Court Opinion

ID: 4680991
Source: CourtListenerOpinion
Date Created: 2021-04-26 15:00:58.630107+00
Date Added: 2024-06-11T08:03:58.601627
License: Public Domain

USCA11 Case: 20-11624   Date Filed: 04/26/2021     Page: 1 of 18

                                                          [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                            No. 20-11624
                        Non-Argument Calendar
                      ________________________

               D.C. Docket No. 4:16-cv-00290-WTM-BKE

ESTATE OF DEBBIE HELMLY, et al.,

                                                         Plaintiffs-Appellants,

                                 versus

BETHANY HOSPICE AND PALLIATIVE CARE OF
COASTAL GEORGIA, LLC,
f.k.a. Bethany Hospice of Coastal Georgia, LLC
(Bethany Coastal),
BETHANY HOSPICE AND PALLIATIVE CARE, LLC,
f.k.a. Bethany Hospice, LLC (Bethany Hospice),
BETHANY BENEVOLENCE FUND, INC.,
AVA BEST, et al.,

                                                        Defendants-Appellees.

                      ________________________

               Appeal from the United States District Court
                  for the Southern District of Georgia
                     ________________________

                             (April 26, 2021)
             USCA11 Case: 20-11624          Date Filed: 04/26/2021         Page: 2 of 18

Before MARTIN, NEWSOM, and BRANCH, Circuit Judges.

PER CURIAM:

       In this qui tam action, Debbie Helmly and Jolie Johnson (the “Relators”)

appeal the dismissal of their complaint. Relators sued Bethany Hospice and

Palliative Care, LLC (“Bethany Hospice”) on behalf of the United States and the

State of Georgia,1 alleging that Bethany Hospice violated the False Claims Act

(“FCA”), 31 U.S.C. §§ 3729–3733, and the Georgia False Medicaid Claims Act,

O.C.G.A. § 49-4-168.1. In particular, Relators alleged that Bethany Hospice

violated the so-called Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b(b),2

by paying physicians remuneration for Medicare and Medicaid patient referrals.

According to Relators, Bethany Hospice submitted false claims when it billed the

government for services provided to illegally-referred patients. Relators further

       1
         See 31 U.S.C. § 3730(b)(1) (“A person may bring a civil action for a violation of section
3729 for the person and for the United States Government. The action shall be brought in the
name of the Government.”); id. § 3732(b) (“The district courts shall have jurisdiction over any
action brought under the laws of any State for the recovery of funds paid by a State or local
government if the action arises from the same transaction or occurrence as an action brought
under section 3730.”).
       2
           An entity violates the AKS when it:

       knowingly and willfully offers or pays any remuneration (including any kickback,
       bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any
       person to induce such person . . . to refer an individual to a person for the
       furnishing or arranging for the furnishing of 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)(2).
                                                  2
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allege that Bethany Hospice falsely certified compliance with the AKS. Under

Rule 9 of the Federal Rules of Civil Procedure, Relators were required to plead

with particularity the submission of an actual false claim to the government.

Because Relators failed to do so, the district court properly dismissed their

complaint. Accordingly, we affirm.

                                      I.    Background 3

       Bethany Hospice provides for-profit hospice care in Georgia. It operates

care facilities in four cities: Douglas, Thomasville, Waycross, and Valdosta. In

2014, Bethany Hospice opened Bethany Hospice and Palliative Care of Coastal

Georgia, LLC (“Bethany Coastal”). Relators are former employees of Bethany

Coastal. Helmly was employed as the administrator of Bethany Coastal from

December 2014 until July 2015. Johnson was employed as a marketer during the

same period.

       Although Bethany Coastal was organized as a separate company from

Bethany Hospice and obtained a different business license number, the two entities

are both owned and operated by Ava Best and Mac Mackey and share personnel,

resources, and management software. According to Relators, Best and Mackey

operated Bethany Coastal “as if it were another facility office of Bethany

       3
        Relators’ original complaint was filed under seal. After the United States and the State
of Georgia declined to intervene, the complaint was unsealed. The following facts are taken
from Relators’ third amended complaint (the “operative complaint”).
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Hospice.” For that reason, Relators allege that they were “effectively . . . corporate

insiders of Bethany Hospice.”

