The district court denied a motion to dismiss by two of several defendants in a qui tam case alleging violations of the Anti-Kickback Statute and FCA. The defendants argued that the alleged misconduct occurred at least seven years before the government filed its complaint and that the government knew or should have known of their alleged role in the scheme much earlier than it did. However, the court declined to limit the timeframe of the alleged fraud based on internal communications between the defendants describing the scheme, finding the emails were presented as evidence, not a temporal boundary. The court also explained that liability can attach to conduct that occurs well before the submission of the fraudulent claim, if that conduct can be shown to have caused the submission of a false claim within the statute of limitations. The defendants also argued the government’s claim of unjust enrichment should be dismissed, as the government could not show they earned a share of any ill-gotten gains obtained through the fraud scheme. However, the court noted the defendants were hired, in part, to increase their employer’s Medicare reimbursements, and therefore, to the extent they were paid for success, the government could have a case they were unjustly enriched by the fraud. However, the court warned the government that it would have to show that payments were ongoing, or the claim could be precluded by the statute of limitations.
Defendants Ted Albin and Grapevine Professional Services, Inc. d/b/a Grapevine Billing and Consulting Services moved to dismiss a qui tam complaint alleging they engaged in fraud on government healthcare insurance programs.
In 2013, relator Gregory Goodman filed a qui tam complaint alleging that his employer, Arriva Medical LLC, and the company that acquired it, Alere Inc., improperly waived or forgave Medicare Part B patients’ copayment and deductible obligations, which the complaint characterized as a form of kickback that would give rise to FCA liability.
The complaint pleaded six counts under the FCA, with each count representing a different theory of liability encompassing numerous Medicare claims over time. It also pleaded claims for unjust enrichment under Tennessee common law. Goodman alleged that Arriva/Alere routinely billed for glucose meters that it knew were likely to be disallowed under Medicare because the program had already paid for a glucose meter for that patient in the last five years. The company would then write off most or all of the patient’s liability for the glucose meter when Medicare denied payment, resulting in another form of kickback with regard to the patient’s continued use of Arriva/Alere for other supplies.
During its investigation, the government received a number of extensions of the seal and the window for intervention. For the first few years, the government apparently had no knowledge of any connection between the activities it was investigating and Albin or Grapevine, who had not yet been named as defendants. However, in 2017, emails to and from Albin were produced by Arriva and Alere and the government issued a civil investigative demand to Albin. During his testimony, Albin admitted that while he had been a consultant for Arriva, he created a policy of not sending a bill to customers who owed less than $5, developed a policy of giving customers “courtesy adjustments” to their amounts owed, and personally directed employees to “write off” customer debt. Albin also explained in his testimony that he had performed his consulting work for Arriva through his company, Grapevine.
In 2019, the government filed a complaint in intervention, in which it named Albin and Grapevine as co-defendants with Arriva and Alere. The Government provided examples of Albin directing, overseeing, or being otherwise involved in or aware of the policy of writing off or declining to collect on patient liabilities.
Albin and Grapevine moved to dismiss, arguing that the government’s 2019 complaint did not allege any they participated in any misconduct after the fall of 2011, when Arriva was sold to Alere. As such, they argued that the claims were barred by the six-year statute of limitations. In the alternative, they argued that the government has failed to plead causes of action against them with sufficient particularity.
Albin and Grapevine argued that the government’s claim is barred under either provision of the statute of limitations. First, because the allegations date back to 2012, they argued that the six-year statute of limitations had expired before the government filed its complaint. They also argued that the government cannot rely on the extended statute of limitations, because the government had been investigating Arriva and Alere for many years before supposedly discovering Albin’s role in the companies’ policies. The defendants argued that absent an explanation of why it took so long for the government to implicate Albin, it would be unreasonable for the court not to consider the long delay between the misconduct and the identification of Albin’s role, especially given his allegedly central role.
In response, the government disagreed that the cutoff date for claims against Albin occurred in 2011 o 2012. The government alleged that Albin was the architect of the scheme, that he worked for Arriva as a consultant until December 2017, and that Arriva/Alere executed the scheme throughout that time. The specific communications pegging Albin as a participant merely dated back to 2011, and did not set a temporal boundary for the misconduct. The government also argued that it is entitled to the FCA’s extended statute of limitations because it could not reasonably have known about Albin’s or Grapevine’s involvement earlier than it did.
