United States District Court, M.D. Louisiana
UNITED STATES OF AMERICA ex rel. ALBERT BRUNO AND ALEX STRAHAN
BRAD SCHAEFFER, ET AL.
RULING AND ORDER
A. JACKSON, CHIEF JUDGE
the Court are the Motions to
Dismiss (Doc. 35 and 39)
filed by Defendants Alpha Labs, L.L.C., Beta Labs, L.L.C,
Gamma Labs, L.L.C., MedComp Laboratory Sciences, L.L.C.,
MedComp Sciences, L.L.C., Brad Schaeffer, Sigma Labs, L.L.C.,
Javid Janani, Lisa Janani, and Quantum Laboratories, L.L.C.
Plaintiff-Relators Albert Bruno and Alex Strahan filed
oppositions, (Docs. 45 and 48), and Defendants filed replies.
(Docs. 51 and 52). For the following reasons, the Motions
to Dismiss (Doc. 35 and 39)
are GRANTED IN PART and DENIED IN
two former employees of a large medical laboratory called
MedComp Laboratory Sciences, L.L.C. and MedComp Sciences,
L.L.C ("MedComp") allege that Defendants conspired
to defraud the United States out of millions of dollars
arising from fraudulent Medicare and Medicaid claims. (Doc. 1
at ¶ 2). Relators allege that Defendants offered
physicians ownership interests in labs called Physician Owned
Labs ("POL"), which existed in name only, and they
received payments from the labs in proportion to the number
of urine specimens the physicians sent to a different lab
called Quantum for urine testing covered by private
insurance. Id. at ¶ 3. Relators also allege
that the scheme incentivized the same doctors to send their
urine specimens covered by Medicare and Medicaid to another
lab called MedComp. Id. at ¶ 109.
allege that the scheme began in early 2013, when Brad
Schaeffer, the owner of MedComp, called a companywide meeting
for Quantum and MedComp to present the POL model.
Id. at ¶ 23, 60. Schaeffer allegedly instructed
MedComp's sales representatives to promote the POL model
to doctors to induce them to send urine specimens covered by
private insurance to Quantum and urine specimens covered by
Medicare and Medicaid to MedComp. Id. at ¶ 60.
Relators allege that Brad Schaeffer, Lisa Janani, and Javid
Janani formed entities called Alpha, Beta, Gamma, and Sigma
as POLs. Id. at ¶ 62. Relators, however, allege
that these labs existed in name only and did not physically
exist, and were not licensed labs. Id. at ¶62.
allege that when participating physicians referred specimens
to the POLs, the POLs would bill Quantum for urine tests, and
then Quantum would pay the POLs for the tests. Id.
at ¶ 74. The revenue paid to the physicians was
proportionate to the amount of specimens they sent to
Quantum. Id. MedComp allegedly only allowed
physicians who were willing to send specimens to Quantum to
buy shares in the POLs. Id. at ¶ 77. Relators
also allege that Schaeffer instructed MedComp's sales
representatives to encourage the physicians to send their
Medicare and Medicaid specimens to MedComp because Quantum
and MedComp, through the POLs, were providing the physicians
with a financial incentive to do so. Id. at ¶
77. As of December of 2014, all physicians who sent specimens
to Quantum for private insurance reimbursements also sent
specimens covered by Medicare and Medcaid to MedComp.
Id. at ¶ 79.
early 2014, Relator Albert Bruno, a Medcomp sales manager,
allegedly presented a subscription agreement for a POL to a
physician, but after the physician's attorney concluded
that the POL model was not legal, the physician did not
invest in the POL. Id. at ¶ 93. Relator Bruno
then raised the legality of the POL program to Brad
Schaeffer, an owner of MedComp because Bruno was concerned
the program violated statues prohibiting self-referral
schemes. Id. at ¶ 94. Rather than responding to
Bruno's concerns, Schaeffer allegedly labeled Bruno a
"trouble maker" who needed to be controlled.
