United States District Court, E.D. California
United States of America and State of California, ex rel. Douglas Dalitz and Randy Gray, Plaintiffs and Relators,
Amsurg Corp.; Gastroenterology Associates Endoscopy Center, LLC; Redding Gastroenterology, LLC d/b/a Redding Endoscopy Center; Gaddam Naresh Reddy, M.D.; Piyush Kumar Dhanuka, M.D.; and B. Nicholas Namihas, M.D. Defendants.
ORDER DENYING DEFENDANTS' MOTION TO DISMISS
TROY L. NUNLEY, District Judge.
This matter is before the Court pursuant to Defendants' AmSurg Corporation ("AmSurg"); Gastroenterology Associates Endoscopy Center, L.L.C. ("GAEC"); Redding Gastroenterology L.L.C. d/b/a Redding Endoscopy Center ("REC"); Gaddam Naresh Reddy, M.D. ("Reddy"); Piyush Kumar Dhanuka, M.D. ("Dhanuka"); and B. Nicholas Nimhas, M.D. ("Nimhas") (collectively "Defendants") Motion to Dismiss Plaintiffs' Amended Complaint. (ECF No. 35.) Plaintiffs and qui tam Relators Douglas Dalitz ("Dalitz") and Randy Gray ("Gray") (collectively "Plaintiffs") filed an Opposition to Defendants' motion. (ECF No. 38.) The Court has carefully considered the arguments raised in Defendants' motion and reply, as well as Plaintiffs' opposition. For the reasons set forth below, Defendants' Motion to Dismiss is DENIED.
I. FACTUAL BACKGROUND
Plaintiffs bring this suit against Defendants for false certification under the Federal False Claims Act ("FCA"), 31 U.S.C. § 3729(a)(1)-(2), and California False Claims Act ("CFCA"), Cal. Gov. Code § 12651(a)(1)-(2); conspiracy under the Federal False Claims Act, 31 U.S.C. § 3729(a)(3), and California False Claims Act, Cal. Gov. Code § 12651(a)(3); and retaliation in violation of the Federal False Claims Act, 31 U.S.C. § 3730(h), and the California Whistleblower Law, Cal. Labor Code § 1102.5.
Defendant AmSurg is a for-profit corporation based in Tennessee that provides management services to ambulatory surgery centers ("ASCs"). (Amended Complaint, ECF No. 23 at ¶ 9.) Defendants Reddy, Dhanuka, and Namihas (collectively "REC Physicians") are surgeons specializing in Gastroenterology. (ECF No. 23 at ¶¶ 12-14.) Defendants REC Physicians and AmSurg own Defendants GAEC and REC as joint ventures in California. (ECF No. 23 at ¶¶ 10-11.)
Plaintiffs worked at REC as Certified Registered Nurse Anesthetists ("CRNAs"). (ECF No. 23 at ¶¶ 2-5.) The Center employed Dalitz from September 27, 2010, to December 17, 2010, and Gray from around November 1, 2010, to December 17, 2010. Plaintiffs were responsible for reviewing pre-surgical assessments and providing anesthesia to patients. (ECF No. 23 at ¶ 7.)
a. Medicare Program
To be a Medicare provider and receive payments from Medicare, an ASC must enter into an agreement with the Centers for Medicare and Medicaid ("CMS") and meet the conditions in Part 416 of the Code of Federal Regulations. (ECF No. 23 at ¶ 23.) Pursuant to 42 C.F.R. § 416.42(a) and 42 C.F.R. § 416.52(a), providers must perform and place in the patient's record: 1) a medical history and physical assessment ("H&P"); 2) pre-surgical assessment; and 3) anesthetic risk assessment on patients before surgery. (ECF No. 23 at ¶ 24.)
Plaintiffs state that during their employment REC Physicians either did not perform the H&Ps and pre-surgical assessments, or performed them in such a cursory manner that Plaintiffs did not have adequate information to properly assess whether the patient was fit to receive anesthesia or undergo surgical procedures. (ECF No. 23 at ¶ 43.) In addition, Plaintiffs allege that REC Physicians did not properly acquire and place patients' H&Ps in their medical records. (ECF No. 23 at ¶ 45.)
b. Plaintiffs' Reporting
On around September 27, 2010, Dalitz raised concerns regarding the REC Physicians' failure to perform pre-surgical assessments and comprehensive H&Ps to the office manager of REC. (ECF No. 23 at ¶ 48.) Per the office manager's instruction, Dalitz brought the issue up at a staff meeting where the office manager, REC Physicians, and AmSurg's Regional Vice President agreed to resolve the issue as soon as possible. (ECF No. 23 at ¶ 49.)
Gray also brought his concerns regarding the REC Physicians' failure to perform pre-surgical assessments and comprehensive H&Ps to REC's office manager, REC Physicians, and AmSurg's Regional Vice President on "multiple occasions." (ECF No. 23 at ¶ 55.) They assured Gray they would take corrective action. Plaintiffs allege that no corrective action was taken despite their complaints. (ECF No. 23 at ¶ 57.)
Plaintiffs' Amended Complaint provided four examples of REC Physicians' failure to perform comprehensive H&Ps and pre-surgical assessments. Patient A was scheduled for a colonoscopy with Namihas around November or December 2010. (ECF No. 23 at ¶ 50.) Namihas had not performed a comprehensive H&P on Patient A before surgery. However, Dalitz evaluated Patient A himself, and determined Patient A should not be treated in an ASC. After Dalitz informed Nahimas that he would not administer anesthesia to Patient A, Nahimas stated "we did the prep, and that's what we're paying you for." Namihas proceeded with the colonoscopy without anesthetizing the patient. (ECF No. 23 at ¶ 50.)
On April 22, 2011, Reddy performed a colonoscopy on Patient B. Patient B's record shows Reddy signed the patient's H&P at 7:42 a.m. (ECF No. 23 at ¶ 51.) However, Patient B's procedure began at 6:51 a.m. That same morning, Reddy performed a colonoscopy on Patient C. Reddy signed Patient C's H&P at 7:45 am, and started Patient C's procedure at 7:45 am. (ECF No. 23 at ¶ 51.) Contrary to CMS guidelines, Reddy performed Patient B's H&P after his surgery, and could not have performed a comprehensive H&P for Patient C given the brief amount of time between Patient B and Patient C's procedures. (ECF No. 23 at ¶ 51.)
Patient D was scheduled for an endoscopy and colonoscopy with Reddy around December 2, 2010. Reddy did not perform a comprehensive H&P or pre-surgical assessment on Patient D. (ECF No. 23 at ¶ 56.) Patient D informed Gray he had been to the emergency room the night before for heart palpitations. Gray expressed his concern for going forward with the procedure, but Reddy insisted that Gray administer the anesthesia prior to the surgery. (ECF No. 23 at ¶ 56.) Once Gray administered the anesthesia to Patient D, Patient D experienced a sudden onset of profound bradycardia. (ECF No. 23 at ¶ 56.) Reddy had to immediately stop the procedure.
c. Termination of Employment
Plaintiffs attended a final meeting with AmSurg management around December 13, 2010. (ECF No. 23 at ¶ 57.) Gray again expressed concerns that REC was not complying with Medicare regulations. On December 17, 2010, Plaintiffs received ...