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United States ex. rel. Scalamogna v. Steel Valley Ambulance

United States District Court, W.D. Pennsylvania

June 26, 2018

UNITED STATES OF AMERICA, ex. rel. Pamela Lynn Scalamogna, Plaintiff,
STEEL VALLEY AMBULENCE., et al., Defendants.


          Cathy Bissoon, United States District Judge.

         Pending before the Court is a Motion to Dismiss Plaintiff's Second Amended Complaint filed by Defendants Steel Valley Ambulance, John T. Jumba, Sr., Patricia Jumba, John J. Jumba and Lori Jumba (collectively, “Defendants”) (Doc. 46), pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, Defendants' Motion to Dismiss will be granted in part and denied in part. Specifically, the Court will deny Defendants' Motion to Dismiss as to Plaintiff's claims based on medical necessity requirements, and grant their Motion to Dismiss to the extent Plaintiff's theories of liability are based on other requirements.


         Defendant Steel Valley Ambulance, Inc. (“Steel Valley”) is an ambulance service based in Homestead, Pennsylvania that provides services for patients who are insured by Medicare and Medicaid. (2d Am. Compl. ¶¶ 10-14, Doc. 45.) Its former emergency medical technician (“EMT”), Pamela Scalamogna (“Plaintiff”), filed claims against Steel Valley and four individuals, John T. Jumba, Sr., Patricia Jumba, John J. Jumba and Lori Jumba, under the False Claims Act, 31 U.S.C. § 3729, et seq. (“FCA”) (Counts 1-7). (See generally 2d Am. Compl.) As the United States has declined to intervene in this action (see Doc. 13), Plaintiff is pursuing these claims individually.

         According to the Second Amended Complaint, Plaintiff began working for Steel Valley in September 2010. (2d Am. Compl. ¶ 30.) Plaintiff alleges that, during her employment with Steel Valley, she observed Defendants violate the FCA by deviating from five Medicare and Medicaid standards, and that she believes that false claims for payment were submitted to the government by virtue of these deviations. (Id. at ¶¶ 58-179.) For each of the claimed deviations, Plaintiff contends that these are the types of issues that would affect government payment decisions, and therefore she avers on belief that they influenced the government's payments to Steel Valley. (Id. at ¶¶ 76-77, 129-30, 142-45, 164-65, 178-79.)

         First, Plaintiff claims that Defendants deviated from vehicle and staff requirements. (Id. at ¶¶ 58-77.) She alleges that Medicare-reimbursable ambulance service providers are required to meet state motor vehicle standards, as well as “Star of Life” standards. (Id. at ¶¶ 58, 61.) She contends that Steel Valley's ambulances did not meet these standards. Specifically, she alleges that on or about October 13, 2010, two ambulances failed to pass inspection for proper heating, cooling and ventilation; that one ambulance failed to pass inspection for oxygen equipment; and that one ambulance was not available for inspection. She also alleges that an ambulance's vehicle registration was expired on November 4, 2006. (Id. at ¶¶ 64-66.) Plaintiff alleges that vehicles and their crews registered to provide Basic Life Support (“BLS”) services were used for Advance Life Support (“ALS”) calls in November 2010 and February 2011, in violation of Medicare's requirements. (Id. at ¶¶ 68-72.)

         Second, Plaintiff claims that Defendants billed for services that were medically unnecessary, such as transporting patients by ambulance when Defendants could have used a wheelchair van. (Id. at ¶¶ 78-130.) Plaintiff claims that Defendant John J. Jumba, Jr. “repeatedly instructed Plaintiff-Relator to remove statements about a patient's ability to walk or ride in a wheel chair [sic] from trip documentation” and “explained to [Plaintiff] that Medicare would not reimburse for ambulance transport that could have been performed in [a] wheelchair van.” (Id. at ¶¶ 91-92.) She claims that Defendant John Jumba, Jr. “would either approve of the submission of the trip to Medicare, or return the documentation to employees to have the trip documentation amended or changed for submission to Medicare.” (Id. at ¶ 90.) Consistent with her claim above, Plaintiff describes eleven specific patients, who, at specified times, were picked up by Plaintiff in non-emergency situations for medically unnecessary services, such as transportation in an ambulance. (Id. at ¶ 95.) She further states, for several of these patients, that Defendant John Jumba, Jr. instructed her to alter trip documentation sheets (“trip sheets”) to reflect the necessity of the services provided in order to justify Medicare reimbursement.[1]

