Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 1 of 20
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEVADA
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`Plaintiff
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`United States of America ex rel. Tali Arik,
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`v.
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`DVH Hospital Alliance, LLC, et al.,
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`Defendants
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`Case No.: 2:19-cv-01560-JAD-VCF
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`Order Granting Motions to Dismiss and
`Leave to Amend; Denying Motion to
`Extend Deadline
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`[ECF Nos. 69, 70, 72, 86, 94]
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`Relator Tali Arik brings this qui tam suit under the False Claims Act (FCA) against
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`defendant DVH Hospital Alliance, LLC; Valley Health Systems LLC; Universal Health
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`Services, Inc.; Vista Health Mirza, M.D. P.C.; and hospitalist Irfan Mirza, claiming that they
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`conspired to defraud the federal government by seeking reimbursement for medically
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`unnecessary and improper services, treatments, tests, and hospitalizations.1 The defendants, led
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`by DVH Hospital, move to dismiss Arik’s amended claims, arguing that Arik fails to plead his
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`allegations with sufficient particularity under Federal Rule of Civil Procedure 9(b); alleges
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`nothing more than his subjective disagreement with the hospital staff’s treatment plans,
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`hospitalization decisions, and diagnoses; asserts claims barred by the FCA; and fails to
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`adequately allege the existence of a conspiracy.2 Arik seeks to extend his time to respond to the
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`defendants’ motions,3 maintains that his allegations are sufficient to survive the defendants’ Rule
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`9(b) and 12(b)(6) challenges, and requests leave to file a third amended complaint.4
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`1 ECF No. 53 (second amended complaint).
`2 ECF Nos. 69, 70, 72 (motions to dismiss).
`3 ECF No. 86 (motion to extend time).
`4 ECF No. 94 (countermotion to amend complaint).
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 2 of 20
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`I find that Arik’s claims for violations of the FCA are insufficiently pled because (1) he
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`has failed to clarify whether and how fraudulent claims for reimbursement were submitted to the
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`federal government and (2) some, though not all, of his disagreements with the hospital’s
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`treatments fail to show fraudulent conduct. I also find that he does not and cannot allege a
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`conspiracy, given the unified corporate interests of the defendants. So I grant the defendants’
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`motions to dismiss, deny as moot Arik’s motion to extend deadlines, and grant Arik’s motion for
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`leave to amend his first and second causes of action.
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`Background5
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`I.
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`Arik’s allegations
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`Arik is an experienced cardiologist who worked at Desert View Hospital in Nye County,
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`Nevada, for roughly three years as a physician, including one year as Medical Chief of Staff.6 In
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`early 2019, Arik became troubled by certain new practices and policies at the hospital.7 The
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`hospital’s CEO, Susan Davila, had informed Arik that low patient admissions, high patient
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`transfer rates, and conservative testing and treatment practices had plunged the hospital into
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`financial precarity.8 To remedy this problem, Davila proposed two solutions: contracting with
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`Vista Health and Mirza, and proactively treating more patients at Desert View, thereby
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`increasing patient admissions and decreasing transfers to other hospitals.9 Davila’s solution
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`appeared to work—in the late winter and early spring of 2019, inpatient admissions increased
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`5 This is merely a summary of facts alleged in the complaint and should not be construed as
`findings of fact.
`6 ECF No. 53 at ¶¶ 11–13.
`7 Id. at ¶ 106.
`8 Id. at ¶ 99.
`9 Id. at ¶¶ 89, 104.
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`between 37.4% to 68.1% in any given month, and revenue at the hospital grew by 50% for
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`patients covered by Humana Medicare Advantage insurance.10
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`But Arik maintains that the hospital generated this revenue by seeking “cost-based
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`reimbursement” from private and commercial insurers, including Medicare, Medicare
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`Advantage, and Medicaid, for medically unnecessary and improper services and hospital
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`admissions, as well as by altering inpatient-admission times and billing codes and inflating
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`billing for emergency patients.11 Arik’s complaint details 98 patients12—identified by number,
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`their medical histories, chief complaints, diagnoses, and, in some cases, their treatments,
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`diagnostic testing, and amount sought in reimbursements from their insurer. Arik claims that
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`each of these patients was mistreated in some way, relying both on his medical experience and
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`the practice standards articulated by medical texts like Braunwald’s Cardiology Practice
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`Standards, the Medicare Program Integrity Manual, and InterQual Level of Care Criteria 2019.13
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`For each patient, he broadly claims that the defendants “knowingly submitted a false claim” to
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`various insurers for “hospitalist services,” “unreasonable and medically unnecessary testing,”
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`and improper inpatient “admission.”14 For certain patients, he specifies the amount of the “false
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`claim;” for others, he leaves that information blank.15
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`10 Id. at ¶¶ 101–05, 219.
