Court Opinion

ID: 4234026
Source: CourtListenerOpinion
Date Created: 2018-01-03 17:01:23.888439+00
Date Added: 2024-06-11T14:42:49.533861
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                               File Name: 18a0003n.06

                                            Case No. 17-3521

                              UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA, ex rel.                      )
J. LYNN ROYCROFT,                                      )                              FILED
                                                       )                        Jan 03, 2018
       Relator –Appellant,                             )                    DEBORAH S. HUNT, Clerk
                                                       )
v.                                                     )
                                                       )
GEO GROUP, INC.; CORNELL COMPANIES                     )         ON APPEAL FROM THE
LLC, dba Cornell Abraxas Ohio; CORNELL                 )         UNITED STATES DISTRICT
ABRAXAS GROUP, INC.; CORRECT CARE,                     )         COURT FOR THE NORTHERN
LLC; CORNELL CORRECTIONS                               )         DISTRICT OF OHIO
MANAGEMENT, LLC,                                       )
                                                       )
       Defendants –Appellees.                          )                                  OPINION

BEFORE:        COLE, Chief Judge; McKEAGUE and STRANCH, Circuit Judges.

       COLE, Chief Judge. J. Lynn Roycroft, a former clinical supervisor at a drug and alcohol

residential treatment center operated by the defendants (collectively, “Geo Group”), alleges that

Geo Group presented false claims for payment to Ohio Medicaid. As part of the fraudulent

billing scheme, Geo Group allegedly submitted claims billing for services that were not provided

and making implied false certifications of compliance with statutory and regulatory

requirements. Roycroft, as a relator in this action, maintains that this conduct violated the False

Claims Act, 31 U.S.C. § 3729 et seq. The district court dismissed Roycroft’s complaint with

prejudice for failure to plead with particularity the submission of at least one representative false

claim, as required by Federal Rule of Civil Procedure 9(b). We affirm.
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

                                      I. BACKGROUND

       Geo Group operates a residential treatment center for drug and alcohol addiction in

Shelby, Ohio (the “Center”). Roycroft worked as a clinical supervisor at the Center, between

May 2008 and March 2009. As part of her duties, she supervised counselor assistants providing

counseling services to adolescent males residing at the Center. Those counseling services were

documented in progress notes, which Roycroft reviewed and approved before forwarding to the

billing department, who then billed Ohio Medicaid.

       Roycroft alleges that, at least during the nine months she was employed, Geo Group

submitted false claims to Ohio Medicaid as part of a fraudulent billing scheme. The alleged

scheme involved two types of fraud.

       First, Geo Group billed for group counseling services that were not provided. Group

counseling services, including morning, evening, and closure group, as well as moral inventory,

were bundled as a three-hour unit and billed to Medicaid each day for each adolescent

undergoing treatment. One month before leaving the Center, Roycroft learned that evening

group was either being infrequently or only partially provided, and that closure group had not

historically been provided because there was no time in the schedule. During the course of her

employment, Roycroft also learned that group counseling services more generally were being

used for noncounseling activities, including snack time, chores, and watching television.

       Second, Geo Group made implied false certifications of compliance with various

statutory and regulatory requirements. It did so by submitting claims using payment codes and

identification numbers that conveyed certain information without disclosing that it (1) did not

provide the required twenty hours per week of alcohol and drug addiction services for residential

treatment facilities; (2) improperly documented group counseling services; and (3) administered

group counseling sessions performed by unqualified personnel.
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

           Roycroft identifies seven claims allegedly representative of the fraudulent billing scheme.

Each claim is alleged in the same fashion, varying only in the use of names and claim numbers:

“A claim submitted to Medicaid for counseling services provided by Rebecca A. Wagers,

CDCA, to client C.R. (000001056) on September 20, 2008.” (Am. Compl., R. 11, PageID 64

¶ 72.a.)

                                  II. PROCEDURAL HISTORY

           Roycroft brought this action as a relator under the False Claims Act, 31 U.S.C. § 3729 et

seq. In the complaint, as amended, she alleges that Geo Group violated the False Claims Act by

presenting false claims, § 3729(a)(1)(A) (Count I); and failing to reimburse the government for

overpayments from those claims, § 3729(a)(1)(G) (Count II).1 The government declined to

intervene.

           Geo Group filed a motion to dismiss pursuant to Federal Rules of Civil Procedure

12(b)(6) and 9(b). The district court granted Geo Group’s motion and dismissed the complaint

with prejudice, finding that the complaint failed to plead the presentment of at least one

representative false claim with the degree of particularity required under Rule 9(b). Roycroft

timely appealed.