         Third, Plaintiff claims that Defendants deviated from “origin and destination requirements” by transporting patients farther than the nearest facility. (Id. at ¶¶ 137-141.) She alleges that Steel Valley has trip sheets that contradict its submissions to Medicare concerning the nearest facilities. (Id.)

         Fourth, Plaintiff claims that Defendants violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). (Id. at ¶¶ 146-65.) She alleges that Steel Valley has “illegal provider agreements with several providers, ” including a list of anonymized entities. (Id. at ¶ 152.) She alleges that these agreements violate the Anti-Kickback Statute, and the FCA, because they are used to facilitate several kickback schemes that result in billing the government. (Id. at ¶¶ 153-162.)

         Fifth, and last, Plaintiff claims that Defendants deviated from periodic billing certification and reporting requirements. (Id. at ¶¶ 166-79.) In support of this theory, she alleges that Steel Valley did not maintain the required records, including certificates of medical necessity. (Id. at ¶¶ 171-74.) She also alleges that Steel Valley completed paperwork that falsely certified two patients as bedridden. (Id. at ¶¶ 175.)


         Defendants move to dismiss Plaintiff's Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) for failure to state a claim on two grounds: (1) Plaintiff has failed to allege fraud with sufficient particularity under Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”); and (2) Plaintiff has not alleged facts that establish the materiality of the fraud to the government's payment decisions, as required for FCA liability. (See generally, Defs.' Br. Supporting MTD, Doc. 47.)

         I. Sufficiency of Plaintiff's Claims under Rule 9(b)

         A. Legal Standard

         “[T]he FCA makes it unlawful to knowingly submit a fraudulent claim to the government.” U.S. ex rel. Schumann v. Astrazeneca Pharm. L.P., 769 F.3d 837, 840 (3d Cir. 2014).[3] As relevant here, FCA liability attaches when a claimant knowingly and falsely certifies compliance with a material statute, regulation, or contract provision, or “makes specific representations about the goods or services provided” but fails “to disclose noncompliance with material statutory, regulatory, or contractual requirements.” U.S. ex rel. Whatley v. Eastwick Coll., 657 Fed.Appx. 89, 94 (3d Cir. 2016) (“Eastwick”) (quoting U.S. ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011) (“Wilkins”)).

         “Plaintiffs must plead [FCA] claims with particularity in accordance with Rule 9(b).” Wilkins, 659 F.3d at 301 n.9 (citing U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs, 149 F.3d 227, 234 (3d Cir. 1998)).[4] For a plaintiff to satisfy Rule 9(b)'s heightened pleading standard in the context of an FCA claim, she must provide “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 157-58 (3d Cir. 2014) (citations omitted). “Describing a mere opportunity for fraud will not suffice.” Id. at 158. The particular details of such a scheme must include information “as to who provided the payments, to whom the payments were made, [and] under what criteria the payments were awarded.” Eastwick, 657 Fed.Appx. at 95; U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d Cir. 2016) (a plaintiff must support her “allegations ‘with all of the essential factual background that would accompany the first paragraph of any newspaper story'” (quoting In re Rockefeller Ctr. Props., Inc. Securities Litig., 311 F.3d 198, 217 (3d Cir. 2002)).

