`EASTERN DISTRICT OF TENNESSEE
`AT KNOXVILLE
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`No. 3:17-CV-96
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`Judge Collier
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`UNITED STATES OF AMERICA,
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`ex rel. LEANN MARSHALL, and
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`LEANN MARSHALL, INDIVIDUALLY,
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`Plaintiffs/Relators, )
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`UNIVERSITY OF TN MEDICAL CENTER HOME
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`CARE SERVICES, LLC, and LHC GROUP, INC.,
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`Defendants. )
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` _______________________________________________________________________
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`UNITED STATES OF AMERICA ex rel.
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`VIB PARTNERS,
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`Plaintiff/Relator,
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`LHC GROUP, INC.,
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`Defendant.
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`Judge Collier
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`) No. 3:19-CV-84
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`M E M O R A N D U M
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`Before the Court is a motion by Defendants, University of TN Medical Center Home Care
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`Services, LLC (“UTMC”), and LHC Group, Inc. (“LHC”), to dismiss the claims of Relators,
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`LeAnn Marshall and VIB Partners, pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules
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`of Civil Procedure. (Doc. 46 in Case No. 3:17-CV-96 (“Marshall”.1) Relators have responded in
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`1 Unless otherwise noted, subsequent citations refer to Marshall, Case No. 3:17-CV-96.
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 1 of 30 PageID #: 475
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`opposition to the motion to dismiss (Doc. 49), and Defendants have replied (Doc. 51). For the
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`reasons set out below, the Court will GRANT IN PART and DENY IN PART Defendants’
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`motion to dismiss (Doc. 46).
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`I.
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`BACKGROUND
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`The Court first summarizes the relevant law regarding the False Claims Act and Medicare
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`and then turns to the facts of this case.
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`A.
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`The False Claims Act
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`The False Claims Act (the “FCA”), 31 U.S.C. §§ 3729, et seq., imposes civil liability on
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`persons and companies who defraud government programs.2 For example, the FCA imposes civil
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`liability for knowingly presenting or causing to be presented false or fraudulent claims to the
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`United States Government for payment or approval. 31 U.S.C. § 3729(a)(1)(A). In addition, it is
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`against the law for a person to knowingly make, use, or cause to be made or used, a false record
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`or false statement that is material to a false or fraudulent claim. 31 U.S.C. § 3729(a)(1)(B). The
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`FCA also imposes liability for knowingly employing a false record or statement to conceal, avoid,
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`or decrease an obligation to pay or transmit money or property to the government, commonly
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`referred to as a “reverse” false claim. 31 U.S.C. § 3729(a)(1)(G). Those who violate the FCA are
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`liable for civil penalties up to $10,000 and treble damages. 31 U.S.C. § 3729(a)(1).
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`To promote enforcement of the FCA, private individuals or organizations, called relators,
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`can bring qui tam actions on behalf of the United States. 31 U.S.C. § 3730(b)(2). After the relator
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`2 Tennessee has similar provisions under the Tennessee Medicaid False Claims Act. See
`Tenn. Code Ann. §§ 71-5-181, et seq.; Tenn. Code. §§ 4-18-101, et seq. Relator Marshall’s
`original complaint asserted several claims under the Tennessee Medicaid False Claims Act (Doc.
`2 ¶¶ 185–98), but these claims were not included in Relators’ Consolidated Amended Complaint
`(see Doc. 40 ¶¶ 263–85). Accordingly, the State of Tennessee will be DISMISSED from this
`lawsuit, and the Clerk of the Court will be instructed to update the case caption accordingly.
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 2 of 30 PageID #: 476
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`2
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`files a complaint, the United States has the option of intervening and conducting the litigation
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`itself. 31 U.S.C. § 3730(b)(4)(B). If the United States opts not to intervene, the relator may
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`proceed individually. 31 U.S.C. § 3730(c)(3). Successful relators are awarded a portion of the
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`award ranging from ten to thirty percent depending on the relator’s role in the case and whether
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`the government chose to intervene. 31 U.S.C. § 3730(d). To protect whistleblowers, the FCA also
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`includes an anti-retaliation provision to protect individuals who make efforts in furtherance of an
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`action under the statute or to stop a violation of the FCA. 31 U.S.C. § 3730(h).