                                          III. ANALYSIS

           A. First Amended Complaint

              1. Standard of Review

           We review de novo the district court’s grant of a motion to dismiss for failure to comply

with the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). United

1
  We do not consider the false-records claim under § 3729(a)(1)(B), which also appears in Count
I, because Roycroft premises her arguments on the presentment of false claims, not the making
of separate false records or statements material to those claims.
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 502 (6th Cir. 2007). Rule 9(b)

requires a plaintiff to state with particularity the circumstances constituting fraud—i.e., the who,

what, when, where, and how of the alleged fraud. See Sanderson v. HCA-The Healthcare Co.,

447 F.3d 873, 877 (6th Cir. 2006); Fed. R. Civ. P. 9(b). In reviewing the district court’s order,

we must construe the complaint in the light most favorable to the plaintiff, accept its allegations

as true, and draw all reasonable inferences in favor of the plaintiff. See United States ex rel. v.

SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 502 (6th Cir. 2008).

             2. Presentment of False Claims

       Roycroft argues that Geo Group presented false claims to Ohio Medicaid, in violation of

§ 3729(a)(1)(A).    Section 3729(a)(1)(A) imposes civil liability on “any person who . . .

knowingly presents, or causes to be presented, a false or fraudulent claim for payment or

approval.”    A claim under § 3729(a)(1)(A), commonly referred to as a presentment claim,

requires proof that the false claim was in fact “presented” to the government. United States ex

rel. Marlar v. BWXT Y-12, L.L.C., 525 F.3d 439, 445 (6th Cir. 2008). At the pleadings stage,

this requirement is satisfied so long as the relator pleads the presentment of at least one

representative false claim with particularity in compliance with Rule 9(b). Bledsoe, 501 F.3d at

510–11.

       Roycroft sufficiently alleges many of the required particulars. In the complaint, she

details a fraudulent billing scheme, whereby Geo Group submitted claims to Ohio Medicaid that

(1) improperly billed for group counseling services and (2) impliedly made false certifications of

compliance with various statutory and regulatory requirements. And Roycroft identifies seven

claims allegedly representative of that scheme. The allegations pertaining to the seven claims

sufficiently identify who provided the services, to whom those services were provided, and when
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

the bills were submitted. (See, e.g., id. ¶ 72.a. (“A claim submitted to Medicaid for counseling

services provided by Rebecca A. Wagers, CDCA, to client C.R. (000001056) on September 20,

2008.”).)

         Presentment of those representative claims to Ohio Medicaid is not disputed. The actual

invoices for the claims referenced in the complaint were attached to Geo Group’s reply in

support of its motion to dismiss.         Although we do not ordinarily consider such integral

documents when attached to a reply, as opposed to a motion to dismiss, doing so here would not

result in unfairness to Roycroft who herself presses for their consideration on appeal. See Brown

v. Daniels, 128 F. App’x 910, 913 (3d Cir. 2005); see also Bassett v. Nat’l Collegiate Athletic

Ass’n, 528 F.3d 426, 430 (6th Cir. 2008). Those invoices reveal—and Geo Group does not

dispute—that six of the seven claims were billed to Medicaid. Notwithstanding the parties’

arguments to the contrary, this court’s decision relaxing the pleading requirements for showing

that a claim was submitted under certain limited circumstances is therefore inapposite. See

United States ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750, 769 (6th Cir.

2016).

         But the allegations are flawed in their failure to identify what is false in the representative

claims, so as to connect the claims to the broader scheme. See Bledsoe, 501 F.3d at 510.

Roycroft does not allege that each and every claim was false in the same respect, as may

otherwise be sufficient. See, e.g., United States ex rel. McDonough v. Symphony Diagnostic

Servs., Inc., 2012 WL 628515, at *9 (S.D. Ohio Feb. 27, 2012). Instead, she alleges a laundry

list of prohibited conduct, “at least one or more” of which rendered false or fraudulent the claims

involved in the scheme. (Id. ¶ 48.) In such circumstances, a relator must specify what is

purportedly false in a representative claim.
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

         The allegations fall short of this requirement. As Roycroft points out, the two paragraphs

immediately preceding the representative claims purport to define what is false in the claims.

But those allegations speak in generalities, not specifics. In the first paragraph, she alleges that

the claims improperly billed for “treatment services,” but she does not specify which of those

services were improperly billed in the representative claims—i.e., whether it was morning,

evening, or closure group. (Id. ¶ 70.) And in the second paragraph, she alleges that the claims

failed to disclose Geo Group’s “many violations” of treatment, staff, and licensing requirements,

but she does not specify which of those many violations apply to the representative claims. (Id.

¶ 71.)

         Roycroft cannot cure these deficiencies by narrowing the scope of the allegations through

her briefing. See Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984). In

her briefing, Roycroft asks this court to focus on one category of improperly billed services

referred to as closure group to the exclusion of all others—what she refers to as the “main

express falsehood.” (Relator Br. 16.) Geo Group’s failure to historically provide this service,

she contends, rendered every identified claim false in the same respect. But Roycroft alleges

more than one express falsehood. And we cannot infer the various reasons why the identified

claims are false based on the appellant’s mere say-so in her briefing. Nor can we discern the

falsity of the claims from the face of the invoices themselves. In a multifaceted scheme such as

this one, the failure to allege which facet of the broader scheme is implicated in a representative

claim fails to give defendants fair notice of the specific conduct with which they are charged.

