Case 1:14-cv-01215-RLY-DLP Document 133 Filed 11/25/20 Page 1 of 19 PageID #: 920
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF INDIANA
`INDIANAPOLIS DIVISION
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`UNITED STATES OF AMERICA and
`STATE OF INDIANA ex rel. Thomas P.
`Fischer,
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`COMMUNITY HEALTH NETWORK, INC., )
`et al.,
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`Plaintiffs,
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`v.
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`No. 1:14-cv-01215-RLY-DLP
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`Defendants.
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`ORDER
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`This matter comes before the Court on Plaintiff-Relator's Motion for Leave to
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`File Second Amended Complaint, Dkt. [108]. On March 17, 2020, Defendant
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`Community Health Network, Inc.1 filed a response in opposition. (Dkt. 115). On
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`March 24, 2020, the United States of America and the State of Indiana filed
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`Statements of Interest. (Dkts. 120, 121). On March 31, 2020, Plaintiff-Relator filed a
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`reply in support of the Motion for Leave to Amend. (Dkt. 47). On April 14, 2020,
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`with this Court's permission, Community Health Network filed a sur-reply in
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`opposition to Plaintiff-Relator's request for leave. (Dkt. 129). The Motion is now
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`fully briefed and ripe for decision. For the reasons discussed below, Plaintiff-
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`Relator's Motion is GRANTED.
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`1 Community Health Network, Inc. is the only Defendant that has been served with a Complaint and
`entered counsel appearances in this matter.
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`1
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`I.
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`BACKGROUND
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`In October 2015, Community Health Network, Inc. ("CHN") recruited
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`Plaintiff-Relator Thomas P. Fischer ("Relator") from his private practice to serve as
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`CHN's Chief Financial Officer. (Dkt. 1 at 6). CHN is a non-profit health system
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`located in Indianapolis, Indiana which includes hospitals, surgery centers, urgent
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`care centers, and patient facilities. (Id. at 7). CHN employs over 350 physicians
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`through subsidiaries and affiliates, primarily through its subsidiary Community
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`Physician Network ("CPN"). (Id.).
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`In December 2012, CHN promoted Relator to serve as its Chief Operating
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`Officer and Chief Financial Officer. (Id. at 6-7). In this dual role, Relator became
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`aware of significant, unexpected monetary losses at CPN. (Id. at 45). As a result, he
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`began asking CPN management for explanations regarding the losses and
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`expressed concern that he believed the losses were directly tied to CHN paying
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`physicians "commercially unreasonable rates." (Id. at 46). Starting in July 2013,
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`Relator began requesting financial information regarding Visionary Enterprises,
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`Inc. ("VEI")2 surgery centers and continued expressing concern about excessive
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`physician compensation to a number of individuals, including CHN senior
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`management. (Id. at 47). On November 27, 2013, CHN terminated Relator from his
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`positions. (Id. at 48).
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`On July 21, 2014, Relator, on behalf of the United States of America (the
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`2 VEI is a for-profit subsidiary of CHN which acquires and manages ambulatory surgical centers on
`behalf of CHN. (Dkt. 1 at 8). Ownership in many of the surgical centers is shared with CPN
`physicians. (Id).
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`2
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`"Government") and the State of Indiana (the "State"), initiated this qui tam lawsuit
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`pursuant to the False Claims Act ("FCA")3 against Defendants Community Health
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`Network, Inc., Community Health Network Foundation Inc., Community
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`Physicians of Indiana, Inc., VEI, Community Surgery Center-North, Community
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`Surgery Center-South, Community Surgery Center-East, Community Surgery
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`Center-Hamilton, Community Surgery Center-Kokomo, Community Surgery
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`Center-Northwest, Hancock Surgery Center, Community Endoscopy Center, and
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`Community Digestive Center (collectively, the "Community Defendants"). (Id. at 2).
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`The original Complaint consists of two main parts.
