Goldberg v. Rush University Medical Center
929 F. Supp. 2d 807, 2013 WL 870651, 2013 U.S. Dist. LEXIS 31715 (2013)
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Rule of Law:
A False Claims Act complaint satisfies the heightened pleading standard of Federal Rule of Civil Procedure 9(b) if it alleges a general fraudulent scheme with particularity and provides representative examples, which creates a strong and reasonable inference that false claims were submitted to the government, even without identifying the specific claims themselves.
Facts:
- Between 1996 and 2004, doctors at Midwest Orthopaedics at Rush (MOR) who performed surgeries at Rush University Medical Center (RUMC) and Rush SurgiCenter had a regular practice of conducting simultaneous or overlapping surgeries in multiple operating rooms.
- These teaching physicians often failed to arrange for another qualified surgeon to be immediately available to assist residents during the overlapping procedures, a requirement for billing Medicare under the 'Teaching Physician Regulations.'
- Specific instances included a surgeon scheduling six complex surgeries in two operating rooms in one day, and another scheduling five surgeries in three different operating rooms across different buildings within a three-hour span.
- Orthopedic residents were allegedly instructed to falsify medical records to state that the teaching surgeons were present for critical portions of the surgery and were 'immediately available.'
- Orthopedic nurses at Rush allegedly facilitated the practice by refusing to properly document the entry and exit times of the teaching surgeons from the operating rooms, even after being instructed by supervisors to do so.
- Dr. Robert Goldberg, an orthopedic surgeon on staff at RUMC, repeatedly communicated his concerns about the lack of surgeon supervision over residents and the corresponding Medicare violations to senior Rush officials between 1999 and 2004.
Procedural Posture:
- Relators Robert S. Goldberg and June Beeeham filed a qui tam action under seal in the U.S. District Court for the Northern District of Illinois on July 12, 2004.
- Relators filed an Amended Complaint (2005), a Second Amended Complaint (2006), and a Third Amended Complaint (2010), progressively adding defendants.
- The case was unsealed in March 2010.
- Defendants filed motions to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction.
- On November 2, 2010, the District Court granted the motion and dismissed the Relators' federal claims.
- Relators appealed the dismissal to the U.S. Court of Appeals for the Seventh Circuit.
- On May 21, 2012, the Seventh Circuit vacated the District Court's dismissal and remanded the case for further proceedings.
- On August 31, 2012, Relators filed their Fourth Amended Complaint, which is the subject of the current motions to dismiss by Defendants pursuant to Rules 12(b)(6) and 9(b).
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Issue:
Does a False Claims Act complaint satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) by alleging a detailed scheme of submitting claims for improperly supervised, overlapping surgeries and providing specific representative examples, even if the complaint does not identify the specific false claims actually submitted to the government for payment?
Opinions:
Majority - Castillo, J.
Yes, as to the claims against Midwest Orthopaedics at Rush (MOR) and the individual Doctor Defendants; No, as to the claims against Rush University Medical Center (RUMC). A complaint alleging fraud under the False Claims Act can satisfy Rule 9(b) by providing a general outline of the fraudulent scheme and representative examples, which is sufficient to reasonably notify the defendants of their purported role. The court held that the relators' complaint met this standard for MOR and the Doctor Defendants by pleading the 'who, what, when, where, and how' of the fraudulent scheme. The relators identified the doctors involved, described the practice of scheduling overlapping surgeries without arranging for required backup surgeons, provided specific dates and surgical schedules as examples, and explained how this violated Medicare rules. The court found it was a reasonable inference that claims were submitted for these non-compliant surgeries, and relators could not be expected to have access to the specific billing records at the pleading stage. However, the claims against RUMC were dismissed because the complaint failed to allege that Rush itself submitted any false claims under Medicare Part A (which covers facility fees) or that it was required to certify compliance with the Teaching Physician Rule, which applies to physician billing under Part B.
Analysis:
This case illustrates the Seventh Circuit's flexible application of the heightened pleading standard of Rule 9(b) in False Claims Act litigation. The decision affirms that a whistleblower (relator) does not need to produce specific, individual false claims at the complaint stage if they can allege a detailed and plausible fraudulent scheme with concrete, representative examples. This approach prevents early dismissal of meritorious cases where the evidence of specific claims is within the defendant's exclusive control. However, the opinion also clarifies the limits of FCA liability, demonstrating that a complaint must specifically tie each defendant to the submission of a false claim; merely alleging an organization's general knowledge of or assistance in another party's fraudulent scheme is insufficient to state a claim against that organization.
