United States ex rel. Carbon v. Care New England Health System

567 F.Supp.3d 355

UNITED STATES of America EX REL. John CARBON and State of Rhode Island and Providence Plantations ex rel. John Carbon, Plaintiffs/Relators,

v.CARE NEW ENGLAND HEALTH SYSTEM, Kent County Memorial Hospital, Kindred Rehabilitation Services, Inc., Defendants.

No. 1:18-CV-000435-JJM-LDA

United States District Court, D. Rhode Island.

Signed October 19, 2021

Bethany N. Wong, U.S. Attorney's Office District of Rhode Island, Vicki J. Bejma, Robinson & Clapham, Providence, RI, for Plaintiffs/Relators United States of America, State of Rhode Island and Providence Plantations.

Stephen M. Robinson, Vicki J. Bejma, Robinson & Clapham, Bethany N. Wong, U.S. Attorney's Office District of Rhode Island, Providence, RI, for Plaintiff/Relator John Carbon.

Eric H. Jaso, Spiro Harrison, Short Hills, NJ, Matthew Thomas Oliverio, Oliverio & Marcaccio LLP, Providence, RI, I. Glenn P. Hendrix, Pro Hac Vice, William Jerad Rissler, Pro Hac Vice, Arnall Golden Gregory LLP, Atlanta, GA, for Defendant Kindred Rehab Services, Inc.

MEMORANDUM AND ORDER

JOHN J. MCCONNELL, JR., United States District Chief Judge.

Before the Court is Defendant Kindred Rehab Services, Inc.’s ("Kindred") Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). ECF No. 48. Relator Dr. John Carbon, D.O. alleges that Kindred violated the False Claims Act by admitting non-qualifying patients to Kent County Memorial Hospital's ("Kent") Acute Rehabilitation Unit ("ARU"). ECF No. 45. Because this claim is brought under the False Claims Act ("FCA"), pursuant to 31 U.S.C. § 3729, a plaintiff's complaint is subject to the heightened pleading standard of Fed. R. Civ. P. 9(b). Despite Kindred's arguments to the contrary, the Court finds that Dr. Carbon's Amended Complaint has pleaded sufficiently particular facts to meet the 9(b) standard. Therefore, Defendant Kindred's Motion to Dismiss is DENIED.

I. BACKGROUND¹

Dr. Carbon was the Medical Director at Kent. ECF No. 45 at ¶ 47. As Medical Director, Dr. Carbon was the Medical Director for the ARU at Kent. Id. In this capacity, Dr. Carbon made admittance determinations of patients to the ARU, often after meeting with them to assess their conditions. Id. at ¶ 50; see also ECF No. 51 at 11.

Defendant Care New England ("CNE") owned and operated Kent. ECF No. 45 at ¶ 12. Kindred and CNE collectively ran the ARU at Kent. Id. at ¶ 229. The Kent ARU, managed by Kindred, is an Inpatient Rehabilitation Facility ("IRF"). Id. at ¶ 14. IRFs are subject to "strict guidelines" when admitting patients. ECF No. 51 at 6. More particularly, Medicare Part A covers IRF stays, and those stays are paid for under what is known as a prospective payment system. Id. at 5—6. Prospective payment systems determine the payment rate for inpatient rehabilitation facilities. 42 U.S.C. § 1395ww(j)(3). For payment to be submitted, the services must be "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." 42 U.S.C. § 1395y(a)(1)(A).

Dr. Carbon and his superiors often disagreed over whether admission to the ARU would be proper. ECF No. 45 at ¶ 55.

For example, over the year 2013-2014, Dr. Carbon was required to admit G.S., the nonagenarian mother of a top Kent administrator on multiple occasions. Dr. Carbon explained that the mother was unable to participate in the intensive therapy, but was directed to accept her nevertheless. He was told that this was what he needed to do to keep his job. G.S. was a Medicare recipient.²

ECF No. 51 at 12 (citations omitted). Dr. Carbon alleges that several similarly admitted patients³ may have been better served by specialty doctors as opposed to an acute rehab program. See, e.g. , id. at ¶ 69.

Despite Dr. Carbon's role of determining admission of patients to the ARU, Jessica Ackerman also began taking an active role in pre-admissions evaluations Id. at ¶ 73, 95. Ms. Ackerman was the Kindred admissions coordinator for the Kent ARU, id. at ¶ 73, and a licensed speech pathologist,⁴ id. at ¶ 95. Essentially, Ms. Ackerman served as a go-between the potential admittees and Dr. Carbon. See ECF No. 48-1 at 14. However, "[t]he clinical liaison (i.e. , Ms. Ackerman) has no role in ... post-admission physician evaluation." Ibid. (emphasis added).

Ms. Ackerman's lack of medical expertise often led to improper recommendations as to the admission for non-qualifying patients, Dr. Carbon alleges. Id. at ¶ 73. Due to the overlapping roles of Dr. Carbon, as the individual who determines admissions, and Ms. Ackerman, as admissions coordinator, there was a high degree of conflict between the two. See id. at ¶¶ 73–78. As a result of their tenuous relationship, Ms. Ackerman worked with other employees to admit such patients. Id. at ¶¶ 101–02.

