United States ex rel. Byrd v. Acadia Healthcare Co.

UNITED STATES ex rel. JEFFREY H. BYRD v. ACADIA HEALTHCARE COMPANY, INC., ET AL.

CIVIL ACTION NO. 18-312-JWD-EWD

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

March 18, 2021

RULING AND ORDER

This matter comes before the Court on Defendants' Motion to Dismiss Relator's First Amended Complaint (Doc. 67) filed by Defendants Acadia Healthcare Company, Inc. ("Acadia") and Vermilion Hospital, LLC ("Vermilion") (collectively, "Defendants"). Plaintiff-Relator Jeffrey H. Byrd ("Relator" or "Byrd") opposes the motion, (Doc. 70), and Defendants have filed a reply, (Doc. 72). Oral argument is not necessary. The Court has carefully considered the law, the well-pleaded allegations of the First Amended Complaint, (Doc. 57), and the arguments and submissions of the parties and is prepared to rule. For the following reasons, Defendants' motion is granted in part and denied in part. Specifically, the motion is granted in that all claims are dismissed except Relator's claims for retaliation under state and federal law. However, Relator will be given leave to amend to cure the deficiencies of the operative complaint.

I. Introduction

A. Relevant Laws and Summary of Fraudulent Actions

"The False Claims Act, 31 U.S.C. § 3729 et seq., 'imposes significant penalties on those who defraud the Government.' " United States ex rel. Porter v. Magnolia Health Plan, Inc., 810 F. App'x 237, 240 (5th Cir. 2020) (unpublished), cert. denied, No. 20-786, 2021 WL 161045 (U.S. Jan. 19, 2021) (quoting Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1995 (2016)). "The Act is remedial, first passed at the behest of President Lincoln in 1863 to stem widespread fraud by private Union Army suppliers in Civil War defense contracts." United States rel. Grubbs v. Kanneganti, 565 F.3d 180, 184 (5th Cir. 2009). "It is 'intended to protect the Treasury against the hungry and unscrupulous host that encompasses it on every side.' " Id. (quoting S. Rep. No. 99-345, at 11 (1986), U.S. Code Cong. & Admin. News 1986, pp. 5266, 5276 (quoting United States v. Griswold, 24 F. 361, 366 (D. Or. 1885))). "To aid the rooting out of fraud, the Act provides for civil suits brought by both the Attorney General and by private persons, termed relators, who serve as a 'posse of ad hoc deputies to uncover and prosecute frauds against the government.' " Id. (quoting United States ex rel. Milam v. Univ. of Tex. M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir. 1992)). "In qui tam¹ suits brought by private persons on behalf of the Government the statute entitles the relator to between ten and thirty percent of any recovery made on behalf of the Government, depending on the extent of the relator's contribution to the action." Id. (citing 31 U.S.C. § 3730(d)).

"There are four elements of a False Claims Act claim." Porter, 810 F. App'x at 240. "Plaintiffs suing under the statute must show that (1) '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 pay out money or to forfeit moneys due (i.e., that involved a claim).' " Id. (quoting Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 387 (5th Cir. 2017) (quoting United States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009))).

Under the False Claims Act, a person is subject to liability if he, inter alia, (1) "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval"; (2)"knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim" ; (3) "knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government"; and (4) "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government[.]" 31 U.S.C. § 3729(a)(1)(A), (B), (G).

Here, Relator is a former Chief Financial Officer of Vermilion, which is a health system and subsidiary of Acadia. (First Amend. Compl. ¶¶ 5-10, Doc. 57.) He brings claims against these Defendants alleging that they violated the False Claims Act and that they terminated his employment in violation of the anti-retaliation provisions of the False Claims Act (31 U.S.C. § 3730(h)) and the Louisiana Medical Assistance Programs Integrity Law (La. Rev. Stat. Ann. § 49:439.1(E)). (Id. ¶¶ 71-78.) More specifically, Relator alleges that Defendants violated the False Claims Act under each of the above four provisions because they failed to comply with three health care laws in five different ways. (Id. ¶¶ 27-68, 71-73.)