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`B. Medicare
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`The FCA applies to claims healthcare providers submit to Medicare, a government
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`healthcare program for people over sixty-five years old. Medicare, as relevant here, includes three
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`parts. Medicare Part A authorizes the payment of federal funds for hospitalization and
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`post-hospitalization care, which includes home healthcare. 42 U.S.C. § 1395c–i-2. Medicare Part
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`B authorizes the payment of federal funds for medical and other health services, including home
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`healthcare and medical supplies. 42 U.S.C. § 1395(k), (i), (s). Medicare Part C authorizes the
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`payment of federal funds to private “Medicare Advantage” organizations to manage the care of
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`Medicare beneficiaries, including organizations that provide home healthcare services. 42 U.S.C.
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`§§ 1395w-21, et seq.
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`Medicare beneficiaries who are homebound can receive certain medically necessary
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`services at home. See 42 U.S.C. §§ 1395(f)(a)(2)(C), 1395n(a)(2)(A). The patients of home health
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`agencies are referred for home health services by their physicians who are required to certify that
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`the respective patients are under their care, that the physicians have established and will
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`periodically review sixty-day plans of care, that the patients are homebound, and that the patients
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 3 of 30 PageID #: 477
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`3
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`require one of the types of home health services that qualifies for Medicare. 42 C.F.R.
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`§ 484.205(a).
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`After receiving a patient referral, a home health agency is required to provide its own
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`patient-specific, comprehensive assessment, called an Outcome and Assessment Information Set
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`(“OASIS”). 42 C.F.R. § 484.55. During this initial assessment, the home health agency must
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`determine the immediate care and support needs of the patient and, for Medicare patients,
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`determine eligibility for home health benefits, which involves an assessment of their homebound
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`status. Id. “The encoded OASIS data must accurately reflect the patient’s status at the time of
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`assessment.” 42 C.F.R. § 484.20(b).
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`A sixty-day plan of care is called an “episode,” and after each episode, a patient must be
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`recertified to continue receiving funds from Medicare. To be recertified, the patient’s physician
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`must review and sign the patient’s plan of care, making any necessary changes, and the home
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`health agency must complete a new OASIS assessment and determine whether the patient is still
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`eligible to receive home health services.
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`Home health agencies are not paid per service rendered; instead, Medicare pays them under
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`a prospective payment system that provides a predetermined amount for the entire sixty-day
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`episode. See 42 U.S.C. § 1395fff(a); 42 C.F.R. § 484.205(a). Adjustments are made to a standard
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`national episode rate to account for the type of care the patient requires as well as the geographic
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`location. See 42 U.S.C. § 1395fff(b)(4)(B), (C). These adjustments are made based on the OASIS
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`forms, which are submitted to the government through a Medicare administrative contractor or
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`fiscal intermediary for payment.
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`Medicare conditions payment on the physician’s certification that the beneficiary is
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`homebound and in need of skilled services. 42 C.F.R. § 409.41(b). Medicare also conditions
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 4 of 30 PageID #: 478
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`payment on the beneficiary actually being homebound and actually needing skilled services. 42
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`C.F.R. § 409.41(c). Additionally, Congress has statutorily prohibited the payment of any Medicare
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`claim for services that are not medically reasonable and necessary. 42 U.S.C. § 1395y(a)(1)(A).
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`Certain additional adjustments are made to the reimbursement rate, including Low
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`Utilization Payment Adjustment (“LUPA”), a Therapy Threshold, and case mix. The
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`reimbursement rate is subject to a LUPA when the home health agency visits the patient four or
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`fewer times during a sixty-day episode. 42 C.F.R. §§ 484.205(a)(1), 484.230. In such a situation,
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`Medicare will calculate its payment using a per-visit amount. Id. A Therapy Threshold is the
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`opposite of a LUPA—when a home health agency reaches a certain number of visits during a given
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`sixty-day episode, Medicare will increase the reimbursement paid on the patient’s behalf. A case
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`mix accounts for the health condition and resource use of each beneficiary, based on OASIS
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`assessments, and a home health service receives a higher rate of reimbursement when its Medicare
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`patients are sicker.
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`Since July 2015, the Centers for Medicare and Medicaid Services, an agency within the
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`United States Department of Health and Human Services, has published quality ratings for home
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`health agencies. The ratings are derived from OASIS assessments and claims data. Specifically,
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`the patient-care rating considers OASIS data regarding patients’ improvement since start of care
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`or recertification. A higher star rating is likely when more patients score as having improved based
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`on their OASIS assessments, and a higher rating generally results in more referrals to and patient
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`interest in certain home health agencies.
