Goldberg v. Rush University Medical Center
2013 U.S. Dist. LEXIS 31715, 2013 WL 870651, 929 F. Supp. 2d 807 (2013)
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Rule of Law:
Under Federal Rule of Civil Procedure 9(b), a False Claims Act complaint satisfies the heightened pleading standard for fraud by providing a general outline of the fraudulent scheme and representative examples that detail the 'who, what, when, where, and how' of the alleged misconduct, even if the relator cannot identify every specific false claim submitted.
Facts:
- Rush University Medical Center (RUMC) is a teaching hospital where surgeons from Midwest Orthopaedics at Rush (MOR) perform surgeries.
- Medicare Part B rules require a teaching physician to be physically present for all 'key and critical' portions of a surgery and 'immediately available' for the entire procedure.
- If a teaching surgeon performs overlapping surgeries and cannot be immediately available, Medicare rules require them to arrange for another qualified surgeon to be available as a backup.
- Between 1996 and 2004, Doctor Defendants from MOR allegedly scheduled and conducted simultaneous and overlapping surgeries in multiple operating rooms without being immediately available or arranging for backup surgeons.
- Dr. Robert Goldberg, an orthopedic surgeon at RUMC, repeatedly communicated with senior Rush officials between 1999 and 2004, informing them that the lack of surgeon supervision over residents violated Medicare regulations.
- The Doctor Defendants allegedly instructed orthopedic residents to falsify medical records to state that the teaching surgeon was present and immediately available during procedures.
- Orthopedic nurses at Rush allegedly facilitated the scheme by failing to note the actual times Doctor Defendants entered and exited surgeries, even after being instructed by supervisors to do so.
Procedural Posture:
- Relators Goldberg and Beeham filed a qui tam action under seal in the U.S. District Court for the Northern District of Illinois.
- Relators filed several amended complaints, adding defendants over time.
- The District Court initially dismissed the complaint for lack of subject matter jurisdiction.
- Relators, as appellants, appealed the dismissal to the U.S. Court of Appeals for the Seventh Circuit.
- The Seventh Circuit vacated the dismissal and remanded the case back to the District Court.
- On remand, Relators filed a Fourth Amended Complaint.
- Defendants MOR, Doctor Defendants, and Rush then filed motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).
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Issue:
Does a False Claims Act complaint satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b) by alleging a detailed fraudulent scheme with representative examples of non-compliance with Medicare rules for overlapping surgeries, even if it cannot pinpoint every specific false claim submitted to the government?
Opinions:
Majority - Castillo, J.
Yes, a False Claims Act complaint satisfies the heightened pleading standard of Rule 9(b) by providing a general outline of the fraudulent scheme and representative examples. The Seventh Circuit applies Rule 9(b) with flexibility, recognizing that relators may lack access to all facts, particularly when details of the fraud are within the defendant's exclusive control. Here, the Relators sufficiently pleaded the 'who, what, when, where, and how' of the fraud by identifying the specific surgeons (MOR and Doctor Defendants), the nature of the misrepresentation (billing for surgeries non-compliant with the 'immediate availability' and backup surgeon rules), and providing concrete examples with specific dates and surgery schedules. These representative examples, outlining a scheme to submit false claims, create a strong inference that such claims were actually submitted, thus satisfying the rule's purpose of providing fair notice. However, the claims against Rush (the hospital) fail because the complaint does not allege that Rush submitted any false claims under Medicare Part A or that its reimbursement was tied to compliance with the Part B teaching physician rules. The conspiracy claim also fails for lacking the requisite particularity, as Relators did not allege any specific facts about an agreement between the defendants.
Analysis:
This opinion reinforces the flexible application of Rule 9(b) in False Claims Act cases within the Seventh Circuit, particularly where evidence is exclusively held by the defendant. It establishes that a relator can survive a motion to dismiss without pleading the details of every single false claim, so long as they plead a plausible fraudulent scheme with sufficient representative examples. This approach prevents premature dismissal of meritorious whistleblower cases and allows relators to use discovery to obtain specific evidence like billing records. The decision also clarifies the distinction between liability for the party submitting the false claim (the doctors) and a facility (the hospital) where the conduct occurred, emphasizing that liability hinges on the specific claims each party submitted to the government.
