United States District Court, M.D. Florida, Tampa Division
UNITED STATES OF AMERICA, ex rel. CORINA HERBOLD f/k/a Corina Duffy, Plaintiff,
DOCTOR'S CHOICE HOME CARE, INC., TIMOTHY T. BEACH, and STUART C. CHRISTENSEN, Defendants.
VIRGINIA M. HERNANDEZ COVINGTON UNITED STATES DISTRICT JUDGE
matter comes before the Court upon consideration of Defendant
Doctor's Choice Home Care, Inc.'s Motion to Dismiss
(Doc. # 58), filed on August 21, 2019. Defendants Timothy T.
Beach and Stuart C. Christensen joined in the Motion. (Doc.
## 59, 60). The United States responded in opposition on
September 27, 2019. (Doc. # 73). Doctor's Choice replied
on October 18, 2019, (Doc. # 76), and the United States filed
a sur-reply on October 30, 2019. (Doc. # 80). For the reasons
that follow, the Motion is denied.
Corina Herbold initiated this qui tam False Claims Act (FCA)
case against Doctor's Choice, Beach, and Christensen on
April 30, 2015. (Doc. # 1). In February 2019, the United
States elected to intervene in the action, and the case was
unsealed. (Doc. ## 29-31). The United States filed its
Complaint in intervention on May 24, 2019. (Doc. # 38). The
Complaint asserts claims under the FCA for presentation of
false claims, false statements, and reverse false claims.
(Id.). The Complaint also asserts claims under
Florida state law for unjust enrichment and payment by
Complaint provides over fifty pages of detailed factual
allegations. Thus, the Court recites only the allegations
necessary to decide the Motion to Dismiss.
Choice provides home health care services in Florida.
(Id. at 5). These services are billed primarily to
Medicare. (Id.). Christensen was Doctor's
Choice's Chief Executive Officer and Vice President.
(Id.). Beach was Doctor's Choice's
President. (Id.). Health at Home Homecare, LLC, is a
home health care services company affiliated with
Doctor's Choice. (Id. at 6). Christensen and
Beach are co-founders and executives of Health at Home.
(Id.). The United States alleges, and cites emails
supporting, that Doctor's Choice “jointly marketed
their services” with Health at Home and encouraged
Doctor's Choice Account Executives to “generate
referrals of patients to” Health at Home. (Id.
Choice submitted Medicare claims electronically through an
intermediary company, Palmetto Government Benefits
Administrators. (Id. at 17). To electronically
submit claims to Medicare, Doctor's Choice entered into
an Electronic Data Interchange Enrollment Agreement, through
which Doctor's Choice agreed to “submit claims that
are accurate, complete, and truthful.” (Id.).
Choice was also required to file an annual cost report with
Palmetto. (Id.). Doctor's Choice was required to
certify that its cost reports “were (1) truthful, i.e.,
that the cost information contained in the report is true and
accurate; (2) correct, i.e., that it was entitled to
reimbursement for the reported costs in accordance with
applicable instructions; (3) complete, i.e., that the cost
report is based upon all information known to DCHC; and (4)
that the services identified in the cost report were not
corrupted by kickbacks, and were otherwise provided in
compliance with all applicable health care laws and
regulations, including the Stark Statute and [Anti-Kickback
Statute].” (Id. at 17-18).
United States alleges that Defendants engaged in two unlawful
schemes. First, from 2010 to 2016, Defendants allegedly
“knowingly billed Medicare, or caused Medicare to be
billed, for home health services to patients referred to
[Doctor's Choice] by three physicians with whom
[Doctor's Choice], Beach and Christensen had entered into
sham Medical Director Agreements for the purposes of inducing
and/or rewarding referrals.” (Id. at 2).
“None of the three implicated physicians performed the
work they billed as DCHC Medical Directors, yet in order to
continue to induce and generate referrals, Defendants
continued to pay, or caused to be paid, the Medical
Directors' invoices.” (Id. at 2-3). The
United States alleges Defendants violated the Stark Law (and
thus the FCA) by submitting claims for reimbursement based on
referrals from these three physicians. (Id. at 2).
