United States District Court, D. Oregon
THE UNITED STATES OF AMERICA, ex rel., MICHAEL T. BROOKS, Plaintiff-Relator,
TRILLIUM COMMUNITY HEALTH PLAN, INC., AGATE RESOURCES, INC. and LANE INDIVIDUAL PRACTICE ASSOCIATION, INC, Defendants.
OPINION AND ORDER
MICHAEL MCSHANE, UNITED STATES DISTRICT JUDGE
Michael Brooks brings this False Claims Act case against his
former employers and their alleged alter egos. Brooks alleges
defendants double billed the United States for medical
services, discriminated against sick (and therefore
expensive) individuals, and violated anti-kickback statutes.
Judge Aiken dismissed the First Amended Complaint with
detailed instructions on how Brooks could cure the
deficiencies. ECF No. 63. Because the Second Amended
Complaint provides no timely representative examples, and
fails to include any timely examples with sufficient
particularity required for fraud claims, defendants'
motion to dismiss, ECF No. 73 is GRANTED.
worked as a database administrator for defendant Agate
Resources, Inc. from 2005 until September 27, 2013. Brooks
alleges he was fired in retaliation for blowing the whistle
on defendants' fraudulent activities related to Medicaid
and Medicare billings. Brooks brings False Claims Act claims
against all three defendants: Agate, Lane Individual Practice
Association (LIPA), and Trillium Community Health Plan.
(at the latest), Brooks started to have some concerns about
defendants' practices. Brooks quietly took his concerns
to the Oregon Attorney General. Around that time, Brooks also
copied thousands of files at the request of government
authorities. Brooks includes some of those files, or data
from those files Brooks turned into spreadsheets, as exhibits
filed under seal in support of his Second Amended Complaint
(SAC). Brooks points to the exhibits as representative
examples supporting his claims. As explained below, Brooks's
representative examples are all time-barred. After the
authorities essentially sat on Brooks's complaints,
Brooks raised his concerns again in 2012. Again, the
authorities did nothing and Brooks was terminated in 2013,
allegedly in retaliation for going to the authorities.
essentially brings three types of claims under the False
Claims Act. First, Brooks alleges defendants double-billed,
or overbilled, the government. Second, Brooks alleges
defendants violated anti-kickback statutes by providing
shares of stock to doctors in exchange for referrals. Third,
Brooks alleges defendants compiled lists of expensive
employees to sell to employers. As explained below, all of
these claims are time-barred.
survive a motion to dismiss under rule 12(b)(6), a complaint
must contain sufficient factual matter that “state[s] a
claim to relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). A claim is plausible on its face when the factual
allegations allow the court to infer the defendant's
liability based on the alleged conduct. Ashcroft v.
Iqbal, 556 U.S. 662, 663 (2009). The factual allegations
must present more than “the mere possibility of
misconduct.” Id. at 678.
considering a motion to dismiss, the court must accept all
allegations of material fact as true and construe them in the
light most favorable to the non-movant. Burget v.
Lokelani Bernice Pauahi Bishop Trust, 200 F.3d 661, 663
(9th Cir. 2000). But the court is “not bound to accept
as true a legal conclusion couched as a factual
allegation.” Twombly, 550 U.S. at 555. If the
complaint is dismissed, leave to amend should be granted
unless the court “determines that the pleading could
not possibly be cured by the allegation of other
facts.” Doe v. United States, 58 F.3d 494, 497
(9th Cir. 1995).
False Claims Act bars Brooks from bringing any claim:
(1) more than 6 years after the date on which the violation
of section 3729 is committed, or
(2) more than 3 years after the date when facts material to
the right of action are known or reasonably should have been
known by the official of the United States charged with
responsibility to act in the circumstances, but in no event
more than 10 years after the date on which the violation is
committed, whichever occurs last.
31 U.S.C. § 3731(b).
addition to satisfying the statutes of limitations and
repose, all claims under the False Claims Act are subject to
heightened pleading standards for fraud claims. United
States v. United Healthcare Ins. Co., 848 F.3d
1161, 1180 (9th Cir. 2016). This means the plaintiff-relator
“must state with particularity the circumstances
constituting fraud.” Id. (quoting Fe. R. Civ.