`11 Id. at ¶¶ 216–17, 220, 229, 250.
`12 See id. at ¶¶ 112–214.
`13 See, e.g., id. at ¶¶ 60, 112–13, 125, 139–40, 147.
`14 Id. at ¶¶ 112–214.
`15 Compare id. at ¶ 125 (“Desert View Hospital . . . knowingly submitted a false claim to
`Medicare/Tricare in the amount of $22,145.42 for the admission of the subject patient.”), with
`¶ 197 (“Desert View Hospital . . . knowingly submitted a false claim to Medicare in the amount
`of $__________ for the admission and the unreasonable and medically unnecessary testing
`performed on the subject patient.”).
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`Arik’s assessments of these patients’ treatments are not uniform—some describe specific
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`discrepancies between symptom presentation and diagnosis/treatment,16 others express his
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`disagreement with certain diagnoses,17 and still others show his frustration with the hospital’s
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`decision to admit patients.18 Many of these accounts are quite detailed. For example, Arik
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`describes patient 12’s stroke; improper admission to Desert View, which lacks a primary or
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`comprehensive stroke center; and resultant, fraudulent claim to “Medicare/Tricare” for
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`$22,145.42.19 But other accounts are vague, like that of patient 35(q), who complained of
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`“generalized weakness due to [the] side effects of a new medication” and received a “medically
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`unnecessary,” unspecified “test”—resulting, apparently, in admission to the hospital, hospitalist
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`services, and an unspecified claim to “Medicare” for an uncertain amount.20
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`II.
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`Desert View Hospital, Medicare, and Medicaid
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`The Department of Health and Human Services, Centers for Medicare & Medicaid
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`Services (CMS) designated Desert View Hospital a “critical access hospital” (CAH), which
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`receives significant federal funding to maintain access to and reduce the financial vulnerability
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`16 See, e.g., id. at ¶ 167 (“Patient 35(f) presented . . . dizziness, weakness, and dark stools . . . .
`[He] underwent . . . a carotid ultrasound, echocardiogram, a T of the brain, and a blood
`transfusion[, which] were not indicated and were medical unnecessary based on the patient’s
`complaints, a diagnosis of hemorrhoidal bleeding, and hemoglobin of 9.”).
`17 See, e.g., id. at ¶ 214 (“Patient 78 presented . . . pressure-like dull chest discomfort[, but]
`cardiac enzymes [and] EKG [were] negative[; t]here was no medical indication for an inpatient
`admission of this patient” for “three [] days with a diagnosis for acute coronary syndrome.”).
`18 See, e.g., id. at ¶¶ 170, 213 (“Patient 37 presented . . . with symptoms of bronchitis . . . based
`on the medical chart, there was no medical indication for an impatient admission of Patient 38.”);
`(Patient 77 presented . . . progressive neurologic issues including left-sided weakness consistent
`with a stroke . . . [and] was admitted as an inpatient . . . for three [] days . . . . Desert View
`Hospital was not equipped to treat the patient.”).
`19 Id. at ¶ 125.
`20 Id. at ¶ 167.