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`C.
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`Defendants’ Fraudulent Practices for Medicare Reimbursement3
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`LHC provides home health and hospice services to patients, many of whom are
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`beneficiaries of Medicare. As of December 2019, LHC operates 513 home health service
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`locations, including 350 wholly owned subsidiaries, one of which is UTMC. Relator Marshall
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`worked for Defendants as a Field Registered Nurse (“RN”), and later as a Team Leader, from June
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`10, 2010, to June 2, 2016. Relator VIB is a two-person partnership, and both partners worked as
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`managers for LHC.
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`Defendants’ revenue primarily comes from treatment of Medicare beneficiaries, and their
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`policies focus on maximizing their reimbursements, rather than meeting their patients’ needs.
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`Defendants generally use two methods to defraud the government through Medicare
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`reimbursements, both of which were designed to maximize their profits.
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`First, Defendants direct clinicians to falsify information by “upcoding” OASIS
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`assessments. At times, a clinician’s initial assessment will show a patient does not qualify for
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`home health services, but LHC managers would instruct clinicians to change information in the
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`OASIS assessment so that the patient seemingly qualifies. LHC managers would call clinicians
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`several times a day to instruct the clinicians to accept these changes, even when the clinicians
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`knew the altered information was inaccurate. Relator Marshall was asked to change practically
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`every OASIS answer she submitted, a practice she reported to her Performance Improvement
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`Coordinator. But clinicians had little to no discretion to reject the changes, and most complied
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`with the instructions to avoid being singled out or reprimanded by their superiors. Between
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`January 1, 2017, and March 23, 2017, in just one region, there were approximately 87,750 change
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`3 This summary of the facts accepts all the factual allegations in Relators’ Consolidated
`Complaint (Doc. 40) as true. See Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009).
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`requests accepted by Defendants’ clinicians, whereas only 245 change requests were denied. Even
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`when change requests were denied, Defendants’ managers can bypass and override those denials
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`to make the fraudulent changes.
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`OASIS assessments also are upcoded to make patients appear less healthy upon admission
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`or recertification, which makes them appear to have improved more upon discharge and results in
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`increased reimbursements from Medicare. This alteration also improves Defendants’ quality
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`ratings with the Home Health Value Based Purchasing program, which is a program that adjusts
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`Medicare reimbursements based on a health agency’s performance. When Defendants maintain
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`high quality ratings, in part, by falsify OASIS data, they are eligible to received increased
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`payments.
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`LHC used to use paper records for OASIS assessments, which required clinicians to
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`physically sign any assessment that was changed. However, in 2012, LHC began using certain
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`software to upload and review OASIS assessments. This software makes it more efficient for
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`clinicians to approve changes to the assessments, which also makes it easier to submit fraudulently
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`upcoded OASIS assessments. Defendants also use another software program to further their
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`fraudulent scheme, specifically, a software that reviews OASIS assessments to detect possible
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`changes to increase reimbursement.
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`Second, Defendants manipulate the number of patient visits per episode to increase their
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`profits. Clinicians are instructed to inflate patients’ plans of care to project the highest number of
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`visits possible, even if some visits are unnecessary. But after indicating these visits are needed in
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`the records, Defendants reduce or eliminate them in actuality to improve their bottom line.
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`Defendants monitor the number of patient visits provided by using software that determines the
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`maximum number of visits a patient can receive to achieve maximum profitability, even when his
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`or her OASIS assessment calls for more. When clinicians follow these practices, Defendants make
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`an even greater profit on each Medicare patient than they already receive from the upcoded OASIS
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`assessments.
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`Defendants also manipulate visit numbers to avoid LUPA— Defendants instruct clinicians,
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`including Relator Marshall, to create plans of care that consist of at least five nursing visits per
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`episode, even when medically unnecessary, so that they are paid for an entire sixty-day episode,
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`rather than a per-visit payment. Defendants also instruct clinicians to inflate the therapy visits for
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`patients because their profitability increases when patients are identified as requiring more therapy.
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`D.
