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IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF FLORIDA

TALLAHASSEE DIVISION

UNITED STATES OF AMERICA,

etc.,

Plaintiff,

v. CASE NO. 4:02cv389-RH/WCS

CAPITAL GROUP HEALTH SERVICES

OF FLORIDA, INC., etc., et al.,

Defendants.

________________________________________/

ORDER DISMISSING FIRST AMENDED COMPLAINT IN PART

This is a qui tam action alleging that a hospital, health maintenance

organization, and psychiatrist entered into a scheme for submission of false claims

to the state and federal governments for services allegedly provided to medicare

and medicaid beneficiaries. Defendants have moved to dismiss. I dismiss the

action as against the health maintenance organization for failure to allege with

adequate specificity that it participated in any fraud. I dismiss the action as against

the hospital on two grounds: first, with respect to claims for hospital services, for

failure to allege fraud with adequate specificity; and second, with respect to claims

for services provided by physicians employed by the hospital, for failure to allege

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Case No: 4:02cv389-RH/WCS

adequately a basis for the relator’s asserted knowledge. I deny the motion to

dismiss the claims against the psychiatrist. I also establish a schedule that will

allow early resolution of the psychiatrist’s assertion that the relator’s allegations

against him are based wholly on conjecture, not knowledge of a kind sufficient to

support a qui tam action.

I

The relator, Dominica Brodsky, filed this action under the False Claims Act,

31 U.S.C. §3729 et seq., and its Florida counterpart, §68.082, Florida Statutes. 

After repeated extensions of its 180-day deadline, the government elected not to

intervene. Ms. Brodsky effected service of process, and defendants moved to

dismiss for failure to allege fraud with the specificity required by Federal Rule of

Civil Procedure 9(b). I granted the motion but afforded Ms. Brodsky leave to

amend. Ms. Brodsky filed her first amended complaint, and defendants again

moved to dismiss.

In the amended complaint, Ms. Brodsky alleges that defendants entered a

conspiracy under which false claims were submitted to the state and federal

governments for services allegedly provided to medicare and medicaid

beneficiaries. While the amended complaint is not a model of clarity, it appears to

allege false claims that may be divided into four categories: first, claims by the

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1

 The amended complaint also names as a defendant Psych. Management

Services, Inc., a corporation that Dr. Munasifi allegedly owned and controlled. 

The amended complaint apparently asserts the same claims against Psych.

Management as against Dr. Munasifi. For convenience, this order refers to “Dr.

Munasifi” to mean both Dr. Munasifi and Psych. Management; the same analysis

applies both to the individual and to his corporation. 

2

 Medicare and medicaid payments to a physician are based on the services

provided. The services are categorized by “current procedural terminology” or

“CPT” codes. For psychiatric consultations (as well as various other types of

service), time is a factor; longer consultations (for example, in the range of 45 to

50 minutes, for one code) yield higher payments than shorter consultations (for

example, in the range of 20 to 30 minutes, for a lower code). Ms. Brodsky alleges

that Dr. Munasifi routinely submitted claims for longer consultations than he

performed, that is, that he “upcoded” his claims.

Case No: 4:02cv389-RH/WCS

defendant psychiatrist, Dr. Faisal Munasifi,1 for psychiatric services that either

were not rendered at all (“phantom claims”) or that were exaggerated for billing

purposes (“upcoded claims”);2

 second, claims by Dr. Munasifi that were false

because he represented that he had complied with applicable statutes when in fact

he violated the “anti-kickback” statute by compensating the defendant health

maintenance organization, Capital Group Health Services of Florida, Inc. d/b/a

Capital Health Plan (“CHP”), for referring the patients; third, claims for services

rendered by psychiatrists employed by the defendant hospital, Tallahassee

Memorial Healthcare, Inc. (“TMH”), for which the compliance representations

were false because TMH compensated CHP and Dr. Munasifi for referring the

patients, thus violating the anti-kickback statute; and fourth, claims by TMH for

hospital services for which the compliance representations were false both because

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Case No: 4:02cv389-RH/WCS

TMH compensated CHP and Dr. Munasifi, thus violating the anti-kickback statute,

and because TMH maintained a “financial relationship” with Dr. Munasifi, thus

violating the “self-referral” statute. 