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`of hospitals serving rural communities.21 It also receives payments under Medicare and
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`Medicaid for patients that it treats with those programs’ insurance.22 The Medicare program
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`provides basic health insurance for individuals who are 65 or older, disabled, or have end-stage
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`renal disease.23 Under Medicare, “no payments may be made . . . for any expenses incurred for
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`items or services . . . [that] are not reasonable and necessary for the diagnosis or treatment of
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`illness or injury to improve the functioning of a malformed body member[.]”24 Medicare
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`reimburses providers for inpatient hospitalization only if “a physician certifies that such services
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`are required to be given on an inpatient basis for such individual’s medical treatment, or that
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`inpatient diagnostic study is medically required and such services are necessary for such
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`purpose.”25
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`CMS defines a “reasonable and necessary” service as one that “meets, but does not
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`exceed, the patient’s medical need” and is furnished “in accordance with accepted standards of
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`medical practice for the diagnosis or treatment of the patient’s condition . . . in a setting
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`appropriate to the patient’s medical needs and condition.”26 Medically necessary services are
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`those “needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that
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`meet accepted standards of medicine.”27 The Medicare program expects doctors to exercise their
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`clinical judgment based on “complex medical factors” but does not give them unfettered
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`21 Id. at ¶¶ 78–81.
`22 Id. at ¶¶ 50–53.
`23 42 U.SC. § 1395c.
`24 Id. § 1395y(a)(1)(A).
`25 Id. § 1395f(a)(3).
`26 CMS, Medicare Program Integrity Manual § 13.5.4 (2019).
`27 CMS, Medicare & You 2020: The Official U.S. Government Medicare Handbook 114 (2019).
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`discretion to decide whether inpatient admission is medically necessary: “The factors that lead to
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`a particular clinical expectation must be documented in the medical record in order to be granted
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`consideration.”28 And medical necessity is considered a question of fact: “A physician’s order or
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`certification will be evaluated in the context of the evidence in the medical record.”29
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`As a CAH, Desert View Hospital is reimbursed for patient treatment through at least two
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`separate Medicare schemes—for those insured under Medicare Advantage, the hospital receives
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`a “capitation” rate and, for Medicare insureds, it receives “cost-based reimbursement.”30 Under
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`Medicare Advantage’s capitation-rate scheme, a private insurer provides benefits to insureds in
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`exchange for federal capitation revenue and pays for Desert View Hospital’s services.31
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`Capitation rates fluctuate based on the severity of the insured’s medical diagnoses, adjustments
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`prescribed by statute, and any audits performed by the private insurer.32 But under Medicare’s
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`cost-based-reimbursement scheme, Desert View Hospital receives an interim per diem rate based
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`on its prior year’s actual, allowable, and reasonable costs.33 At the end of the year, the hospital
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`submits its actual operating-costs report to Medicare, which is compared to the interim rate,
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`resulting in a credit, debit, or change to next year’s rate.34 Reimbursements under both schemes
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`appear throughout Arik’s complaint.35
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`28 42 C.F.R.§ 412.3(d)(1)(i); see also id. § 412.3(a)–(c); see generally 42 U.S.C. § 1395f(a)(3).
`29 42 C.F.R. § 412.46(b); see also id. §§ 412.3(d)(1)(i), 412.3(d)(3).
`30 42 U.S.C. § 1395w-23; 42 C.F.R. §§ 413.1(a)(2)(i), 413.1(b), 413.5, 413.70, 422.300.
`31 42 C.F.R. §§ 422.300, 422.304(a).
`32 Id. § 422.308(c).
`33 Id. §§ 413.5, 413.50, 413.60(a)–(c), 413.64(e).
`34 Id. §§ 413.5, 413.20, 413.60(a)–(c), 413.64(e).
`35 See, e.g., ECF No. 53 at ¶¶ 47, 219, 233, 234.
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`III. Arik’s suit
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`Arik brings this qui tam suit for violations of the FCA on behalf of the United States,
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`which has declined to intervene in this action.36 In his first complaint, he alleged that Desert
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`View Hospital falsely certified its compliance with certain federal rules governing CAH-based
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`services.37 But upon amendment, Arik has abandoned those theories, now theorizing that Desert
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`View Hospital’s staff and an assortment of new defendants conspired to provide medically
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`unnecessary testing and services; improperly admitted patients; and altered their billing codes,
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`billing amounts, and admission times in order to generate ill-gotten federal reimbursements.38
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`The defendants move to dismiss, arguing that Arik’s allegations are insufficiently pled and
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`barred by the FCA’s public-disclosure rule, and that he lacks personal knowledge of the claims
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`he presents.39 While Arik disagrees,40 he seeks leave to amend his complaint41 and provides a
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`proposed third amended complaint42 that slightly modifies his current allegations.
