARMA, Plaintiff/Relator,

v.MIRACA LIFE SCIENCES, INC., et al., Defendants.

Case No. 1:15cv2355

United States District Court, N.D. Ohio.

Signed July 14, 2020

Patricia M. Fitzgerald, Office of the U.S. Attorney, Cleveland, OH, for Plaintiff United States of America.

Ann-Marie Ahern, Tobias J. Hirshman, McCarthy, Lebit, Crystal & Liffman, Cleveland, OH, David M. Freeman, David A. Mazie, Mazie Slater Katz and Freeman, Roseland, NJ, for Plaintiff Girishwar Sharma.

Peter C. Mulcahy, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Boston, MA, Gregory C. Djordjevic, Michael N. Ungar, Trevor J. Hardy, Ulmer & Berne, Cleveland, OH, Karen S. Lovitch, Laurence J. Freedman, Sarah Elizabeth S. Kuyers, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Washington, DC, for Defendant Miraca Life Sciences, Inc.

Avia M. Dunn, Pro Hac Vice, Dorielle Obanor, Pro Hac Vice, Jennifer L. Bragg, Pro Hac Vice, Jennifer L. Spaziano, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom, Washington, DC, Douglas L. Shively, Baker & Hostetler, Cleveland, OH, for Defendant Miraca Holdings, Inc.

Peter C. Mulcahy, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Boston, MA, Gregory C. Djordjevic, Michael N. Ungar, Trevor J. Hardy, Ulmer & Berne, Cleveland, OH, for Defendant Metroplex Pathology Associates.

MEMORANDUM OPINION AND ORDER

PAMELA A. BARKER, U. S. DISTRICT JUDGE

Currently pending are the Motions to Dismiss of Defendants Miraca Holdings, Inc., Miraca Life Sciences, Inc., and Metroplex Pathology Associates. (Doc. Nos. 47, 48.) For the following reasons, Defendants’ Motions are GRANTED.

I. Procedural History

On November 17, 2015, Plaintiff/Relator Girishwar Sharma (hereinafter "Relator") filed a Complaint in this Court, on behalf of himself and the United States of America and the States of California and North Carolina, against Defendants Miraca Life Sciences, Inc., Metroplex Pathology Associates, and Miraca Holdings, Inc., for alleged violations of the Federal False Claims Act, 31 U.S.C. § 3729 et seq . and the California and North Carolina False Claims Act Statutes, Cal. Gov't Code Section 12650, et seq. and N.C. Gen. Stat. Section 1-605, et seq ., respectively. (Doc. No. 1.) Pursuant to 31 U.S.C. § 3730(b), the Complaint was filed under seal to allow the United States the opportunity to determine whether it wished to intervene.¹

On February 7, 2019, after receiving several extensions of time to make its intervention decision, the United States filed a Notice informing the Court that it had elected not to intervene in the instant action. (Doc. No. 15.) Several days later, on February 12, 2019, then-assigned District Judge Dan Polster issued an Order unsealing the Complaint and ordering that it be served upon the Defendants. (Doc. No. 16.)

On June 27, 2019, this matter was re-assigned to the undersigned pursuant to General Order 2019-13. On July 18, 2019, the States of California and North Carolina filed a Notice of their Intention to Decline Intervention. (Doc. No. 31.)

On September 11, 2019, Defendants Miraca Life Sciences, Inc. and Metroplex Pathology Associates filed a Motion to Dismiss for Failure to State a Claim. (Doc. No. 39.) Relator thereafter filed a First Amended Complaint raising the same federal and state False Claims Act ("FCA") claims against Defendants. (Doc. No. 40.)

Defendants Miraca Life Sciences, Inc. and Metroplex Pathology Associates then filed a Motion to Dismiss the First Amended Complaint on October 23, 2019. (Doc. No. 47.) On that same date, Defendant Miraca Holdings, Inc. filed its own Motion to Dismiss for both lack of personal jurisdiction and failure to state a claim upon which relief may be granted. (Doc. No. 48.) Relator filed Briefs in Opposition on December 4, 2019, to which Defendants responded. (Doc. Nos. 51, 52, 53, 54.)

II. Factual Allegations

The First Amended Complaint sets forth the following factual allegations. Relator Girishwar Sharma, M.D., graduated from medical school in India in July 1993. (Doc. No. 40 at ¶ 6.) He subsequently moved to the United States and, in 2004, completed a residency in pathology at University Hospitals in Cleveland, Ohio. (Id .) Relator is not and has never been licensed to practice medicine in Ohio or any other State. (Id .)

