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Polansky v. Executive Health Resources Inc.

United States District Court, E.D. Pennsylvania

June 26, 2019

JESSE POLANSKY M.D., M.P.H., et al.
v.
EXECUTIVE HEALTH RESOURCES, INC., et al.

          MEMORANDUM AND ORDER FOR MODIFICATION OF PROCEDURES, FILING OF DISPOSITIVE MOTIONS, AND LIMITED DISCOVERY

          MICHAEL M. BAYLSON UNITED STATES DISTRICT COURT JUDGE

         The background of this False Claims Act case has been set forth in numerous memoranda and orders since the case was transferred to the undersigned over two years ago. The Court held a hearing on June 24, 2019 reviewing a number of issues and this Memorandum and Order will reflect the pending matters and the Court's decision on further procedures designed to, expeditiously but fairly, come to a decision as to whether any dispositive motions should be granted and if not, schedule a bellwether trial as previously ordered by the Court with agreement of both parties.

         Earlier this calendar year, the United States, as the ultimate beneficiary of this case, indicated an intention to seek dismissal of the case. The Court then imposed a stay of discovery to allow the parties to negotiate with the Government and/or with each other. The Court played no role in these discussions.

         As a result, the following occurred. Relator filed a “Partial Dismissal” where it informed the Court that, with the consent of the Government, it would seek to prove liability and recover damages only for EHR inpatient certifications that met a new set of “narrowing criteria.” Apparently with the help of an expert, Relator then unilaterally selected 87 cases, later increased to 104 cases, that Relator intended to proceed on in discovery, and incorporated the narrowing criteria in paragraphs 364 and 379 of the proposed Third Amended Complaint.

         Although this proposal would necessitate a negation of the extensive procedures that the Court had previously ordered to constitute “Phase I” of this case, no motion was filed with the Court to request a modification of the existing discovery on the 444 case universe. In Relator's opposition to the Defendant's Motion to Dismiss the Third Amended Complaint, Relator explains in some detail how Relator chose cases to become the “universe” for the bellwether trial, notwithstanding the Court orders specifically establishing 444 cases as that “universe.” (ECF 442 at 17-20.) This explanation reflects only one way of meeting the Government's narrowing circumstances. Relator, at no point, gives any reason for not seeking Court approval to change this “universe” of cases for the bellwether trial. Relator's undertaking this process without Court approval was unauthorized, and may have significance in future Court rulings in this case.

         The Court ordered that Relator's proposed Third Amended Complaint be filed and that Defendant file a Motion to Dismiss to provide a basis for the Court to rule, to the extent possible, under established precedent, on legal issues presented.

         Defendant's Motion to Dismiss the Third Amended Complaint raised a number of issues, but did not specifically complain about Relator's unilateral abrogation of the 444 case procedures that had been adopted as to which discovery had been basically completed, except for the possibility of some depositions.

         The Government then filed its proposed narrowing of the case for the Court's benefit. The Court then observed some ambiguities and requested the Government to clarify its intent. At the hearing on June 24, 2019, the Government explained further its understanding of the “narrowing criteria” it had adopted, which Relator apparently accepted as the “condition” of proceeding with the case with the Government abandoning its intent of dismissal.

         At this hearing, the Court ascertained at least one contradiction between Relator's interpretation of the narrow criteria and the Government's. It is not necessary at this time to resolve that contradiction.

         The Defendant has expressed an opposition to abandoning the procedures using the 444 cases, as the “universe” for Phase I.

         Relator also appears to be proceeding under what has been referred as to “time based standards” which Relator contends are inherent in long-standing and accepted interpretations of Medicare regulations, contained in a manual, which may have consequences in future rulings by this Court in this case.

         After extensive briefing, the Court has decided to deny the Defendant's Motion to Dismiss the Third Amended Complaint. This conclusion is necessitated by at least three circumstances:

1. Judge O'Neill's decision denying a Motion to Dismiss the Second Amended Complaint, with very similar allegations, which must be construed in the light most favorable to Relator, under Rule 12;
2. The fact that the United States, as the ultimate beneficiary of the Plaintiff's case, if it is successful, although having contemplated moving for dismissal of the entire case, has since agreed that the Plaintiff's claims, if narrowed to certain ...

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