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United States, ex rel Landsberg v. Levinson

May 29, 2008


The opinion of the court was delivered by: Amy Reynolds Hay United States Magistrate Judge


Hay, Magistrate Judge

Marc A. Landsberg, M.D., and Sharon L. Burke, hereinafter collectively referred to as the "Relators," commenced this qui tam action pursuant to the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3732, as amended.*fn1 The Relators allege that the defendants perpetrated a scheme to defraud the United States of America, billing Medicare and Medicaid for unnecessary medical tests and procedures.*fn2

Specifically, the Complaint charges that defendant Serhat Erzurum, M.D. ("Erzurum"), conspired with others and devised the scheme to defraud the government.*fn3 The Relators claim that defendants Dr. Levinson ("Levinson") and Lake Erie Women's Center, P.C. ("LEWC") entered into agreements with Erzurum's company, 3 Dimensional Imaging, Inc. ("3DI"), to implement fraudulent billing protocols and to pay 3DI commissions of 25% to 40% of the increased revenues generated.*fn4 Further, it is alleged that Levinson, applying the techniques and lessons learned from Erzurum, (1) instructed his ultrasound technicians to perform ultrasound tests, frequently without regard to medical necessity, in order to maximize revenues;*fn5 (2) designated obstetric patients as "high risk" when they were not, for purposes of justifying tests that were not necessary;*fn6 (3) instructed his employees and billing company to bill multiple codes for each test performed, thus billing the government several times for a single test;*fn7 (4) instructed his employees to schedule patients for multiple repeat tests far in excess of what could be medically necessary or justified;*fn8 and (5) instructed his employees to mis-code ultrasound tests under a code for CAT scan tests.*fn9

Levinson and LEWC subsequently filed a motion to dismiss or, in the alternative, a motion for a more definite statement, arguing that the complaint is devoid of specific allegations of fraud as required by Rule 9(b) of the Federal Rules of Civil Procedure.*fn10 See [Dkt. 11]. Specifically, defendants argued that the Relators had not identified a single false claim, the date of any such claim or the contents of any such claim nor had they identified a single instance when Dr. Levinson or any LEWC practitioner performed a medically unnecessary test or billed the United States for any unnecessary or unperformed procedure.

Finding that the Third Circuit Court of Appeals has rejected a strict application of Rule 9(b), requiring only that plaintiffs plead with particularity the "circumstances" of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and that the Relators had sufficiently identified the scheme of fraudulent behavior in which the defendants allegedly engaged, the Court denied defendants' motion. See [Dkts. 44, 50]. Citing to United States of America v. Kensington Hospital, 760 F. Supp. 2d 1120, 1125 (E.D. Pa. 1991), the Court also noted that full particulars will have to be revealed during discovery. [Dkt. 44, p.8].

Now, in the throws of discovery, Levinson and LEWC have filed another motion to dismiss, this time pursuant to Fed. R. Civ. P. 12(b)(1), arguing that subject matter jurisdiction in a qui tam action is dependent on the plaintiff-relators having actual and direct knowledge that the defendants submitted at least one false claim to the government.*fn11 Because the Relators in this case testified at their deposition that they have no independent knowledge that defendants submitted a false claim to the government, defendants conclude that the Court is without jurisdiction.*fn12

Defendants' argument is premised on § 3730(e)(4)(A) of the FCA, which provides that:

No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or actions in a criminal, civil or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action in an original source of the information.

31 U.S.C. § 3730(e)(4)(A). The FCA goes on to define "original source" as "an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided that information to the Government before filing an action under this section which is based on the information." 31 U.S.C. § 3730(e)(4)(B). Because the Relators in this case do not have direct and independent knowledge of the information upon which their claims are based and, thus, are not "original sources," defendants contend that jurisdiction is lacking under § 3730(e)(4).*fn13

We disagree.

As the Court of Appeals for the Third Circuit has explained,

The jurisdictional requirements of the FCA involve assessing whether the allegations and transactions constituting the bases of the claims were publicly disclosed and whether, if they were , the relator is an original source -- meaning that he has direct and independent knowledge of the information.

Atkinson v. PA. Shipbuilding Co., 473 F.3d 506, 515 (3d Cir. 2007) ("Atkinson") (emphasis supplied). Thus, for the jurisdictional bar to apply, the complaint must be based on material that was publicly disclosed in the first instance. Id. at 513. Section 3730(e)(4)(B) merely creates an exception to the public disclosure bar where the realtor is nevertheless an "original source" of the information. Id. As such, the question of whether the relator is an original source is only reached if it has already been determined that the relator's claims are based upon allegations that were publicly disclosed. Id. at 519 ("To determine whether a plaintiff is barred by the FCA's public disclosure provisions, we must first assess whether the relator's claim is based on publicly disclosed allegations or transactions"). See U.S. ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 728 (1 st Cir. 2007) (Finding that because there had been no public disclosure the court need not address whether the relator falls within the original source exception); U.S. v. Bank of Farmington, 166 F.3d 853, 859 (7 th Cir. 1999) ("Whether the plaintiff is an original source is immaterial unless there has been such public disclosure"); U.S. ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699, 703 (8 th Cir. 1995) ("A court reaches the original source question only if it finds ...

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