In July 2005, Relator was hired by Onco Diagnostics Laboratory, Inc. ("Onco") to perform preliminary interpretations of surgical pathology specimens which would then be re-read by a licensed pathologist. (Id .) In January 2010, Onco was purchased by Predictive Biosciences, Inc. ("Predictive"). (Id .) From January 2010 until January 2013, Relator was employed by Predictive as a pathologist associate. (Id .)

During the time period that he was employed by Predictive, Relator alleges that he was directed to "interpret [pathology] studies and sign them out under licensed pathologists’ names, even though it was Relator who was reading and interpreting the studies as an unlicensed pathologist." (Id . at ¶¶ 53, 67.) Specifically, Relator alleges as follows:

67. Once Onco Diagnostics was acquired by Predictive profitability and turnaround time became a corporate priority. To facilitate those goals, James Groves, Vice President of Operations at Predictive and Senior Management from Boston, instructed Dr. Sharma to perform urine cytology interpretations and sign them out under the name of a licensed pathologist. Emails directing that this be done were sent by both Groves and others in management. Rather than providing a screening, Relator was now providing the definitive read though he was not licensed to do so. This course of conduct continued from January 2010 to January 2013 during which as many as 35,000 to 50,000 [fn omitted] urine cytology studies were signed out by Dr. Sharma under another pathologist's name. These urine cytology studies were assigned a CPT code of 88112 for which Medicare was paid, it is estimated, between $100.07 and $105.02 per study.

68. By virtue of these fraudulent billings, Medicare paid Predictive somewhere between $3,500,000 and $5,250,000 for fraudulently billed and presented claims between January 2010 and January 2013 for urine cytology studies reviewed and signed out by an unlicensed pathologist under a licensed pathologist's name. The civil penalties associated with these fraudulent billings according to 31 USC § 3729 as updated by 28 CFR § 85.3(a)(9) is between $192,000,000 and $550,000,000 [footnote omitted].

(Id . at ¶¶ 67, 68.)² Notably, Relator acknowledges some "uncertainty" regarding how many studies (or which specific studies) were presented to Medicare, stating "Relator's estimates in this First Amended Complaint as to the number of studies performed are gross numbers that do not take into account whether the studies were paid for by Medicare or by another payor. Those studies paid for by another payor will need to be deducted from these estimates." (Id . at p. 18, fn 2.)

Relator also alleges a second category of allegedly fraudulent billings as follows. Relator alleges that the States of California, North Carolina, South Carolina and Utah have each promulgated regulations providing that only a physician licensed in those respective states is permitted to examine any pathology samples taken from a patient in those states. (Id . at ¶¶ 75-78.) Relator alleges that Predictive was aware of these laws but directed Relator and other unlicensed pathologists to interpret and sign out pathology studies under the properly licensed pathologists from those States. (Id. at ¶¶ 80A, 80B.) This occurred even when these properly licensed pathologists were on vacation, unavailable, or no longer employed by Predictive.³ (Id . at ¶¶ 93, 94, 95, 98, 100, 101, 102, 105, 106.)

Lastly, Relator alleges that Predictive implemented a fraudulent scheme whereby pathologists were directed to sign out on computer-generated test results relating to urine molecular studies without ever examining the underlying data. Specifically, Relator alleges as follows:

113. From 2011 to January 2013 Predictive was providing testing for bladder cancer with their proprietary bladder cancer assay known as CertNDx. CertNDx was a noninvasive molecular diagnostic test which was promoted by Predictive as having the ability to detect bladder and upper urinary tract cancers by detecting mutations in the Fibroblast Growth Factor Receptor 3 gene ("FGFR3") found in cells in urine samples. These tests were conducted by technologists employed by Predictive and the results were then sent to Predictive's pathologists. The pathologists were instructed to sign off on these results, often at night, after being provided with an email list of cases to sign out without ever being provided with the underlying data upon which the results were based.

114. When a CertNDx study was performed upon a urine sample a report would be created by Defendant's molecular lab. The pathologists who would ultimately sign out the molecular reports had no significant involvement in the operations of the molecular lab and had no supervisory role over the lab. The pathologists would simply be sent a list of the final reports. Although the pathologists were provided by Defendants with access to the actual reports they were provided with no meaningful images of the cells being reported upon in the reports. Additionally, they were not involved in any fashion in the diagnostic workup. As such, they were in possession of none of the underlying data which formed the basis for the report's conclusions. The pathologists were instructed by email directive to sign out the reports though they had no basis upon which to determine if the reports were accurate and complete. The pathologists, sight unseen, would then sign these studies out in batches electronically. The only care that the pathologists would take would be to make sure that those studies involving patients from states with a requirement that the interpreting

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