United States ex rel. Blankenship v. Lincare, Inc., CIVIL ACTION NO. 2:19-00104-KD-N

UNITED STATES OF AMERICA ex rel. STEPHANIE STRONG BLANKENSHIP, Plaintiff, v. LINCARE, INC. and LINCARE HOLDINGS, INC., Defendants.

CIVIL ACTION NO. 2:19-00104-KD-N

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA NORTHERN DIVISION

January 29, 2021

REPORT AND RECOMMENDATION

This action is before the Court on the motion to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted (Doc. 25) filed by Defendant Lincare Inc. ("Lincare"). The assigned District Judge has referred said motion to the undersigned Magistrate Judge for appropriate action under 28 U.S.C. § 636(a)-(b), Federal Rule of Civil Procedure 72, and S.D. Ala. GenLR 72(a). See S.D. Ala. GenLR 72(b); (5/27/2020 electronic reference). In accordance with the Court's briefing schedule (see Docs. 26, 28), the Relator, Stephanie Strong Blankenship, has timely filed a response (Doc. 30) in opposition to the motion, and Lincare has timely filed a reply (Doc. 32) to the response. Lincare's motion is now under submission and ripe for disposition. Upon due consideration, and for the reasons explained herein, the undersigned will recommend that Lincare's motion be GRANTED in part and DENIED in part.

I. Procedural Background

On March 6, 2019, Blankenship, a former Lincare employee, filed a three-count sealed complaint against Lincare and Lincare Holdings, Inc., alleging causes of action under the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA" or "the Act"). Counts I and II alleged qui tam causes of action violations of 31 U.S.C. § 3729(a)(1)(A) and (B), respectively,¹ while Count III alleged a violation of the FCA's anti-retaliation provision, 31 U.S.C. § 3730(h). After the United States gave notice on December 2, 2019, that it did not intend to intervene in this action (Doc. 7), the Court ordered the complaint unsealed and directed Blankenship to serve the defendants. (See Doc. 8).²

On April 27, 2020, the defendants filed a joint Rule 12(b)(6) motion to dismiss the initial complaint (Doc. 21). Rather than litigate that motion, on May 13, 2020, Blankenship amended her complaint as a matter of course under Federal Rule of Civil Procedure 15(a)(1)(B). (See Doc. 23). The amended complaint dropped all claims against Lincare Holdings, Inc. but continued to assert the same three causes of action against Lincare. (See id.). In light of the amended complaint, the Court mooted theDefendants' motion to dismiss the initial complaint. (See Doc. 24).³ Lincare filed the present motion to dismiss the amended complaint (Doc. 25) on May 27, 2020.

II. Legal Standards

In deciding a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, a court must "accept the allegations in the complaint as true and construe them in the light most favorable to the plaintiff." Duty Free Ams., Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248, 1262 (11th Cir. 2015). "Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.' ... [T]he pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (citations and some quotations omitted). See also Duty Free Ams., 797 F.3d at 1262 (Courts " 'afford no presumption of truth to legal conclusions and recitations of the basic elements of a cause of action.' " (quoting Franklin v. Curry, 738 F.3d 1246, 1248 n. 1 (11th Cir. 2013) (per curiam))).

"To survive a motion to dismiss [for failure to state a claim], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). In other words, the complaint must contain "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

Hi-Tech Pharm., Inc. v. HBS Int'l Corp., 910 F.3d 1186, 1196 (11th Cir. 2018).

"The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Iqbal, 556 U.S. at 678 (citation and quotation marks omitted). Put another way, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show [n]'—'that the pleader is entitled to relief.' " Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). "[T]o determine what the plaintiff must plausibly allege at the outset of a lawsuit, [courts] usually ask what the plaintiff must prove in the trial at its end." Comcast Corp. v. Nat'l Ass'n of African Am.-Owned Media, 140 S. Ct. 1009, 1014, 206 L. Ed. 2d 356 (2020)

Moreover, " 'the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.' " Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 556 U.S at 678). Iqbal "suggested that courts considering motions to dismiss adopt a 'two-prongedapproach' in applying these principles: 1) eliminate any allegations in the complaint that are merely legal conclusions; and 2) where there are well-pleaded factual allegations, 'assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.' " Id. (quoting Iqbal, 556 U.S. at 679). "Importantly, ... courts may infer from the factual allegations in the complaint 'obvious alternative explanation[s],' which suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to infer." Id. (quoting Iqbal, 556 U.S. at 679 (quoting Twombly, 550 U.S. at 567)).

III. Well-Pleaded Allegations

Blankenship was employed for approximately six years at Healthcare Solutions in Selma, Alabama. (Doc. 23, PageID.106, ¶ 12). She started in July 2010 as a respiratory therapist, and was promoted to Center Manager in February 2011. (Id., ¶ 17). As Center Manager, Blankenship's duties included overseeing the operation of all areas of the center such as sales; customer service; clinical and delivery, including growing the patient base, purchasing equipment and supplies; and ensuring that operational procedures complied with federal, state, and local regulations. (Id., PageID.106-107, ¶ 17). In September or October of 2015, the Selma Healthcare Solutions center combined with Lincare's Selma operation and continued operating as Lincare. (Id., ¶¶ 12, 18). Blankenship continued working at the Selma Lincare center as a respiratory therapist until she was terminated on March 7, 2016. (Id.). As a Lincare respiratory therapist, her duties included equipment setups for ventilators, monitors, CPAP units, and other respiratory services in patients'homes; providing patient education; and performing care checks on current patients. (Id., PageID.107, ¶ 18).

a. Suspicious Practices

While performing her duties as a Respiratory Therapist for Lincare, Blankenship discovered, both from personal observation and interaction with patients and doctors, that Lincare engaged in the following conduct, which Blankenship alleges violated the FCA: billing for oxygen equipment after receiving notice that the customer was no longer using the equipment; billing for portable oxygen tanks when the customer did not require them; fabricating evidence to support claims that customers had ordered refills of oxygen that they never requested; testing potential customers and providing oxygen to Medicare beneficiaries without physician orders; and failing to return overpayments received from government payors. (Id., ¶ 19). Moreover, in September 2015, Blankenship noticed that the signatures on Certificates of Medical Necessity ("CMN") from prescribing physicians Dr. Bruce Taylor, Dr. Walid Freij, and Dr. Samer Fahoum looked unusual. (Id., ¶ 20). Blankenship was very familiar with the signatures of these physicians because they frequently referred patients to Lincare, and concluded that the signatures had been forged by someone in Lincare's office. (Id., ¶¶ 20-21).

In late September or early October 2015, Blankenship anonymously called the Lincare corporate hotline and reported the above suspicious activity. (Id., PageID.108, ¶ 22). In October 2015, Blankenship called and reported the activity to Vanessa Hager, a Lincare billing supervisor and compliance investigator at Lincare'scorporate office. (Id., PageID.108, 114, ¶¶ 23, 52). On November 12, 2015, Blankenship had a follow-up telephone conversation with Hager to check on the status of her investigation, and reported that patient "JB" had complained to her about being billed for equipment that JB never received. (Id., PageID.108, 115, ¶¶ 23, 56). Blankenship believes that Lincare failed to conduct even a facially sufficient investigation into her allegations, as, to her knowledge, Lincare never contacted any of the physicians who Blankenship identified as having had their signatures forged on CMNs to verify their authenticity, or JB to verify Blankenship's allegation that JB was being billed for equipment never received. (Id., PageID.108, ¶ 24).

Blankenship also discussed the above-mentioned issues with Lincare District Manager Ashley Holler on November 13, 2015. (Id., ¶ 25). Blankenship...