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`First, Relator alleged that the Community Defendants knowingly defrauded
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`the Government and State by engaging in a fraudulent scheme to pay physicians
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`improper and excessive compensation to ensure that they referred patients,
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`including Medicare and Medicaid patients, to CHN. (Id. at 4, 31-39). This
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`fraudulent scheme, Relator alleged, violates the Stark Law,4 the Anti-Kickback
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`Statute,5 and the FCA. (Id. at 25). Specifically, Relator asserted that Defendants
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`paid kickbacks and illegal remunerations to induce physicians to refer patients to
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`CHN, (Id. at 25), solicited and received kickbacks from Indianapolis nursing home
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`3 The FCA prohibits, among other acts, presenting to the government "a false or fraudulent claim for
`payment or approval." U.S. v. UCB, Inc., 970 F.3d 835, 840-41 (7th Cir. 2020) (citing 31 U.S.C. §
`3729(a)(1)(A)). The Indiana FCA prohibits the same conduct. Ind. Code § 5-11-5.7-2.
`4 The Stark Law is a wide-ranging federal statute that prohibits a physician who has a "financial
`relationship" (including compensation and ownership interests) with an entity from referring
`patients to the entity for "designated health services" covered by Medicare unless an exception is
`available. 42 U.S.C. § 1395nn.
`5 The Medicare and Medicaid Fraud and Abuse Statute, or the Anti-Kickback Statute, prohibits
`knowingly and willfully making any false statement or representation of a material fact in any
`application for any benefit or payment under a federal health care program. 42 U.S.C. § 1320a-7b.
`3
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`facilities in exchange for patient referrals, (Id. at 25-26), ensured the profitability of
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`ambulatory surgical centers in which its physicians had ownership interests, (Id. at
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`29, 39), and provided lucrative medical directorships to referring physicians. (Id. at
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`43). Relator alleged that all claims submitted to Medicare, Medicaid, or a
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`government funded healthcare program for services rendered pursuant to a referral
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`from a physician who was paid an illegal remuneration are false claims that violate
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`the FCA and Indiana FCA. (Id. at 4, 25-26).
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`Second, Relator alleged that CHN retaliated against him in violation of the
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`applicable FCA and Indiana FCA anti-retaliation provisions. Relator alleged that he
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`was discharged in retaliation for expressing concern to CHN leadership that
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`operating losses and budget variances were a direct result of illegal activities
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`related to physician compensation, referral patterns, and business practices. (Id. at
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`7, 46, 49). Relator's original complaint alleged eight counts for: (1) FCA violations;
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`(2) Indiana FCA violations; (3) retaliation under the FCA; (4) retaliation under the
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`Indiana FCA; (5) breach of contract; (6) breach of oral contract; (7) promissory
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`estoppel; and (8) quantum meruit. (Id. at 51-58).
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`As required by the FCA statutory provisions, Relator filed the original
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`Complaint under seal. See 31 U.S.C. § 3730(b)(2). The original Complaint remained
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`under seal while the Government and State investigated Relator's allegations to
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`determine the appropriateness of intervention. On October 15, 2015, Relator filed a
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`First Amended Complaint under seal. (Dkt. 32).
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`4
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`Relator's allegations in the original Complaint and the First Amended
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`Complaint are nearly identical, except that Relator provided greater factual detail
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`regarding nursing home kickbacks in exchange for patient referrals, (see Dkt. 32 at
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`50-51), and added a ninth count for blacklisting asserting that CHN knowingly
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`provided false information to Relator's prospective employers after his termination.
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`(See Dkt. 32 at 59-60, 63-64, 68-69).
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`On August 7, 2019, the Government filed a Notice of Election to Intervene in
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`Part and Decline to Intervene in Part. (Dkt. 86). The Government opted to intervene
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`"in that part of the action which alleged that [D]efendant Community Health
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`Network, Inc. violated the FCA by submitting claims to Medicare that were referred
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`by physicians with whom [it] had employment relationships that violated the Stark
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`Law." (Dkt. 86 at 1). The Government declined to intervene with respect to the
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`remaining allegations and requested that this Court unseal the Complaint. (Id). In
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`its Notice, the Government did not explicitly indicate whether its decision to
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`intervene was based on the original Complaint or the First Amended Complaint,
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`but a subsequently filed Statement by the Government refers to the First Amended
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`Complaint as the operative Complaint in this matter.6 The Court agrees.