Attached to the amended complaint are lists identifying specific transactions

in the first three of these categories. Thus, for example, exhibit 6 to the amended

complaint lists the precise date on which Dr. Munasifi submitted a bill for a

specific procedure that either was not in fact performed or for which the bill was

exaggerated. 

Ms. Brodsky alleges she knows of these false representations because she

worked as a mental health counselor at TMH in “the early 1990s,” Amended

Compl. ¶19, and “later” worked in an office building where Dr. Munasifi and the

TMH-employed psychiatrists maintained their offices. There, Ms. Brodsky says,

she became aware of Dr. Munasifi’s hours and related patterns of work. Ms.

Brodsky says she also observed documents supporting her allegations in a common

area of the building used by support staff to stage documents until a decision was

made regarding their destruction or other disposition. Amended Compl. ¶20; see

also id. ¶89. Finally, Ms. Brodsky also identifies as a source of some of her

information a response by TMH to a discovery request in a different lawsuit. See

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3

 The discovery response cited by Ms. Brodsky was made after the filing of

the case at bar but while the government was deciding whether to intervene. At

that time, this action remained under seal, TMH had not been served, and no

discovery had been undertaken. The discovery response thus was not made in this

lawsuit. 

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id. at 30 n.1.3

II

The Eleventh Circuit affirmed dismissal of a qui tam action similar to the

case at bar in United States ex rel. Clausen v. Laboratory Corp. of America, 290

F.3d 1301 (11th Cir. 2002). The court’s holding was that Rule 9(b) applies to qui

tam actions and that the complaint there was not sufficiently specific, in part

because it:

“d[id] not identify any specific claims that were submitted to the

United States or identify the dates on which those claims were

presented to the government” and “relie[d] exclusively on conclusory

allegations of fraudulent billing.”

Clausen, 290 F.3d at 1311 (quoting district court opinion dismissing complaint and

stating, “We agree with these conclusions.”). The court also said:

The particularity rule serves an important purpose in fraud actions by

alerting defendants to the precise misconduct with which they are

charged and protecting defendants against spurious charges of

immoral and fraudulent behavior. The application of Rule 9(b),

however, must not abrogate the concept of notice pleading. Rule 9(b)

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is satisfied if the complaint sets forth (1) precisely what statements

were made in what documents or oral representations or what

omissions were made, and (2) the time and place of each such

statement and the person responsible for making (or, in the case of

omissions, not making) same, and (3) the content of such statements

and the manner in which they misled the plaintiff, and (4) what the

defendants obtained as a consequences of the fraud.

Clausen, 290 F.3d at 1310, quoting Zemba v. Cascade Int’l, Inc., 256 F.3d 1194,

1202 (11th Cir. 2001). Finally, the court said that speculation about what likely

happened is not enough; instead, 

if Rule 9(b) is to be adhered to, some indicia of reliability must be

given in the complaint to support the allegation of an actual false

claim for payment being made to the Government.

Clausen, 290 F.3d at 1311 (emphasis added).

These standards, and the guidance derived from the manner in which they

were applied in Clausen, provide the starting point for the analysis in the case at

bar. I address in turn each of the four categories of claims at issue.

A

The first category of allegedly false claims at issue consists of “phantom”

and “upcoded” claims by Dr. Munasifi. The amended complaint alleges that in

some instances Dr. Munasifi submitted medicare and medicaid bills for services he

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simply did not perform. The amended complaint alleges that in other instances,

Dr. Munasifi billed the higher rate payable for longer psychiatric consultations

than he actually performed. Billing for these phantom or upcoded services in this

manner obviously is fraudulent. Dr. Munasifi does not contend otherwise. 

Dr. Munasifi says, however, that the amended complaint does not allege this

type of fraud with sufficient particularity. I disagree. The amended complaint

alleges, for example, that Dr. Munasifi billed a specific amount ($247.30) for a

specific procedure (“[p]rolonged physician services with direct (face-to-face)

patient contact in inpatient setting”) on a specific date (February 21, 2000), and

that he did not in fact perform that procedure as claimed. See Amended Compl.,

ex. 6, at page 1, entry 5. This is specificity enough. 