       Relators allege that, as corporate insiders, they learned that Bethany Hospice

operated an illegal kickback referral scheme in which Bethany Hospice paid

doctors in exchange for referring Medicare beneficiaries 4 to Bethany Hospice.

Relators further allege that, after rendering services to the illegally referred

patients, Bethany Hospice submitted claims to Medicare for reimbursement.

       In particular, Helmly alleged that when she and Best were negotiating the

terms of Helmly’s employment as administrator of Bethany Coastal, Best offered

her compensation based on the kickback scheme. During those negotiations, Best

allegedly told Helmly that Best “would follow the same protocol to add

compensation for . . . Helmly that [Best] used to pay referring doctors for their

referrals.” Under that “protocol,” Helmly could make a below-market ownership

investment in Bethany Coastal that would provide “huge returns” based on the

number of referred patients. Helmly further alleged that Best said that she “paid all

the medical directors who owned shares in Bethany Hospice according to this same

formula, and the payments varied depending on the volume of referrals.”

       4
        Relators allege that the referral scheme involved Medicare and Medicaid beneficiaries.
For simplicity, we will refer only to Medicare.
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       Relators also alleged that, on other occasions, Best acknowledged to them

that the compensation structure was designed to avoid getting caught for FCA

violations. Best was formerly employed by Odyssey Hospice—a predecessor to

Bethany Hospice. Relators alleged that Odyssey also employed a kickback

compensation scheme, Odyssey’s owner was eventually convicted of Medicare

Fraud, and Odyssey agreed to a $25 million settlement with the U.S. Department

of Justice. According to Relators, Best acknowledged that kickbacks were

improper but, because they were “the most effective way to get referrals,” Best

“tried to have the best of both worlds: paying the kickbacks to referring physicians

but hiding or masking them as compensation to medical directors and part owners

of Bethany Hospice.”

       Relators alleged that several doctors purchased ownership interests in

Bethany Hospice and were paid kickbacks for referrals through “a monthly salary,

dividends, and/or monthly bonuses.”5 According to Relators, that compensation

was not paid for the fair market value of their work but, rather, “as inducement for

or reward for referrals of patients, which constitute kickbacks.” Relators’

complaint points to Dr. Tanner as an example: In 2007, he purchased a 5% interest

in Bethany Hospice for $20,000 and, seven years later, he sold that interest for

       5
        Relators also allege that, on at least one occasion, Bethany Hospice offered its doctors a
paid family vacation as a kickback.
                                                5
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$300,000. Relators’ complaint identifies at least four other doctors (the “Bethany

Hospice doctors”) who are allegedly the primary participants in this compensation

scheme.

      Relators point to other facts to show that the scheme was operational and

successful. They allege that, after purchasing an investment in Bethany Hospice,

the Bethany Hospice doctors made “nearly all” or “around 95%” of their patient

referrals to Bethany Hospice. Realtors also allege that they were able to access

Bethany Hospice’s internal billing software, Consolo, to confirm that Bethany

Hospice tracked each patient admission and the doctor who referred that patient for

the purpose of paying those doctors kickbacks. Relators claim that other Bethany

Hospice employees confirmed that Bethany Hospice ran “weekly and monthly

reports” tracking referrals and that “Best use[d] these reports to determine how

much to pay referral sources.”

      Relators further alleged that, as a result of the kickback scheme, Bethany

Hospice submitted false claims for Medicare reimbursement to the government.

Relators alleged that “all or nearly all of Bethany Hospice’s patients put under

service received coverage from Medicare.” Johnson “had access to the census

reports documenting each site’s patients and which payor paid for the patients’

care.” By accessing these records, and speaking to some of Bethany Hospice’s

billing employees, Johnson allegedly “was able to find out about the billing and

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collection from Medicare of the illicit referrals and the submission of bills for other

inappropriate patients.” For her part, Helmly alleged that she also had access to all

billing information and “attended meetings with Ms. Best where Bethany Hospice

and Bethany Coastal management discussed site productivity and census numbers

for all Bethany Hospice’s and Bethany Coastal’s sites.” And, relevant here,

Relators claim to have discovered that “all (or nearly all) the hospice patients

referred by [the Bethany Hospice doctors] were Medicare or Medicaid patients and

that Bethany Hospice submitted claims to the Government for per diem payments

for those patients knowing that they were false.”