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`On December 23, 2019, this Court granted the Government's request to
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`unseal the Complaint and ordered that it serve its own complaint on Defendant
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`CHN within 120 days. (Dkt. 93 at 1). This Court further ordered that the seal be
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`6 On March 24, 2020, the Government filed a Statement of Interest Regarding Relator's Standing to
`Pursue Non-Intervened Claims. (Dkt. 120). The Government requested that this Court unseal
`Relator's First Amended Complaint, as it is the operative Complaint in this matter. (Id. at 9). The
`Court unsealed the First Amended Complaint on November 24, 2020. (Dkt. 132).
`5
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`lifted on all matters occurring in the action after the date of the order. (Id. at 2).
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`That same date, December 23, 2019, this Court granted the State's Notice of
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`Election to Decline Intervention. (Dkt. 94).7 On January 6, 2020, the Government
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`filed its Complaint in Intervention. (Dkt. 96).
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`The Government's Complaint in Intervention focuses on false claims arising
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`from the performance of health services by physicians with compensation
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`arrangements with CHN that exceeded fair market value or considered the volume
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`or value of their referrals to CHN, thereby violating the Stark Law. (Id. at 3). These
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`physicians allegedly referred patients to CHN for health services, and, in turn,
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`CHN submitted these false claims to Medicare knowing that they were not eligible
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`for payment, in violation of the FCA. (Id. at 3-4).
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`On March 3, 2020, Relator filed the present Motion for Leave to File Second
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`Amended Complaint. (Dkt. 108). Initially, Relator asserted that an amendment to
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`its First Amended Complaint was necessary to address issues raised by the
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`Government in its Complaint in Intervention and add new claims and Defendants
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`based on evidence developed over the course of the Government's four-year
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`investigation. (Id. at 2). On March 17, 2020, CHN filed a response in opposition,
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`arguing that the Court should deny the Relator's request for leave to amend the
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`complaint. (Dkt. 115). On March 24, 2020, the Government and the State each filed
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`a Statement of Interest. (Dkts. 120, 121). On March 31, 2020, Relator filed a reply,
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`in which he does not argue that the amendment adds claims, but asserts that the
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`7 The State filed its Notice of Election to Decline Intervention on December 5, 2019. (Dkt. 92).
`6
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`amendment adds a new Defendant, renames Defendants, and adds evidence and
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`details to the fraudulent scheme outlined in the First Amended Complaint. (Dkt.
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`124 at 2). On April 14, 2020, with this Court's permission, CHN filed a sur-reply in
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`opposition to Relator's request for leave to amend. (Dkt. 129).
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`CHN opposes Relator's Motion for Leave to Amend for two main reasons: (1)
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`the proposed amendments are futile; and (2) the Relator unduly delayed in filing
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`the proposed second amended complaint. (Dkt. 115 at 2-3).
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`II.
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`LEGAL STANDARD
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`After the opportunity to amend the pleadings as a matter of course has
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`passed, a party may amend a complaint only with the consent of the opposing party
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`or leave of the court. Fed. R. Civ. P. 15(a). Leave to amend should be "freely given
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`when justice so requires" absent considerations such as "undue delay, bad faith or
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`dilatory motive on the part of the movant, repeated failure to cure deficiencies by
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`amendments previously allowed, undue prejudice to the opposing party by virtue of
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`allowance of the amendment, and futility of amendment." Fed. R. Civ. P. 15(a)(2);
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`Foman v. Davis, 371 U.S. 178, 182 (1962).
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`An amendment is futile if the amended pleading would not survive a motion
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`to dismiss. McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 685 (7th Cir. 2014).