To be sure, the amended complaint does not include this patient’s name. But

the reference is obviously to a specific patient whose name, if not already known to

Ms. Brodsky or Dr. Munasifi, presumably will be subject to easy determination. 

And gratuitously including the name of a psychiatric patient in a publicly available

complaint would be inappropriate. In light of the other specific information

provided for this transaction, the absence of the name does not violate Rule 9(b).

The only other specificity lacking is whether Dr. Munasifi saw the patient on

this date at all, that is, whether this was a phantom claim or merely an upcoded

claim. This is, at bottom, a difference not of kind but of degree; the question is, in

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effect, whether Dr. Munasifi defrauded the payer out of the whole $247.30, or just

part of it. Nothing in Clausen suggests this level of detail is required. 

Finally, the amended complaint provides at least “some indicia of reliability”

to support this claim. Ms. Brodsky says she has personal knowledge of the length

of Dr. Munasifi’s workday from having worked in the same building with him, and

she says she heard him brag about not working beyond 5:00 in the afternoon. Ms.

Brodsky gives precise figures, apparently based on available documentation, that

on specific dates he submitted claims for more hours than he ever actually worked. 

This is hardly conclusive proof, but it is enough to survive a motion to dismiss. 

It is true, of course, that even with this level of specificity and this

explanation of Ms. Brodsky’s knowledge, these allegations are not much different

from those in Clausen. They are, however, at least somewhat different; there is a

degree of specificity here that in Clausen was lacking. My conclusion is that

Clausen is the high water mark for the specificity requirement for qui tam

complaints of this type, and that the decision ought not be extended further to the

somewhat different circumstances of the case at bar.

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4

 The statute makes it a felony knowingly and willfully to solicit, receive, or

offer to pay “any remuneration (including any kickback, bribe, or rebate) directly

or indirectly, overtly or covertly, in cash or in kind,” in exchange for referring a

person for “any item or service for which payment may be made in whole or in part

under a Federal health care program.” 42 U.S.C. §1320a-7b(b)(1) & (2).

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B

The next category of allegedly false claims at issue consists of all claims by

Dr. Munasifi for services rendered to members of the defendant health

maintenance organization, CHP. The amended complaint alleges that these claims

were accompanied by false representations of compliance with the so-called “antikickback” provision, that is, the statutory prohibition on paying or soliciting any

“remuneration” in exchange for the referral of medicare or medicaid patients. See

42 U.S.C. §1320a-7b(b)(1) & (2).4

 The amended complaint alleges that Dr.

Munasifi compensated CHP for referring patients to him.

The only manner in which the amended complaint alleges that Dr. Munasifi 

compensated CHP, however, is by reducing the costs CHP incurred for treatment

of its members. The amended complaint says Dr. Munasifi did this by

hospitalizing fewer patients. The amended complaint hints that this was

inappropriate, that is, that more patients should and would have been hospitalized,

but for Dr. Munasifi’s nefarious scheme to profit CHP. 

This is not, however, “remuneration” of a type prohibited by the antiCase 4:02-cv-00389-RH-WCS Document 90 Filed 06/07/05 Page 9 of 19
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Case No: 4:02cv389-RH/WCS

kickback provision. To the contrary, a health maintenance organization properly

can and indeed should strive to reduce excessive utilization of medical services. 

An HMO may contract with physicians it believes will contribute to that goal. The

key, of course, is to cut excessive services while continuing to provide appropriate

ones. If an HMO or one of its contracted physicians goes too far, there are

available remedies—but one of them is not a qui tam action asserting that by

limiting services, the physician somehow paid the HMO an illegal kickback. 

