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United States v. Cross Garden Care Center, LLC

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

December 3, 2019

THE UNITED STATES OF AMERICA, THE STATE OF FLORIDA, ex rel. DELIA BELL, Plaintiffs/Relator,
v.
CROSS GARDEN CARE CENTER, LLC and KARL E. CROSS, Defendants.

          ORDER

          JAMES D. WHITTEMORE UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT are motions to dismiss Relator Bell's Second Amended Complaint from Defendants Cross Garden Care Center, LLC (Dkt. 91) and Karl Cross (Dkt. 102), and Bell's responses in opposition (Dkts. 99, 110). Upon consideration, the motions are GRANTED in part and DENIED in part. The claims against Defendant Tabatha Cross have been dismissed (Dkt. 118), and her motion to dismiss is therefore DENIED as moot. (Dkt. 103).

         I. FACTUAL ALLEGATIONS

         This action alleges violations of the federal False Claims Act (FCA) and the Florida False Claims Act (FFCA) for claims relating to medical services and the length of patient stays submitted by a skilled nursing facility to the Center for Medicare and Medicaid Services (CMS). The United States and the State of Florida have elected not to intervene in the action. (Dkts. 31-32).

         Accepting the allegations of the Complaint as true, Defendant Karl Cross is the founder of Cross Senior Care, a chain of skilled nursing facilities including the Cross Garden Care Center (CGC) facility. (Dkt. 81 ¶ 18). Relator Bell is a former administrator of the CGC facility, which was owned by Defendant Cross Garden Care Center, LLC (Cross Garden). (Id. ¶¶ 4, 16, 19). She reported directly to Karl Cross. (Id. ¶ 49).

         Bell alleges that Defendants engaged in several practices she argues constitute violations of the FCA. For example, she contends that CMS covers the cost of a patient's first 100 days in a skilled nursing facility and, beyond this period, the patient is required to cover costs. (Id. ¶ 2, 40). She alleges Defendants "required their medical staff to keep patients on service for 100 days without regard to patient welfare or medical necessity ... to maximize reimbursement from Medicare." (Id. ¶ 3). More specifically, she alleges "[a]s she reviewed . . . utilization reports, she noticed that Karl Cross and [Cross Garden] kept track of how many days a resident had remaining under Medicare's 100 day Benefit Period," that "once a patient reached 100 days, CGC, at the direction of Karl Cross, immediately discharged the patient," and that Defendants "refused to discharge any, or virtually any, Medicare patients before they reached the end of the 100 day Benefit Period." (Id. ¶¶ 68-70). Relatedly, she alleges that Defendants "falsely readmitted patients in order to reset the 100 day Benefit Period," such as patient W.S. who was readmitted after three to four day transfers to Palmetto Psychiatric Unit. (Id. ¶¶ 71-76). She was aware of the practice because she "personally observed [W.S.'] treatment." (Id. ¶ 79). The Complaint provides the initials of other patients who allegedly stayed at Cross Garden's facilities for 100 days during multiple benefit periods. (Id. ¶ 81).[1]

         Next, Bell alleges that, as an administrator, she noticed "that many of the facility's residents did not require therapy services and were not eligible for treatment at the [skilled nursing facility]" but nonetheless received services. (Id. ¶ 50). The Complaint mentions a patient, W.S., who suffered schizophrenia and was able to perform everyday functions without assistance. (Id. ¶ 51). Defendants allegedly provided occupational and physical therapy services to him and submitted claims for reimbursement. (Id. ¶ 52-53). Another patient, J.P., could walk without assistance and refused therapy services. (Id. ¶ 57-58). Practitioners performed bedside therapy in the form of "a few minutes of stretching from time to time." (Id. ¶ 59). Bell personally observed the treatment of W.S. and J.P. (Id. ¶¶ 55, 62).

         Bell also alleges Defendants categorized patients into higher Resource Utilization Group (RUG) levels to obtain higher reimbursements. (Id. ¶ 100). Rehab therapy is classified by different RUG levels, with higher levels resulting in higher Medicare reimbursement. (Id. ¶¶ 41, 47-48). And patients "with a high level of independence are not good candidates for rehab therapy," while patients who are "extremely sick, unable to participate, and have a poor rehab prognosis are not good candidates for rehab therapy." (Id. ¶¶ 43-45). She also alleges that Karl Cross "routinely wrote e-mails to the effect of, 'We need to get these RUG levels up.'" (Id. ¶ 66).

