United States v. Molina Healthcare of N.M.

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UNITED STATES OF AMERICA and STATE OF NEW MEXICO ex rel. JACOB KURIYAN, Plaintiffs, v. MOLINA HEALTHCARE OF NEW MEXICO, INC., PRESBYTERIAN HEALTH PLAN, INC., UNITEDHEALTHCARE OF NEW MEXICO, INC., and HCSC INSURANCE SERVICES CO. dba BLUE CROSS & BLUE SHIELD OF NEW MEXICO, Defendants.

No. 16-cv-1148 JB-KK

United States District Court, D. New Mexico

August 28, 2023

PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

KIRTAN KHALSA, UNITED STATES MAGISTRATE JUDGE.

Relator Jacob Kuriyan alleges that Defendants-four Medicaid Managed Healthcare Organizations (“MCOs”)-failed to meet a requirement under their contracts with the New Mexico Human Services Department (“HSD”) to provide benefits to Medicaid recipients, falsely certified to HSD that the requirement had been met, and fraudulently retained millions of dollars in payments that they should have returned to HSD. (Docs. 1; 142 (Third Amended Complaint (the “TAC”).) Relator brings claims against the MCOs on behalf of the United States under the False Claims Act, 31 U.S.C. §§ 3729, et seq. (“FCA”), and on behalf of the State of New Mexico under the New Mexico Fraud Against Taxpayers Act, N.M. Stat Ann. §§ 44-9-1 through 44-9-14 (“NMFATA”), and the New Mexico Medicaid False Claims Act, N.M. Stat. Ann. §§ 27-14-1 through 27-14-15 (“NMMFCA”). (Doc. 142.)

Before the Court are two motions filed by the United States and the State of New Mexico (collectively, the “Government”):^[1] (i) the Motion to Dismiss Relator's Qui Tam Action under the Public Disclosure Bar (the “Public Disclosure Motion”) (Doc. 303) and (ii) the Motion for Summary Judgment on Relator's Demand for an Alternate Remedy (the “Alternate Remedy Motion”). (Doc. 305.) The Honorable James O. Browning held a hearing on October 28, 2022, (Doc. 389) and granted both Motions in an interlocutory order entered on March 22 2023 (the “Interlocutory Order”). (Doc. 403.) In the Interlocutory Order, Judge Browning referred the Motions^[2] to me to issue proposed findings of fact and a recommended disposition. (Id.)

Having reviewed Relator's and the Government's submissions the transcript of the October 28, 2022, hearing, the record and the relevant law, I recommend that the Court GRANT the Public Disclosure Motion, enter summary judgment in the Government's favor, and dismiss the TAC. I further recommend that, if the Court grants the Public Disclosure Motion, it DENY the Alternate Remedy Motion as moot. In the alternative, if the Court denies the Public Disclosure Motion, I recommend that the Court GRANT the Alternate Remedy Motion on its merits.

ANALYSIS

I. Legal Standards Governing Summary Judgment

“Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Jones v. Kodak Med. Assistance Plan, 169 F.3d 1287, 1291 (10th Cir. 1999) (quotation marks omitted); Fed.R.Civ.P. 56(a). “A dispute is genuine when ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party,' and a fact is material when it ‘might affect the outcome of the suit under the governing substantive law.'” Birdv. W.Valley City, 832 F.3d 1188, 1199 (10th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Only material factual disputes preclude the entry of summary judgment. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000). If the nonmovant demonstrates a genuine dispute as to material facts, the Court views the facts in the light most favorable to the nonmovant. Ricci v. DeStefano, 557 U.S. 557, 586 (2009). However, the Court will not draw “unreasonable inferences that are unsupported by the record.” Est. of Redd ex rel. Redd v. Love, 848 F.3d 899, 906 (10th Cir. 2017); Wellington v. Daza, No. 21-2052, 2022 WL 3041100, at *2 (10th Cir. Aug. 2, 2022), cert. denied, 143 S.Ct. 788 (2023).

The movant bears the initial burden of demonstrating the absence of a genuine issue of material fact and its entitlement to a judgment as a matter of law. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998). When the nonmovant will bear the burden of proof at trial, the movant may meet its initial summary judgment burden by submitting “affirmative evidence that negates an essential element of the nonmoving party's claim” or by demonstrating that the nonmoving party's evidence is insufficient to establish an essential element of his claim. Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 994 (10th Cir. 2019) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986)). If the movant meets this initial burden, “the burden then shifts to the nonmovant to ‘set forth specific facts showing that there is a genuine issue for trial.'” Id. (quoting Anderson, 477 U.S. at 250).