      Relators’ complaint included government Medicare claims data that showed

that “Bethany Hospice derive[d] nearly all of its revenue from the Medicare

program monies,” and it provided a breakdown of Medicare referrals from the

Bethany Hospice doctors.

      Finally, Relators alleged that five other Bethany Hospice employees

confirmed that Bethany Hospice submitted Medicare reimbursement claims for

patients referred by the Bethany Hospice doctors. At bottom, Relators alleged that

“all or nearly all” of Bethany Hospice’s business was derived from Medicare

beneficiaries and that Bethany Hospice submitted claims for Medicare

reimbursement for those patients. Combined with Relators’ access to the billing

systems and confirmation from other employees that Bethany Hospice submitted

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Medicare reimbursement claims, Relators alleged that Bethany Hospice submitted

false claims to the government.

       As noted, Relators’ operative complaint alleged two causes of action.

Relators alleged that Bethany Hospice made false or fraudulent claims for

reimbursement based on illegal kickbacks, in violation of 31 U.S.C.

§ 3729(a)(1)(A) and O.C.G.A. § 49-4-168.1(a)(1). Relators also alleged that

Bethany Hospice made false statements by certifying compliance with the AKS, in

violation of 31 U.S.C. § 3729(a)(1)(B) and O.C.G.A. § 49-4-168.1(a)(2).6

       Bethany Hospice eventually moved to dismiss the operative complaint.

Bethany Hospice argued that Relators’ complaint contained primarily conclusory

assertions and failed to plead its claims with sufficient particularity, as required by

Fed. R. Civ. P. 9(b). The Relators opposed the motion, arguing that the operative

complaint satisfied the requirements of Rule 9(b).

       The district court granted Bethany Hospice’s motion to dismiss with

prejudice. First, the district court concluded that Relators did not plead sufficiently

particular facts to allege that Bethany Hospice violated the AKS. Although it

acknowledged that the Relators had put forth some facts to support their

allegations about a kickback scheme, the district court determined that Relators

       6
         Relators also alleged that Best and Bethany Hospice retaliated against them for their
investigations into the alleged FCA violations, in violation of 31 U.S.C. § 3730(h) and O.C.G.A.
§ 49-4-168.4. The parties agreed to settle that claim.
                                               8
          USCA11 Case: 20-11624       Date Filed: 04/26/2021    Page: 9 of 18

failed to allege particular facts about the precise nature of the kickback incentives

and how much Best paid for referrals. The district court then noted that, despite

Relators’ access to billing reports, they failed to “provide specific dates that

Bethany Hospice paid doctors, the amounts doctors were paid, or any specific

patient in the reports.” The district court added that Relators failed to provide

enough background for the district court to infer that Dr. Tanner’s ownership

shares were so inflated as to constitute remuneration. Finally, the district court

concluded that Relators’ claim that 95% of Bethany Hospice’s referrals came from

the Bethany Hospice doctors lacked factual support.

      Second, the district court concluded that the Relators failed to plead the

submission of a false claim with particularity. The district court began by

observing that Relators’ complaint did not present an example of a Medicare

reimbursement claim that Bethany Hospice submitted to the government on behalf

of an illegally referred patient. Next, the district court addressed the Relators’

argument that their inside knowledge and Bethany Hospice’s Medicare referral

rates were sufficient indicia of reliability to meet Rule 9(b)’s pleading standard.

Relying on our FCA precedent, the district court concluded that Relators’

complaint lacked sufficient indicia of reliability because Relators: (1) failed to

describe Bethany Hospice’s billing operations in sufficient detail, (2) failed to

describe a single example of when Relators observed a false claim being

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         USCA11 Case: 20-11624       Date Filed: 04/26/2021    Page: 10 of 18

submitted, (3) did not themselves participate in the submission of false claims.

