Court Opinion

ID: 6334238
Source: CourtListenerOpinion
Date Created: 2022-04-22 17:01:42.109882+00
Date Added: 2024-06-11T09:23:35.519957
License: Public Domain

USCA11 Case: 21-10366    Date Filed: 04/22/2022   Page: 1 of 6

                                         [DO NOT PUBLISH]
                          In the
         United States Court of Appeals
               For the Eleventh Circuit

                ____________________

                        No. 21-10366
                ____________________

TROY OLHAUSEN,
                                           Plaintiff-Appellant,
versus
ARRIVA MEDICAL, LLC,
ALERE, INC.,
AMERICAN MEDICAL SUPPLIES, INC.,
ABBOTT LABORATORIES, INC.,

                                        Defendants-Appellees.
USCA11 Case: 21-10366            Date Filed: 04/22/2022       Page: 2 of 6

2                         Opinion of the Court                    21-10366

                       ____________________

            Appeal from the United States District Court
                for the Southern District of Florida
               D.C. Docket No. 1:19-cv-20190-RNS
                     ____________________

Before WILSON and ROSENBAUM, Circuit Judges, and COVINGTON,*
District Judge.
PER CURIAM:
       Troy Olhausen appeals from the dismissal of his False
Claims Act (“FCA”) action against Arriva Medical, LLC (“Arriva”),
Alere, Inc. (“Alere”), American Medical Supplies, Inc., and Abbott
Laboratories, Inc. (“Abbott”) (collectively, “Defendants”). Because
dismissal was appropriate, we affirm.
                            BACKGROUND
       Arriva was a Florida provider of mail-order diabetic testing
supplies and other medical products. Olhausen was Arriva’s Senior
Vice President of Business Development and Marketing. In 2011,
Alere acquired Arriva. In 2013, the Centers for Medicare and Med-
icaid Services (“CMS”) awarded Arriva a Durable Medical Equip-
ment, Prosthetics/Orthotics and Supplies (“DMEPOS”) competi-
tive bidding contract to provide Medicare beneficiaries with mail-

* The Honorable Virginia Covington, United States District Judge for the Mid-
dle District of Florida, sitting by designation.
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21-10366               Opinion of the Court                        3

order diabetic supplies. In 2017, Abbott acquired Alere, and closed
Arriva soon after.
        According to Olhausen’s second amended complaint, Arriva
violated a number of Medicare rules in the course of furnishing
supplies to its patients. As relevant here, Olhausen alleged that Ar-
riva provided mail-order diabetic testing supplies without obtain-
ing required Assignment of Benefit forms from patients. Olhausen
also alleged that Arriva violated Medicare rules and the terms of its
competitive-bid contract when it failed to disclose or accredit its
Tennessee, Arizona, and Philippines call-center locations. Finally,
he alleged that Arriva conspired with its parent companies, Alere
and Abbott to submit false Medicare claims based on regulatory
violations alleged in the other Counts.
       The district court granted the Defendants’ motion to dismiss
on the grounds that Olhausen failed to sufficiently plead his claims.
                    STANDARD OF REVIEW
       “We review a dismissal with prejudice for failure to state a
claim under the False Claims Act de novo.” Urquilla-Diaz v. Kaplan
Univ., 780 F.3d 1039, 1050 (11th Cir. 2015) (citing Hopper v. Solvay
Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir.2009)). “In doing so, we
accept the allegations in the complaint as true and construe them
along with the reasonable inferences therefrom in the relator’s fa-
vor.” Id. (citing McNutt v. Haleyville Med. Supplies, Inc., 423 F.3d
1256, 1259 (11th Cir.2005)).
                           DISCUSSION
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4                        Opinion of the Court                    21-10366