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`Motions to dismiss [ECF Nos. 69, 70, 72]
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`Discussion
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`District courts employ a two-step approach when evaluating a complaint’s sufficiency on
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`a Rule 12(b)(6) motion to dismiss. The court must first accept as true all well-pled factual
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`allegations in the complaint, recognizing that legal conclusions are not entitled to the assumption
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`36 ECF No. 2 at 2.
`37 See generally ECF No. 14.
`38 ECF No. 53.
`39 See ECF Nos. 69, 70, 72.
`40 ECF No. 91–93.
`41 ECF No. 94.
`42 ECF No. 94–1.
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`of truth.43 Mere recitals of a claim’s elements, supported by only conclusory statements, are
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`insufficient.44 The court must then consider whether the well-pled factual allegations state a
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`plausible claim for relief.45 A claim is facially plausible when the complaint alleges facts that
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`allow the court to draw a reasonable inference that the defendant is liable for the alleged
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`misconduct.46 Additionally, “as with all fraud allegations, a plaintiff must plead FCA claims
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`‘with particularity’” under Rule 9(b).47 To satisfy Rule 9(b), “a pleading must identify ‘the who,
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`what, when, where, and how of the misconduct charged,’” as well as “‘what is false or
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`misleading about [the purportedly fraudulent] statement, and why it is false.’”48
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`A.
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`The FCA
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`The FCA imposes significant civil liability on any person who “knowingly presents, or
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`causes to be presented, a false or fraudulent claim for payment or approval”; “knowingly makes,
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`uses, or causes to be made or used, a false record or statement material to a false or fraudulent
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`claim”; or “conspires to commit” either of the previous acts.49 The Act allows a private plaintiff
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`to enforce its provisions by bringing a qui tam suit on behalf of the United States.50 To state an
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`FCA claim, a plaintiff must allege “(1) a false statement or fraudulent course of conduct, (2)
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`43 Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009).
`44 Id.
`45 Id. at 679.
`46 Id.
`47 Winter ex rel. United States v. Gardens Reg’l Hosp. and Med. Ctr., Inc., 953 F.3d 1108, 1116
`(9th Cir. 2020).
`48 Cafasso U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)
`(quoting Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal
`quotation marks and citations omitted)) (alteration in original).
`49 31 U.S.C. § 3792(a)(1).
`50 Id. § 3730(b).
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`made with scienter, (3) that was material, causing (4) the government to pay out money or forfeit
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`moneys due.”51 Courts are advised to interpret the FCA “broadly, in keeping with Congress’s
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`intention ‘to reach all types of fraud, without qualification, that might result in financial loss to
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`the Government.’”52
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`Arik’s allegations fall under a “false certification” theory of FCA liability, which can be
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`either “express” or “implied.”53 Express certification occurs when “the entity seeking payment
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`certifies compliance with a law, rule[,] or regulation as part of the process through which the
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`claim for payment is submitted.”54 Implied certification occurs “when the defendant submits a
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`claim for payment that makes specific representations about the goods or services provided, but
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`knowingly fails to disclose the defendant’s noncompliance with a statutory, regulatory, or
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`contractual requirement.”55 Arik concedes that his false-medical-necessity certifications are
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`“express,”56 asserting that the provided medical services were not “reasonable and necessary,” in
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`violation of Medicare’s statutory and regulatory medical-necessity requirements.57
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`1.
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`Arik’s allegations fail to satisfy Rule 9(b)’s pleading standards.
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`Arik’s professional disagreement with Desert View’s diagnoses and treatments are well-
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`documented.58 But as before, he has failed to articulate whether and how the described
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`51 United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 899 (9th Cir. 2017).
`52 Gardens Reg’l Hosp., 953 F.3d at 1116 (quoting United States v. Neifert-White Co., 390 U.S.
`228, 232 (1968)).
`53 See id. at 1114.
`54 Ebeid, 616 F.3d at 998.
`55 Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1995 (2016).
`56 ECF No. 53 at ¶¶ 112–214 (claiming that each patient falls under “False Express Certification
`of Medical Necessity”).
`57 See Gardens Reg’l. Hosp., 953 F.3d at 1113, 1118–19.