See Sanderson, 447 F.3d at 877.

         The need for specificity is especially acute in this case. Many of the allegations involve

fraudulent conduct taking place several months after the identified claims were submitted. For
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

example, Roycroft alleges that she learned in February 2009 that evening group was being

infrequently or only partially provided, but she does not allege whether that was the case in

September 2008, when the identified claims were submitted. Nor does she specify what portion,

if any, of evening group—or group counseling services more generally—was improperly billed

in the identified claims. See, e.g., Bledsoe, 501 F.3d at 512–13 (holding that a relator alleging

the submission of allegedly inflated cost reports to Medicare must identify how much they were

inflated).

        Accordingly, Roycroft fails to plead a presentment claim with the requisite particularity

under Rule 9(b).

             3. Failure to Reimburse Overpayments

        Roycroft also contends that Geo Group failed to reimburse overpayments from the

allegedly false claims presented to Ohio Medicaid, in violation of § 3729(a)(1)(G). That section

imposes civil liability on “any person who . . . knowingly conceals or knowingly and improperly

avoids or decreases an obligation to pay or transmit money or property to the Government,”

including for obligations “arising . . . from the retention of any overpayment.” Id.; § 3729(b)(3).

A claim under § 3729(a)(1)(G) requires a relator to “allege facts that show defendants received

overpayments from the government and failed to refund those payments.” United States ex rel.

Ibanez v. Bristol-Myers Squibb Co., 874 F.3d 905, 916 (6th Cir. 2017). Because Roycroft’s

claim is, as she concedes, dependent on the viability of her presentment claim, it fails for the

same reasons she fails to plead a presentment claim.
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.

       B. Leave to Amend

       In the alternative, Roycroft argues that the district court abused its discretion in

dismissing her complaint with prejudice, instead of granting leave to file an amended complaint.

We disagree.

       While a district court “should freely give leave [to amend] when justice so requires,” Fed.

R. Civ. P. 15(a)(2), the district court must have before it the substance of the proposed

amendment to determine whether “justice so requires.” Beydoun v. Sessions, 871 F.3d 459, 469

(6th Cir. 2017). In applying this rule, we have held that a district court does not abuse its

discretion where, as here, the plaintiff never sought leave to amend. Islamic Ctr. of Nashville v.

Tennessee, 872 F.3d 377, 387 (6th Cir. 2017); Sinay v. Lamson & Sessions Co., 948 F.2d 1037,

1041 (6th Cir. 1991). And we have applied this holding in affirming a district court’s failure to

sua sponte grant leave to amend a complaint that, like here, was dismissed for failure to comply

with Rule 9(b). See CNH Am. LLC v. Int’l Union, United Auto., Aerospace & Agr. Implement

Workers of Am. (UAW), 645 F.3d 785, 795 (6th Cir. 2011).

       Roycroft nonetheless contends that we announced a contrary rule in Newberry when we

stated that “dismissal with prejudice and without leave to amend is not appropriate unless it is

clear on de novo review that the complaint could not be saved by amendment,” notwithstanding

a plaintiff’s failure to seek leave to amend. Newberry v. Silverman, 789 F.3d 636, 646 (6th Cir.

2015) (internal marks and citation omitted). This broad statement, however, was appropriate due

to the particular facts of that case. The plaintiff in Newberry attached a ten-page affidavit in

support of his opposition to a motion to dismiss, which contained “significantly greater detail”

demonstrating a “reasonable probability” that the complaint, if amended, could withstand

scrutiny under Rule 9(b). Id. at 645. The district court therefore had before it all that was

needed to determine whether leave to amend was warranted. See Islamic Center of Nashville,
Case No. 17-3521, U.S. ex rel. Roycroft v. Geo Group, et al.
872 F.3d at 387 n.7 (noting that “[t]he problem with the lack of a motion or proposed

amendment” is that “it is impossible for the district court to determine whether leave to amend

should have been granted”).

       In contrast, Roycroft failed to identify what she might plead to save her claim below or

on appeal. Instead, she relies on a bare request for another opportunity to do so. Such a request

is insufficient when made before a district court and it is insufficient here. See Louisiana Sch.

Employees’ Ret. Sys. v. Ernst & Young, LLP, 622 F.3d 471, 486 (6th Cir. 2010) (“[A] bare

request in an opposition to a motion to dismiss . . . is not a motion to amend.” (internal marks

and citation omitted)).

                                    IV. CONCLUSION

       We affirm the judgment of the district court.