Zafirov v. Florida Medical Associates, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

UNITED STATES OF AMERICA

ex rel. CLARISSA ZAFIROV,

Plaintiff,

v. Case No. 8:19-cv-1236-KKM-SPF

FLORIDA MEDICAL ASSOCIATES

LLC, et al.,

Defendants.

ORDER

In this unsealed False Claims Act action, the defendants move to dismiss Relator

Clarissa Zafirov’s complaint, (Docs. 41, 50, 51), which Zafirov opposes, (Docs. 56, 57, 59).

The motions to dismiss are due to be granted. Zafirov’s complaint fails to adequately allege

that the defendants submitted false claims to the government, much less who submitted

the claims, when they were submitted, and how those claims were submitted. See Fed. R.

Civ. Proc. 9(b). Further, the public-disclosure bar prohibits Zafirov from bringing her

claims as alleged because they are substantially the same as those in a previous qui tam case

and she fails to adequately allege that she qualifies as an original source. As a result, the

defendants’ motions to dismiss will be granted without prejudice with leave to file an

amended complaint to remedy the deficiencies identified below.'

The defendants raise a host of other potentially meritorious faults with Zafirov’s complaint, including the

I. BACKGROUND?

A. Medicare Advantage Program

The United States operates and administers Medicare, a health insurance program

for disabled individuals and individuals 65 years old or older. (Doc. 1 44 5, 27.) The

operating division for Medicare is the Centers for Medicare and Medicaid Services (CMS).

(Id. ¥ 5.) Medicare consists of four distinct programs, Parts A through D. Ud. § 28.)

Relevant here is Medicare’s Part C Program, called the Medicare Advantage Program. (Id.)

Under Medicare Advantage, the beneficiary enrolls in a plan that is typically

managed by a private insurance company (“MA Organization”). (Id.) The MA

Organization, in turn, contracts with a provider organization, such as a hospital network

or a group of physicians, to furnish healthcare services to the beneficiary. (Id.) Unlike

Medicare Parts A and B, where CMS reimburses healthcare providers for services provided

via submission of claims (often known as a fee-for-service system), under Medicare

Advantage, the Government pays each MA Organization a fixed, capitated amount each

month for the provision of covered items and services for each plan beneficiary. (Id. 74 28,

failure to allege an “obligation” for purposes of a reverse False Claims Act, impermissible grouping of

defendants, the first-to-file bar, and the government-action bar. Because Zafirov’s complaint must be

repleaded for the primary fault of failure to allege the requisite particularity required by Rule 9(b) for False

Claims Act violations, the Court does not analyze all the remaining grounds as it is yet to be seen whether

Zafirov can sufficiently replead the missing facts. But Zafirov should be mindful of these other grounds if

she elects to file an amended complaint.

* The Court describes the facts, as it must, taking the allegations in Zafirov’s complaint as true and

construing them in the light most favorable to her. See Pielage v. McConnell, 516 F.3d 1282, 1284 (11th

Cir. 2008).

30.) This payment does not depend on the amount of healthcare services provided to each

enrollee. (Id.) The MA Organizations, in turn, enter into financial agreements to pay the

provider organizations. (Id. § 35.) Importantly, the provider organizations do not directly

submit claims for payment to CMS. (Id.)

To determine the fixed, capitated amount of payment for each plan beneficiary,

CMS uses a “bidding process[.]” (id. § 30.) In that process, each Medicare Advantage

Plan, through a MA Organization, submits a bid amount, “which is then compared to an

administratively set benchmark set by CMS based on a statutory formula.” (Id.) The

government adjusts the capitated payments for each beneficiary based on his or her

demographic factors (age, gender, etc.) and his or her health conditions or status. (Id.) This

adjustment by the government is called a “risk adjustment,” “risk score,” or “risk-adjustment

factor,” and it acts as a multiplier to the MA Organization’s bid for covered services. (Id.)

Generally, the higher the “risk score” for a plan beneficiary, the more money the MA

Organizations receive for that beneficiary each month. (Id.)

To determine the risk score for a plan beneficiary, CMS uses a risk-adjustment

model that takes into account certain patient demographic factors, as well as medical

conditions and previous diagnoses. (Id. 4 33.) To ensure the accuracy of any diagnosis,

such diagnosis must follow an in-person visit between the patient and a physician during

the relevant year and the diagnosis must be properly documented in the patient’s medical

record when the physician saw the patient. (Id. § 31.) To ensure consistency, CMS uses

the International Classification of Diseases (ICD) codes to diagnose and identify health

conditions. (Id.)

According to Zafirov, the typical process for submitting a claim to CMS is as

follows: Provider organizations treat plan beneficiaries and submit patient data, including

diagnosis codes, to MA Organizations. (Id. 4 32.) The MA Organizations, in turn, review

and filter the data to ensure that it is accurate and complies with CMS requirements, and

then submit the data and diagnosis codes to CMS through the Risk-Adjustment

Processing System and the Encounter Data System. (Id. 44 32, 37, 40.) CMS uses the

diagnosis codes to calculate a risk score for each beneficiary. (Id. § 32.) CMS then uses

that calculation to adjust the capitated payments to the MA organizations for each plan

member. (Id.) Each Medicare Advantage patient’s risk score is calculated annually. (Id.

q 34.)