`58 See, e.g., ECF No. 53 at ¶¶ 112–214.
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`fraudulent claims—which include both the patient-based-fraud theory59 and the altered-billing-
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`codes and admissions-times and artificially enlarged-billing-amounts theory60—were submitted
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`to the government for reimbursement. The Ninth Circuit does not require a plaintiff to “identify
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`representative examples of false claims to support every allegation,” but he must allege
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`“particular details of a scheme to submit false claims paired with reliable indicia that lead to a
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`strong inference that claims were actually submitted.”61 A complaint provides the requisite
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`indicia of reliability when “specific allegations of the defendant’s fraudulent conduct necessarily
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`[lead] to the plausible inference that false claims were presented to the government.”62
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`The defendants argue, and Arik concedes,63 that he improperly claims that both private
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`and commercial insurers received Desert View Hospital’s false claims64—calling into question
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`whether an FCA action exists at all, given that the statute does not afford a remedy to private
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`insurers. But Arik also fails to connect (1) the direct “submi[ssion of] a false claim” to
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`Medicare, Medicare Advantage, or Medicaid and (2) the general reimbursement scheme that
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`might result in a fraudulent payment based on that direct submission. Instead, Arik’s complaint
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`59 Id. at ¶¶ 112–214
`60 Id. at ¶¶ 220, 229, 250.
`61 Ebeid, 616 F.3d at 998 (quoting United States ex rel. Grubbs v. Ravikumar Kanneganti, 565
`F.3d 180, 190 (5th Cir. 2009)) (internal quotation marks omitted); see also United States v. Ojai
`Valley Cmty. Hosp., Inc., No. CV 17-6972, 2018 WL 6177257, at *7 (C.D. Cal. Jul. 30, 2018)
`(“Relator has not ple[d] who submitted the false claims, any specific claims that were submitted
`to CMS, any actual fraudulent charges Ojai submitted, or why the representations were false.”).
`62 United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 457 (4th Cir. 2013).
`63 ECF No. 91 at 17 (“Nonetheless, to appease DVH’s concerns, Dr. Arik (to the best of his
`ability) removed from the proposed TAC all insurances he believed to be private commercial
`insurers . . . and clarified that ‘Medicare/Humana’ was intended to mean Humana Medicare
`Advantage Plan.”).
`64 See ECF No. 53 at ¶¶ 112, 114, 117–19, 121, 123–29 (noting that a single claim was provided
`to two payors, which included private commercial insurers like Humana, Anthem, United, and
`AARP.).
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 11 of 20
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`seemingly posits at least three methods by which Desert View Hospital receives ill-gotten funds
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`from the government, asserting that it: directly submits claims for individual services to the
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`government, passes along inflated-risk adjustment data” that results in “inaccurate capitation
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`rates,” and submits “inaccurate inpatient service reports.”65 He also claims that the “fraudulent
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`billing practice[s],” which include altering inpatient-admission times and billing codes, were
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`“commonly used” “for billing Medicare and other government programs for medications, IV
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`solution, and radiology services.”66
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`These theories are inconsistent and at odds with the law that Arik describes in his
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`complaint. According to his own allegations, a CAH does not directly submit a claim to the
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`government;67 it either creates a cost report for which it receives an annualized cost-based
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`reimbursement (under Medicare) or works with a private insurer, who passes along hospital-
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`developed data to the government to develop capitation rates for hospital services (under
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`Medicare Advantage). As I advised Arik in my prior order, clarifying how Desert View Hospital
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`falsified claims under these schemes is essential to satisfying the FCA’s requirement that a
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`fraudulent claim be submitted.68 After all, under Medicare Advantage, any improper billing may
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`be caught by a third-party audit and thus not result in a fraudulent repayment;69 under Medicare,
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`any improper-testing claim may never make it into the cost report that affects the interim per
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`65 See id. at ¶¶ 47, 48, 112–214.
`66 Id. at ¶ 255.
`67 See id. at ¶¶ 85–87 (“Desert View Hospital, as a CAH, is not subject to Medicare’s Inpatient
`Prospective Payment System [] or the Hospital Outpatient Prospective Payment System.”).
