By Robert B. Barnett Jr., J.D.
While fraud plaintiffs are required to plead specifics, when they allege a wide-ranging scheme involving numerous systematic misrepresentations, they are allowed to plead representative samples without having to plead every single false claim.
In a whistleblower action under the False Claims Act (FCA) involving illegal kickbacks to diabetes patients, the government’s allegations against an individual consultant and the business he operated were sufficient to survive a motion to dismiss, a Nashville federal district court has ruled. The consultant was accused of being the mastermind behind a scheme to increase Medicare billings for Arriva Medical’s diabetes supplies by forgiving Medicare Part B patients’ copayments and deductibles (U.S. ex rel. Goodman v. Arrival Medical LLC, March 24, 2020, Trauger, A.).
Background. Arriva Medical, LLC, which has since been acquired by Alere, Inc., provide diabetes supplies such as glucose meters and test strips. An Arriva employee filed a qui tam action under the False Claims Act in Tennessee federal court, alleging that Arriva/Alere improperly waived or forgave copayments and deductibles in the hope of influencing a patient’s choice of diabetes supply vendors. After a lengthy investigation, the U.S. government opted to join the suit. The government’s complaint named not only Arriva/Alere but also Ted Albin, Arriva’s consultant, and Albin’s company Grapevine Billing and Consulting Services, Inc. The inclusion was based on a theory that they were Arriva/Alere’s reimbursement consultant and, for a period of time, oversaw Arriva’s Medicare claims submission process. The complaint alleges claims for submission of false Medicare claims under the FCA, using false records to make fraudulent claims under the FCA, conspiracy under the FCA, unjust enrichment, and payment by mistake. The newly added consultant and Grapevine filed motions to dismiss.
Statute of limitations. The consultant and Grapevine first argued that the FCA claims should be dismissed because they were filed outside of the six-year statute of limitations. The consultant and Grapevine contended that the government’s investigation took too long and that it seeks claims for conduct that occurred, at the latest, in 2012. The court, however, rejected that argument, not because it determined that the claim was filed within the six-year-period but because it determined that the question could not be resolved at the motion-to-dismiss stage. For the time being, the court said, the complaint established enough of a contestable issue of fact to survive a motion to dismiss.
Fraud pleading. The consultant and Grapevine next argued that the FCA claims should be dismissed because the fraud was not pleaded with sufficient particularity. While fraud plaintiffs are required to plead the who, what, and where specifics, when they allege a wide-ranging scheme involving numerous systematic misrepresentations, they are allowed to plead representative samples without having to plead every single false claim. In this case, the government was deemed to have met its burden by providing examples of particular claims that applied also to the consultant and Grapevine. Although a plaintiff is still required to explain each defendant’s culpable role, nothing prevents a plaintiff from using the same set of examples for each defendant. The court also rejected the consultant and Grapevine’s argument that the government failed to plead a conspiracy, for similar reasons. The kickback scheme and the false claims were part of the same conspiracy because they depended on one another. No magic language was required in the pleading.
Unjust enrichment. The court also concluded that the unjust enrichment claim was adequately pleaded against the consultant and Grapevine. The claim was adequate on the merits because the government was not required to show that the consultant and Grapevine actually received the false claim money because they received consulting fees for their part in the scheme. Unjust enrichment allows the victim to follow the proceeds of the fraud. The claim was adequate on the question of the statute of limitations for the same reason as before, that is, that the true nature of the time periods involved will have to await further discovery. For now, the claim was sufficiently pleaded.
The court, therefore, denied the consultant and Grapevine’s motion to dismiss.
The case is No. 3:13-cv-0760.
Attorneys: Ellen Bowden Mcintyre, Office of the United States Attorney, for the United States. David W. Garrison (Barrett Johnston Martin & Garrison, LLC) for Gregory M. Goodman. Andrew A. Kassof (Kirkland & Ellis, LLP) for Arriva Medical, LLC and Alere, Inc. Charles Frederick Spainhour (Bradley Arant Boult Cummings LLP) for Ted Albin and Grapevine Professional Services, Inc.
Companies: Arriva Medical, LLC; Alere, Inc.; Grapevine Professional Services, Inc.
MainStory: TopStory CaseDecisions CMSNews FDCActNews AntikickbackNews CoPNews FCANews FraudNews ProgramIntegrityNews TennesseeNews
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