The United States also alleges that Defendants were unjustly
enriched and paid by mistake as a result of this conduct.
United States describes the second scheme this way:
[Doctor's Choice], through Beach and Christensen, hired
employees who were the wives of physicians who then began to
refer more patients to [Doctor's Choice], and
[Doctor's Choice] paid those employees based on the
volume or value of referrals by their physician spouses in
violation of the Stark Law, and therefore the FCA, and also
in a manner that unjustly enriched Defendants and caused the
United States to pay DCHC by mistake.
Medical Director Referrals Scheme
the first alleged scheme, Doctor's Choice had numerous
Medical Directors over the years and the Complaint contains
allegations about Doctor's Choice's payment of
Medical Directors and the Medical Director's referral
rates. (Id. at 21-52).
Complaint alleges that Doctor's Choice made a practice of
closely tracking Medical Directors' referrals, and that
Doctor's Choice executives, including Christensen and
Beach, would push Medical Directors for more referrals.
(Id. at 21) When a Medical Director did not refer as
many patients as hoped, Doctor's Choice would terminate
the Medical Directorship early. (Id.).
example, in a July 2010 email, Christensen expressed
disappointment with Dr. Gelvin, a Medical Director who had
not referred as many patients as Doctor's Choice
Dr. Gelvin is not working out as a med director. As you can
see, he has only given us 17 ref in 6 mo. He was good for 7
last month and 1 this month. I think we could find someone
more productive with his spot. We have paid him 6K so far.
(Id. at 22). Dr. Gelvin continued to refer fewer
patients than desired, and his Medical Directorship was
allegedly terminated as a result. (Id.).
on October 24, 2012, Christensen emailed a Doctor's
Choice Account Executive about Medical Director Dr. Ruano,
attaching a spreadsheet of referrals for the month and
stating: “I feel it is time to start to think of a new
Med Director. Dr. Ruano is not pulling his weight.”
(Id. at 23). About a year later, on October 10,
2013, Christensen emailed multiple Account Executives
regarding referrals from Medical Directors generally and Dr.
Ruano in particular. (Id.). Christensen stated that
Dr. Ruano was “not good” because he had made no
referrals that month. (Id.) Christensen also
remarked that Doctor's Choice's Medical Directors
were “not doing good. My suggestion is to have a talk
with them and let them know what the expectation is.”
(Id.). A few weeks later, Dr. Ruano and Doctor's
Choice agreed to terminate his Medical Directorship early.
expressed similar dissatisfaction with Medical Director Dr.
Janick's rate of referrals. On January 14, 2014,
Christensen emailed a Doctor's Choice Account Executive
and others, stating: “Did Dr. J get his check[?] Where
are his referrals[?] I need to turn the business on[.]”
(Id. at 42). Again, on January 29, 2014, Christensen
sent another email, directing Doctor's Choice's Vice
President of Marketing and Sales to
[G]o see Dr. Janick and have a very frank conversation about
the volume we are receiving. He is our Medical Director and
he has NOT sent us as much as we agreed he would. I need him
to know that we are not getting business so if it comes down
to us making a change because we are not getting business he
(Id.). In early March 2014, Dr. Janick resigned as
Medical Director. (Id. at 43).
after Dr. Stolarski ended his term as Medical Director with
Doctor's Choice and became a Medical Director at a
competitor, Beach emailed Dr. Stolarski on October 15, 2012.
(Id. at 33). In that email, Beach expressed his
understanding that Dr. Stolarski owed Doctor's Choice
half of his referrals for home health care services and
threatened to “[n]otify all State and Federal Agencies
of [Relator Herbold's] illegal activities, ”
including “medical director invoices, ” unless
Dr. Stolarski continued to refer half of his referrals to
Doctor's Choice. (Id. at 33-34).
to the United States, these emails - and other allegations
discussed below - show that the Medical Director Agreements
with Dr. Stolarski, Dr. Frey, and Dr. Janick were shams.
