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Johnson v. University of Rochester Medical Center

February 18, 2010


The opinion of the court was delivered by: David G. Larimer United States District Judge


This is an action under the False Claims Act, 31 U.S.C. § 3729 et. seq. ("FCA"). Plaintiff-relators, Keith Johnson, M.D. ("Johnson"), and Laura Schmidt, R.N. ("Schmidt") (collectively "plaintiffs"), filed this qui tam action against the University of Rochester Medical Center ("URMC") and Strong Memorial Hospital (the "Hospital") (collectively "defendants"). In essence, plaintiffs contend that the defendants defrauded the United States Government by filing false and/or improper claims for payment under New York Medicare/Medicaid and other federal programs, for anesthesiology services performed in the Obstetric and Gynecological Department and operating rooms ("OR") of the Hospital.

Plaintiffs' complaint sets forth three causes of action. In Count I, plaintiffs allege that defendants committed fraud pursuant to 31 U.S.C. §3729(a). In Count II, Johnson alleges that after he repeatedly advised his supervisors that he believed the Hospital was inadequately supervising its physicians in violation of Medicare/Medicaid regulations and fraudulently reflecting the presence of physicians on medical records in order to obtain reimbursement, the defendants retaliated against him by subjecting him to undue criticism and harassment, and in October 2006 compelled him to resign from employment rather than be terminated, in violation of 31 U.S.C. §3730(h). In Count III, Schmidt contends that after she advised the Hospital that it was inadequately supervising its resident physicians and refused to fraudulently alter medical records to reflect attendance of physicians at procedures for which they had not been present, she was given unduly negative performance reviews and ultimately terminated from employment in June 2006. (Dkt. #2).

Defendants have moved to dismiss the amended complaint for failure to plead fraud claims with the particularity required by FED. R. CIV. P. 9(b), and for failure to state a claim, pursuant to FED. R. CIV. P. 12(b)(6). (Dkt. #14). Plaintiff Johnson has cross-moved to amend the complaint to add allegations of libel per se and prima facie tort, and to add Dr. Lustik as a defendant. (Dkt. #18). For the reasons that follow, defendants' motion is granted, and plaintiffs' cross-motion is denied.


The Hospital is a teaching hospital owned and operated by URMC. Plaintiff Johnson was a medical resident who worked at the Hospital between July 2004 and October 2006, when he was terminated on the alleged grounds of dishonesty and incompetence. Plaintiff Schmidt was employed by the Hospital for fourteen years as an operating room nurse, from 1984 through June 2006, when her employment was terminated.


In deciding whether plaintiffs' complaint should go forward, I note that there are several principles which apply simultaneously to the examination of a motion to dismiss under these circumstances.

Federal Rule of Civil Procedure 12(b)(6) provides that a complaint may be dismissed for failure to state a claim upon which relief can be granted. FED. R. CIV. PROC. 12(b)(6). In evaluating a motion to dismiss under Rule 12(b)(6), a court must "accept the allegations contained in the complaint as true, and draw all reasonable inferences in favor of the non-movant." Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994), citing Ad-Hoc Comm. of Baruch Black & Hispanic Alumni Ass'n v. Bernard M. Baruch College, 835 F.2d 980, 982 (2d Cir. 1987). In seeking to defeat a motion to dismiss, "a plaintiff's obligation . . . requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). See also Ashcroft v. Dept. of Corrections, 2007 U.S. Dist. LEXIS 49079 (W.D.N.Y. 2007). In determining the motion, the Court's review is generally limited to the Complaint, as well as any documents incorporated by reference therein. See Savino v. Fiorella, 2007 U.S. Dist. LEXIS 43284 at *10-*11 (W.D.N.Y. 2007).

With respect to the specificity of the stated claims, the Federal Rules of Civil Procedure generally demand only "notice" pleading, with allegations sufficient to put the responding defendants on notice as to the general nature of the claim. However, where, as here, the complaint sounds in fraud, a more rigorous standard is applied. FED. R. CIV. PROC. 9(b) requires that fraud be pleaded with "particularity." The extent of that particularity is at issue here.

Additional concerns also come into play. The plaintiffs' claims are asserted pursuant to the False Claims Act, which allows private citizens, acting as private attorneys general, to commence litigation relating to fraud committed against the government. The purpose of the statute is to encourage citizens to act as "whistle blowers" and to assist in exposing fraud against the government. See United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 18 (2d Cir. 1990) ("[w]e also note that 'the purpose of the qui tam provisions of the False Claims Act is to encourage private individuals who are aware of fraud being perpetrated against the Government to bring such information forward'"), quoting H.R. Rep. No. 660, 99th Cong., 2d Sess. 22 (1986). The erection of unrealistic barriers to such actions would defeat the purpose of the Act. Therefore, individuals who act according to the statute and bring fraudulent claims forward are statutorily protected from punishment or retaliation against as a consequence of doing so. See 31 U.S.C. § 3730(h).

I. Plaintiffs' Fraud Claims

Defendants argue that the plaintiffs have presented only general allegations and have failed to detail any false claims allegedly submitted by defendants, and therefore have failed to plead their fraud claims with sufficient specificity to satisfy Fed. R. Civ. Proc. 9(b). After a careful reading of the complaint, and affording all favorable inferences to the plaintiffs, I agree.

The complaint alleges a quotidian pattern wherein the Hospital compelled or permitted violations of the hospital's policy and Medicare/Medicaid regulations which require the presence or supervision of a teaching or attending physician (collectively, "TP") when certain procedures are performed by residents. Plaintiffs allege that the pertinent Medicare/Medicaid regulations make reimbursement for such procedures by residents contingent upon TP supervision.

The complaint identifies the general time period and frequency of the alleged failures to provide a supervising TP, some of the medical procedures for which TPs were not provided, and the names of various Strong faculty physicians who actively participated in, or else condoned, the practice. Plaintiff Johnson estimates that he performed several hundred epidurals and well over one thousand extubations or emergence procedures without the supervision of a TP, and that TPs rarely, if ever, filled out post-operative reports as required by statute. Both plaintiffs describe a number of examples of anesthetic procedures in which TPs were absent or unavailable to supervise residents performing procedures for ...

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