When a movant moves for summary judgment “to test an affirmative defense,” in turn, it must first “demonstrate that no disputed material fact exists regarding the affirmative defense asserted.” Helm v. Kansas, 656 F.3d 1277, 1284 (10th Cir. 2011) (quoting Hutchinson v. Pfeil, 105 F.3d 562, 564 (10th Cir.1997)). “Once the defendant makes this initial showing, ‘the plaintiff must then demonstrate with specificity the existence of a disputed material fact.'” Helm, 656 F.3d at 1284 (quoting Hutchinson, 105 F.3d at 564). If the plaintiff does not do so, “the affirmative defense bars [her] claim, and the defendant is then entitled to summary judgment as a matter of law.” Id. Ultimately, where the movant will bear the burden of proof at trial on an affirmative defense, it “must establish beyond peradventure all of the essential elements of the . . . defense to warrant [summary] judgment in [its] favor.” Leone v. Owsley, 810 F.3d 1149, 1153 (10th Cir. 2015) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986)).

The Court “may not grant summary judgment based on its own perception that one witness is more credible than another[.]” Helget v. City of Hays, Kansas, 844 F.3d 1216, 1223 n.3 (10th Cir. 2017) (quoting Fogarty v. Gallegos, 523 F.3d 1147, 1165 (10th Cir. 2008)). But “where a nonmoving party (who has the burden of persuasion at trial) fails to provide admissible evidence rebutting testimony offered by the moving party, the question is not one of credibility, but rather the absence of evidence creating a triable issue of fact.” Id. Thus, nonmoving parties “must present [their] own affirmative evidence” to contradict the testimony presented by the movant. Id. In addition, under Local Rule 56(b), “[a]ll material facts set forth [by the movant] will be deemed undisputed unless specifically controverted.” D.N.M.L.R.-Civ. 56.1(b).

Finally, Local Civil Rule 7.1 provides that “[t]he failure of a party to file and serve a response in opposition to a motion within the time prescribed for doing so constitutes consent to grant the motion.” D.N.M.LR-Civ. 7.1(b). “Implicit in that rule is that the failure to respond to an argument raised in a motion constitutes consent to grant the motion to the extent associated with that particular argument.” Lewis v. XL Catlin, 542 F.Supp.3d 1159, 1168 n.6 (D.N.M. 2021), appeal dismissed, 2021 WL 6197126 (10th Cir. Sept. 27, 2021); see also Hinsdale v. City of Liberal, Kan., 19 Fed.Appx. 749, 768-69 (10th Cir. Aug. 28, 2001) (holding that plaintiff abandoned claim by failing to respond to summary judgment arguments about it); Coffey v. Healthtrust, Inc., 955 F.2d 1388, 1393 (10th Cir. 1992) (holding that plaintiff's failure to challenge defendants' summary judgment arguments was “fatal”).

II. Legal Standards Governing FCA, NMMFCA, and NMFATA Claims

The FCA “allows for the recovery of civil penalties and treble damages from anyone who defrauds the [federal] government by submitting fraudulent claims for payment.” United States ex rel. Reed v. KeyPoint Gov't Sols., 923 F.3d 729, 735-36 (10th Cir. 2019); § 3729(a)(i)(A). “Liability also attaches to anyone who ‘knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.'” Reed, 923 F.3d at 736 (quoting § 3729(a)(1)(B)). In addition, the FCA imposes liability for attempts to reduce an obligation owed to the government. Id. at 736; § 3729(a)(1)(G). Thus, “an individual who makes a material misrepresentation to avoid paying money owed the Government would be equally liable under the Act as if he had submitted a false claim to receive money.'” U.S. ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1194-95 (10th Cir. 2006) (quoting S.Rep. No. 99-345, at 18, 1986 U.S.C.C.A.N. at 5283). “To enforce its provisions, the Act empowers individuals to file suits on behalf of the government alleging that a third party made a fraudulent claim for payment to the government.” Reed, 923 F.3d at 736; § 3730(b)(1). “These suits are known as ‘qui tam' suits, and the individual plaintiffs are called ‘relators.'” Reed, 923 F.3d at 736.

Like the FCA with respect to the federal government, the NMMFCA and NMFATA permit a relator to bring an action on behalf of the State of New Mexico for false or fraudulent claims. See § 27-14-7(B); § 44-9-5. In relevant part, the NMMFCA imposes liability on one who: 1) “presents, or causes to be presented, to the state a claim for payment under the [M]edicaid program knowing that such claim is false or fraudulent”; 2) “makes, uses or causes to be made or used a record or statement to obtain a false or fraudulent claim under the [M]edicaid program paid for or approved by the state knowing such record or statement is false”; or, 3) “makes, uses, or causes to be made or used a record or statement to conceal, avoid or...