The district court denied a motion to dismiss claims against two of multiple defendants in a complaint alleging healthcare fraud. The defendants argued there was no connection between the two defendants and the entity that allegedly submitted false claims, other than a common corporate parent, and that the relators had not conducted any inquiry into their relationship during discovery. However, the court noted the group of defendants had replied to the complaint as a single entity, and that the two defendants in question—and others—asserted in their responses that they did business as the entity alleged to have submitted false claims. The court held that the defendants could not make multiple admissions that they did business as one entity and then later claim they had no liability for the conduct of that entity.
Relators Ricia Johnson and Health Dimensions Rehabilitation Inc. alleged that defendants Golden Gate National Senior Care LLC, GGNSC Holdings LLC, GGNSC Wayzata LLC, and Aegis Therapies Inc. submitted false Medicare claims in connection with their provision of physical and occupational therapy services to nursing home patients.
The court previously denied the defendants’ motion for summary judgement on the relators’ remaining claims, but requested additional information with respect to the claims against certain defendants and the relators’ conspiracy count before deciding those issues. Specifically, the court requested additional information on the relationship among the defendants, and how the relators’ conspiracy claim affects the ultimate outcome of this litigation. Because neither party had fully briefed those issues, the court found it could not conclude whether dismissal of allegations against certain defendants was appropriate or whether the relator’s claims survived summary judgment.
The defendants argued that the claims against Golden Gate and GGNSC Holdings should be dismissed because the relators presented no evidence that either knowingly presented or caused the presentation of false claims. According to the defendants, during 12 years of litigation, no direct linkage had been established between these defendants and the operations at Hillcrest or Aegis Therapies, other than general corporate affiliation. The also argued there was no evidence either defendant knowingly caused Hillcrest to submit false claims. The defendants argued the courts have universally rejected the idea that all affiliated companies are liable under the FCA when a single entity is liable.
In opposition, the relators argued there was sufficient evidence to link GGNSC Holdings and Golden Gate to the operations at Hillcrest. The relators asserted that the defendants admitted in their answers to the complaint that GGNSC Holdings and Golden Gate, as well as GGNSC Wayzata, were all doing business as Golden Living Center—Hillcrest of Wayzata.
The relators also argued the defendants answered discovery requests as one entity and on numerous occasions explicitly made the same admission that they were all doing business as Golden Living Center–Hillcrest of Wayzata. According to the defendants, in light of those admissions, there was no need for further discovery. The court agreed. Because GGNSC Holdings and Golden Gate repeatedly held themselves out as doing business as Golden Living Center, the court found that a reasonable factfinder could find them liable for the operations at Hillcrest. Therefore, the court declined to dismiss them as defendants.
Next, the defendants argued that the conspiracy count should be dismissed because the relators: (1) did not provide summary judgment evidence that the defendants entered into an agreement to get false claims paid; and (2) therefore allege a conspiracy among related corporate entities. The defendants noted that the vast majority of FCA cases have applied the intra-corporate conspiracy doctrine in FCA cases to dismiss conspiracy allegations.
In response to the court’s question regarding how the conspiracy count affects the ultimate outcome of this litigation, the relators asserted that the conspiracy count should be superfluous to the ultimate outcome of the case as the evidence shows that each of the defendants were liable as direct participants in submitting or causing the submission of the false claims. The relators argued that, to the extent the defendants attempt to hide behind corporate shells, it may be necessary for the jury to consider in the alternative the defendants’ liability for conspiracy.
Because the court found sufficient evidence that GGNSC Holdings and Golden Gate were sufficiently linked to the operations at Hillcrest because they repeatedly held themselves out as doing business as Golden Living Center, it agreed that the conspiracy count is likely superfluous. However, the court held that whether or not dismissal of the count is warranted is more appropriately resolved as a pre-trial matter. Accordingly, the court declined to dismiss the conspiracy count at this time.
In short, after the defendants’ multiple admissions that GGNSC Holdings and Golden Gate were doing business as Golden Living Center, the court held they may not now claim that GGNSC Holdings and Golden Gate are immune from liability.
