United States ex rel. Estate of Cunningham v. Millennium Laboratories
United States ex rel. Estate of Cunningham v. Millennium Laboratories
Opinion of the Court
MEMORANDUM
I. Introduction
The Estate of Robert Cunningham (“Relator”) brings suit asserting that Defendants
II. Background
A. Factual Background
Because the issues analyzed here arise in the context of a motion to dismiss, this court examines the facts as they are presented in Relator’s Complaint,
The False Claims Act states that one who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval .... is liable to the United States Government for a civil penalty. ...”
The public disclosure bar of the FCA states that a court lacks jurisdiction to hear such a qui tam suit, unless the Government opposes:
if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or (iii) from the news media.7
In 2010, Congress amended the public disclosure bar to include the requirement that the previous public disclosure under the first sub-category occur in a federal case or hearing. Prior to the amendment, the previous public disclosure could have occurred in either a federal or state suit or hearing.
The issue presented in Defendant’s Motion to Dismiss is whether this court had jurisdiction over Relator’s claim at the time the original complaint was filed.
Defendant Millennium Laboratories of California (“Millennium”) is a California company that “offers medication or prescription monitoring services for physicians.”
On December 24, 2009, Millennium filed a complaint against Calloway and John Does 1-50, inclusive, in the Superior Court
First, there are the patients and insurances being billed twice for the same service. Medicaid and Medicare frown upon being billed twice for the same thing____ Second, these in-house screens that clinics are billing the 80101 code for should be bundled, but clinics are “un-bundling” each metabolite screened for on the cup or test strip and again Medicaid and Medicare frowns upon that.21
Five days after Millennium filed its complaint against Calloway, Robert Cunningham filed the Complaint in the present case against Millennium in the United States District Court for the District of Massachusetts. When Robert Cunningham passed away, the Estate of Robert Cunningham stepped in as Relator.
In its First Amended Complaint, Relator alleges the following. Since 2007, Millennium has provided urine drug testing services to physicians and other healthcare practitioners practicing pain management.
In Count I, Relator asserts that Millennium’s billing practices violated the Federal False Claims Act. Counts II-XVI assert that the same practices also violated similar state false claims acts for the states of California, Connecticut, Florida, Georgia, Illinois, Indiana, Nevada, New Jersey, New York, Oklahoma, Rhode Island, Tennessee, Texas; the Commonwealth of Virginia; and the District of Columbia.
B. Procedural History
Robert Cunningham filed the original Complaint [# 2] in this suit on December 29, 2009.
The Defendant filed its Motion to Dismiss [# 36] on July 22, 201 1.
III. Discussion
A. Public Disclosure Bar
Federal courts are courts of limited jurisdiction.
The False Claims Act contains a public disclosure bar, which is a jurisdictional bar.
In 2010—after Robert Cunningham filed the original Complaint in this suit, but before the Estate of Robert Cunningham filed the First Amended Complaint—Congress amended the public disclosure bar.
As a result, the parties in this case disagree as to which public disclosure bar applies. Defendant argues that the public disclosure bar as it existed at the time the original Complaint was filed applies. Relator counters that the current version of the public disclosure bar applies because, according to Relator, it is retroactive. If Relator is correct, the California suit would not qualify as a prior, public disclosure.
The court must decide whether there was jurisdiction over Relator’s FCA claim under the public disclosure bar as it existed at the time Robert Cunningham filed the original Complaint in this suit before it may move on to the issue of which public disclosure bar applies to the First Amended Complaint. If jurisdiction did not exist over this claim at the time the suit was filed, then the suit must be dismissed because a party cannot amend to fix a juris
At the time Robert Cunningham filed the Complaint in this case, the public disclosure bar of the FCA read:
No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.41
The First Circuit has stated that in an analysis of the public disclosure bar, the court must determine:
(1) whether there has been public disclosure of the allegations or transactions in the relator’s complaint; (2) if so, whether the public disclosure occurred in the manner specified in the statute; (3) if so, whether the relator’s suit is “based upon” those publicly disclosed allegations or transactions; and (4) if the answers to these questions are in the affirmative, whether the relator falls within the “original source” exception....42
For the public disclosure bar to preclude jurisdiction, each of the first three elements must be met. If they are, then the court only has jurisdiction over the suit if the relator qualifies as an original source under the fourth element of the test. Each of the first three elements of the public disclosure bar will be addressed in turn.
1. Prior Public Disclosure
The standard for a prior, public disclosure of the allegations or transactions under the FCA is clear. Public disclosure occurs “when the essential elements exposing the particular transaction as fraudulent find their way into the public domain”
In 2010, the Supreme Court rejected the notion that a potential defendant in an FCA lawsuit might attempt to “insulate [itself] from qui tam liability ‘through careful, low key “disclosures” ’ of potential fraud....”