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`Relator Marshall’s Termination
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` Relator Marshall had personal knowledge of and experience with the above-described
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`practices. She routinely expressed her concerns about these procedures to her supervisors,
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`questioning these fraudulent practices at least once a week to her Branch Managers. In May 2016,
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`Relator Marshall again objected to these practices and also refused to comply with Defendants’
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`instructions to falsify OASIS assessments. Approximately one month later, on June 2, 2016,
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`Relator Marshall was fired. Defendants indicated the termination was due to her performance, but
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`Relator Marshall had received excellent reviews throughout her six years of employment. Unlike
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`other employees who did not object to Defendants’ practices, Relator Marshall was immediately
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`fired, rather than given an opportunity to participate in a performance improvement plan.
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`E.
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`The Bowling Action
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`On April 18, 2014, Erica Bowling and Melissa Poynter filed a qui tam action against LHC
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`and Lifeline Health Care of Pulaski, LLC, one of LHC’s subsidiaries, in the United States District
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`Court for the Eastern District of Kentucky. (Doc. 47-5.) The relators amended their complaint on
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`December 16, 2014, asserting several causes of action for violations of 31 U.S.C.
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`§§ 3729(a)(1)(A), (B), and (G), violations of 31 U.S.C. § 3730(h) based on Bowling’s and
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`Poynter’s retaliatory discharges, and statutory claims under Kentucky law, described further
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`below. (Doc. 47-3 ¶¶ 183–206.) On August 8, 2017, the United States declined to intervene in
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`the action. (Id.) On June 4, 2018, the case was voluntarily dismissed with prejudice pursuant to a
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`stipulation of dismissal. (Id.)
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`F.
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`Procedural History
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`On March 16, 2017, Relator Marshall filed a qui tam action against Defendants LHC and
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`UTMC on behalf of the United States and the State of Tennessee. (Doc. 2.) On June 26, 2017,
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`Relator VIB filed a qui tam action against Defendant LHC on behalf of the United States. (Doc.
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`1 in Case No. 3:19-CV-84 (“VIB”).) On February 6, 2020, the United States and the State of
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`Tennessee notified the Court that they would not intervene in Marshall (Doc. 29), and the United
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`States notified the Court that it would not intervene in VIB (Doc. 43 in VIB).
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`On July 10, 2020, Relators filed an unopposed motion to consolidate their cases, which the
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`Court granted on July 17, 2020. (Docs. 34, 39; Docs. 46, 51 in VIB.) On August 17, 2020, Relators
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`filed a consolidated amended complaint against Defendants that asserted two counts: (1) violations
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`of 31 U.S.C. § 3729(a)(1)(A), (B), and (G) against Defendant LHC; and (2) violations of 31 U.S.C.
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`§ 3730(h) against Defendants based on Relator Marshall’s discharge. (Doc. 40 ¶¶ 263–85.)
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`Defendants now have filed a motion to dismiss Relators’ claims based on Rule 12(b)(1)
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`and 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 46.) Specifically, Defendants argue
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`the Court lacks subject-matter jurisdiction, as the FCA’s first-to-file rule bars Relators’ FCA
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`claims. (Doc. 47 at 15–21.) Alternatively, Defendants contend Relators have failed to state
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`plausible claims in that they have failed to plead them with specificity as required by Rule 9(b).
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`(Id. at 21–28.) Further, Defendants assert Relator Marshall has failed to state a claim for
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`retaliation. (Id. at 28–30.)
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`Relators have responded in opposition. (Doc. 49.) As to the first-to-file bar, Relators assert
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`it is a non-jurisdictional rule and does not apply to their claims in any case. (Id. at 6–14.) Relators
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`also assert Rule 9(b) does not apply to FCA claims and, even if it does, they have plausibly alleged
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`violations of the FCA and for retaliatory discharge. (Id. at 20–31.)
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`Defendants’ motion to dismiss (Doc. 46) is now ripe for review.
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`II.
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`STANDARD OF REVIEW
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`As an initial matter, the parties dispute whether Defendants’ motion implicates Rule
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`12(b)(1) of the Federal Rules of Civil Procedure, which concerns challenges to the Court’s
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`jurisdiction. Defendants argue the FCA’s first-to-file bar, 31 U.S.C. § 3730(b)(5), is jurisdictional
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`(Doc. 47 at 15; Doc. 51 at 9 n.1), whereas Relators assert it is a non-jurisdictional provision (Doc.
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`49 at 11–12).