        To prevail on his FCA claims, Olhausen must prove: “(1) a
false statement or fraudulent course of conduct, (2) made with sci-
enter, (3) that was material, causing (4) the government to pay out
money or forfeit moneys due.” United States ex rel. v. Mortg.
Inv’rs Corp., 987 F.3d 1340, 1346 (11th Cir. 2021), cert. denied sub
nom. Mortg. Inv’rs Corp. v. United States ex rel. Bibby, 141 S. Ct.
2632 (2021). We assume without deciding that Olhausen’s second
amended complaint pled with sufficient particularity that the De-
fendants submitted false statements to the government. We none-
theless affirm because we hold that Olhausen has failed to allege
the element of scienter as a matter of law. 1
       Under the FCA, a person acts with the requisite scienter
when she “knowingly” submits a false claim, which the FCA de-
fines as either “actual knowledge,” “deliberate ignorance,” or
“reckless disregard.” United States ex rel. Phalp v. Lincare Hold-
ings, Inc., 857 F.3d 1148, 1155 (11th Cir. 2017) (citing 31 U.S.C. §
3729(b)). The FCA’s scienter requirement is “rigorous.” Universal
Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176,
192 (2016). It ensures that FCA liability “does not reach an inno-
cent, good-faith mistake about the meaning of an applicable rule or
regulation,” nor does it reach “claims made based on reasonable
but erroneous interpretations of a defendant’s legal obligations.”

1 We may affirm on any ground that finds support in the record. Long v.
Comm’r, 772 F.3d 670, 675 (11th Cir. 2014). Moreover, the parties have fully
briefed the scienter issue.
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21-10366                Opinion of the Court                           5

United States ex rel. Purcell v. MWI Corp., 807 F.3d 281, 287–88
(D.C. Cir. 2015) (internal quotation marks omitted). Where “the
statutory text and relevant court and agency guidance allow for
more than one reasonable interpretation, it would defy history and
current thinking to treat a defendant who merely adopts one such
interpretation as a knowing or reckless violator.” Safeco Ins. Co. of
Am. v. Burr, 551 U.S. 47, 70 n.20 (2007). And the analysis of
whether an interpretation of ambiguous law is reasonable is an ob-
jective one. Id. at 69–70.
       The Medicare rules that Olhausen alleged the Defendants
violated are susceptible to multiple reasonable interpretations. As
for Olhausen’s allegations regarding signatures, because Arriva had
a Medicare contract, it was considered a “participating supplier.”
42 C.F.R. § 400.202. Generally, “Medicare pays the supplier for
covered services if the beneficiary . . . assigns the claim to the sup-
plier and the supplier accepts the assignment.” Id. § 424.55(a). But
“when payment is for services furnished by a participating physi-
cian or supplier, the beneficiary . . . is not required to assign the
claim to the supplier in order for an assignment to be effective.” Id.
§424.55(c) (emphases added). And if a supplier “files a claim for
services that involved no personal contact between the . . . supplier
and the beneficiary . . . a representative of the . . . supplier may sign
the claim on the beneficiary’s behalf.” Id. § 424.36(c).
      Arriva concludes from these rules that it was not required to
obtain beneficiary signatures for every assignment of benefits, in-
cluding for assignments for products not covered by its DMEPOS
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6                      Opinion of the Court                 21-10366

contract, such as heating pads, orthotic braces, and vacuum-ther-
apy pumps. Even if Arriva’s interpretation is wrong (and it was
required to obtain signatures), Olhausen cannot show that Arriva
had the requisite scienter because it is an objectively reasonable in-
terpretation of the rules to conclude that the signatures were not
required. See, e.g., U.S. ex rel. Hixson v. Health Mgmt. Sys., Inc.,
613 F.3d 1186, 1190 (8th Cir. 2010) (“[A] statement that a defendant
makes based on a reasonable interpretation of a statute cannot sup-
port a claim under the FCA if there is no authoritative contrary in-
terpretation of that statute.”).
       The same is true regarding the call-center locations allega-
tions. Medicare regulations require a supplier to “enroll separate
physical locations it uses to furnish Medicare-covered DMEPOS,
with the exception of locations that it uses solely as warehouses or
repair facilities.” 42 C.F.R. §424.57(b)(1). The term “furnish” is not
defined. It is an objectively reasonable interpretation of the rule
that Arriva’s call-center locations did not “furnish” DMEPOS, so it
was not required to enroll them. Again, even if this interpretation
is incorrect, that objectively reasonable conclusion by Arriva ne-
gates the scienter element.
       And for these same reasons, Olhausen also failed to plead
the requisite scienter for Arriva and its parent companies to have
conspired to violate the FCA.
      AFFIRMED.