This case presents a unique set of circumstances. Typically, the prior, public disclosure is a previous lawsuit brought against the defendant for the same or similar action. Here, the alleged prior, public disclosure—the California suit—is a lawsuit brought by Millennium, the Defendant in the present FCA case, against Calloway for, inter alia, defamation. Although the situation is atypical, the California suit undoubtedly qualifies as a prior public disclosure under the FCA as it existed at the time Robert Cunningham filed the original Complaint in this case. In the complaint in the California suit, Millennium describes its billing practice and argues that Calloway has misrepresented it as fraudulent.
The public disclosure of allegations of fraud can occur when a plaintiff brings a defamation suit alleging that the defendant has represented plaintiffs actions to be fraudulent.
2. Specified Manner
Under the public disclosure bar as it existed when Robert Cunningham filed the original Complaint in this case, prior public disclosure could occur in either a state or federal lawsuit. Public disclosure occurs through any public documents available on the docket in that civil hearing.
The First Circuit recently joined a majority of circuits by determining that the “based upon” requirement in § 3730(e)(4)(A) means that the “relator’s allegations are substantially similar to information disclosed publicly,” even if the relator did not use that information as the basis for his claim.
Here, in the original Complaint, Robert Cunningham alleges that Millennium’s PBM allowed physicians to “bill both government and private health insurance companies for the multiple drug classes detected by the test kit.”
MILLENNIUM knowingly encouraged defendants JOHN DOE 1-10,000 to perform and order medically excessive and unnecessary testing by encouraging them to use a multi-class qualitative drug screen which uses a single specimen, and to bill the government and private insurance programs multiple units for the single testing devices. MILLENNIUM encouraged defendants JOHN DOE 1-10,000 to begin performing point of care testing in their office and to improperly bill the government under the CPT codes 80101, 80101QW, and/or pathology and laboratory codes. Defendants knew that these practices and procedures resulted in fraudulent claims to the federal government through the Medicare, Medicaid, and other federally funded programs.60
There is no doubt that the allegations made in the first count of the original Complaint are substantially similar to the information disclosed in the California suit complaint. In the complaint for the California suit, Millennium describes its PBM.
First, there are the patients and insurances being billed twice for the same services. Medicaid and Medicare frown upon being billed twice for the same thing. Bills are as high as $1500-$2000. Which is outrageous. Second, these in-house screens that clinics are billing the 80101 code for should be bundled, but clinics are “un-bundling” each metabolite screened for on the cup or test strip and again Medicaid and Medicare frowns upon that.64
In general, in these e-mails, Calloway executives allege that Millennium implements a plan that billed insurance agencies and the federal government multiple times for the same test. The information disclosed in the complaint for the California suit is, thus, substantially similar to the allegations in the original Complaint in the case before us.
Relator’s qui tarn suit is barred by the public disclosure bar because all of the elements of the bar are satisfied. First, there has been public disclosure of the allegations or transactions in Relator’s Complaint. Second, the public disclosure occurred in the manner specified in the statute. Third, Relator’s suit is “based upon” the previously publicly disclosed allegations or transactions.
Relator does not even attempt to argue that it fits into the original source exception to the bar. Because the public disclosure bar is a jurisdictional bar, the court DISMISSES WITH PREJUDICE Plaintiffs FCA claim. The court will not consider Defendant’s two other grounds for dismissal.
B. State Law Claims
In addition to the federal FCA claim, Plaintiff brings fifteen claims under the laws of fourteen States and the District of Columbia. The First Circuit has recognized that federal district courts have broad discretion in deciding whether to exercise jurisdiction over pendent state-law claims in non-diversity cases.
Here, Plaintiffs federal claim has been dismissed. In accordance with the principles laid out in Newman
For the foregoing reasons, the Defendant’s Motion to Dismiss [# 36] is ALLOWED. Plaintiffs federal claim, Count I, in the First Amended Complaint is DISMISSED WITH PREJUDICE. Plaintiffs state law claims, Counts IIXVI in the First Amended Complaint, are DISMISSED WITHOUT PREJUDICE. Lastly, pursuant to 31 U.S.C. § 3730(b), the Government has filed a Notice of United States’ Consent to Dismissal [# 54] stating that it consents to dismissal of this action.
AN ORDER HAS BEEN ISSUED.
ORDER
After a hearing on November 28, 2011, and for the reasons set forth in the accompanying Memorandum, Defendant’s Motion to Dismiss the First Amended Complaint [# 36] is ALLOWED. This case is CLOSED.
