United States District Court, N.D. Texas, Dallas Division
THE UNITED STATES OF AMERICA, ex rel. EMERSON PARK
LEGACY HEART CARE, LLC, LEGACY HEART CARE OF FORT WORTH, LLC, LEGACY HEART CARE OF AUSTIN, LLC, LEGACY HEART CARE OF MIDTOWN AUSTIN, LLC, TRINITY HEART CARE, LEGACY HEART CARE OF SAN ANTONIO, LLC, LEGACY HEART CARE OF KANSAS CITY, LLC, MICHAEL GRATCH, TUAN D. NGUYEN, VU D. NGUYEN, VINH D. NGUYEN, and NIMA AMJADI
MEMORANDUM OPINION AND ORDER
GREN SCHOLER UNITED STATES DISTRICT JUDGE.
Emerson Park ("Relator") brings this qui
tarn action against Defendants Legacy Heart Care, LLC
("LHC"), Legacy Heart Care of Fort Worth, LLC,
Legacy Heart Care of Midtown Austin, LLC, Legacy Heart Care
of Austin, LLC, Trinity Heart Care, Legacy Heart Care of San
Antonio, LLC, Legacy Heart Care of Kansas City, LLC
(collectively "LHC Entities"), Michael Gratch
(together with LHC Entities, the "LHC Defendants"),
Tuan D. Nguyen, Vu D. Nguyen, Vinh D. Nguyen, and Nima Amjadi
("Medical Director Defendants"), alleging that LHC
Defendants and Medical Director Defendants defrauded the
United States while providing Enhanced External
Counterpulsation ("EECP") to Medicare patients.
before the Court is LHC Defendants' and Medical Director
Defendants' Motions to Dismiss Relator's Third
Amended Complaint ("Motions to Dismiss) [ECF Nos. 100,
102], and their Joint Motion for Attorneys' Fees
("Motion for Attorneys' Fees") [ECF No. 93].
For the reasons that follow, the Court grants in part and
denies in part the Motions to Dismiss, and denies the Motion
for Attorneys' Fees at this time.
to Special Order 3-318, this case was transferred from the
docket of Judge Sam A. Lindsay to the docket of this Court on
March 8, 2018. As the present action is the subject of a
prior opinion of this Court, see United States ex rel.
Park v. Legacy Heart Care, LLC, Civ. A. No.
3:16-CV-803-S, 2018 WL 5313884 (N.D. Tex. Oct. 26, 2018), the
Court will discuss the background facts only to the extent
necessary for this Memorandum Opinion and Order.
procedural posture of this qui tarn action is worthy
of note, Relator filed his initial complaint under seal on
March 22, 2016. See ECF No. 2. After over a year of
investigation, the United States decided not to intervene in
this action, and the Court ordered the unsealing of the
complaint on September 19, 2017. See ECF Nos. 16,
17. LHC Defendants and Medical Director Defendants filed
their initial motions to dismiss the complaint on January 31,
2018, but the Court denied these motions as moot because
Relator amended his complaint. See ECF Nos. 31, 33,
39, 57. Thereafter, LHC Defendants and Medical Director
Defendants filed a renewed set of motions to dismiss on March
7, 2018. See ECF Nos. 42, 45. Although Relator
amended his complaint for a second time, the amendment served
only to clarify the parties to the suit, and all parties
agreed that it did not moot the second set of motions to
dismiss. See ECF No. 60.
October 26, 2018, the Court granted LHC Defendants' and
Medical Director Defendants' second set of motions.
See Park, 2018 WL 5313884, at *9. Significantly, the
Court dismissed Relator's claims against then-defendants
Michael Grad, M.D., Legacy Heart Care of South Austin, LLC,
Legacy Heart Care of Phoenix, LLC, and Legacy Heart Care of
Charlotte, LLC with prejudice after finding the allegations
"to be potentially a violation of Fed.R.Civ.P. 11 (b)(3)
and an unreasonable stretch of deduction." Id.
at *5. The Court granted Relator leave to replead the
remaining claims, id. at *9, and Relator filed his
Third Amended Complaint (the "Complaint") on
November 26, 2018.
fourth attempt to state a claim, Relator-a former scribe
employed by LHC for approximately seven months-continues to
claim that LHC Defendants and Medical Director Defendants
"engaged in a pervasive pattern of false and fraudulent
conduct with respect to its provision of EECP and related
services to Medicare patients." Third Am. Compl.