In any event, Ms. Brodsky does not allege with particularity any basis for

believing that Dr. Munasifi “remunerated” CHP in this manner. She apparently

asserts CHP members were hospitalized for psychiatric treatment less often than

other patients. But she gives no specifics. She has identified not a single occasion

when a patient was not hospitalized but should have been. She alleges no

particularized basis for believing the lower hospitalization rate for CHP

patients—if indeed there was one—meant CHP patients were underutilizing

hospital services, rather than that other patients were over-utilizing them. The

assertion that Dr. Munasifi committed fraud by representing that he had complied

with anti-kickback requirements, despite having “remunerated” CHP in this

manner, is precisely the kind of generalized, unsupported allegation that Rule 9(b)

targets. To the extent based on this theory, the amended complaint will be

dismissed.

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C

The third category of allegedly false claims consists of claims for services

rendered by the psychiatrists employed by TMH. The amended complaint alleges

that these claims, like those in the second category, were accompanied by false

representations of compliance with the governing statutes. The amended

complaint alleges the compliance representations were false in two respects. 

First, the amended complaint alleges that TMH compensated CHP for

referring these patients, thus violating the anti-kickback provision. The manner in

which TMH allegedly compensated CHP was by joining the conspiracy under

which fewer CHP members were hospitalized. In essence, this is an allegation that

TMH compensated CHP by not charging CHP for hospital services that TMH did

not provide. This is not “remuneration” within the meaning of the anti-kickback

statute. Nor, in any event, does the amended complaint allege with sufficient

particularity the facts purportedly rendering TMH’s claims fraudulent in this

respect. 

Second, the amended complaint alleges TMH compensated Dr. Munasifi for

referring patients to the TMH-employed psychiatrists. The allegation is that the

compensation took two forms: payment of consulting fees for work that Dr.

Munasifi did not in fact perform; and payment of above-market rent for space that

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5

 The amended complaint also alleges that, because of these payments, these

referrals violated the self-referral statute, 42 U.S.C. §1395nn, as discussed in

section II-D below. In response to the motions to dismiss, however, Ms. Brodsky

has acknowledged that the self-referral provision does not apply to referrals of this

type. See 42 U.S.C. §1395nn(h)(6) (defining “designated health services” covered

by the self-referral law not to include physician office visits). Ms. Brodsky now

says, though, that the TMH-employed physicians also provided ancillary services,

such as blood work, for at least some of the referred patients, and that, to this

extent, the referrals violated the self-referral statute. But identifying a broad class

of claims, and saying that some unspecified transactions within the group must

have been fraudulent because of violations of the self-referral provision, falls far

short of the specificity required by Rule 9(b). For present purposes, however, this

does not matter; the ruling on the motion to dismiss would be the same whether the

transactions were alleged to violate both the anti-kickback and self-referral

statutes, or just the anti-kickback provisions.

6

 Exhibits to the amended complaint provide the same detail for the

transactions at issue in this section as was provided for the transactions at issue in

section II-A above. For the reasons set forth there, I conclude that this is sufficient

particularity to comport with Rule 9(b).

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Dr. Munasifi owned and in turn leased to TMH for the offices occupied by the

TMH-employed psychiatrists. The amended complaint alleges that the consulting

fees and rent were compensation for Dr. Munasifi’s referral of these patients to the

TMH-employed psychiatrists, thus violating the anti-kickback provisions.5

 I

conclude that this is an adequate allegation of fraud.6

What is lacking, however, is any allegation of a basis for Ms. Brodsky’s

knowledge. She says she worked at TMH in the early 1990s, later worked in the

building where Dr. Munasifi and the TMH-employed physicians had offices, and

saw papers in a staging area in that building. None of that explains how she could

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7

 In addition, it is unclear whether the discovery responses would provide a

basis for this action even if they included a factual basis for the allegations at issue

(which they apparently did not). See 31 U.S.C. §3730(e)(4)(A) (barring qui tam

action “based upon the public disclosure of allegations or transactions in a

criminal, civil, or administrative hearing . . . unless the action is brought by the

Attorney General or the person bringing the action is an original source of the

information”) (emphasis added).

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know Dr. Munasifi was paid a consulting fee he did not earn or that he charged

above-market rent. Ms. Brodsky makes no claim to have seen particular

documents or heard conversations supporting these allegations. And although Ms.