One such patient, known as L.P., was admitted to the ARU upon the recommendation of Ms. Ackerman. Id. at ¶ 103. L.P. was unable to advance nor actively engage while in the ARU because of their severe malnutrition.⁵ Id. at ¶ 103. Relatedly, P.I. was admitted the ARU despite an inability to properly participate in therapy. Id. at ¶ 118. Ms. Ackerman did not disclose that P.I.’s alcoholism and mental health issues would prevent his advancement in the ARU. Id. at ¶ 118. One final example from the Amended Complaint was R.F., who was discharged after five days in the ARU because of the overstatement of their level of impairment.⁶ Id. at ¶ 117. All three of these individuals were Medicare recipients. Id. at ¶¶ 103, 117, 118.

II. STANDARD OF REVIEW

Kindred moves, under Fed. R. Civ. P. 12(b)(6), to dismiss the claims brought against them. The complaint must have sufficient factual allegations that plausibly state a claim upon which a court may grant relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This standard requires more than a recitation of elements and must allow the court to draw a reasonable inference that a defendant is liable. Ashcroft v. Iqbal , 556 U.S. 662, 675, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court must accept a plaintiff's allegations as true and construe them in the light most favorable to the plaintiff, Gargano v. Liberty Int'l Underwriters , 572 F.3d 45, 48 (1st Cir. 2009).

" Rule 9(b) applies to FCA claims," rather than the traditional Rule 8(a) standard.⁷ U.S. ex rel. Rost v. Pfizer, Inc. , 507 F.3d 720, 731 (1st Cir. 2007). "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake, Malice, intent , knowledge, and other conditions of a person's mind may be alleged generally. " Fed. R. Civ. P. 9(b) (emphasis added), "In the FCA context, [the First Circuit] has previously held that the rule requires relators to provide details that identify particular false claims for payment that were submitted to the government." Rost , 507 F.3d at 731 (1st Cir. 2007) (internal quotation omitted). This is illustrative of a heightened pleading standard. Therefore, to survive a Rule 12(b)(6) motion for failure to state a claim, a plaintiff must overcome this heightened pleading standard.

The First Circuit has "repeatedly emphasized that there is no checklist of mandatory requirements" that a complaint must satisfy to overcome the heightened pleading standard. Hagerty ex rel. United States v. Cyberonics, Inc. , 844 F.3d 26, 31 (1st Cir. 2016). Nonetheless, complaints subject to Rule 9(b) "invariably are inadequate unless they are linked to allegations, stated with particularity, of the actual false claims submitted to the government that constitute the essential element of an FCA qui tam action." U.S. ex rel. Karvelas v. Melrose-Wakefield Hosp. , 360 F.3d 220, 232 (1st Cir. 2004). Thus, a plaintiff must provide at least some identifying content to satisfy Rule 9(b). Id. at 233.

III. DISCUSSION⁸

Whether a claim is false is governed by 31 U.S.C. § 3729(a)(1). The parties rely on the first two provisions of the statute, which involves those who "(A) knowingly present[ ], or cause[ ] to be presented, a false or fraudulent claim for payment or approval;" or "(B) knowingly make[ ], use[ ], or cause[ ] to be made or used, a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a)(1).

"FCA liability continues to be circumscribed by strict enforcement of the Act's materiality and scienter requirements." U.S. ex rel. Jones v. Brigham & Women's Hosp. , 678 F.3d 72, 85 (1st Cir. 2012). "[M]ateriality look[s] to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation." Universal Health Servs., Inc. v. United States , 579 U.S. 176, 136 S. Ct. 1989, 2002, 195 L.Ed.2d 348 (2016) (internal quotations omitted). "Materiality, in addition, cannot be found where noncompliance is minor or insubstantial." Id. at 2003. The scienter requirement relates to the knowledge of a submission of a false claim. See Guilfoile v. Shields, 913 F.3d 178, 187 (1st Cir. 2019).

A person acts "knowingly" if he or she "(1) had actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information." The FCA also stated that the term "knowingly" requires "no proof of specific intent to defraud."

U.S. ex rel. Hutcheson v. Blackstone Med., Inc. , 647 F.3d 377, 380 (1st Cir. 2011) (citing 31. U.S.C. § 3729(b)).

As has been alluded to, the IRF admissions criteria are strict. For a patient to be properly covered by an IRF, a patient's claim must be "reasonable and necessary." 42 C.F.R. § 412.622(a)(3). Subject to limited exceptions, a potential patient must satisfy all four conditions to meet this standard: (1) there is "active and ongoing therapeutic intervention of multiple therapy disciplines (physical therapy, occupational therapy, speech-language pathology,⁹ or prosthetics/orthotics therapy), one of which must be physical or occupational therapy;" (2) the patient "can reasonably...