(Id. at 11). Importantly, the claims in the
Complaint are based only on Doctor's Choice's
relationship with these three doctors: Dr. Stolarski, Dr.
Janick, and Dr. Frey. (Id. at 2). The allegations
about each doctor's relationship with Doctor's Choice
Choice was aware that Dr. Stolarski would be a good source of
referrals because he had many patients who required home
health services. (Id. at 24). Ultimately, Dr.
Stolarski ended up serving as a Medical Director for either
Doctor's Choice or the affiliated Health at Home on three
occasions. (Id.). First, in mid-2010, Beach and
Christensen offered Dr. Stolarski the position of Medical
Director for Health at Home because “the Medical
Director position in DCHC's Sarasota office was then
filled by Dr. Gelvin, and Florida law permits only one
Medical Director per location.” (Id. at 25).
Although he had referred only one patient to Doctor's
Choice between January and June 2010, Dr. Stolarski's
referrals to Doctor's Choice increased after this job
Dr. Stolarski “signed a Job Description to be Medical
Advisor for [Health at Home] and also completed an IRS Form
W-9 for [Health at Home]” in September 2010, his
referrals to Doctor's Choice increased even more.
(Id.). Between September 16 and November 30, 2010,
Dr. Stolarski referred fifty-six patients to Doctor's
Choice. (Id.). The United States includes a list of
representative claims paid by Medicare to Doctor's Choice
for home health services provided to patients Dr. Stolarski
referred. (Id. at 26).
Stolarski's referrals to Doctor's Choice increased
even more in December 2010, when he officially began his term
as Medical Director to Health at Home. (Id. at 27).
From December 2010 through May 2011, Dr. Stolarski referred
143 patients to Doctor's Choice. (Id.). Again,
the United States includes a list of representative claims
paid by Medicare to Doctor's Choice for home health
services provided to patients Dr. Stolarski referred.
(Id.). During his Medical Directorship with Health
at Home, Dr. Stolarski submitted thirty-six invoices and was
paid over $25, 000. (Id. at 28).
Medical Directorship at Doctor's Choice became available,
Doctor's Choice hired Dr. Stolarski as Medical Director
on June 1, 2011. (Id. at 29). Dr. Stolarski resigned
his first Medical Directorship with Doctor's Choice on
September 18, 2012. (Id.). During his first Medical
Directorship with Doctor's Choice, Dr. Stolarski referred
426 patients to Doctor's Choice. (Id. at 30).
The Complaint contains a list of sample claims paid by
Medicare to Doctor's Choice for home health services
provided to patients Dr. Stolarski referred. (Id.).
During this time, Dr. Stolarski submitted over 150 invoices
and was paid over $75, 000. (Id. at 31).
“After Dr. Stolarski left as  Medical Director,
Christensen told a [Doctor's Choice] Account Executive
that [Doctor's Choice] paid Dr. Stolarski ‘a lot of
good money' and got a lot of referrals from him in
return.” (Id. at 34).
his first Medical Directorship with Doctor's Choice
ended, Dr. Stolarski's referrals to Doctor's Choice
“dropped substantially.” (Id.). From
September 19, 2012, to November 1, 2014, Dr. Stolarski
referred only forty-four patients to Doctor's Choice.
Dr. Stolarski had resigned as Medical Director, Doctor's
Choice “attempted to induce Dr. Stolarski to again
refer patients to [Doctor's Choice] by offering him a
Medical Directorship plus in-kind remuneration in the form of
[Doctor's Choice] marketing and promoting Dr.
Stolarski.” (Id. at 35). Accordingly, Dr.
Stolarski became Doctor's Choice's Medical Director
for a second time in November 2014. (Id. at 35).