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`To survive a motion to dismiss, the amended complaint must "contain sufficient
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`factual matter, accepted as true, to 'state a claim to relief that is plausible on its
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`face.'" Id. at 685 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Before denying
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`a motion to amend, however, it should be "clear" that the proposed amended
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`complaint "is deficient" and would not survive such a motion. Johnson v. Dossey,
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`515 F.3d 778, 780 (7th Cir. 2008); see Runnion ex rel. Runnion v. Girl Scouts of
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`Greater Chi. & Nw. Ind., 786 F.3d 510, 519-20 (7th Cir. 2015) ("Unless it is certain
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`from the face of the complaint that any amendment would be futile or otherwise
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`unwarranted, the district court should grant leave to amend.") (quoting Barry
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`Aviation Inc. v. Land O'Lakes Mun. Airport Comm'n, 377 F.3d 682, 687 (7th Cir.
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`2004)).
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`For undue delay, courts look to the similarity of the factual basis for the
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`claims in the original complaint to the new claims raised in the amended complaint,
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`the moving party's explanation for waiting to raise the new claims, whether the
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`moving party is attempting to introduce a new theory of the case, and whether
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`granting the motion to amend will require new or duplicated discovery efforts. See
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`Marshall v. Town of Merrillville, 262 F. Supp. 3d 733, 738 (N.D. Ind. 2017); see also
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`Bethany Pharmacal Co., 241 F.3d at 861 (7th Cir. 2001). Typically, "delay by itself
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`is normally an insufficient reason to deny a motion for leave to amend" and "must
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`be coupled with some other reason." Dubicz v. Commonwealth Edison Co., 377 F.3d
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`787, 793 (7th Cir. 2004) (citations omitted).
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`The party seeking to amend has the burden of showing that undue prejudice
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`will not result to the non-moving party. McDaniel v. Loyola Univ. Med. Ctr., 317
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`F.R.D. 72, 77 (N.D. Ill. 2016). "Ultimately, 'the decision to grant or deny a motion to
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`file an amended pleading is a matter purely within the sound discretion of the
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`district court.'" Brunt v. Serv. Emps. Int'l Union, 284 F.3d 715, 720 (7th Cir. 2002).
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`8
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`III. DISCUSSION
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`A. Futility of the Proposed Second Amended Complaint
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`CHN argues that Relator's request to amend should be denied on futility
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`grounds. (Dkt. 115 at 2). Specifically, CHN asserts that Relator's proposed second
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`amended complaint should be denied as futile because: (1) the Government's
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`Complaint in Intervention supersedes Relator's pleadings and is considered the
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`operative complaint in this matter; (2) the FCA claims are barred by the applicable
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`statute of limitations; and (3) the claims are foreclosed by the FCA's "original
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`source" requirement. (Id).
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`i.
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`Intervention in Part
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`First, CHN argues that the claims in Relator's proposed second amended
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`complaint are futile because the Government has intervened in this matter. (Dkt.
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`115 at 13). As such, the Government's Complaint in Intervention "supersedes the
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`Relator's pleadings" and serves as the operative complaint. (Id. at 16). Accordingly,
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`Relator has no right to conduct this action and any pleading filed by him has no
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`legal effect. (Id. at 19-20).8 In reply, Relator contends that because the Government
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`elected to intervene in part and the State of Indiana declined to intervene at all,
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`Relator has standing to litigate non-intervened claims. (Dkt. 124 at 16).
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`8 CHN points out that the Relator's "disregard for the Government's commanding role in qui tam
`actions is highlighted by his public filing of the proposed second amended complaint in violation of
`the FCA's sealing requirement." (Dkt. 115 at 3). The Court notes that a violation of the FCA seal
`provision does not mandate dismissal of a relator's complaint, see State Farm Fire & Cas. Co. v. U.S
`ex rel. Rigsby, 137 S. Ct. 436, 442 (2016), and declines to deny leave to amend on this basis.
