The district court denied the defendants’ motion to dismiss a qui tam case for improper venue, finding that the plaintiffs had sufficiently demonstrated the defendants conducted business in the district where the case was filed, even though the entities were organized under the laws of Delaware and held headquarters in another state. The court also granted the plaintiffs’ motion to amend their complaint to include the affiliated firms the defendants identified as the actual entities conducting business in the district.
Defendants Team Health Holdings Inc., Team Finance LLC, Team Health Inc., and AmeriTeam Services LLC filed a motion to dismiss the plaintiff’s first amended complaint based on improper venue. Alternatively, the defendants moved the court to transfer the case to a district closer to their corporate headquarters.
Caleb Hernandez and Jason Whaley filed a qui tam suit alleging the defendants violated the False Claims Act by fraudulently overbilling Medicare and Medicaid for hospital emergency room management services. The plaintiffs brought their suit based on information learned during their employment in emergency departments managed by the defendants.
The defendants moved to dismiss the complaint for improper venue, arguing that their corporate entities were organized under the laws of Delaware and held a principal place of business in Tennessee. They also argued that Team Health Holdings and Team Finance are holding companies and conduct no business activities, and that none of the defendants have any contracts for the provision of emergency department clinician staffing or other services with any healthcare facilities in the district. Instead, they argued that non-party firms provided the staffing and management services and submit billing.
In response, the plaintiffs noted that TeamHealth has transacted business with hospital emergency rooms in Texas and that it submitted false claims in relation to those services. The plaintiffs alleged the other defendants were affiliated businesses that were aware of and participated in the scheme. The relators argued they had observed the same fraudulent billing practices in multiple ERs managed by TeamHealth in different areas of the country and that the billing policies are communicated nationwide.
The relators argued that FCA liability attaches to all who participated in the alleged scheme without regard to who actually submitted the claim forms to the government for reimbursement. The relators argued their allegations sufficiently demonstrated that the defendants caused healthcare providers to falsify medical records both in that district and nationwide and that those records were used to fraudulently bill the government. Because the defendants do business in the district and because acts prohibited by the FCA occurred in the district, the relators argued the venue was properly chosen.
The court sided with the defendants, finding that AmeriTeam transacted business in the district, including providing administrative support services and setting compliance polices. The court also found that TeamHealth recruited physicians in the area using a website maintained by AmeriTeam. Further, the court agreed that TeamHealth sets policies that are implemented nationwide, including in this district. The court also found that an AmeriTeam executive is also a manager of one of the non-party entities that holds a management contract with a local hospital.
The court also allowed the plaintiffs to amend their complaint to include the non-party entities identified by the defendants. The court also declined the defendants’ request to transfer the matter to a court in Tennessee.