Lastly, the district court explained that, under our precedent, courts may not rely

on mathematical probability to conclude that a defendant submitted a false claim.

      Finally, the district court dismissed Relators’ false statements claim. The

district court noted that Relators’ complaint contained only one paragraph

describing the allegedly false statements. In the district court’s view, that lone

paragraph lacked the factual support necessary to plead the claim with sufficient

particularity.

      Relators timely appealed.

                              II. 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). We take the allegations in the complaint as true and draw all

reasonable inferences in Relators’ favor. Id.

                                   III. Discussion

       Relators argue that the district court erred when it concluded that their

complaint failed to plead with particularity Bethany Hospice’s kickback scheme,

submission of a false claim, and certification of a false statement. We agree with

the district court that Relators failed to plead with particularity the submission of

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an actual false claim, and that shortcoming is fatal to Relators’ case. Accordingly,

we affirm the district court’s dismissal of Relators’ complaint.

      “The FCA imposes liability on any person who ‘knowingly presents, or

causes to be presented, a false or fraudulent claim for payment or approval; [or]

knowingly makes, uses, or causes to be made or used, a false record or statement

material to a false or fraudulent claim.’” United States ex rel. Phalp v. Lincare

Holdings, Inc., 857 F.3d 1148, 1154 (11th Cir. 2017) (quoting 31 U.S.C.

§ 3729(a)(1)(A)–(B)). The AKS “makes it a felony to offer kickbacks or other

payments in exchange for referring patients ‘for the furnishing of any item or

service for which payment may be made in whole or in part under a Federal health

care program.’” McNutt ex rel. United States v. Haleyville Med. Supplies, Inc.,

423 F.3d 1256, 1259 (11th Cir. 2005) (quoting 42 U.S.C. § 1320a-b7(b)(1)). And,

relevant here, “a claim that includes items or services resulting from a violation of

[the AKS] constitutes a false or fraudulent claim for purposes of [§ 3729(a)(1)].”

42 U.S.C. § 1320a-7b(g).

      Nevertheless, the FCA “does not create liability merely for a health care

provider’s disregard of Government regulations or improper internal policies

unless, as a result of such acts, the provider knowingly asks the Government to pay

amounts it does not owe.” United States ex rel. Clausen v. Lab. Corp. of Am., 290

F.3d 1301, 1311 (11th Cir. 2002). A violation of the AKS is a separate criminal

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offense. See United States v. Sosa, 777 F.3d 1279, 1293 (11th Cir. 2015). But a

relator in a qui tam action must plead that a defendant “both violated the [AKS]

when it unlawfully recruited a patient and then billed the government for the

services provided to that patient.” Carrel v. AIDS Healthcare Found., Inc., 898

F.3d 1267, 1277 (11th Cir. 2018). Thus, the “act of submitting a fraudulent claim

to the government is the ‘sine qua non of a False Claims Act violation.’” Corsello

v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005) (quoting Clausen, 290 F.3d

at 1311). Put differently, “[l]iability under the False Claims Act arises from the

submission of a fraudulent claim to the government, not the disregard of

government regulations or failure to maintain proper internal policies.” Id.

      Furthermore, complaints alleging violations of the FCA must meet the

heightened pleading standard of Rule 9(b). Id.; United States ex rel. Atkins v.

McInteer, 470 F.3d 1350, 1357 (11th Cir. 2006). Under Rule 9(b), a party

“alleging fraud or mistake . . . must state with particularity the circumstances

constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To meet this standard, we

have explained that a complaint “must allege actual ‘submission of a false claim,’”

and that it must do so with “some indicia of reliability.” Carrel, 898 F.3d at 1275

(quoting Clausen, 290 F.3d at 1311) (alteration adopted). It is not enough to “point

to ‘improper practices of the defendant’ to support ‘the inference that fraudulent

claims were submitted’ because ‘submission . . . cannot be inferred from the

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circumstances.’” Id. (quoting Corsello, 428 F.3d at 1013) (alterations adopted). In

short, a relator must “allege the ‘who,’ ‘what,’ ‘where,’ ‘when,’ and ‘how’ of

fraudulent submissions to the government.” Corsello, 428 F.3d at 1014.