Brodsky cites discovery responses in a different lawsuit, she makes no allegation

that those responses support the assertion that Dr. Munasifi charged for consulting

services he did not perform or charged above-market rent.7

 

In short, if, as the Eleventh Circuit has said, “some indicia of reliability must

be given in the complaint,” Clausen, 290 F.3d at 1311, then Ms. Brodsky’s

amended complaint is deficient. I conclude that to the extent directed to this

category of false claims, the amended complaint must be dismissed.

D

The final category of allegedly false claims consists of claims by TMH for

hospital services. The amended complaint asserts that these claims were false

because TMH represented it had complied with the governing statutes, when in

fact it compensated CHP and Dr. Munasifi for referring the patients, thus violating

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the anti-kickback statute, and TMH maintained a “financial relationship” with Dr.

Munasifi, in violation of the self-referral statute. 

For the reasons discussed is section II-C above, the amended complaint

adequately alleges that TMH compensated Dr. Munasifi for referring patients, both

by paying consulting fees that were not earned and by paying above-market rent. 

The amended complaint also adequately alleges a violation of the selfreferral statute, under which a physician may not refer a patient to an entity

(including a hospital) with which the physician has a “financial relationship.” See

42 U.S.C. §1395nn. The statute defines a “financial relationship” to include,

among other things, above-market consulting fees or rental payments that are either

above-market or unsupported by a written lease. See 42 U.S.C. §1395nn(a)(2)

(defining “financial relationship” to include a “compensation arrangement” as

defined in subsection (h)(1)); 42 U.S.C. §1395nn(h)(1)(A) (defining

“compensation arrangement” to include any arrangement involving

“remuneration”); 42 U.S.C. §1395nn(h)(1)(B) (defining “remuneration” to include

“any remuneration, directly or indirectly, in cash or in kind”); 42 U.S.C.

§1395nn(e)(3)(A)(v) (providing exception for fees paid to physicians for services

rendered, subject to specified conditions, including that fees not exceed fair market

value of services); 42 U.S.C. §1395nn(e)(1)(A) (providing exception for lease

payments, subject to specified conditions, including that lease is in writing and rent

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8

 Dismissal is appropriate for another reason as well. For the reasons

discussed in section II-C above, the amended complaint fails to allege an adequate

basis for Ms. Brodsky’s knowledge that Dr. Munasifi charged for consulting

services he did not provide, charged above-market rent, or had no written lease

covering the space at issue.

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is consistent with fair market value). The amended complaint alleges that the

consulting fees paid to Dr. Munasifi exceeded fair market value (services not in

fact rendered obviously have no market value), that the office rent exceeded fair

market value, and that Dr. Munasifi and TMH did not have a written lease covering

all of the space occupied by the TMH-employed psychiatrists.

The amended complaint nonetheless fails to allege fraud with respect to

these claims with sufficient particularity. For claims in this category, the amended

complaint sets forth no specifics at all—not, for example, the date, amount, or

basis of a single claim. The amended complaint thus provides, for this category of

claims, much less information than was provided in Clausen. To the extent based

on this category of claims, therefore, the amended complaint must be dismissed.8

III

The result of these rulings is that the amended complaint survives only with

respect to Dr. Munasifi’s phantom or upcoded claims. Although the amended

complaint alleges a conspiracy among TMH, CHP, and Dr. Munasifi, it does not

allege with the specificity required by Rule 9(b) any basis for the assertion that

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9

 The basis of the ruling in this section is the failure to allege with

particularity a factual basis for holding TMH or CHP responsible for these claims. 

As an aside, it bears noting that the allegation that CHP participated in—or even

acquiesced in or knew about—the phantom and upcoded claims seems unlikely: 

why would an HMO want a physician to charge the HMO for services he did not

provide? Ms. Brodsky’s theory apparently is that this entire three-sided operation

was such a good arrangement for all concerned that they cooperated for their

mutual benefit. This comes close to, if indeed it is not, the kind of allegation found

lacking in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 595,

106 S. Ct. 1348, 1360, 89 L. Ed. 2d 538 (1986) (holding summary judgment

appropriate where, "as presumably rational businesses, petitioners had every

incentive not to engage in the conduct with which they are charged, for its likely

effect would be to generate losses for petitioners with no corresponding gains");

see also id. at 596-97, 106 S. Ct. at 1361 (commenting on the "permissible

conclusions" that courts may draw from evidence at summary judgment stage and

holding, "if petitioners had no rational economic motive to conspire, and if their

conduct is consistent with other, equally plausible explanations, the conduct does

not give rise to an inference of conspiracy").

