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United States ex rel Repko v. Guthrie Clinic

March 12, 2008

UNITED STATES OF AMERICA EX REL RODNEY REPKO, PLAINTIFF,
v.
GUTHRIE CLINIC, P.C., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge McClure

MEMORANDUM

BACKGROUND

On July 19, 2004, plaintiff-relator Rodney Repko commenced this civil action with the filing of a complaint against defendants Guthrie Clinic, P.C. ("Clinic"), Guthrie Healthcare System, Inc. ("GHS"), Robert Packer Hospital ("Hospital"), Kevin Carey, and Terence Devine. Plaintiff-relator's complaint sets forth a cause of action based on the False Claims Act ("FCA"), and was filed under the qui tam provisions of the act which authorize private individuals to bring a civil action in the name of the United States. 31 U.S.C. § 3730(b).

On June 6, 2006, the United States filed a notice of election declining to intervene in the action. (Rec. Doc. No. 27.) On June 8, 2006, we ordered that the complaint be unsealed and served upon the defendant. (Rec. Doc. No. 28.) On October 6, 2006, plaintiff-relator filed an amended complaint. (Rec. Doc. No. 29.) On October 12, 2007, with defendants' permission, plaintiff-relator filed another amended complaint, which removed Kevin Carey as a defendant.

On December 3, 2007, defendants filed a "Motion to Dismiss Plaintiff and Relator's Third*fn1 Amended Complaint and to Strike." (Rec. Doc. No. 67.) On January 11, 2007, relator filed a "Motion to Amend and Plead Even More Specifics if Necessary." (Rec. Doc. No. 75.) The motions are now ripe for consideration. For the following reasons, the court will grant in part and deny in part defendants' motion to dismiss and will deny relator's motion to amend as moot.

DISCUSSION

I. Motion to Dismiss Standard

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must view all allegations stated in the complaint as true and construe all inferences in the light most favorable to plaintiff. Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In ruling on such a motion, the court primarily considers the allegations of the pleading, but is not required to consider legal conclusions alleged in the complaint. Kost, 1 F.3d at 183. At the motion to dismiss stage, the court considers whether plaintiff is entitled to offer evidence to support the allegations in the complaint. Maio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir. 2000). A complaint should only be dismissed if, accepting as true all of the allegations in the complaint, plaintiff has not plead enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1960 (2007).

The failure-to-state-a-claim standard of Rule 12(b)(6) "streamlines litigation by dispensing with needless discovery and factfinding." Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). A court may dismiss a claim under Rule 12(b)(6) where there is a "dispositive issue of law." Id. at 326. If it is beyond a doubt that the non-moving party can prove no set of facts in support of its allegations, then a claim must be dismissed "without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one." Id. at 327.

II. Allegations in the Complaint

The following allegations are taken from relator's lengthy third amended complaint. (Rec. Doc. No. 64.) In his complaint, relator alleges that he was employed by defendant Clinic from 1982 to 1998. (Id., ¶ 7.) Defendant Clinic is a professional corporation that employs over 240 physicians, the majority of whom are the shareholders of the organization. (Id. ¶ 8.) Defendant GHS is a nonprofit corporation and holding company for the defendant Hospital. (Id. ¶ 9.) Defendant Guthrie Health is a nonprofit corporation formed by Clinic and GHS. (Id. ¶ 10.) Defendant Hospital is a nonprofit corporation with a 250-bed acute healthcare facility. (Id. ¶ 12.) Furthermore, every physician with active staff privileges at defendant Robert Packer Hospital is employed by Clinic. (Id. ¶ 12.)

Relator appears to allege that every claim that defendant Hospital submitted to the government for payment was the result of referrals from physicians employed by Clinic. (Id. ¶¶ 52, 109, 110, 136.) Furthermore, GHS and Hospital entered into various financial agreements with Clinic which were favorable to Clinic, such as loans at low interest rates. (Id. ¶¶ 42-108.) Thus, in exchange for these favorable financial agreements, defendant Clinic and its physicians would refer large volumes of patients to Hospital who would in turn bill Medicare, Medicaid, and other government health care programs. (Id. ¶ 108.) Relator alleges that these referrals and financial agreements violated the Stark and Anti-Kickback Acts. (Id.) Therefore, because every claim that was submitted to the government for payment was the result of these illegal referrals and kickbacks, every claim necessarily violated the FCA. (Id.)

The third amended complaint sets forth various counts. Count I alleges a claim under the FCA for the presentation of false claims to the government in violation of 31 U.S.C. § 3729(a)(1). (Rec. Doc. No. 64, ¶¶ 174-76.) Count II alleges a claim under the FCA for the use of false records or statements to get a claim paid by the government in violation of 31 U.S.C. § 3729(a)(2). (Id. ¶¶ 177-79.) Count III alleges a claim under the FCA for retaliation in violation of 31 U.S.C. § 3730(h). (Id. ¶¶ 180-82.) Count IV alleges a common law claim for unjust enrichment. (Id. ¶¶ 183-86.) Count V alleges a common law claim for mistake of fact. (Id. ¶¶ 187-191.) Count VI alleges a claim under the FCA for concealment in violation of 31 U.S.C. § 3729(a)(7). (Id. ¶¶ 192-93.) Count VII alleges a claim for circumvention under the Stark Law. (Id. ¶¶ 194-96.) Count VIII alleges another FCA violation for the presentation of false claims. (Id. ¶¶ 197-201.) Count IX alleges a claim under the FCA for the employment of excluded physicians. (Id. ¶¶ 202-07.) Finally, Count X alleges a claim under the FCA for conspiracy in violation of 31 U.S.C. § 3729(a)(3). (Id. ¶¶ 208-10.)

III. Defendant's Motion

Defendants make various arguments in support of their motion to dismiss. First, they argue, with respect to each of relator's FCA claims, that relator has failed to plead fraud with particularity. (Rec. Doc. No. 67, at 16-21.) Second, they argue that relator has failed to state a claim for conspiracy, concealment, or retaliation under the FCA. (Id. at 21-27.) Third, they argue that relator does not have standing to pursue a claim under the Stark Law or common law causes of action for unjust enrichment and mistake of fact. (Id. at 27-29.) Fourth, defendants argue that all of relator's claims are barred by the statute ...


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