Id. at ¶ 95. As of December 2014, about
sixty-one doctors in seven states had ownership interests in
the POLs. Id. ¶ 107. Relators also allege that
the POL model encouraged doctors to act based on financial
gain and not patients' best interest. Id. at
total, Relators claim that between April 2013 and November
2014, over 15, 000 urine specimens were sent to Quantum from
doctors participating in the POL scheme. Id. at
¶ 118. According to Relators, between April 2012 and
January 2016, private insurance companies paid Quantum $12
million for urine tests and from April 2013 through December
2014 MedComp has been paid $46 million. Id. at
¶ 119-120. Relators further claim that between April
2013 and January 2016, Medicare and Medicaid paid MedComp $18
million for specimens originating from doctors participating
in the POL scheme. Id. at ¶ 121.
claim that Defendants violated the False Claims Act
("FCA"), 31 U.S.C. §§ 3729(a)(1)(A)-(C)
by presenting false claims to the United States, making false
records, and conspiring to violate the FCA. Id. at
¶ 122-140. Relators also claim that Defendants violated
the Anti-Kickback Statute, 42 U.S.C. § l32Oa-7b, the
Stark Law, 42 U.S.C. § l395nn, and the Louisiana
Anti-Kickback Statute, La. R.S. § 37:1745. Id.
The United States declined to intervene. (Doc. 53).
survive a 12(b)(6) motion to dismiss, the plaintiff must
plead facts sufficient to "state a claim to relief that
is plausible on its face." Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell All Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). Additionally,
motions to dismiss under Rule 12(b)(6) test the sufficiency
of the complaint against the backdrop set forth in Rule 8,
which requires "a short and plain statement of the claim
showing that the pleader is entitled to relief." Rule
8(a)(2). "Determining whether a complaint states a
plausible claim for relief [is] ... a context-specific task
that requires the reviewing court to draw on its judicial
experience and common sense." Ashcroft, 556
U.S. at 679.
"facial plausibility" exists "when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. at 678 (citing
Twombly, 550 U.S. at 556). Hence, the complaint need
not set out "detailed factual allegations, " but
something "more than labels and conclusions, and a
formulaic recitation of the elements of a cause of
action" is required. Twornbly, 550 U.S. at 555.
When conducting its inquiry, the Court "accepts all
well-pleaded facts as true and views those facts in the light
most favorable to the plaintiff." Bustos v. Martini
Club Inc., 599 F.3d 458, 461 (5th Cir. 2010) (quotation
brought under the FCA are fraud claims subject to the
heightened pleading requirements of Federal Rule of Civil
Procedure 9(b). U.S. ex rel. Longhi u. Lithium Power
Techs, Inc., 575 F.3d 458, 468 (5th Cir. 2009). Rule
9(b) requires, "in alleging fraud or mistake, a party
must state with particularity the circumstances constituting
fraud or mistake."
Presentment of False Claims under §
claim that Defendants made false Medicare and Medicaid
claims. (Doc. 1 at ¶ 124). The FCA imposes civil
liability and treble damages on any person who
"knowingly presents, or causes to be presented, a false
or fraudulent claim for payment or approval" to the
United States government. 31 U.S.C. § 3729(a)(1)(A);
see also United States ex rel. Steury v. Cardinal Health,
Inc., 625 F.3d 262, 267 (5th Cir. 2010). There are
therefore three basic elements of an FCA violation: (1) the
claimant presented or caused to be presented a claim for
payment to the United States; (2) the claim was false or
fraudulent; and (3) the claimant knew the claim was false or
Presented or Caused a Claim to be Presented
the first element of an FCA claim, a relator must allege that
a defendant presented or caused a claim to be presented to
the United States. 31 U.S.C. § 3729(a)(1)(A). An
"FCA claim can be either legally false or factually
false." United States ex rel. Rascher v. Omnicare,
Inc.,663 Fed.Appx. 368, 373 (5th Cir. 2016). "A
claim is factually false when the information provided to the
government for reimbursement is inaccurate."
Id. For example, the traditional false claim occurs
when a doctor bills Medicare or Medicaid for services that
were not actually performed. A claim is legally false when
"a claimant . . . falsely certifies compliance with ...