¶¶ 2, 14. Specifically, Relator alleges that LHC
Defendants and Medical Director Defendants presented false
claims to Medicare in violation of the False Claims Act
(1) seeking reimbursement for EECP services that did not
satisfy the diagnostic criteria under [National Coverage
Determination ('NCD')] 20.20, (2) upcoding
[Evaluation and Management ('E&M')] services to
the highest level billing codes, (3) seeking reimbursement
for EECP services that were not directly supervised by a
physician as required by NCD 20.20, and (4) paying kickbacks
to patients in the form of waived co-pays and certain
Id. ¶ 62. The Complaint splits these
allegations between four causes of action. In Counts I and
II, Relator purports to state presentment and false-statement
claims by alleging that LHC Defendants and Medical Director
Defendants (1) submitted Medicare claims for EECP services
performed in violation of NCD 20.20, and (2)
"upcoded" bills for E&M services, respectively.
In Count III, Relator recasts the preceding allegations into
a conspiracy claim under 31 U.S.C. § 3729(a)(1)(C).
Finally, in Count IV, Relator pleads that LHC Defendants and
Medical Director Defendants violated the FCA by seeking
Medicare reimbursement for services while violating the
Anti-Kickback Statute ("AKS"), 42 U.S.C. §
third time, LHC Defendants and Medical Director Defendants
move to dismiss each of Relator's claims, arguing that
the Complaint still fails under Federal Rules of Civil
Procedure 9(b) and 12(b)(6). See ECF Nos. 100, 102,
Additionally, LHC Defendants and Medical Director Defendants
request attorneys' fees they incurred in defending
against claims the Court dismissed with prejudice in its
prior opinion. See ECF No. 93, Relator filed
responses to these motions, LHC Defendants and Medical
Director Defendants filed replies, and Relator filed
The Rule 12(b)(6) Standard
defeat a motion to dismiss filed pursuant to Federal Rule of
Civil Procedure 12(b)(6), a plaintiff must plead "enough
facts to state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); Reliable Consultants, Inc. v.
Earle, 517 F.3d 738, 742 (5th Cir. 2008). To meet this
"facial plausibility" standard, a plaintiff must
"pleadf factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). Plausibility does not require
probability, but a plaintiff must establish "more than a
sheer possibility that a defendant has acted
unlawfully." Id. The court must accept
well-pleaded facts as true and view them in the light most
favorable to the plaintiff. Sonnier v. State Farm Mut.
Auto. Ins., 509 F.3d 673, 675 (5th Cir. 2007). However,
the court does not accept as true "conclusory
allegations, unwarranted factual inferences, or legal
conclusions." Ferrer v. Chevron Corp., 484 F.3d
776, 780 (5th Cir. 2007) (citation omitted). A plaintiff must
provide "more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do." Twombly, 550 U.S. at 555
(internal citations omitted). "Factual allegations must
be enough to raise a right to relief above the speculative
level... on the assumption that all the allegations in the
complaint are true (even if doubtful in fact)."
Id. (internal citations omitted).
ultimate question is whether the complaint states a valid
claim when viewed in the light most favorable to the
plaintiff. Great Plains Tr. Co. v. Morgan Stanley Dean
Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). At
the motion to dismiss stage, the court does not evaluate the
plaintiffs likelihood of success. It only determines whether
the plaintiff has stated a claim upon which relief can be
granted. Mann v. Adams Realty Co., 556 F.2d 288, 293
(5th Cir. 1977).
The Rule 9(b) Standard
all of Relator's claims are premised on alleged
violations of the FCA, the allegations must also satisfy Rule
9(b)'s heightened pleading standard. See United
States ex ret Grubbs v. Kanneganii, 565 F.3d 180, 185
(5th Cir. 2009). Rule 9(b) requires that "[i]n alleging
fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake."
Fed.R.Civ.P. 9(b). "At a minimum, Rule 9(b) requires
allegations of the particulars of time, place, and contents
of the false representations, as well as the identity of the
person making the misrepresentation and what he obtained
thereby." Benchmark Elecs., Inc. v. J.M. Huber
Corp., 343 F.3d 719, 724 (5th Cir. 2003) (quoting
Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975
F.2d 1134, 1139 (5th Cir, 1992)). Put simply, Rule 9(b)
requires the "who, what, when, where, and how" of
the fraud. United States ex rel Williams v. Bell
Helicopter Textron Inc., 417 F.3d 450, 453 (5th Cir.