`9
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`The FCA allows private persons, or relators, to prosecute qui tam actions
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`"against alleged fraudsters on behalf of the United States government." U.S. ex rel.
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`Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 840 (7th Cir. 2018) (citing U.S. ex
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`rel. Watson v. King-Vassel, 728 F.3d 707, 711 (7th Cir. 2013); 31 U.S.C. § 3730. As
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`such, 31 U.S.C. § 3730(b)(1) requires that a qui tam action under the FCA must be
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`filed "in the name of the Government." 31 U.S.C. § 3730(b)(1). "Before 1986, if the
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`government intervened in the action, the relator's participation was at an end." U.S.
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`v. UCB, Inc., 970 F.3d 835, 841 (7th Cir. 2020). "In 1986, however, Congress
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`amended the FCA to allow for the relator's continued participation even after the
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`government intervenes." Id. Thus, as it stands, "§ 3730(b)(4)(B) gives the relator
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`'the right to conduct the action' – without qualification – when the government has
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`declined to intervene." Id. at 845. "If the Government proceeds with the action," it
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`assumes "primary responsibility" for prosecuting it. 31 U.S.C. § 3730(c). Relator still
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`retains "the right to continue as a party to the action." Id.
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`Here, CHN argues that the word "action" in 31 U.S.C. § 3730(c) refers to the
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`entire qui tam lawsuit. (Dkt. 115 at 14). Thus, even when the Government
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`intervenes in part, Relator cannot pursue any claims, including non-intervened
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`claims. (Id. at 17). In support, CHN relies on one sole case from outside this Circuit,
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`U.S. ex rel. Brooks v. Stevens-Henager Coll., Inc., 359 F. Supp. 3d 1088, 1095 (D.
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`Utah 2019), which held that relators are not permitted to litigate non-intervened
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`claims. The Court disagrees.
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`10
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`The Court finds in this case that the Relator is permitted to litigate non-
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`intervened claims notwithstanding the Government's partial intervention and the
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`State's non-intervention. See Carnithan v. Cmty. Health Sys., Inc., No. 11-CV-312-
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`NJR-DGW, 2015 WL 9258595, at *1 (S.D. Ill. Dec. 18, 2015); see also U.S. ex rel.
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`Trombetta v. EMSCO Billing Servs., Inc., No. 96 C 226, 2002 WL 34543515, at *1
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`(N.D. Ill. Dec. 5, 2002). This interpretation aligns with the FCA mandate vesting
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`the government with the primary responsibility for prosecuting the action but
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`allowing relator to continue as a party and not directing relator to abandon
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`individual claims simply because the government intervenes in part. See 31 U.S.C. §
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`3730 ([i]f the Government elects not to proceed with the action, the person who
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`initiated the action shall have the right to conduct the action); Ind. Code § 5-11-5.7-
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`4(e) (if attorney general or inspector elects not to proceed with the action . . . the
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`person who initially filed the complaint may proceed with the action).
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`"Courts regularly allow relators to pursue their separate claims after the
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`government's intervention." U.S. ex rel. Ormsby v. Sutter Health, 444 F. Supp. 3d
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`1010, 1075 (N.D. Cal. 2020) (citing U.S. ex rel. Ketroser v. Mayo Found., 729 F.3d
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`825, 826 (8th Cir. 2013) (relator filed an FCA case, government intervened in part
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`and settled intervened claim, and relator filed an amended complaint asserting
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`additional claims against defendant); U.S. ex rel. Fallon v. Accudyne Corp., 97 F.3d
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`937, 938 (7th Cir. 1996) ("Attorney General took over the prosecution of Count I . . .
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`but left Count II in the hands of the relators.").