`68 See United States ex rel. DVH Hosp. Alliance, LLC, No. 2:19-cv-01560, 2020 WL 6173528 at
`*4 n.59 (“[T]hese details matter.”) (Oct. 21, 2020); see also United States ex rel. Rose v.
`Stephens Inst., 909 F.3d 1012, 1017 (9th Cir. 2018).
`69 42 C.F.R. § 422.308(c).
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 12 of 20
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`diem rate because that rate is calculated by the number of days a patient remains in the hospital
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`and not the tests that patient receives.70 Thus, it is entirely unclear from the face of Arik’s
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`complaint whether and how these alleged “false claims” were actually passed along to the
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`government, such that they resulted in fraudulent reimbursements or payments. But because
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`Arik might amend his complaint to remedy these pleading deficiencies, I dismiss his claims
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`without prejudice.
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`2.
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`Some of Arik’s medical-necessity claims are insufficiently pled.
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`The defendants also challenge the sufficiency of Arik’s medical-necessity claims, arguing
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`that he fails to satisfy the pleading standard articulated in Winter ex rel. United States v. Gardens
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`Regional Hospital and Medical Center, Inc.71 In Gardens Regional Hospital, the Ninth Circuit
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`addressed whether the relator’s subjective disagreement with the hospital staff’s certifications
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`regarding the medical necessity of inpatient admissions could form the basis of an FCA claim.72
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`As a matter of first impression, the court concluded that it could, holding that “false certification
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`of medical necessity can give rise to FCA liability” and that “the FCA does not require a plaintiff
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`to plead an ‘objective falsehood.’”73 Instead, a physician’s certification that treatment was
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`“medically necessary” “can be false or fraudulent for the same reasons [that] any opinion can be
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`false or fraudulent.”74 “These reasons include if the opinion is not honestly held, or if it implies
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`the existence of facts—namely, that inpatient hospitalization is needed to diagnose or treat a
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`medical condition, in accordance with accepted standards of medical practice—that do not
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`70 Id. §§ 413.5, 413.20, 413.50, 413.60(a)–(c), 413.64(e), 413.70.
`71 Gardens Reg’l Hosp., 953 F.3d 1108 (9th Cir. 2020).
`72 Id. at 1117.
`73 Id. at 1118–19.
`74 Id. at 1119.
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 13 of 20
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`exist.”75 Thus, the Ninth Circuit determined that the Gardens Regional Hospital relator
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`sufficiently alleged fraudulent conduct: she reviewed inpatient admissions at the defendant
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`hospital, determined that those admissions failed to satisfy the hospital’s own admission criteria,
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`and presented evidence that those admissions were improperly billed to Medicare.76
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`Most, though not all, of Arik’s improper patient-care accounts satisfy the standard set out
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`in Gardens Regional Hospital. Like the Gardens Regional Hospital relator, Arik properly
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`asserts that certain inpatient admissions “fail[] to satisfy the hospital’s own admissions criteria—
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`the InterQual criteria,” permitting admissions that go “against the medical consensus.”77 He also
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`claims that many patients were admitted to the hospital for treatments that the hospital could not
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`provide because it lacked the necessary facilities.78 These allegations are similar to those in
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`Garden Regional Hospital, where the relator described psychiatric admissions to a hospital
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`devoid psychiatric-treatment services or doctors.79 Many of Arik’s accounts also raise thorny
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`questions of diagnostic accuracy and hospitalization decisions, which largely present questions
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`of fact that cannot and should not be resolved at this stage.80
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`75 Id.
`76 Id. at 1120.
`77 Compare id. at 1120, with ECF No. 53 at ¶¶ 139–40, 147–48, 171, 176, 179, 180–92, 198–99,
`201–14.
`78 See, e.g., ECF No. 53 at ¶¶ 112–37, 149, 170, 178, 193, 194.
`79 See Gardens Reg’l Hosp., 953 F.3d at 1120–21 (“[S]he alleges that a number of hospital
`admissions were for diagnoses that had been disprove by laboratory tests, and that several
`admissions were for psychiatric treatment, even though Gardens Regional was not a psychiatric
`hospital—and one of those patients never even saw a psychiatrist.”).
`80 See ECF No. 53 at ¶¶ 112–37, 143.