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`Although the Courts of Appeals are split on this issue,4 the Court of Appeals for the Sixth
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`Circuit has held the first-to-file bar is jurisdictional. Walburn v. Lockheed Martin Corp., 431 F.3d
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`966, 970 (6th Cir. 2005) (emphasis added) (explaining “Congress has placed a number of
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`jurisdictional limitations on qui tam actions, . . . [such as] the first-to-file bar of 31 U.S.C.
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`4 Compare United States ex rel. Palmieri v. Alpharma, Inc., 647 F. App’x 166, 166–67 (4th
`Cir. 2016) (per curiam) (jurisdictional); United States ex rel. Branch Consultants v. Allstate Ins.
`Co., 560 F.3d 371, 376–77 (5th Cir. 2009) (same); United States ex rel. Lujan v. Hughes Aircraft
`Co., 243 F.3d 1181, 1183 (9th Cir. 2001) (same); United States ex rel. Grynberg v. Koch Gateway
`Pipline Co., 390 F.3d 1276, 1278 (10th Cir. 2004) (same), with United States ex rel. Heath v.
`AT&T, Inc., 791 F.3d 112, 120–21 (D.C. Cir. 2015) (non-jurisdictional); United States ex rel.
`McGuire v. Millenium Lab’ys, Inc., 923 F.3d 240, 248–51 (1st Cir. 2019) (same); United States ex
`rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 84 (2d Cir. 2017) (same); In re Plavix Mktg., Sales
`Pracs. & Prods. Liab. Litig. (No. II), 974 F.3d 228, 231–233 (3d Cir. 2020) (same).
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`§ 3730(b)(5)”); see also United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 507 (6th Cir.
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`2009), abrogated on other grounds by United States Rahimi v. Rite Aid Corp., 3 F.4th 813 (6th
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`Cir. 2021) (repeatedly referring to first-to-file bar as a “jurisdictional limitation” on qui tam
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`actions). The Court therefore treats the first-to-file bar as a jurisdictional limitation, which means
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`Defendant’s motion relies not only on Rule 12(b)(6), but also on Rule 12(b)(1).
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`A.
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`Rule 12(b)(1)
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`When a defendant moves to dismiss for lack of subject-matter jurisdiction under Rule
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`12(b)(1), the plaintiff has the burden of proving jurisdiction. Davis v. United States, 499 F.3d 590,
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`594 (6th Cir. 2007). A motion to dismiss under 12(b)(1) may raise a facial attack or a factual
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`attack. Golden v. Gorno. Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005). A facial attack “questions
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`merely the sufficiency of the pleading” in alleging subject-matter jurisdiction and thus the court
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`takes the allegations raised in the complaint as true. Gentek Bldg. Prods., Inc. v. Sherwin-Williams
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`Co., 491 F.3d 320, 330 (6th Cir. 2007). In contrast, a factual attack challenges the factual existence
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`of subject-matter jurisdiction, requiring the court to “weigh the conflicting evidence to arrive at
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`the factual predicate that subject-matter does or does not exist.” Id. The plaintiff bears the burden
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`of proving jurisdiction is proper. Cob Clearinghouse Corp. v. Aetna U.S. Healthcare, Inc., 362
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`F.3d 877, 881 (6th Cir. 2004) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).
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`Here, Defendants raise a factual attack of subject-matter jurisdiction, so the Court may
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`weigh conflicting evidence to determine whether jurisdiction exists.
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`B.
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`Rule 12(b)(6)
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`A defendant may move to dismiss a claim for “failure to state a claim upon which relief
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`can be granted.” Fed. R. Civ. P. 12(b)(6). In ruling on a motion to dismiss under Rule 12(b)(6),
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`a court must accept all of the factual allegations in the complaint as true and construe the complaint
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 11 of 30 PageID #: 485
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`11
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`in the light most favorable to the plaintiff. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009)
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`(quoting Hill v. Blue Cross & Blue Shield of Mich., 49 F.3d 710, 716 (6th Cir. 2005)). The court
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`is not, however, bound to accept bare assertions of legal conclusions as true. Papasan v. Allain,
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`478 U.S. 265, 286 (1986).
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`In deciding a motion under Rule 12(b)(6), a court must determine whether the complaint
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`contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp.
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`v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need only contain a “short and plain
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`statement of the claim showing that the pleader is entitled to relief,” Ashcroft v. Iqbal, 556 U.S.
