Gordon Rees Scully Mansukhani Partner Elizabeth Lorell and Associate Jacob Ide claimed an early victory in a high-stakes False Claims Act (FCA) case before the U.S. District Court for the Southern District of New York, securing dismissal with prejudice of the entirety of the amended complaint filed against a prominent home healthcare provider.
The plaintiff, a former compliance employee, alleged in the complaint that the healthcare provider fraudulently billed Medicare and Medicaid for healthcare services not provided in strict accordance with federal and state regulations. The plaintiff asserted he discovered “compliance deficiencies” while conducting a routine audit, that he raised the alleged deficiencies with company officials, and that the company subsequently terminated his employment in violation of the retaliation provisions of the FCA. The plaintiff further asserted that the company violated the “reverse false claim” provisions of the FCA by unlawfully retaining “overpayments” issued by Medicare and Medicaid as reimbursements for allegedly noncompliant services. GRSM’s client vehemently denied all of the plaintiff’s allegations.
In their motion to dismiss, the GRSM team successfully argued that the plaintiff’s FCA claims were legally and factually deficient because the plaintiff failed to identify a single allegedly fraudulent claim submitted to Medicare and Medicaid for reimbursement, as required for fraud claims under Rule 9 of the Federal Rules of Civil Procedure, and asserted that the plaintiff was not entitled to the “relaxed” pleading standard established by the Second Circuit Court of Appeals in Chorches. GRSM further argued that the plaintiff’s retaliation claim was insufficiently pled, as the plaintiff’s alleged “protected activity” amounted to nothing more than what his normal job responsibilities as a compliance employee required. Lastly, GRSM successfully argued that the plaintiff’s “reverse false claim” was legally insufficient, as the plaintiff’s theory of “overpayments” was wholly predicated on the success of his “regular” FCA claims.
The court agreed with each of the GRSM team’s arguments, holding that the plaintiff “fail[ed] to satisfy even the relaxed pleading standard for FCA claims” and that the plaintiff’s FCA claims “rest[ed] on ‘speculation and conclusory allegations.’” In dismissing the plaintiff’s retaliation claim, the court held that the plaintiff’s actions did not amount to “conduct that is protected by the FCA” and that the plaintiff “fail[ed] to show that his activity went beyond the performance of his normal job responsibilities” because the plaintiff’s position made him inherently “responsible for auditing documentation and ensuring proper billing.” Having dismissed the plaintiff’s federal FCA claims, the court additionally declined to extend supplemental jurisdiction to the plaintiff’s state-law claims brought under seven states’ FCA equivalents. Finally, the court agreed with GRSM’s arguments and denied the plaintiff leave to further amend his complaint due to the “dearth of factual, as opposed to conclusory, allegations in support of [his] claims.”
The court’s dismissal of the plaintiff’s amended complaint in its entirety, with prejudice, secured a complete victory for the healthcare provider client. The result demonstrates GRSM’s ability to achieve successful results in high-stakes litigation through comprehensive dispositive motion practice at the inception of a case shortly after the filing of a complaint.