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 14 of 20
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`But some accounts, as before, merely document Arik’s disagreements with Mirza’s and
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`other staff members’ medical decisions,81 asserting little more than his “reasonable difference of
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`opinion”82 on medical care. Those accounts lack entirely the indicia of subjective falsity
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`required by the Ninth Circuit and, in fact, often show Mirza’s belief that her medical decisions
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`were reasonable.83 And still others are either entirely devoid of supporting details needed to
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`meet Rule 9(b)’s requirements or more closely resemble medical-malpractice claims.84 So I
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`dismiss those insufficiently pled claims related to those patients with leave to amend.
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`3.
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`The FCA’s public-disclosure bar does not apply.
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`The defendants argue that the FCA’s statutory public-disclosure bar limits Arik’s ability
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`to plead the new fraud theories85 raised in his prior, proposed amended pleading. “The FCA’s
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`public[-]disclosure bar deprives federal courts of subject[-]matter jurisdiction when a relator
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`alleges fraud that has already been publicly disclosed, unless the relator qualifies as an ‘original
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`source.’”86 Under the statute, information is considered publicly disclosed if it is contained “(i)
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`81 Id. at ¶¶ 141–42, 144–46, 150, 151, 152, 153, 154–66, 168, 169, 173, 177, 197.
`82 Gardens Reg’l Hosp., 953 F.3d at 1120.
`83 See, e.g., ECF No. 53 at ¶¶ 141 (“Dr. Mirza stated, ‘because of history of hypertension, will
`get an echocardiogram.’”); 142 (“Dr. Mirza states, ‘wife reported that he is not breathing well.
`She would like to have a stress test and an echocardiogram done while he is here . . . . Which I
`will order.”); 200.
`84 Id. at ¶¶ 167 (documenting an unknown “test” given to a patient with weakness that was
`“medically unnecessary,” resulting in an unspecified claim made to the government on an
`unknown date); 176 (asserting, without explanation, that there “was no medical indication for an
`impatient admission” and providing an unspecified claim made to the government on an
`unknown date); 195 (“[A]fter the discharge from Desert View Hospital, the patient had to be
`treated at a higher level of care facility as an inpatient.”); 196.
`85 Id. at ¶¶ 220, 229, 253 (asserting that the defendants altered inpatient admissions times and
`billing codes and fraudulently billed for services).
`86 U.S. ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 569 (9th Cir. 2016) (quoting United States
`ex rel. Hartpence v. Kinetic Concepts, 792 F.3d 1121, 1123 (9th Cir. 2015)).
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`Case 2:19-cv-01560-JAD-VCF Document 100 Filed 05/04/21 Page 15 of 20
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`in a [f]ederal criminal, civil, or administrative hearing in which the [g]overnment or its agent is a
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`party; (ii) in a congressional, Government Accountability Office, or other [f]ederal report,
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`hearing, audit, or investigation; or (iii) from the news media.”87 But this bar does not apply if
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`the government opposes its application or “the person bringing the action is an original source of
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`the information,” meaning that he “has knowledge that is independent of and materially adds to
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`the publicly disclosed allegations or transactions.”88 Thus, the public-disclosure bar sets up a
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`“two-tiered inquiry,” requiring courts to first “determine whether there has been a prior ‘public
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`disclosure’” of the “allegations or transactions” and, second, to “inquire whether the relator is an
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`‘original source’” within the meaning of the statute.89
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`The defendants may be correct that Arik fails to allege that he is the original source of
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`these allegations. But they fail to satisfy the first step of the inquiry because a proposed
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`amended pleading filed in the same litigation, when the government has expressly declined to
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`intervene, does not satisfy the statute’s public-disclosure requirement. Courts have generally
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`held that “information disclosed through civil litigation and on file with the clerk’s office should
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`be considered a public disclosure of allegations.”90 But that appears to apply to information
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`disclosed in prior litigation and not to successive pleadings in the same action. In United States
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`v. Northrop, for example, the Ninth Circuit remarked that information that had been publicly
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`disclosed in a separate state court suit and brought by a different relator was subject to the
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`public-disclosure bar. So too in U.S. ex rel. Siller v. Becton Dickinson & Co., when t