U.S. ex rel. Woods v. SouthernCare, Inc. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Woods v. SouthernCare, Inc., No. 3:09-CV-00313-CWR-LRA (S.D. Miss. Mar. 30, 2013)

The United States District Court for the Southern District of Mississippi granted in part and denied in part a hospice care corporation’s motion to dismiss a False Claims Act suit brought by two former employees alleging that the corporation improperly enrolled patients in hospice care who were not certified as terminally ill (having six months or less to live) and submitted false claims for hospice benefits.

This was the second qui tam suit filed against the corporation based on the same allegations.  The government intervened in the first suit and, in 2009, a settlement agreement was reached. The district court ruled that the only claims that could be brought in the second case were those that took place after September 1, 2008, noting that the settlement agreement released the corporation from all claims occurring before that date.  The court held that the claims that occurred after this date were sufficient to survive a motion to dismiss, rejecting the corporation’s argument that the relators failed to allege fraud with particularity.  The court specifically noted that the claims include patient initials, dates and patient identification numbers.

The district court dismissed the relators’ claims of companywide fraud, finding inadequate evidence to support them, as well as the claims of a conspiracy, noting that a corporation is incapable of conspiring with its own employees and agents, which was what was alleged.  Likewise, the relators’ claims based on the Stark Law and the Anti-Kickback Statute were dismissed because the relators failed to plead the claims with particularity, noting that they did not identify one physician who referred patients to the hospice provider and has a financial relationship with it or one nurse who was given inducements to recruit new patients.