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United States Ex Rel. Donegan v. Anesthesia Associates of Kansas City, Pc

United States District Court, W.D. Missouri, Western Division

July 28, 2014

UNITED STATES OF AMERICA ex rel., JOHN TIMOTHY DONEGAN, Plaintiffs and Relator,
v.
ANESTHESIA ASSOCIATES OF KANSAS CITY, PC, Defendant.

ORDER GRANTING IN PART MOTION TO DISMISS

GREG KAYS, Chief District Judge.

This is a qui tam lawsuit in which Relator John Donegan ("Donegan" or "Relator") claims Defendant Anesthesia Associates of Kansas City, P.C., ("AAKC" or "Defendant") violated the False Claims Act ("FCA"), 31 U.S.C. ยงยง 3729-3733, by submitting fraudulent claims for reimbursement and terminating him in retaliation for his efforts to stop it from presenting false claims.

Now before the Court is Defendant's motion to dismiss the amended complaint (Doc. 22) pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). Defendant argues the Complaint fails to plead the FCA fraud claims in sufficient detail and fails to plead all the required elements of an FCA retaliation claim. Finding that the Complaint alleges the who, what, where, when, and how of the alleged fraud with particularity and provides the requisite representative examples, but fails to allege the second element of a retaliation claim, the motion is GRANTED IN PART. Count III is dismissed without prejudice.

Standard of Review

A complaint may be dismissed if it fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). To avoid dismissal, the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although it need not make detailed factual allegations, it must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Benton v. Merrill Lynch & Co., 524 F.3d 866, 870 (8th Cir. 2008).

The complaint must also state a claim for relief that is plausible. Iqbal, 556 U.S. at 678. A claim is plausible when "the court may draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The plaintiff need not demonstrate the claim is probable, only that it is more than just possible. Id. In reviewing the complaint, the court accepts as true its factual allegations and draws all reasonable inferences in the plaintiff's favor. Drobnak v. Andersen Corp., 561 F.3d 778, 781 (8th Cir. 2009).

Additionally, a violation of the FCA must be pled with particularity pursuant to Rule 9(b). Id. at 783. Conclusory allegations that the defendant's conduct was fraudulent and deceptive are insufficient. Id. "[T]he complaint must plead the who, what, where, when, and how of the alleged fraud" so that the defendant can respond to the allegations "specifically and quickly." Id. Where the relator claims systemic fraud in violation of the FCA, he or she need not "allege specific details of every alleged fraud claim, " but "must provide some representative examples of [the] alleged fraudulent conduct, specifying the time, place, and content of [the] acts and the identity of the actors." United States ex rel. Joshi v. St. Luke's Hosp., Inc., 441 F.3d 552, 557 (8th Cir. 2006) (emphasis in original).

Factual and Procedural Background

Drawing all reasonable inferences in Relator Donegan's favor, the Court finds the facts to be as follows.

The Billing Guide for Medicare Part B anesthesia billing states that anesthesia is given under "medical direction" if, among other things, the doctor prescribes the anesthesia plan, personally participates in the most demanding parts of the anesthesia plan (including induction and emergence, if applicable), and monitors the course of anesthesia administration at frequent intervals.

Relator worked for Defendant at its Menorah Medical Center location as a Certified Registered Nurse Anesthetist ("CRNA") from 2006 to 2012. During training, Relator's superiors told him and other CRNAs that it was AAKC's corporate policy to always check the "medical direction" box on Defendant's billing forms, whether or not the physician anesthesiologist rendered "medical direction" services. Relator personally observed eleven named anesthesiologists at the Menorah facility always check, or cause to be checked, the "medical direction" box on these forms. They checked this box even though they did not prescribe the anesthetic and were not present at emergence from general anesthesia.

Defendant's billing office subsequently relied on these billing forms to prepare and submit payment requests. As a result, Defendant submitted false claim to Medicare and other Government healthcare programs for physician "medical direction" of anesthesia services. Defendant's other facilities in the greater Kansas City area used these same forms, and it was corporate policy to always check the medical direction box. Since this was corporate policy, the Court infers the same practice was occurring at Defendant's other facilities in the greater Kansas City area.

Eventually, Relator came to understand that this billing practice was illegal. One morning in late December 2011, Relator told the physician anesthesiologist he was working with that day that he would no longer mark the "medical direction" box on the claim form. Shortly thereafter, another anesthesiologist sent Relator home for the day. That evening, another anesthesiologist telephoned Relator at home and told him that he should not return to work until notified otherwise.

On approximately January 3, 2012, Relator met with Defendant's Chief Operating Officer ("COO"). In their meeting, Relator told the COO he would no longer check the "medical direction" box on the billing form, but Relator did not explain why. The COO did not request an explanation, but communicated to ...


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