Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-03758/USCOURTS-azd-2_05-cv-03758-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 31:3729 False Claims Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States ex rel Joyce Roberts,

Barbara Jo Landau, Shirley Nyetrae, and

James Buie, 

Plaintiffs, 

vs.

Sunrise Senior Living, Inc., et al.,

Defendants. 

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No. CV 05-3758-PHX-MHM

ORDER

Currently pending before the Court are two motions to dismiss, filed by KRG Capital

Fund II, LP, KRG Capital Management LP, KRG Capital, LLC, KRG Co-Investment LLC

(“KRG”) (Dkt.# 103) and by Sunrise Senior Living and Trinity (Dkt.#104) respectively. The

United States has also filed a motion to intervene (Dkt.#118).

I. Factual Background

This case involves allegations that Sunrise, KRG, and Trinity billed Medicare for

hospice-related services in violation of the False Claims Act. Specifically, the relators (a

group of ex-employee nurses who had previously worked for Trinity) allege that Sunrise,

Trinity, and KRG (1) admitted patients to hospice care who did not meet the Medicare

requirements for hospice, (2) falsified and backdated patient medical records and certification

of hospice eligibility determinations, (3) permitted unlicensed persons to approve physician

prescriptions, and (4) provided financial incentives to induce hospice referrals. This order

Case 2:05-cv-03758-MHM Document 123 Filed 02/26/09 Page 1 of 4
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addresses the motion of the United States to intervene as well as two motions to dismiss filed

by various groups of defendants.

II. Motion to Intervene

The United States moves to intervene in this action that was originally brought by

Plaintiff-relators Joyce Roberts, Barbara Jo Landau, Shirley Nyetrae and James Buie

(“Relators”), individually and on behalf of the United States. (Dkt.#118) 

The United States has standing to seek leave to intervene “at any time and in any

appropriate court” to protect the public interest and protect the federal fisc from fraud. See

S&E Contractors, Inc., v. United States, 406 U.S. 1, 17 (1972). Moreover, the United States

is always the real party in interest in a qui tam action under the False Claims Act. See United

States ex rel. Stoner v. Santa Clara County Office of Education, 502 F.3d 1116, 1126 (9th

Cir. 2007) (under the False Claims Act, “the underlying claim of fraud always belongs to the

government”). Thus, even when the United States does not intervene at the outset of a qui

tam action, a district court may “permit the government to intervene at a later date upon a

showing of good cause.” 31 U.S.C. § 3730(c)(3). Good cause may include a showing of

changed circumstances, the discovery of additional information, or a variety of other factors.

United States ex rel. Sequoia Orange Co. V. Sunland Packing, 912 F. Supp. 1325, 1348

(E.D. Cal. 1995); United States ex rel. Rockwell Int’l Corp., 950 F. Supp. 1046, 1049 (D.

Colo. 1996). 

Here, the United States initially declined to intervene in June 2007 because it had not

completed its investigation despite the extension of the intervention deadline. (Dkt.#16)

However, its motion to intervene is unopposed by the relators or by the Defendants.

(Dkt.#118 at 1; #121 at 2) The United States explains that it has discovered additional

evidence since its initial decision not to intervene in June 2007. Specifically, it identified an

expert medical review of hospice services that shows that “Medicare was billed for Trinity

patients who were inappropriately admitted to and re-certified for hospice treatment” and the

“known loss to Medicare is substantial.” (Dkt.#118 at 6) None of the Defendants have filed

an answer, and no formal discovery has occurred. Thus, granting this request would not

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unduly prejudice or delay this proceeding or the parties. See United States ex rel. Hall v.

Schwartzman, 887 F. Supp. 60, 62 (E.D.N.Y. 1995) (allowing intervention by the United

States in part because it “would not unduly prejudice defendants” since the action was in its

“initial stages, and the parties [had] only recently commenced discovery”). 

Thus, because good cause has been shown, the motion of the United States to

intervene is granted.

III. Motions to Dismiss

Defendants filed two motions to dismiss that raise the following three issues: (1)

jurisdiction, (2) Rule 9(b)’s particularity requirements, and (3) liability of Trinity’s owners.

However, given that the government is now allowed to intervene, and that the government’s

complaint may change the claims that are currently asserted, these motions are now moot.

While the court will still need to determine whether it has subject matter jurisdiction over the

Relators, it would not be prudent to base such an assessment on a complaint that may

ultimately prove irrelevant to this litigation. Only after the government has decided which

claims it will purse (and the Relators have framed their own claims if any in light of the

government’s complaint) will it make sense for this Court to evaluate whether the Relators

are original sources for any of the newly-framed claims. It may well be that many of the

same issues are present; however, this Court declines to decide this question when the

government’s complaint is not yet before it. See Rockwell International Corp. v. United

States, 549 U.S. 45, 473 (2007) (explaining that courts should consider the pleadings as

amended by the government after intervention in making original source determinations).

 Accordingly, 

IT IS HEREBY ORDERED GRANTING the United States’ Motion to Intervene

against Trinity Hospice, Inc. (Dkt.#118)

IT IS FURTHER ORDERED that the United States shall file a complaint in

intervention within thirty (30) days of the date of this order, and the Relators shall file any

amended complaint in light of the United States’ complaint within twenty (20) days of the

filing of the United States' complaint. Any responsive pleading to the United States’

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complaint and/or the Relators' complaint shall be due thirty (30) days after the filing of the

United States' or Relators’ complaint, whichever date is later. A Rule 16 scheduling

conference will follow.

In light of this Order providing for the filing of the United States' complaint and a

possible further Relators' amended complaint, IT IS FURTHER ORDERED DENYING

the Defendants' Motions to Dismiss as MOOT. (Dkts. #103, 104). If Defendants' wish to

reurge their motions to dismiss after the filing of such complaint(s), they shall proceed upon

the time table set forth above. 

DATED this 24th day of February, 2009.

Case 2:05-cv-03758-MHM Document 123 Filed 02/26/09 Page 4 of 4