P. 9(b)). To satisfy this heightened pleading standard, the
plaintiff must provide specific factual allegations
describing “the who, what, when, where, and how of the
misconduct charged.” Id. (quoting Ebeid ex
rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th
dismissing the First Amended Complaint, Judge Aiken provided
detailed instructions for Brooks to correct the deficiencies
in his complaint. Specifically, Judge Aiken stated:
At this stage, however, the fact that all plaintiff's
representative examples occurred outside the statutes of
limitations and/or repose represents a pleading deficiency
rather than a bar to relief as a matter of law. As discussed
above, Rule 9(b) pleadings must include the “who, what,
when, where, and how” of the alleged misconduct. The
First Amended Complaint broadly refers to activity throughout
relator's employment with defendants, from 2005 to 2013.
It also refers to “more than 200, 000 possible
instances of duplicated billing data” obtained in
discovery. Compl. ¶ 30. The problem is not that relator
failed to allege violations within the statutes of limitation
and/or repose-it is that he failed to do so with
sufficient particularity. Representative examples are
one way of meeting the particularity requirement. Ebeid
ex rel. United States v. Lungwitz, 616 F.3d 993, 998-99
(9th Cir. 2010). But here, the representative examples cannot
cure the particularity deficiencies of the Complaint because
the vast majority of them are time-barred by the statute of
repose. Relator may remedy this problem by providing timely
representative examples or by otherwise amending the
Complaint to include particularized allegations within the
statutes of limitation and repose.
29, 2016 Opinion, 6-7 (footnotes omitted), ECF No. 63.
discussing “timely representative examples, ”
Judge Aiken noted:
Because section 3731(b) bars actions commenced either six
years after the violation was committed or three years after
the date when the “qui tam plaintiff knows or
reasonably should have known the facts material to his right
of action, ” whichever occurs later, United States
ex rel. Hyatt v. Northrop Corp., 91 F.3d 1211, 1217-18
(9th Cir. 1996), any representative examples that occurred on
or after September 3, 2008 are timely. Whether representative
examples that occurred between September 3, 2004 and
September 2, 2008, are timely depends on when relator knew or
reasonably should [have] known the material facts for his
claims. That issue is not before the Court in its
consideration of this Motion.
April 29, 2016 Opinion, 7 at n.2., ECF No. 63.
filed the original complaint on September 3, 2014. ECF No. 3.
The 10 year statute of repose bars claims arising on or
before September 3, 2004. § 3730(b). The timeliness of
claims between September 3, 2004 and September 3, 2008
depends on when Brooks reasonably should have known of the
facts supporting the claim. Id. In examining the SAC
and Brooks's own declarations, it is clear he did not,
and cannot, provide “timely representative
examples” or “particularized allegations within
the statutes of limitations and repose.” Because this
deficiency is fatal to Brooks's claims, I need not
discuss defendants' other arguments.
alleges defendants overbilled the United States with Medicaid
and Medicare double billings. Exhibit B to the SAC contains
Brooks's representative examples detailing the alleged
overbilling. The spreadsheets show two bills on the same day
for the same patient for the same procedure. At this stage, I
assume the documents show what Brooks argues they show.
addition to overbilling, Brooks argues exhibit B shows
examples of overpayments. As alleged by Brooks:
¶ 78. The claims records of Exhibit B to the SAC having
a Fraud Type of referencing “Overpayment” or
“Overpay” show specific illustrative examples of
very likely overpayments due to the unlisted procedures or
high variability of quantity and costs indicating an attempt
to hide charges.
¶ 79. Specific examples of overpayment include Claim
Numbers 200501116500173, 20050116500174, and 200503166500225
having relatively expensive and unspecified parts were paid
via claims LIPA presented to the Government.
last representative example of overbilling is from December
31, 2006. Ex. B to SAC. As discussed above, any
representative examples from September 3, 2008 or earlier are
barred by the six-year statute of limitations unless Brooks
was unaware of the facts supporting his claim. Brooks