         Under this pleading standard, a plaintiff need not identify a specific claim for payment. Foglia, 754 F.3d at 156 (citing Wilkins, 659 F.3d at 308); see also United States ex rel. Brown v. Pfizer, Inc., No. 05-6795, 2016 WL 807363, at *11 (E.D. Pa. Mar. 1, 2016) (“The fact that Relators did not identify a single reimbursement is not fatal to their claims at this stage of the proceedings.”); United States v. Medco Health Sys., Inc., No. 12-522, 2014 WL 4798637, at *11 (D.N.J. Sept. 26, 2014) (a plaintiff need not identify specific claims as “such specific proofs are usually inaccessible to a qui tam plaintiff”). Indeed, a plaintiff may allege that claims were submitted to the government for payment based on information and belief if she alleges that the submissions were peculiarly within a defendant's knowledge and control, as long as other reliable indicia lead to a strong inference that claims were actually submitted. United States ex rel. Chorches for Bankruptcy Estate of Fabula v. American Medical Response, Inc., 865 F.3d 71, 85-86 (2d Cir. 2017) (“Chorches”).

         B. Pleading on Information and Belief

         In this Court's Order granting Defendants' prior Motion to Dismiss (Doc. 44), the Court noted that the facts of this case resemble those alleged in Chorches, in which the FCA relator pleaded key elements of his complaint on information and belief. The Chorches court found that the plaintiff, an EMT for an ambulance company, had satisfied the pleading requirements of Rule 9(b). Id. at 86.

         The relator in Chorches alleged that his employer engaged in a scheme: the ambulance company asked EMTs to alter patient reports to falsely demonstrate the medical necessity of ambulance runs, which would then be billed to Medicare. Id. at 76-77, 85. Although the relator did not identify particular claims that were submitted to the government based on his personal knowledge, he “set[] forth facts establishing specific reasons why such information . . . is ‘peculiarly within [the ambulance company's] knowledge.”' Id. at 82 (quoting Wexner v. First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990)). In addition, the relator alleged on personal knowledge that his “supervisors specifically referenced Medicare as the provider to whose requirements the allegedly falsified revisions were intended to conform.” Id. at 85. The Chorches court found that this pleading was sufficient-even though the EMT's allegation that his employer submitted bills to the government was based on information and belief rather than personal knowledge-because it contained “plausible allegations creating a strong inference that specific false claims were submitted to the government.” Id. at 86.

         Recognizing the similarities between Plaintiff's allegations and the facts alleged in Chorches, Defendants argue that Plaintiff's Second Amended Complaint is nonetheless distinguishable because Plaintiff has not shown that her access to Steel Valley's billing records was restricted to the same extent as in Chorches. (Defs.' Br. Supporting MTD 6, 10-12.) Plaintiff responds, to the contrary, that she “alleged that Defendants exclusively controlled the submission of medical billing information for Steel Valley . . . and Steel Valley's owners and family members were responsible for the submission of the claims for payment to [M]edicare.” (Pl.'s Br. Against MTD 7, Doc. 50.) Defendants reply that the Second Amended Complaint contains no such allegations. (Defs.' Reply Supporting MTD 1-2, Doc. 51.)

         The first question for the Court to resolve is whether the allegations in the Second Amended Complaint sufficiently demonstrate that medical billing was peculiarly within Defendants' knowledge and control, thus permitting Plaintiff to make her claim submission allegations on information and belief. The Court finds that Plaintiff's allegations are sufficient to show that medical billing was peculiarly within Defendants' knowledge and control. Specifically, Plaintiff alleges that:

• “The Defendant, John T. Jumba, (a.k.a. John Jumba[, ] Sr.), is the 100% owner and Chief Executive Officer of Defendant, Steel Valley Ambulance. . . . John Jumba, Sr., personally makes the business decisions related to billing, ” (2d Am. Compl. ¶ 17),
• “Defendant, Patricia Jumba (Wife of John Jumba, Sr.) is the Billing Manager of Steel Valley Ambulance. Defendant, Patricia Jumba, personally performs and supervises the billing practices, ” (Id. at ¶ 20),
• “The Defendant, John J. Jumba, (a.k.a. John Jumba, Jr.) is the Chief Operations Officer of Defendant, Steel Valley Ambulance. . . . John Jumba, Jr. personally makes the business decisions ...

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