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`11
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`Moreover, CHN's argument, that permitting the Relator to litigate his FCA
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`allegations "while the Government simultaneously prosecutes its own FCA action"
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`is prejudicial to CHN, is similarly overruled. (Dkt. 115 at 21). CHN is aware of the
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`various claims being alleged, regardless of which party litigates those claims. See
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`Carnithan, 2015 WL 9258595, at *3. No initial pretrial conference has occurred,
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`discovery has not yet commenced, and this case is in its infancy; thus, even if the
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`Court were to conclude that prejudice may occur (which it does not), that prejudice
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`is mitigated by the early stage of the lawsuit and ability to rectify any logistical
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`issues. The Court declines to deny leave to amend on this basis.
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`ii.
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`Statute of Limitations
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`Next, CHN argues that the new allegations contained in Relator's proposed
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`second amended complaint are time barred by the FCA's six-year statute of
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`limitations. (Dkt. 115 at 11). Specifically, because Relator filed his original
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`Complaint on July 21, 2014 and filed his proposed second amended complaint on
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`March 3, 2020, any new FCA claims within the second amended complaint fall
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`outside the six-year statute of limitations. (Id. at 10-11). Further, CHN argues that
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`it "appears that Relator's new FCA claims are being brought more than three years
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`after the Government learned of, or was in a position to learn of, the claims as a
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`result of its investigation." (Id).
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`
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`In response, Relator contends that the FCA provides a ten-year statute of
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`limitations. (Dkt. 124 at 11). Thus, because the second amended complaint alleges
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`ongoing FCA violations beginning in 2009, the applicable statute of limitations does
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`12
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`not bar the claims. (Id. at 11-12). Even if the statute of limitations barred some or
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`all claims, Relator argues, a response to a motion to amend is not the proper avenue
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`to address an affirmative defense. (Id. at 12).
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`
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`The FCA statute of limitations provides:
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`. . .
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`(b) A civil action under section 3730 may not be brought –
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`(1) more than 6 years after the date on which the violation of
`section 3729 is committed, or
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`(2) more than 3 years after the date when facts material to the
`right of action are known or reasonably should have been
`known by the official of the United States charged with
`responsibility to act in the circumstances, but in no event more
`than 10 years after the date on which the violation is
`committed,
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`
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`whichever occurs last.
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`31 U.S.C. § 3731. Under Federal Rule of Civil Procedure 8(c)(1), a statute of
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`. . .
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`limitations argument is an affirmative defense, not an attack against the sufficiency
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`of the pleadings. U.S. ex rel. McGee v. IBM Corp., 81 F. Supp. 3d 643, 656 (N.D. Ill.
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`2015); Fed. R. Civ. P. 8(c)(1).
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`Here, Relator filed the original Complaint on July 21, 2014 – approximately
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`five years after CHN's allegedly fraudulent scheme began, (Dkt. 1), and filed a First
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`Amended Complaint, which included nearly identical allegations, on October 15,
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`2015. (Dkt. 32). Relator's proposed second amended complaint asserts that
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`beginning in 2009, CHN "began a systematic, corporate-wide campaign to increase
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`the number of both its employed and affiliated physicians and physician practice
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`13
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`groups to increase market share in the Indianapolis region" by "steer[ing] high-
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`margin business to surgery centers owned (or partially owned) by its employed
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`physicians" and sending referrals to nursing home providers in exchange for money.
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`(Dkt. 108-1 at 21-22). The proposed second amended complaint does not add new
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`claims, but provides additional factual detail to the central allegations involving
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`improper compensation paid to physicians that were detailed in the original
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`Complaint and First Amended Complaint. The second amended complaint also
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`clarifies the business names of certain Defendants, for example, by amending
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`"Community Surgery Center North" to "North Campus Surgery Center, LLC d/b/a
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`Community Surgery Center North." (Dkt. 108-1 at 1). Finally, the proposed second
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`amended complaint adds North Campus Office Associates, L.P. as a Defendant. (Id).
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`A motion to amend is an "ill-suited vehicle for determining statute of
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`limitations and relation back issues." Miller v. Panther II Transportation, Inc., No.
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`1:17-cv-04149-JMS-TAB, 2018 WL 3328135, at *7 (S.D. Ind. July 6, 2018); cf. U.S.
