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United States v. Norman

United States District Court, M.D. Florida, Tampa Division

January 2, 2018

UNITED STATES and STATE OF FLORIDA ex rel. THEODORE A. SCHIFF, Plaintiffs,
v.
ROBERT A. NORMAN, et al., Defendants.

          ORDER

          STEVEN D. MERRYDAY, UNITED STATES DISTRICT JUDGE.

         A dermatologist in South Florida, relator Theodore Schiff allegedly discovered through public databases, anonymous calls to the defendants' offices, and stakeouts of the defendants' operations that the defendants fraudulently billed Medicare for radiation therapy.[1] Alleging that the defendants submitted, or caused the submission of, false claims and that the defendants conspired to violate the False Claims Act, the relator sues (Doc. 20) two dermatology practices (Robert A. Norman, D.O., PA and Dermatology Healthcare, L.L.C.), the dermatologist who owns the practices (Robert Norman), and the dermatologist's wife (Carol Norman), who allegedly supervises billing. The defendants move (Doc. 27) to dismiss the complaint under Rules 9(b) and 12(b)(6), Federal Rules of Civil Procedure.

         BACKGROUND

         The relator alleges two fraud schemes. First, Medicare allegedly paid some or all of the defendants for complex radiation treatments not provided by any defendant. According to the relator, Medicare reimburses about $20 for a “superficial” radiation treatment, which requires a “relatively inexpensive” x-ray machine that emits no more than a hundred kilovolts. (Doc. 20 at ¶¶ 25 and 32-33) A provider allegedly bills Medicare for a superficial-radiation treatment under CPT code 77401.[2] (Doc. 20 at ¶ 27) In contrast, Medicare reimburses up to $250 for a “complex” radiation treatment, which the provider purportedly bills under CPT codes 77402, 77407, or 77412. (Doc. 20 at ¶¶ 28-30 and 32) The relator alleges that a complex treatment requires a linear accelerator, which reportedly costs $3 million. (Doc. 20 at ¶¶ 31 and 33) Despite allegedly owning no linear accelerator, the defendants billed Medicare for complex treatments. (Doc. 20 at ¶¶ 64-67)

         Second, the relator alleges that some or all of the defendants billed Medicare for radiation therapy provided by a non-physician. (Doc. 20 at ¶ 74) According to the relator, a Medicare regulation requires a physician to supervise radiation therapy. (Doc. 20 at ¶ 22) An unnamed and allegedly unsupervised “mobile technician” purportedly provides the radiation therapy for which some or all of the defendants bill Medicare. (Doc. 20 at ¶¶ 74-79) The relator concludes that a claim resulting from this unsupervised-provider scheme constitutes a false claim. (Doc. 20 at ¶ 80)

         DISCUSSION

         I. The failure to distinguish between defendants

         Although each count suffers from several defects, the failure to distinguish between defendants pervades all three claims in the complaint.[3] If a plaintiff sues more than one defendant for fraud, the plaintiff cannot “lump together” several defendants and allege generally the defendants' participation in a fraud scheme. Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007) (citing Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1380-82 (11th Cir. 1997)). As Brooks explains, a defendant cannot identify and respond to a fraud claim if the complaint fails to detail each defendant's participation in the fraud. 116 F.3d at 1380. To satisfy Rule 9(b)'s particularity requirement, the plaintiff must allege specifically a fraudulent act by each defendant. Ambrosia, 482 F.3d at 1317 (citing Brooks, 116 F.3d at 1381); see also Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir. 2009) (explaining that Rule 9(b) requires a relator to allege specific facts “as to [the] time, place, and substance” of a defendant's alleged fraud) (internal quotation omitted). In this action, the relator impermissibly groups the four defendants. (Doc. 20 at ¶ 12 (“Norman, Carol, Norman PA[, ] and [Dermatology Healthcare] are collectively and interchangeably referred to as Norman Group”)) Because the complaint fails to describe with particularity each defendant's participation in the alleged fraud, the complaint violates Rule 9(b).[4]

         A. The unsupervised-provider scheme

         In addition to impermissibly grouping the defendants, the allegations about the unsupervised-provider scheme suffer from at least three other defects. First, the relator conspicuously fails to exclude the prospect that a physician supervised the radiation therapy. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (holding that a complaint must allege facts sufficient to exclude the prospect of lawful conduct). Paragraph 74 alleges that “Norman Group sends mobile technicians across the state” and that the “technicians are not physicians.” Even if a technician administers the radiation therapy, a physician might stand next to the technician during the procedure, but no well-pleaded facts in the complaint exclude that possibility. Paragraph 79 alleges: “Based upon communications with the NORMAN GROUP office personnel as well as personnel at several Facilities, Relator alleges that all radiation treatments [sic] services rendered at the Facilities by use of the mobile van are rendered without direct physician supervision.” As the defendants observe, the relator fails to identify the details of the “communications” and fails to allege specific facts showing that no physician supervised the radiation therapy.

         Second, the False Claims Act subjects a defendant to liability only if the defendant's claim for reimbursement misrepresents or omits a material fact, but the relator fails to allege with particularity facts that show the United States considers a violation of the physician-supervision requirement material. In Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016), several allegedly unlicensed and unsupervised providers treated a patient, and the defendant purportedly billed Medicaid under a CPT code reserved for a licensed and supervised provider. Because the False Claims Act punishes fraud - not “garden-variety breaches of contract or regulatory violations” - Escobar holds that liability under the False Claims Act requires proof that the United States would deny reimbursement if the United States were to uncover the defendant's violation of a “particular statutory, regulatory, or contractual requirement.” 136 S.Ct. at 2003. And Escobar explains that a plaintiff must allege with particularity “facts to support allegations of materiality.” 136 S.Ct. at 2004 n.6. In this action, the relator alleges no facts to show or permit an inference that the United States routinely refuses to reimburse a defendant for radiation therapy not supervised by a physician.

         Third, the relator fails to identify with particularity (or even with generality) a false claim “actually submitted” under the unsupervised-provider scheme. In United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002), a relator employed by the defendant's competitor alleged that the defendant billed for medically unnecessary tests, but the relator failed to allege any details about a fraudulent claim (for example, the day and the amount of a claim). The district court in Clausen dismissed the action because the complaint relied on nothing more than speculation that the defendant submitted a claim for reimbursement. Affirming the dismissal, Clausen holds that a relator must allege with particularity facts that show the “actual submission” of a false claim. 290 F.3d at 1311-12 (“Rule 9(b) . . . does not permit a False Claims Act plaintiff merely to describe a private scheme in detail but then to allege simply and without any stated reason for his belief that claims requesting illegal payments must have been submitted, were likely submitted, or should have been submitted to the Government.”). In this action, the relator's complaint alleges no facts to show that a defendant “actually” billed Medicare for radiation therapy not supervised by a physician. For example, the relator neither alleges the day and amount of a false claim nor appends to the complaint a claim submitted to the United States. Because the complaint fails to allege specific and well-pleaded facts showing that a defendant “actually submitted” a false claim, the allegations about the unsupervised-provider scheme violate Rule 9(b).

         B. The Florida False Claims Act

         Although the complaint alleges that some or all of the defendants billed Medicare[5] (Doc. 20 at ¶ 84), the complaint says nothing about a claim submitted to, or paid by, the State of Florida (for example, a claim under Medicaid). Because the complaint fails to identify with particularity a false claim submitted to, or paid by, the State of Florida, the relator fails to state a claim under the Florida False Claims Act. See Clausen, 290 F.3d at ...


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