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`662, 677–78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)), this statement must nevertheless contain
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`“factual content that allows the court to draw the reasonable inference that the defendant is liable
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`for the misconduct alleged,” id. at 678. Plausibility “is not akin to a ‘probability requirement,’ but
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`it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting
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`Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more
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`than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—
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`‘that the pleader is entitled to relief.’” Id. at 679 (alteration in original) (quoting Fed. R. Civ. P.
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`8(a)(2)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
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`statements, do not suffice.” Id. at 678.
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`If a party presents matters outside the pleadings in connection with a motion to dismiss,
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`the court must either exclude those matters from consideration or treat the motion as one for
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`summary judgment. Fed. R. Civ. P. 12(d). Documents attached to pleadings are considered part
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`of the pleadings for all purposes. Fed. R. Civ. P. 10(c).
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 12 of 30 PageID #: 486
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`III. DISCUSSION
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`The Court turns first to Defendants’ jurisdictional argument for dismissal based on the
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`first-to-file bar. The Court then will address Defendants’ arguments for dismissal of any remaining
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`claims based on Rule 12(b)(6).
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`A.
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`First-to-File Bar (31 U.S.C. § 3730(b)(5))
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`The FCA provides that “[w]hen a person brings an action under this subsection, no person
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`other than the Government may intervene or bring a related action based on the facts underlying
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`the pending action.” 31 U.S.C. § 3730(b)(5). This provision “unambiguously establishes a
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`first-to-file bar, preventing successive plaintiffs from bringing related actions based on the same
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`underlying facts.” Walburn, 431 F.3d at 971 (quoting United States ex rel. Lujan v. Hughes
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`Aircraft Co., 243 F.3d 1181, 1187 (9th Cir. 2001)). The bar “furthers the policies animating the
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`FCA by ensuring that the government has notice of the essential facts of an allegedly fraudulent
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`scheme while, at the same time, preventing ‘opportunistic plaintiffs from bringing parasitic
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`lawsuits.’” Poteet, 552 F.3d at 516 (quoting Walburn, 431 F.3d at 970).
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`To determine whether the first-to-file bar applies here, the Court must answer two
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`questions: (1) was Bowling “pending” when Marshall or VIB was filed; and (2) if so, is Marshall
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`or VIB a related case based on the facts underlying the Bowling complaint? See United States ex
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`rel. Moore v. Pennrose Props., LLC, No. 3:11-cv-121, 2015 WL 1358034, at *10 (S.D. Ohio Mar.
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`24, 2015).5
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`5 Defendants also argue Marshall bars VIB under the first-to-file bar. (Doc. 47 at 15–17.)
`However, Defendants also assert Marshall fails to satisfy Rule 9(b) (id. at 21–28), and a legally
`infirm complaint, including for failure to meet Rule 9(b), cannot preempt another action under the
`first-to-file bar. See United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 516 (6th Cir.
`2009), abrogated on other grounds by U.S. Rahimi v. Rite Aid Corp., 3 F.4th 813 (6th Cir. 2021)
`(“One important caveat to this first-to-file rule, however, is that, . . . to preclude later-filed qui tam
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`Case 3:17-cv-00096-CLC-DCP Document 52 Filed 08/23/21 Page 13 of 30 PageID #: 487
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`1.
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`Is Bowling a “Pending” Action?
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`“Pending,” as used in the first-to-file bar, takes on its ordinary dictionary definition of
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`“remaining undecided; awaiting decision.” Kellogg Brown & Roots Servs. v. United States ex rel.
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`Carter, 575 U.S. 650, 662 (2015). Therefore, “an earlier suit bars a later suit while the earlier suit
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`remains undecided.” Id. But “the ultimate fate of an earlier-filed action does not determine
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`whether it bars a later action under § 3730(b)(5).” Walburn, 431 F.3d at 972 n.5. Instead, the
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`“pending” inquiry focuses on the status of the earlier-filed case “at the time the later action was
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`filed.” Id.