Case No: 4:02cv389-RH/WCS

TMH and CHP participated in, approved, or even knew about the phantom or

upcoded claims. To the extent the amended complaint attempts to state claims

against TMH and CHP with respect to the phantom and upcoded claims, the

amended complaint falls short.9

IV

In upholding the amended complaint’s allegations regarding phantom and

upcoded claims, I have not overlooked the considerable skepticism manifested in

the Eleventh Circuit’s opinion in Clausen—as well as in the motions to dismiss in

the case at bar—that a person in the relator’s position could really know the facts

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that have been alleged. Indeed, the dissent in Clausen suggested this might really

have been what motivated the decision. And this concern ought not be taken

lightly. As I said in dismissing the original complaint in the case at bar:

Although Rule 9(b) draws no distinction between qui tam

actions and individual fraud claims, the application of the rule in qui

tam actions serves an important purpose: it prevents relators from

filing suit based on a mere hunch and using discovery in the hope of

finding support for the claim. As the Eleventh Circuit said in

Clausen, “we cannot be left wondering whether a plaintiff has offered

mere conjecture.” Clausen, 290 F.3d at 1313.

Order of December 28, 2004 (document 50) at 4. As set forth in section II-A

above, however, I conclude that Ms. Brodsky has adequately alleged the basis of

her knowledge, and that the level of specificity she has provided is sufficient, at

least at the pleading stage, to overcome the concern that this is “mere conjecture.”

Even so, I also conclude, as a matter of discretion, that Ms. Brodsky ought

not be given a free pass to unlimited discovery. As the Supreme Court has said,

“federal courts and litigants must rely on summary judgment and control of

discovery to weed out unmeritorious claims sooner rather than later.” Leatherman

v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168-

69, 113 S. Ct. 1160, 122 L.Ed.2d 517 (1993). If, as Ms. Brodsky has alleged, she

has information sufficient to allow the maintenance of this qui tam action, she

should be able to discover her case fully. But if she does not, this action should

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10 The parties have submitted their joint scheduling report. Issuance of a

scheduling order responding to that report has been delayed pending entry of this

order. A scheduling order will no be entered incorporating the provisions set forth

in the text.

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come to a swift end. A schedule thus will be established under which Dr. Munasifi

may depose Ms. Brodsky and promptly seek summary judgment if warranted, prior

to the commencement of full discovery.10

For these reasons, 

IT IS ORDERED:

1. The motions to dismiss of defendants Capital Group Health Services of

Florida, Inc. d/b/a Capital Health Plan (document 71) and Tallahassee Memorial

Healthcare, Inc. (document 75) are GRANTED. All claims against these

defendants are dismissed with prejudice. 

2. The motion to dismiss of defendants Dr. Faisal Munasifi and Psych.

Management Services, Inc. (document 73) is GRANTED IN PART and DENIED

IN PART. The motion is denied with respect to claims arising from phantom or

upcoded claims and is granted in all other respects. These defendants shall file

answers by June 22, 2005, but need not respond to paragraphs of the amended

complaint not related to phantom or upcoded claims. 

3. I do not direct the entry of judgment under Federal Rule of Civil

Procedure 54(b). 

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Case No: 4:02cv389-RH/WCS

4. The previously entered stay of discovery is vacated in part. Defendants

may depose and propound other discovery requests to the relator commencing

immediately. The defendants may conduct other discovery and the relator may

conduct discovery commencing on (a) July 15, 2005, if defendants have filed no

motion for summary judgment by that date; or (b) 21 days after the relator files her

response to any motion for summary judgment filed on or before July 15, 2005; or

(c) any earlier date if leave is granted on motion showing good cause.

SO ORDERED this 7th day of June, 2005.

s/Robert L. Hinkle 

Chief United States District Judge

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