IT IS SO ORDERED.
. Throughout this Memorandum, the term "Defendants” refers to Millennium Laboratories of California and John Does 1-10,000. The term "Defendant” only refers to Millennium, unless otherwise stated.
. The States of California, Connecticut, Florida, Georgia, Illinois, Indiana, Nevada, New Jersey, New York, Oklahoma, Rhode Island, Tennessee, Texas; and the Commonwealth of Virginia.
. Trans-Spec Truck Serv., Inc. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir. 2008).
. See Pettengill v. Curtis, 584 F.Supp.2d 348, 362 (D.Mass. 2008) (quoting Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 96 (1st Cir. 2007)).
. Fraud Enforcement and Recovery Act of 2009, Pub.L. No. 111-21, § 4(a), 123 Stat. 1617, 1621 (codified as amended at 31 U.S.C. § 3729(a) (Supp. 2010)).
. 31 U.S.C. § 3730(b) (2006).
. Patient Protection and Affordable Care Act, Pub.L. No. 111-148, § 10104(j)(2), 124 Stat. 119, 901 (2010) (codified as amended at 31 U.S.C. § 3730(e)(4)(A) (Supp. 2010) (effective July 22, 2010)).
. 31 U.S.C. § 3730(e)(4)(A) (2006) (amended 2010).
. See infra Part III.A.
. First Am. Compl. ¶ 8[# 21],
. First Am. Compl-¶ 6[# 21],
. First Am. Compl. ¶ 6[# 21].
. First Am. Comply 7[# 21],
. First Am. Compl. ¶ 7[# 21].
. Pl.'s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc.) ].
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. l(Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶¶ 15-31) ].
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶ 7) ].
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶ 11)].
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶ 12) ].
. Pl.'s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. l(Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc., Ex. C.]).
. See Pl.’s/Relator’s Opp’n to Def. Millennium Labs, of Cal.’s Mot. to Dismiss the First Am. Compl. [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc., Ex. A.)].
. First Am. Comply 7[# 21],
. First Am. Comply 18[# 21],
. First Am. ComplA 19[# 21].
. First Am. Comply 21 [# 21], For example, a nine panel test kit can test for nine different drugs. In such an instance, Defendant Millennium explains to physicians and practitioners that they can use CPT code 80101QW to bill for nine different tests.
. First Am. Comply 21 [# 21].
. Compl. [# 2],
. First Am. Compl. [# 21].
. Notice of the U.S. that It Is not Intervening at this Time [# 22],
. Notice of the U.S. that It Is not Intervening at this Time [# 22]; Supplemental Notice of U.S. Regarding Non-Intervention at this Time [# 26],
. Mot. to Dismiss [# 36],
. Morales Feliciano v. Rullan, 303 F.3d 1, 6 (1st Cir. 2002).
. See Mullan v. Torrance, 22 U.S. 537, 539, 9 Wheat. 537, 6 L.Ed. 154 (1824) (“It is quite clear, that the jurisdiction of the Courts depends upon the state of things at the time of the action brought....”); Sallen v. Corinthians Licenciamentos LTDA, 273 F.3d 14, 23 (1st Cir. 2001) (citing Morales Feliciano for this principle).
. Forbes v. FDIC, 850 F.Supp. 94, 97 (D.Mass. 1994) (Tauro, J.) ("The First Circuit has previously observed that a plaintiff may not use post-complaint events to create jurisdiction or satisfy prerequisites to suit."); see also Fed. Recovery Servs., Inc. v. United States, 72 F.3d 447, 453 (5th Cir. 1995); Aetna Casualty & Surety Co. v. Hillman, 796 F.2d 770,
. United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 328 (5th Cir. 2011) (internal citation omitted).
. 31 U.S.C. § 3730(e)(4)(A); Rockwell Int’l Corp. v. United States, 549 U.S. 457, 468, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007) ("[Under the public disclosure bar,] the issue is not whether casting the creation of a cause of action in jurisdictional terms somehow limits the general grant of jurisdiction under which that cause of action would normally be brought, but rather whether a clear and explicit withdrawal of jurisdiction withdraws jurisdiction. It undoubtedly does so.”).
. Schindler Elevator Corp. v. United States ex rel. Kirk, — U.S. —, 131 S.Ct. 1885, 1894, 179 L.Ed.2d 825 (2011) (quoting Graham Cnty. Soil and Water Conservation Dist. v. United States ex rel. Wilson, — U.S. —, 130 S.Ct. 1396, 1399, 176 L.Ed.2d 225 (2010)).