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`The Court therefore must determine whether Bowling, which was filed on April 18, 2014,
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`and dismissed on June 5, 2018 (Doc. 47-5), was undecided, and therefore “pending,” when
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`Marshall and VIB were filed. But the parties dispute the date on which Marshall and VIB were
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`filed, a dispute that is outcome-determinative to this question. Relators argue their case was filed
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`on August 17, 2020, the date they filed their Consolidated Amended Complaint, which followed
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`Bowling’s dismissal. (Doc. 49 at 18–19.) Defendants contend Marshall was filed on March 16,
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`2017, and VIB was filed on June 26, 2017, as those are the dates Relators filed their original qui
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`tam actions, which occurred before Bowling was dismissed. (See Doc. 51 at 17–18.)
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`As previously stated, the first-to-file bar goes to the Court’s subject-matter jurisdiction, see
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`Walburn, 431 F.3d at 970, and “[t]he basis for jurisdiction must be apparent from the facts existing
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`at the time the complaint is brought.” Poteet, 552 F.3d at 510; see Moore, 2015 WL 1358034, at
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`actions, the allegedly first-filed qui tam complaint must not itself be jurisdictionally or otherwise
`barred.”); Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 (6th Cir. 2005) (declining to
`apply first-to-file bar when first-filed complaint failed to comply with Rule 9(b)). It is more
`efficient to first assess whether the first-to-file bar applies to both Marshall and VIB based on
`Bowling.
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`14
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`*14 (noting a plaintiff “cannot create federal court jurisdiction where none previously existed” by
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`filing an amended complaint) The Court therefore finds the relevant date to assess whether an
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`earlier-filed case was “pending” is the date on which the qui tam action was first filed, not the date
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`an amended or a consolidated complaint was filed. See Moore, 2015 WL 1358034, at *13 (finding
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`“[u]nder the FCA’s first-to-file bar, the filing of an amended complaint does not create an
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`exception to the time-of-filing rule”); United States ex rel. Howard v. Lockheed Martin Corp., No.
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`1:99-CV-285, 2011 WL 4348104, at *3 (S.D. Ohio Sept. 16, 2011) (citing United States ex rel.
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`Nowak v. Medtronic, Inc., Nos. 1:08-cv-10368, 1:09-cv-11625, 2011 WL 3208007, at *19 n.4 (D.
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`Mass. July 27, 2011)) (noting “the Nowak court found that the act of consolidating the two suits
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`did not save Dodd’s claim from dismissal pursuant to § 3730(b)(5)”).
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`Thus, Marshall was filed on March 16, 2017, and VIB was filed on June 26, 2017, at which
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`times Bowling had not been dismissed, which makes Bowling is a “pending” action for purposes
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`of the first-to-file bar.
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`2.
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`Is Marshall or VIB a Related Action to Bowling?
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`The next question is whether Marshall or VIB is a “related action based on the facts
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`underlying” Bowling. See 31 U.S.C. § 3730(b)(5). To answer this question, “a court must compare
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`the relator’s complaint with the allegedly first-filed complaint.” Poteet, 552 F.3d at 516. Before
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`doing so, however, the Court must resolve another disputed issue—which complaints it should
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`compare.
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`a.
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`Operative Complaints
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`The parties have not briefed the issue of which complaints the Court should compare. As
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`to Bowling, the parties seem to agree that the operative complaint is the First Amended Complaint,
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`filed on December 16, 2014. See, e.g., Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276,
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`1279 (10th Cir. 2004) (comparing amended complaint pending at time later action was filed). The
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`Court agrees, as doing so aligns with the policy behind the first-to-file bar. The bar prohibits later
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`suits based on facts already known to the government, see Poteet, 552 F.3d at 516, and when
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`Marshall and VIB were filed, the First Amended Complaint in Bowling contained all of the
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`allegations of fraud known to the government.
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`However, the parties disagree which complaints should be compared for Marshall and VIB,
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`as Defendants cite to the original complaints (Doc. 47 at 17–21), while Relators cite to their
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`Consolidated Amended Complaint (Doc. 49 at 16–18). This question is more difficult, and courts
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`are split on the issue. In Walburn, the Court of Appeals for the Sixth Circuit analyzed the “First
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`Amended Complaint as it was the last complaint to have been filed in the district court,” but it did
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`not engage in substantive analysis of the question, as the question may not have even been raised.
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`431 F.3d at 971 n.3. However, the Southern District of Ohio in Moore ten years later compared
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`the original complaints, reasoning they were the operative pleadings to determine jurisdiction.
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`2015 WL 1358034, at *16 n.5. The Court finds it helpful to consider the approaches of other
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`courts and the policies behind those approaches before answe