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Julie Zeman, On Behalf of the United States of America v. Usc University Hospital


February 19, 2013


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge




Presently before the court is Defendant USC University Hospital ("the Hospital")'s Motion to Dismiss. Having considered the submissions of the parties and heard oral argument, the court grants the motion and adopts the following order.

I. Background

The Medicare program provides certain health care benefits to eligible elderly and disabled people. See Maximum Comfort Inc. v. Sec'y of Health and Human Servs., 512 F.3d 1081, 1083 (9th Cir. 2007); Vencor Inc. v. Nat'l States Ins. Co., 303 F.3d 1024, 1026 (9th Cir. 2002); Alhambra Hosp. v. Thompson, 259 F.3d 1071, 1072 (9th Cir. 2001). Hospitals are reimbursed through private fiscal administrators, who are themselves regulated by the Department of Health and Human Services. Alhambra Hosp., 259 F. 3d at 1072.

Relator Julia Zeman is covered by Medicare. (Complaint ¶ 11.) Zeman "receives her Medicare services through a Medicare managed plan administered by third party companies . . . ." (Compl. ¶ 12.) Zeman underwent foot surgeries at USC Hospital on August 25, 2008, April 30, 2009, October 27, 2009, and February 15, 2011. (Compl. ¶¶ 14-16, 32.) Dr. David Thorardson performed the surgeries. (Compl. ¶ 11.) Zeman later received Hospital bills that Zeman alleges are improper in two ways. (Compl. ¶ 13, 18, 19, 21.)

First, Zeman alleges that the Hospital improperly billed her for post-operative office visits within ninety days of a surgery, in violation of Medicare regulations. (Compl. ¶¶ 18, 19, 35, 38, 41.) Second, Zeman alleges that the Hospital improperly billed her for medical services that were not provided at any Hospital facility. (Compl. ¶ 21.)

On July 13, 2011, Zeman filed a qui tam complaint against the Hospital for violations of the False Claims Act, 31 U.S.C. §§ 3729-3733. The complaint alleges that the Hospital knowingly presented false or fraudulent claims to Medicare and used false records to get the fraudulent claims approved. The government did not intervene.*fn1 The Hospital now moves to dismiss Zeman's complaint.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

To prevail on a False Claims Act claim, a plaintiff must show that (1) the defendant made a claim against the United States, (2) the claim was false or fraudulent, and (3) the defendant knew that the claim was false or fraudulent. Aflatooni ex rel United States v. Kitsap Physicians Serv., 314 F. 3d 955, 1000 (9th Cir. 2002). False Claims Act complaints must also satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Cafasso ex rel. United States v. General Dynamics C4 Systems, Inc., 637 F.3d 1047, 1054 (9th Cir. 2011). Rule 9(b) requires that a pleading identify, with particularity, the "who, what, when, where, and how, of the misconduct charged, as well as what is false and misleading about the purportedly fraudulent statement, and why it is false." Id. at 1954-1055 (citing Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal quotations and alterations omitted)).

It is a "fairly obvious notion" that a False Claims Act suit requires a false claim. Cafasso, 637 F.3d at 1055 (citing Aflatooni, 314 F.3d at 997.) Zeman's complaint does not allege that the Hospital submitted any claims to the United States. Zeman argues that she has nevertheless satisfied the false claim element because she has alleged that she "receives her Medicare services through a medicare managed plan administered by third party companies." (Compl. ¶ 12; Opp. at 8.) The mere fact that Plaintiff received a bill, however, does not necessarily establish that the service was covered by Medicare in the first instance or indicate that the Hospital submitted any claims, let alone false or fraudulent claims, to the United States.

In the absence of a properly pled false claim, a complaint may nevertheless warrant the inference that false claims are part of an alleged fraudulent scheme. Cafasso, 637 F.3d at 1056. It is not enough, however "to describe a private scheme in detail but then to allege simply and without any stated reason . . . that claims requesting illegal payments must have been submitted." Aflatooni, 314 F.3d at 1002 (quotation and citation omitted). Here, the complaint only alleges that Zeman received bills for certain services on certain dates. As such, the complaint does not allege any particular nefarious scheme with sufficient detail to warrant the inference that the Hospital actually and knowingly submitted false claims to the United States.

IV. Conclusion

For the reasons stated above, Defendant's Motion to Dismiss is GRANTED, with leave to amend.*fn2 Any amended complaint shall be filed within fourteen days of the date of this order.


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