      Although Relators concede that their complaint did not include any details

about specific claims submitted to the government, they argue that they have met

Rule 9(b)’s pleading threshold because their complaint contains sufficient indicia

of reliability to support their claim that Bethany Hospice submitted false claims to

the government. First, Relators rely on their complaint’s allegations that they had

access to and knowledge of Bethany Hospice’s billing practices. For example,

Relators alleged that they attended meetings in which Best “discussed site

productivity and census numbers for all Bethany Hospice’s and Bethany Coastal’s

sites.” Relators further alleged that they reviewed billing data that showed that

Bethany Hospice submitted Medicare reimbursement claims for patients referred

by the Bethany Hospice doctors. And Relators alleged that five other Bethany

Hospice employees confirmed that such claims were submitted. Second, Relators

draw our attention to the numbers. They alleged that the Bethany Hospice doctors

referred significant numbers of Medicare recipients to Bethany Hospice and that

“all or nearly all” of Bethany Hospice’s patients received coverage from Medicare.

In short, Relators argue that their knowledge and access, coupled with data about

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Bethany Hospice’s Medicare claims submissions, lends sufficient indicia of

reliability to survive Bethany Hospice’s motion to dismiss. We disagree.

      To begin, Relators have failed to allege any specifics about actual claims

submitted to the government. Despite alleging intimate familiarity with and access

to Bethany Hospice’s billing practices, Relators’ complaint fails to identify even a

single, concrete example of a false claim submitted to the government. See

Clausen, 290 F.3d at 1306 (“[N]o copies of a single actual bill or claim or payment

were provided. No amounts of any charges by LabCorp were identified. No actual

dates of claims were alleged. Not a single completed Form 1500 was provided.”);

Carrel, 898 F.3d at 1277 (noting that the plaintiff failed to allege facts about a

specific claim submitted for reimbursement).

      To be sure, we do not always require a sample fraudulent claim because “we

are more tolerant toward complaints that leave out some particularities of the

submissions of a false claim if the complaint also alleges personal knowledge or

participation in the fraudulent conduct.” United States ex rel. Matheny v. Medco

Health Sols., Inc., 671 F.3d 1217, 1230 (11th Cir. 2012). But Relators do not even

attempt to provide any particular facts about a representative false claim.

Moreover, Relators do not have the personal knowledge or level of participation

that can give rise to some indicia of reliability. In Carrel, the relators “highlighted

their managerial positions” at the defendant company and their attendance “at

                                          14
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monthly financial review meetings.” 898 F.3d at 1277. But we found this kind of

senior insider knowledge insufficient because “the relators failed to explain how

their access to possibly relevant information translated to knowledge of actual

tainted claims presented to the government.” Id. at 1278. Relators’ complaint

suffers from the same flaw. The complaint alleged that at least one Relator

(Helmly) attended meetings that discussed the productivity of various Bethany

Hospice sites and that both Relators had access to Bethany Hospice’s billing

systems and confirmed from their review of those systems and conversations with

other employees that Bethany Hospice submitted false claims. Those allegations

are insufficient to satisfy Rule 9(b)’s particularity requirement because even with

“direct knowledge of the defendants’ billing and patient records,” Relators have

“failed to provide any specific details regarding either the dates on or the frequency

with which the defendants submitted false claims, the amounts of those claims, or

the patients whose treatment served as the basis for the claims.” United States ex

rel. Sanchez v. Lymphatx, Inc., 596 F.3d 1300, 1302 (11th Cir. 2010).

Additionally, Relators did not claim to have observed the submission of an actual

false claim; nor did they personally participate in the submission of false claims.

See Matheny, 671 F.3d at 1230 (crediting the complaint’s allegations when one of

the relators was intimately involved in a department of the defendant company that

was responsible for creating the alleged false claims.); United States v. R&F Props.

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of Lake Cnty., Inc., 433 F.3d 1349, 1356–58 (11th Cir. 2005) (crediting a

complaint’s allegations because one of the relators was a nurse practitioner who

personally used incorrect billing codes). In sum, Relators’ access and knowledge

are not sufficient indicia of reliability.