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`ex rel. McGee, 81 F. Supp. 3d at 656 (declining to decide that FCA claims were
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`barred by the statute of limitations on motion to dismiss). The proposed second
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`amended complaint does not assert new claims, and, when accepted as true,
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`Relator's factual allegations provide the Court with sufficient information to
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`plausibly determine that the lawsuit falls within the applicable ten-year statute of
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`limitations. It is not plain from the face of Relator's proposed second amended
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`complaint that this litigation is time-barred, and the Court declines to conclude as
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`Case 1:14-cv-01215-RLY-DLP Document 133 Filed 11/25/20 Page 15 of 19 PageID #: 934
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`such. See Runnion, 786 F.3d at 519-20. Instead, CHN will have an opportunity to
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`assert the statute of limitations as an affirmative defense should it choose to do so.
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`iii. Original Source
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`Next, CHN argues that Relator's new claims are barred by the FCA's
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`"original source" requirement. (Dkt. 115 at 11). CHN argues that because the new
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`allegations in Relator's proposed second amended complaint are based on
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`information developed after Relator left CHN, the new claims in the proposed
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`second amended complaint are futile because Relator is not the original source of
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`the information. (Dkt. 115 at 12).
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`
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`In reply, Relator argues that the FCA does not have an "original source" rule.
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`(Dkt. 124 at 13). Instead, the FCA has a "public disclosure" rule which "includes a
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`savings provision if the relator is an "original source." (Id). As such, Relator
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`contends, because no public disclosure was made in this matter, the original source
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`inquiry is inapplicable. (Dkt. 124 at 13-14).
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`
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`CHN filed a sur-reply, arguing that Relator cannot be an "original source' for
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`allegations that are "grounded in information discovered after he left his
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`employment. (Dkt. 129 at 6). Moreover, CHN argues, a public disclosure occurred in
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`this case when the Government informed CHN of its active investigation into
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`CHN's physician compensation, patient referrals, and related business practices.
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`(Id. at 8).
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`CHN's argument is a jurisdictional challenge to Relator's proposed second
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`amended complaint. The FCA generally bars qui tam actions that are based on
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`15
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`Case 1:14-cv-01215-RLY-DLP Document 133 Filed 11/25/20 Page 16 of 19 PageID #: 935
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`information already in the public domain. U.S. ex rel. Ziebell v. Fox Valley
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`Workforce Dev. Bd., Inc., 806 F.3d 946, 951 (7th Cir. 2015) (language of FCA "clearly
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`withdraws jurisdiction over qui tam actions that are based on publicly disclosed
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`information unless the relator is an "original source" of the information"); see
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`Rockwell Int'l Corp. v. U.S., 549 U.S. 457, 468 (2007); Glaser v. Wound Care
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`Consultants, Inc., 570 F.3d 907, 912 (7th Cir. 2009). "The point of the jurisdictional
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`bar is to 'deter parasitic qui tam actions.' " U.S. ex rel. Gear v. Emergency Med.
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`Assocs. of Ill., Inc., 436 F.3d 726, 728 (7th Cir. 2006). Once information is public,
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`"only the Attorney General and a relator who is an 'original source' of the
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`information may represent the United States." Id. (quoting U.S. ex rel. Fallon, 97
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`F.3d at 941.
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`In order to determine whether a qui tam claim falls within the public-
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`disclosure bar, the Court must assess three questions: (1) whether the relator's
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`allegations have been publicly disclosed; (2) if so, whether the lawsuit is "based
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`upon" those publicly disclosed allegations; and (3) if it is, whether the relator was
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`the original source of the information. Glaser, 570 F.3d at 913. But a relator can
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`still proceed if he brought to bear some "genuinely new" and "material" information
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`beyond what was public. Cause of Action v. Chi. Transit Auth., 815 F.3d 267, 281
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`(7th Cir. 2016); U.S. ex rel. Goldberg v. Rush Univ. Med. Ctr., 680 F.3d 933, 936 (7th
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`Cir. 2012).