“Dr. Stolarski negotiated the terms of this Medical
Advisor agreement with Beach and Christensen, on behalf of
[Doctor's Choice], including one conversation where they
promised to pay him $7500 per month and another conversation
where they discussed possible ways to justify paying him that
November 1, 2014, to March 31, 2016, Dr. Stolarski referred
631 patients to Doctor's Choice. (Id. at 37).
Again, the Complaint contains a list of sample claims paid by
Medicare to Doctor's Choice for home health services
provided to patients Dr. Stolarski referred. (Id.).
During his second Medical Directorship with Doctor's
Choice, Dr. Stolarski submitted over forty invoices and was
paid over $80, 000. (Id. at 38).
early January 2016, “the United States served
investigative subpoenas on Dr. Stolarski, on Beach
individually, on Christensen individually, and on
[Doctor's Choice] by serving Beach and
Christensen.” (Id.). “Shortly
thereafter, Dr. Stolarski's referrals to [Doctor's
Choice] began to drop sharply.” (Id.).
According to the United States,
From January 1, 2016, through March 31, 2016, Dr. Stolarski
referred 136 patients to [Doctor's Choice], or nearly 50
patients per month. However, from April 1, 2016, through
December 31, 2016, he referred only 101 patients to
[Doctor's Choice], or barely 11 patients per month. And
from January 1, 2017, through December 31, 2017, he referred
only 16 patients to [Doctor's Choice], or just over 1
patient per month.
2011, Doctor's Choice learned that many of Dr. Frey's
patients were Medicare beneficiaries, which enticed
Christensen and Beach to meet with Dr. Frey to discuss
becoming a Medical Director. (Id. at 44). Because of
the legal limits on the number of Medical Directors
Doctor's Choice can have and the lack of Medical Director
openings at the time, Doctor's Choice hired Dr. Frey as a
consultant instead. (Id. at 45).
consultant, Dr. Frey was ostensibly paid for providing
“in-service trainings” to Doctor's Choice
staff. (Id.). Yet Dr. Frey did not come into
Doctor's Choice's offices to provide trainings;
instead, some Doctor's Choice staff went to Dr.
Frey's office “to watch him perform procedures he
was otherwise performing, which provided DCHC staff little if
any educational value.” (Id.). According to
the United States, Doctor's Choice merely “called
it ‘training' in order to justify compensating Dr.
Frey.” (Id.). Moreover, “[t]hese
payments were not consistent with fair market value or
commercially reasonable because they were not meaningful
training, ” and “the payments were determined in
a manner that took into account the volume or value of Dr.
Frey's referrals because [Doctor's Choice] made those
payments to reward him for referrals.” (Id.).
Indeed, after he became a consultant, Dr. Frey - who had
previously referred only twelve patients to Doctor's
Choice over a more than two- year period - referred over
thirty-five patients to Doctor's Choice in six months.
(Id. at 45-46).
Doctor's Choice ended its consultancy with Dr. Frey
because Christensen grew concerned “that paying Dr.
Frey as a consultant could run afoul of Florida's
prohibition on having more than one Medical Director.”
(Id. at 47). After his consultancy ended, Dr. Frey
“substantially decreased his referrals to”
Doctor's Choice. (Id. at 47).
Medical Directorship became available in late 2012,
Doctor's Choice hired Dr. Frey as a Medical Director.
(Id.). Once he was hired as Medical Director, Dr.
Frey's referral of patients to Doctor's Choice for
home health services increased, and he referred 244 patients
in just under two years. (Id.). The United States
includes a list of sample claims for reimbursement submitted
by Doctor's Choice for treatment of patients referred by
Dr. Frey while he was a Medical Director. (Id. at
early 2014, when Dr. Frey's referrals were again down,
one of the assigned [Doctor's Choice] Account Executives
told him that [Doctor's Choice] might not be able to keep
him as a Medical Director.” (Id. at 52).
“On several occasions during his Directorship, one of
the assigned Account Executives would confront Dr. Frey about
referring patients to home health agencies other than
[Doctor's Choice], telling him that, because he was