2005) (quoting United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th
Fifth Circuit has given Rule 9(b) a "flexible"
interpretation in the FCA context in order to achieve the
FCA's remedial purpose. See Grubbs, 565 F.3d at
190. A complaint can survive a motion to dismiss by alleging
"the details of an actually submitted false claim"
or by "alleging particular details of a scheme to submit
false claims paired with reliable indicia that lead to a
strong inference that the claims were actually
submitted." Id., However, this
"flexible" interpretation does not absolve qui
tarn relators of the heightened pleading requirements of
Rule 9(b). See United Stales ex rel. Nunnally v. W.
Calcasieu Cameron Hosp., 519 Fed.Appx. 890, 893 (5th
Cir. 2013). A relator must still allege the '"who,
what, when, where, and how' of the alleged fraud."
United States ex rel. Jamison v. Del-Jen, Inc., 747
Fed.Appx. 216, 219 (5th Cir, 2018) (quoting United States
ex rel. Shupe v. Cisco Sys., Inc., 759 F.3d 379, 382
(5th Cir. 2014) (per curiam)).
Lack of Allegations as to Certain
the Court previously dismissed claims against certain
defendants for failure to allege any specific,
non-speculative fraudulent or illegal conduct attributable to
them, see Park, 2018 WL 5313884, at *5, Relator
continues to disregard his obligation to "plead
factual content that allows the [C]ourt to draw the
reasonable inference that. . . [each Defendant is] liable for
the misconduct alleged." Iqbal, 556 U.S. at
678. This obligation is particularly acute here because
Relator purports to bring a claim under the FCA. "As a
counterweight to the [FCA's] power and as a shield
against fishing expeditions, FCA suits are subject to the
screening function of Federal Rule of Civil Procedure
9(b)." United States ex rel. Gage v. Davis S.R.
Aviation, L.L.C., 623 Fed.Appx. 622, 623 (5th Cir,
2015). The requirements of Rule 9(b) "must be met for
each defendant." United States ex rel.
Capshaw v. White, Civ, A. No, 3:12-CV-4457-N, 2018 WL
6068806, at *3 (N.D. Tex. Nov. 20, 2018). The Court finds
that Relator's allegations against Michael Gratch, Vu D.
Nguyen, Trinity Heart Care, LHC of San Antonio, LLC, and LHC
of Kansas City, LLC are so deficient that they may, again,
rise to the level of a Federal Rule of Civil Procedure 11(b)
violation. At a minimum, Relator did not plead sufficient
facts to satisfy the heightened pleading standard of Rule
9(b) as to these Defendants.
these Defendants hardly appears outside of the caption of the
Complaint. Michael Gratch is mentioned in only one paragraph,
where he is identified as "the founder, president, and
owner of LHC" and alleged to be the individual
"responsible or LHC's fraudulent operations,"
without a single fact supporting this sweeping accusation.
Third Am. Compl. ¶ 21, Vu D. Nguyen is mentioned three
times-Relator identified him as a cardiologist, as one of
LHC's medical directors, and as a doctor who referred a
patient to LHC. See id, ¶¶ 23, 26, 120. In
72 pages of the Third Amended Complaint, Relator did not
offer one factual allegation specifically linking Michael
Gratch or Vu D. Nguyen to the alleged fraudulent scheme aside
from their employment at LHC. Instead, Relator continues to
rely on generalized accusations-e.g., "Defendants
collectively engaged in a multi-faceted scheme that resulted
in the presentment of false claims to Medicare in violation
of the FCA." Id. ¶ 62, Does Relator not
understand that he may not simply lump Defendants together?
See Park, 2018 WL 5313884, at * 10 (citation
omitted). Such general allegations do not establish
"more than a sheer possibility that [Michael Gratch or
Vu, D. Nguyen] has acted unlawfully." Iqbal,
556 U.S. at 678.
fourth attempt, Relator's allegations regarding some of
the LHC entities are just as egregiously deficient. LHCs of
San Antonio and Kansas City are mentioned twice each, without
any detail as to their specific involvement. See id
¶ 18 (listing their addresses); id. ¶ 292
("[LHC of] San Antonio and Kansas City had approximately
20 patient [sic] per-day."). Trinity Heart Care is
referenced three times. See Id. ¶ 18 (listing its
address); id. ¶ 71 (stating amount Medicare
reimburses it for EECP services); id. ¶ 72
("[LHC of] Dallas . . . had approximately 20 patient
[sic] per day."). And, Relator's allegations against
these LHC Entities are not saved by his claim that LHC
Entities have "centralized billing" or
"standardized policy." E.g., Id.