The court held that neither issue could be resolved on a motion to dismiss. Regarding the date range for which Albin could be held responsible for Arriva/Alere’s claims, the court noted the FCA also attaches liability for those who cause the submission of false claims. Nothing in the plain language of the statute precludes the possibility that an individual’s actions on one date might “cause” a false claim on a later date. Based on the complaint, the court found it plausible that Albin’s culpability extended to claims submitted well after 2012. Further, the government alleged a long-running scheme, and the court declined to use internal communications between Albin and Arriva to establish a time frame for the misconduct.
Similarly, at this stage of proceedings, the court declined to jump to any conclusions about the length of the government’s investigation or the timing of its discovery of Albin’s role. Although the government had an obligation to plead fraud with particularity and to plead claims that were not facially untimely, it was not required to plead every detail necessary to allow the court to adjudicate a statute of limitations affirmative defense.
Next, Albin and Goodman argued that the government failed to allege they violated the FCA, as the complaint failed to tie them to any particular false claims but, at most, to a broadly objectionable policy that led to the filing of allegedly false claims by the other defendants. Generally, they argued the complaint was an impermissible group pleading that dressed up internal corporate decisions as a false claim scheme.
However, the court disagreed, finding the government alleged that Albin was central to formulating and adopting the policy with regard to Medicare patients, which formed the core of the kickback scheme on which the allegations are based. Further, the policies at issue were not tangential to the alleged illegality. The government’s allegation that Albin created company policy is also an allegation that he caused violations of the AKS and the submission of false claims. Contrary to Albin’s assertion, the government’s case did not rely on a group pleading, but specifically identified Albin’s role. According to the court, once the defendants’ respective actions are set forth, there is nothing inherently wrong with using the same set of examples to support the allegations against each defendant.
The court also rejected the defendants’ assertion that the government failed to allege a conspiracy and that the government failed to cite particular language asserting the defendants intended to commit fraud. However, according to the court, what matters is not the specific language used, but the acts, communications, relationships, and agreements described. The government’s allegations were not defective simply because they were not more specifically shaped to mirror the language of conspiracy caselaw.
Next, the defendants challenged the unjust enrichment claims as untimely and meritless. First, Albin and Grapevine argued that the complaint did not plead a claim for unjust enrichment against them because it does not allege that they, as opposed to Arriva or Alere, actually received any payment from the Medicare program. In response, the government argued they could be held liable for unjust enrichment because they received part of the proceeds in the form of the payment of consulting fees paid to them by Arriva.
The court noted that a claim of unjust enrichment also must show that the defendants’ retention of funds was inequitable, such that the government had a reasonable expectation of repayment. In their response, the defendants argued the government failed to show that any ill-gotten gains ended up with Albin or Grapevine. However, the court noted they failed to cite any case stating any set level of formal connection is required to allow a claim of unjust enrichment to proceed.
Read in the light most favorable to the government, the court noted that Albin was paid as a consultant, for at least some of the time he worked with Arriva/Alere, specifically to increase its Medicare business through the kind of scheme at issue. The court reasoned that if the facts show that Albin and Grapevine were paid specifically for their work increasing Medicare payments, the government could have a case for unjust enrichment.
Next the court considered the defendants’ argument that the claim was untimely, generally using the same arguments it made to assert that the FCA claims were untimely. They argued that the government could rely only on dates for which it specifically alleged Albin had taken influential action, while the government argued the dates of the alleged conduct was only incidental evidence of the fraud itself, which it already asserted was ongoing. Based on its earlier reasoning, the court held that the issue could not be resolved on a motion to dismiss.
However, the court warned the government that it could not assume that the date range of the defendants’ liability for unjust enrichment will be the same as the date range for FCA claims. While the fraud on Medicare was ongoing, the court reasoned it was possible that Albin received a one-time payment for his consultant work putting the corporate policy in place. If that were the case, then his unjust enrichment concluded at the time of payment, even if the fraud continued.