       Relators’ reliance on Bethany Hospice’s business model and Medicare

claims data lends no credence to their allegation that Bethany Hospice submitted a

false claim. Relators alleged that Bethany Hospice doctors referred significant

numbers of Medicare recipients, that “all or nearly all” of Bethany Hospice’s

patients were Medicare recipients, and that Medicare claims data shows that

Bethany Hospice billed the government for their patients. Therefore, Relators

contend, their complaint contains sufficient indicia of reliability to allege plausibly

that Bethany Hospice submitted a false claim. But we have explained that relators

cannot “rely on mathematical probability to conclude that [a defendant] surely

must have submitted a false claim at some point.” Carrel, 898 F.3d at 1277; see

also Corsello, 428 F.3d at 1012–13 (explaining that it is insufficient to “describe[]

in detail a private scheme to defraud” and then speculate that claims “must have

been submitted, were likely submitted or should have been submitted to the

Government”). Thus, numerical probability is not an indicium of reliability.

Relators attempt to distinguish Clausen and Carrel by pointing out that neither

defendant in those cases billed the government for almost all its business. That

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distinction is unpersuasive. Under the FCA and Rule 9(b), a false claim cannot be

“inferred from the circumstances.” Corsello, 428 F.3d at 1013. Whether a

defendant bills the government for some or most of its services, the burden remains

on a relator alleging the submission of a false claim to “allege ‘specific details’

about false claims to establish ‘the indicia of reliability necessary under Rule

9(b).’” Carrel, 898 F.3d at 1276 (quoting Sanchez, 596 F.3d at 1302). Here,

Relators have failed to allege any specific details about the submission of an actual

false claim.7

       In sum, Relators’ complaint fails to contain some indicia of reliability to

meet Rule 9(b)’s particularity requirement. Although we construe all facts in favor

of Relators, we “decline to make inferences about the submission of fraudulent

claims because such an assumption would ‘strip[] all meaning from Rule 9(b)’s

requirements of specificity.’” Corsello, 428 F.3d at 1013 (quoting Clausen, 290

F.3d at 1312 n.21); Atkins, 470 F.3d at 1359 (“The particularity requirement of

Rule 9 is a nullity if Plaintiff gets a ticket to the discovery process without

identifying a single claim.” (quotation omitted)); id. at 1360 (“Requiring relators to

       7
         Relators also rely on two other decisions that they argue support their case. See United
States ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591 F. App’x 693, 695 (11th Cir. 2014); Hill
v. Morehouse Med. Assocs., 2003 WL 22019936, at *3–4 (11th Cir. Aug. 15, 2003) (per curiam).
We do not read those nonprecedential decisions to be contrary to our analysis.
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plead FCA claims with particularity is especially important in light of the quasi-

criminal nature of FCA violations (i.e., a violator is liable for treble damages).”).

      Because Relators have failed to plead the submission of an actual false claim

with particularity, their false statement claim also fails. The “submission of a

[false] claim is . . . the sine qua non of a False Claims Act violation.” Clausen,

290 F.3d at 1311. And as Relators acknowledge, “[i]f Bethany Hospice’s claims

were false or fraudulent, it follows that when Bethany Hospice certified its

compliance with the AKS” it made false statements under § 3729(a)(1)(B). But

Relators have failed to plead a false claim with particularity, so their false

statement claim must also be dismissed. See, e.g., United States ex rel. Grant v.

United Airlines Inc., 912 F.3d 190, 199–200 (4th Cir. 2018) (dismissing a false

statement claim because relators’ complaint failed to allege a false claim); United

States ex rel. Strubbe v. Crawford Cnty. Mem’l Hosp., 915 F.3d 1158, 1166 (8th

Cir. 2019) (rejecting a false statement claim because the complaint “fail[ed] to

connect the false records or statements to any claim made to the government”).

                                   IV. Conclusion

      Because Relators failed to allege the submission of an actual false claim

with particularity, the district court properly dismissed their complaint.

Accordingly, we affirm.

      AFFIRMED.

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