¶¶ 141, 147. Even if Trinity Heart Care, LHC of San
Antonio, and LHC of Kansas City had a policy of
"inputting the specific angina code in all patient
charts," the Court cannot simply accept Relator's
speculations that these LHC Entities submitted claims for
EECP treatment that did not satisfy NCD 20.20 criteria,
billed for services not provided, or paid kickbacks to
patients. Without factual support, Relator's
claims against these LHC entities appear to be no more than
"nuisance suits and . . . baseless claims" that are
used "as a pretext to gain access to a 'fishing
expedition, '" and that are prohibited by Rule 9(b).
Grubbs, 565 F.3d at 191.
the Court finds that Relator pleaded insufficient facts to
show that Michael Gratch, Vu D. Nguyen, Trinity Heart Care,
or LHC Entities of San Antonio and Kansas City entered into
"an unlawful agreement... to get a false or fraudulent
claim allowed or paid by [the Government]" or "at
least one act performed in furtherance of that
agreement," Grubbs, 565 F.3d at 193 (first
alteration added) (quoting United States ex rel. Farmer
v. City of Houston, 523 F.3d 333, 343 (5th Cir. 2008))
(reciting the elements of FCA conspiracy claim). There are no
facts suggesting that any of these Defendants may be held
liable as co-conspirators.
was put on notice of these wholly inappropriate pleading
deficiencies by the Court's prior opinion. The Court
dismissed claims against then-Defendant Michael Grad, M.D.,
for substantially the same reason and warned Relator that
such pleading tactics may violate Federal Rule of Civil
Procedure 11(b). See Park, 2018 WL 5313884, at *5.
Nonetheless, the Court did not dismiss the claims against
Michael Gratch, Vu D. Nguyen, Trinity Heart Care, LHC of San
Antonio, and LHC of Kansas City to afford Relator an
opportunity to plead facts as to each of these Defendants.
Id. at *6, The Court will no longer tolerate
Relator's scattershot pleading tactics. The Court finds
that Relator "has had fair opportunity to make his
case," Schiller v. Physicians Res. Grp., Inc.,
342 F.3d 563, 567 (5th Cir. 2003) (quoting Jacquez v.
Procunier, 801 F.2d 789, 792 (5th Cir. 1986)), and that
further amendment would be futile. See Rombough v.
Bailey, 733 Fed.Appx. 160, 165 (5th Cir. 2018).
Consequently, the Court grants the Motions to Dismiss as to
every Count alleged against Michael Gratch, Vu D. Nguyen,
Trinity Heart Care, LHC of San Antonio, and LHC of Kansas
City with prejudice.
Theories of False Claims Liability
defendant to be liable under the FCA, the relator must
establish that "(1). . . there was a false statement or
fraudulent course of conduct; (2) made or carried out with
the requisite scienter; (3) that was material; and (4) that
caused the government to pay out money or to forfeit moneys
due (i.e., that involved a claim)." United States ex
rel. Lemon v. Nurses to Go, Inc., 924 F, 3d 155, 159
(5th Cir. 2019) (quoting United States ex rel Barman v.
Trinity Indus. Inc., 872 F.3d 645, 654 (5th Cir. 2017)).
A claim under 31 U.S.C. § 3729(a)(1)(A) arises when a
person "knowingly presents, or causes to be presented, a
false or fraudulent claim for payment or approval."
"[T]he provision's sine qua non is the
presentment of a false claim." Grubbs, 565 F.3d
at 188. The FCA "attaches liability, not to the
underlying fraudulent activity ... but to the claim for
payment." United States ex rel. Longhi v. United
States, 575 F.3d 458, 467 (5th Cir. 2009) (quoting
Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 785 (4th Cir. 1999)). A claim under §
3729(a)(1)(B) similarly requires a relator to "show that
the claim presented for payment. . . was false,"
United States ex rel. Rigsby v. State Farm Fire &
Cas. Co., 794 F.3d 457, 476-77 (5th Cir. 2015),
aff'd, 137 S.Ct. 436 (2016), but also requires
that the defendant made, used, or caused to be made or used,
"a false record or statement material to a false or
fraudulent claim." 31 U.S.C. § 3729(a)(1)(B).
case, Relator alleged that Remaining Defendants are liable
under §§ 3729(a)(1)(A) and (B) because they
purportedly: (1) billed Medicare for EECP treatments not
allowed by NCD 20.20-Count I; (2) billed Medicare for E&M
services using incorrect billing codes--Count II; and (3)
falsely certified compliance with the AKS-Count IV. For the
reasons that ...