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`[F]utility, in the context of Rule 15, refers to the inability to state a claim, not
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`the inability of the plaintiff to prevail on the merits." Gorss Motels, Inc. v.
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`Brigadoon Fitness Inc., No. 1:16-cv-330-HAB, 2020 WL 2570046, at *3 (N.D. Ind.
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`May 21, 2020). Taking the Relator's allegations as true, the Court is not certain that
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`the proposed second amended complaint, on its face, alleges facts demonstrating
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`that a public disclosure occurred or that Relator is not the original source of the
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`information. Relator has stated a claim at this stage of the proceedings; whether
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`Relator can support that claim is a question better left to the discovery process.
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`Accordingly, the Court, applying the liberal standard for amending pleadings early
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`in a lawsuit, finds that Relator's proposed second amended complaint is sufficient to
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`survive CHN's jurisdictional public disclosure challenge.9
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`B. Undue Delay
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`Finally, CHN argues that Relator's request for leave should be denied for
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`undue delay. (Dkt. 115 at 8). Specifically, CHN asserts that because Relator waited
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`six years before requesting leave to amend, the Court should deny the request for
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`leave. (Id).
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`
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`In reply, Relator argues that the six-year delay in this case is attributable to
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`the procedural requirements of the FCA and Indiana's FCA, not Relator's actions.
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`(Dkt. 124 at 2). Further, because Relator requested leave before the April 21, 2020
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`deadline to serve the complaint; there is no scheduling order; discovery has not
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`begun; no responsive pleading filed; and no trial date has been set, therefore no
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`undue delay has occurred. (Id. at 2, 9). The Court agrees.
`
`
`9 CHN attempts to bring allegations regarding "claims smuggling," (See Dkt. 115 at 12), but does not
`flesh out that argument. As such, the Court shall not evaluate that argument here.
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`Case 1:14-cv-01215-RLY-DLP Document 133 Filed 11/25/20 Page 18 of 19 PageID #: 937
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`Here, on August 7, 2019 and upon completion of its investigation, the
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`Government filed an Election to Intervene in Part, (Dkt. 86), and on December 5,
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`2019, the State filed a Notice of Election to Decline Intervention. (Dkt. 92). On
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`December 23, 2019, this Court granted the Government's Notice of Election. (Dkt.
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`93). Approximately two weeks later, on January 6, 2020, the Government promptly
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`filed its Complaint in Intervention. (Dkt. 96). Two months later, on March 3, 2020,
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`Relator filed the instant Motion for Leave to Amend. (Dkt. 108).
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`Leave to amend should be "freely given," absent considerations such as undue
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`delay. Foman, 371 U.S. at 182. This is not the case of a party seeking leave to
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`amend well into litigation of the lawsuit, Sanders v. Venture Stores, Inc., 56 F.3d
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`771, 773-74 (7th Cir. 1995), or one in which Relator "failed to act with diligence."
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`Campania Mgmt. Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 849 (7th Cir. 2002).
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`Instead, any delay in this case is attributable to that which is permitted by the
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`FCA, which requires that Relator's Complaint remain sealed until the completion of
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`government investigation into the claims. Thus, because the delay between the
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`filing of the original Complaint (and First Amended Complaint) and the present
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`Motion for Leave to Amend is attributable to government investigation permitted
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`by the language of the FCA, the Court declines to deny Relator's request based on
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`undue delay.
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`IV. CONCLUSION
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`For the reasons discussed above, the Court GRANTS Plaintiff-Relator's
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`Case 1:14-cv-01215-RLY-DLP Document 133 Filed 11/25/20 Page 19 of 19 PageID #: 938
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`Motion for Leave to File Second Amended Complaint, Dkt. [108]. Plaintiff-Relator is
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`permitted to file the Second Amended Complaint within ten (10) days from the date
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`of this Order. Plaintiff-Relator sh