         Finally, Bell contends that Medicaid patients in Florida receive an allowance of $105 per month while in a skilled nursing facility, and that the CGC facility "took money out of the patients' individual accounts and placed it in a general facility account." (Id. ¶ 85-87). "Karl Cross then used the money from this general account to purchase furniture for the [skilled nursing facility]." (Id. ¶ 88). The Complaint includes as an example Karl Cross removing $400 from W.S.' account to purchase a $90 television. (Id. ¶ 89-90). And "nurses complained to Bell that they were prevented from providing therapy services to Medicaid patients because Medicaid reimbursed at a lower level than Medicare for such services." (Id. ¶ 93).

         Bell brings three claims against Defendants. Count I alleges a violation of the FCA, 31 U.S.C. § 3729(a)(1)(A), for knowingly presenting a false claim for payment in the form of billing unnecessary therapy services, falsely inflating RUG levels, unnecessarily retaining patients for 100 days, and improperly resetting the 100-day benefit period for readmitted patients. (Id. ¶¶ 99-100). Count II alleges a violation of § 3729(a)(1)(B) for making a false record or statement to a false claim when Defendants "created false narratives in patient notes to justify their decision to provide services in excess of what is medically necessary." (Id. ¶¶ 104-05). Bell brings Count III under the FFCA, Fla. Stat. § 68.082(2)(a), alleging Defendants "appropriate[d] patient allowances and us[ed] those funds to purchase furniture and equipment for their facilities." (Id. ¶¶ 109-10).

         Defendants raise four arguments for dismissal.[2] First, they argue the Complaint does not allege fraud with particularity to satisfy Rule 9(b) of the Federal Rules of Civil Procedure. Second, they contend that Bell invoked an incorrect basis for the Court's supplemental jurisdiction over the FFCA claim and that the conduct giving rise to the FFCA claim is not part of the same transaction or occurrence as the FCA claim. Third, they contend the Middle District of Florida is an improper venue. Finally, they argue the Second Amended Complaint is an impermissible shotgun pleading. (Dkts. 92, 102).

         II. STANDARD

         A complaint must contain a "short and plain statement of the claim showing that the pleader, is entitled to relief." Fed.R.Civ.P. 8(a)(2). The complaint must "plead all facts establishing an entitlement to relief with more than 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action.'" Resnick v. AvMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007)). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2008) (citation omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678 (citation omitted). "Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citation omitted).

         III. DISCUSSION

         The motions are due to be granted in part and denied in part. The allegations in Count I satisfy Rules 8(a) and 9(b) of the Federal Rules of Civil Procedure, but the allegations supporting Count II do not. Second, the FFCA claim in Count III is due to be dismissed because the factual allegations giving rise to the FFCA claim are not part of the same transaction or occurrence as the FCA claim. Third, the Middle District of Florida is a proper venue for this action. Finally, Defendants' contention that the Complaint is a shotgun pleading is not a basis to dismiss the action.

         1- Specificity of the Allegations Stating an FCA Claim

         The FCA imposes liability on any person who knowingly presents or causes to be presented a false or fraudulent claim for payment or approval, 31 U.S.C. § 3729(a)(1)(A), or knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim, § 3729(a)(1)(B). "To prevail on an FCA claim, the plaintiff must prove that the defendant (1) made a false statement, (2) with scienter, (3) that was material, (4) causing the Government to make a payment." United States v. AseraCare, Inc., 938 F.3d 1278, 1284 (11th Cir. 2019) (citation omitted); see also United States ex rel. Sharpe v. Americare Ambulance, No. 8:13-cv-1171-T-33AEP, 2017 WL 2840574, at *4 (M.D. Fla. July 3, 2017); Baklid-Kunz v. Halifax Hosp. Med. Or., No. 6:09-CV-1002-ORL-31, 2014 WL 2968251, at *3 (M.D. Fla. July 1, 2014).

         Moreover, an FCA complaint must "state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b); see United States ex rel. Clausen v. Lab. Corp. of Am.,290 F.3d 1301, 1310 (11th Cir. 2002). This is satisfied if the complaint alleges "facts as to time, place, and substance of the defendant's alleged fraud, specifically the details of the defendants' allegedly fraudulent acts, when they occurred, and who engaged in them." Hopper v. ...


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