First, Defendants allegedly violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) ("AKS"). (See First Amend. Compl. ¶¶ 11-15, Doc. 57.) "The AKS is a criminal statute prohibiting the knowing or willful offering to pay, or soliciting, any remuneration to induce the referral of an individual for items or services that may be paid for by a federal health care program." United States v. Nunnally v. W. Calcasieu Cameron Hosp., 519 F. App'x 890, 893 (5th Cir. 2013) (per curiam) (citing 42 U.S.C. § 1320a-7b(b)(1-2); United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997)).²

The AKS contains a number of exceptions, called "safe harbors." 42 U.S.C. § 1320a-7b(b)(3). For example, the AKS does not apply to "any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services[.]" Id. § 1320a-7b(b)(3)(B). Some of these exceptions involve written contracts between organizations and individuals. See id. § 1320a-7b(b)(3). Further, fair market value is a key concept with the AKS, see Bingham v. HCA, Inc., 783 F. App'x 868, 873 (11th Cir. 2019) (unpublished), though the parties dispute whether Byrd must properly allege this at the pleading stage, (Doc. 67-1 at 28-29; Doc. 70 at 18-20).

Second, Relator claims that Defendants violated the Stark Law, 42 U.S.C. § 1395nn, and its regulations, 42 C.F.R. § 350 et seq. (First Amend. Compl. ¶ 16-20, Doc. 57.) The Stark Law provides that, if a physician has a "financial relationship" with an entity (that is, an ownership orinvestment interest or a "compensation arrangement"), then that physician generally cannot make a referral to the entity for the furnishing of "designated health services" for which payment may be made, and "the entity may not present or cause to be presented a claim under [Medicare or Medicaid] or bill to any individual, third party payor, or other entity for designated health services furnished pursuant to a referral prohibited" by the Stark Law. 42 U.S.C. § 1395nn(a).

The Stark Law includes a number of defined terms. For example, a " 'compensation arrangement' [generally] means any arrangement involving any remuneration between a physician . . . and an entity[,]" subject to certain exceptions. Id. § 1395nn(h)(1)(A). " 'Remuneration' includes any remuneration, directly or indirectly, overtly or covertly, in cash or in kind." Id. § 1395(h)(1)(B). "Designated health services" includes, inter alia, inpatient and outpatient hospital services, clinical laboratory services, outpatient prescription drugs, and radiology services. Id. § 1395nn(h)(6).

The Stark Law also contains exceptions, one of which is for bona fide employment relationships. Id. § 1395nn(e)(2). Specifically, the Stark Law excepts from the definition of "compensation arrangement" "[a]ny amount paid by an employer to a physician . . . who has a bona fide employment relationship with the employer for the provision of services if" certain requirements are met. Id. Such requirements include that "(B) the amount of the remuneration under the employment—(i) is consistent with the fair market value of the services, and (ii) is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician," and "(C) the remuneration is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the employer[.]"³ Id.

Third, Relator claims that Defendants violated the False Claims Act by failing to comply with Louisiana licensure law. (First Amend. Compl. ¶ 26, Doc. 57.) Byrd alleges that, "To be payable under Medicare, Medicaid, or other government healthcare programs, services must be furnished by a physician or other practitioner licensed to provide such services under applicable state law," (id. ¶ 21), though Defendants dispute whether this requirement is material to payment, (Doc. 67-1 at 27-28).

In any event, under the Louisiana Nurse Practice Act, La. Rev. Stat. Ann. § 37:911 et seq. ("LNPA"), an " 'Advanced practice registered nurse' or 'APRN' means a licensed registered nurse who is certified by a nationally recognized certifying body . . . as having an advanced nursingspecialty as described in [the LNPA] and who meets the criteria for an advanced practice registered nurse as established by the [nursing] board." La. Rev. Stat. Ann. § 37:913(1). The LNPA provides that, as a general rule, "acts of medical diagnosis and prescription by an advanced practice registered nurse shall be in accordance with a collaborative practice agreement." Id. § 37:913(8).

The LNPA also contains a number of defined terms. For example, a " 'Collaborative practice agreement' means a formal written statement addressing the parameters of the collaborative practice which are mutually agreed upon by the advanced practice registered nurse and one or more licensed physicians . . . which shall include but not be limited to" certain described provisions. Id. § 37:913(9).⁴ " 'Collaborative practice' means the joint management of the health care of a patient by an advanced practice registered nurse performing advanced practice registered...