. Patient Protection and Affordable Care Act, Pub.L. No. 111-148, § 10104(j)(2), 124 Stat. 119, 901 (2010) (codified as amended at 31 U.S.C. § 3730(e)(4)(A) (Supp. 2010) (effective July 22, 2010)).
. Id. ("The court shall dismiss an action or claim under this section ... if substantially the same allegations or transactions alleged in the action or claim were publicly disclosed (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party ....”) (emphasis added).
. See McKesson Corp., 649 F.3d at 328.
. 31 U.S.C. § 3730(e)(4)(A) (2006) (amended 2010).
. United States, ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 21 (1st Cir. 2009) (quoting United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 728 (1st Cir. 2007) (overruled on other grounds)).
. United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 54 (1st Cir. 2009).
. United States ex rel. Poteet v. Bahler Med., Inc., 619 F.3d 104, 110 (1st Cir. 2010).
. See Ondis, 587 F.3d at 54 (“Against this backdrop, our initial task is to determine whether both the City's alleged misrepresentation (that it would promote subsidized housing) and what the relator alleges was the City’s true plan (that it would strive to curtail or eliminate subsidized housing) were sufficiently in the public domain to ground an inference of fraud.”).
. United States ex rel. Poteet, 619 F.3d at 110.
. Graham Cnty. Soil and Water Conservation Dist. v. United States ex rel. Wilson, — U.S. —, 130 S.Ct. 1396, 1410, 176 L.Ed.2d 225 (2010) (internal citation omitted).
. Id.
. Schindler Elevator Corp. v. United States ex rel. Kirk, — U.S. —, 131 S.Ct. 1885, 1895, 179 L.Ed.2d 825 (2011).
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1(Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶ 7) ].
. See Schindler Elevator Corp., 131 S.Ct. at 1895; Graham Cnty. Soil and Water Conservation Dist., 130 S.Ct. at 1410.
. See Schindler Elevator Corp., 131 S.Ct. at 1894.
. See, e.g., United States ex rel. McKenzie v. BellSouth Telecomms. Inc., 123 F.3d 935, 939 (6th Cir. 1997) ("`Public disclosure’ also includes documents that have been filed with a court, such as discovery documents and a plaintiff’s complaint." (citing United States ex rel. Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 652 (D.C.Cir. 1994))).
. United States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 57 (1st Cir. 2009); see also United States ex rel. Poteet v. Bahler Med., Inc., 619 F.3d 104, 114 (1st Cir. 2010) ("As we establish in Ondis, an action is `based upon’ prior disclosures if the relator’s complaint contains allegations that are `substantially similar to’ those disclosures.").
. United States ex rel. Poteet, 619 F.3d at 114.
. Compl. ¶ 18[# 2],
. Compl. ¶¶ 20, 22, 24, 53[# 2],
. Compl. ¶¶ 52—63[# 2],
. Compl. ¶ 18[#2]. The three other counts are (1) misrepresentation of medical necessity, (2) misrepresentation of the material facts, and (3) misrepresentation of the samples tested. These counts do not appear in the First Amended Complaint and thus have no bearing on this motion to dismiss. Even if these claims were not barred by the public disclosure bar they do not provide Relator with the ability to amend the complaint to include a claim that was jurisdictionally barred at the time Cunningham filed the original Complaint.
. Compl. ¶ 53[# 2].
. Pl.’s/Relator’s Opp’n Def. Mot. to Dismiss [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. ¶ 7) ].
. See Pl.'s/Relator’s Opp’n to Def. Millennium Labs, of Cal.’s Mot. to Dismiss the First Am. Compl. [#42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc., Exs. AC.)].
. Pl.'s/Relator's Opp’n to Def. Millennium Labs, of Cal.'s Mot. to Dismiss the First Am. Compl. [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. Ex. C.) ].
. Pl.’s/Relator’s Opp'n to Def. Millennium Labs, of Cal.'s Mot. to Dismiss the First Am. Compl. [# 42, Ex. 1 (Compl. in Millennium Labs. Inc. v. Calloway Labs., Inc. Ex. A.)].
. Newman v. Burgin, 930 F.2d 955, 963 (1st Cir. 1991).
. Id. at 964 (quoting Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988) (when the federal-law claims have dropped out of the lawsuit in its early stages and only state-law claims remain, the federal court should decline the exercise of jurisdiction by dismissing the case without prejudice)).
. Newman, 930 F.2d at 963.
. Cohill, 484 U.S. at 350, 108 S.Ct. 614.
Reference
- Full Case Name
- UNITED STATES of America, ex rel. The ESTATE OF Robert CUNNINGHAM v. MILLENNIUM LABORATORIES OF CALIFORNIA
- Cited By
- 1 case
- Status
- Published