MA Organizations often pay provider organizations through a capitated or

gainsharing arrangement. (Id. 4 35.) Under a capitated arrangement, an MA Organization

agrees to pay part of the capitation payment it receives from CMS to the provider

organization, less an administrative percentage fee. (Id.) In a gainsharing arrangement, a

provider organization receives incentive payments based on total revenue an MA

Organization receives from CMS for patients to whom the provider organizations provided

healthcare service. (Id.) According to Zafirov, under this system, provider organizations

are incentivized to increase the number of risk-adjusting diagnoses they report to MA

Organizations and to report diagnosis codes “for more severe risk-adjusting medical

conditions[,]” so that the beneficiaries that they treat will receive higher risk scores. (Id.)

B. The Parties

Zafirov is a board-certified family medicine physician licensed to practice in Florida.

(Id. § 6.) She previously worked for Florida Medical Associates, one of the named

defendants in this case, beginning in 2018. (Id.)

Zafirov divides the defendants into three categories: Medicare Advantage

Defendants (MA Defendants), Provider Organization Defendants (Provider Defendants);

and Siddartha Pagidipati individually. (Id. ¢§ 7-15.)> The MA Defendants are Freedom

Health (a health maintenance organization (HMO)), Optimum Healthcare (another

HMO), and Anthem. (Id. 4 8.)* The Provider Defendants are Florida Medical Associates,

Physician Partners, Physician Partners Specialty Services, Sun Labs USA, and Anion. (Id.

19 7, 15.)

> The Defendants disagree with Zafirov’s grouping them together. (See Doc. 41 at 1 n.1.) But for the sake

of consistency, they accept Zafirov’s groupings in their briefing. (See id.) The Court does so too for purposes

of clarity. But Zafirov should not interpret this format as an acceptance of her grouping for pleading

purposes, especially in the light of the discussion below about shotgun pleading.

Zafirov notified the government that she intends to drop her claims against Anthem. (Doc. 57 at 1 n.1.)

Zafirov did not contest Anthem’s arguments for why the case should be dismissed, at least as to Anthem.

As a result, those arguments are considered conceded. If Zafirov chooses to file an amended complaint, she

should omit any claims against Anthem.

Pagidipati is the former Chief Operating Office of Freedom and Optimum.

(Id.§15.) Although he resigned from Freedom and Optimum, Zafirov claims that

Pagidipati continued to direct and carry out violations under the False Claims Act through

the MA Defendants and Provider Defendants. (Id.) She alleges that he “not only owns but

also controls the policies, procedures and operations of the P[rovider] Defendants.” (Id.)

The MA Defendants have common ownership and control. (Id. § 11.) America’s

1st Choice Holdings of Florida owned Freedom and Optimum through February 2017;

afterward, Anthem owned Freedom and Optimum. (/d.) Freedom and Optimum, Zafirov

alleges, “share the same management and staff [and] employees and use the same offices,

databases, network systems, storage facilities, and coders” and “the managers and

employees conduct the business of both plans jointly and concurrently[.]” (Id.)

C. Zafirov’s Allegations

Zafirov brings three counts for violations of the False Claims Act, the first two

against all the defendants and the third against only the MA Defendants. (Doc. 1 at 42-

43.) But because Zafirov realleges all the factual allegations into each count, it is difficult

if not impossible to distinguish which allegations are intended to support which count,

despite alleging the same basic scheme to defraud throughout her complaint. (See id.

44 97, 101, 105.)

Zafirov alleges that the Provider Defendants engaged in fraudulent activity to

increase their gainsharing payments from the MA Defendants. (Id. 4 49.) Those practices

included causing physicians to bring in patients for medically unnecessary office visits so

the physicians could capture diagnosis codes; submitting diagnosis codes to increase CMS

payments even if the patient did not have the condition diagnosed or was not treated in-

person during the year at issue; using coders to review medical records for “missing”

diagnosis codes without regard to CMS and ICD coding standards; and pressuring

physicians to provide false diagnoses through the use of required checklists, known as the

“5 Star Check List.” (Id.)

Zafirov alleges that the MA Defendants, in turn, submitted false and incorrect

diagnosis codes to CMS to increase the capitated payments. Zafirov alleges that the MA

Defendants submitted three types of incorrect codes. First, she alleges that Freedom

submitted codes from impermissible sources (i.e., outside of in-person encounters, as

required by CMS regulations). (Id. 4 51.) Second, she alleges that Freedom and other

defendants “upcoded” by replacing codes chosen by doctors with “higher-value” codes that

were more likely to increase a beneficiary’s risk score. (Id. § 52.) Third, she alleges that

the MA Defendants submitted “entirely inapplicable conditions” that were not based on a

beneficiary’s medical conditions, but instead, were based on recommendations contained

in the “5 Star Check List.” (Id. ¥ 53.) Zafirov claims that these actions, as well as others

described in her complaint, violate the False Claims Act.

E. Procedural History

In May 2019, Zafirov filed this action against the defendants. (Doc. 1.) The

government declined to intervene, and the Court unsealed the case in June 2020. (Docs.

14, 17.) The MA Defendants, the Provider Defendants, and Pagidipati each move to

dismiss Zafirov’s complaint. (Docs. 41, 50, 51.) Consistent with the Court’s orders

directing them to do so, the Provider Defendants and MA Defendants replied to Zafirov’s

opposition to their motions to dismiss. (Docs. 74, 75.)

Il. LEGAL STANDARD

To survive a motion to dismiss for failure to state a claim, a plaintiff must plead

sufficient facts to state a claim that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (quotation omitted). A claim is plausible on its face when a plaintiff “pleads

factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Id. Additionally, Federal Rule of Civil Procedure 9(b)

requires a party “alleging fraud . . . [to] state with particularity the circumstances

constituting fraud[.]” To satisfy this heightened-pleading requirement in a qui tam action,

“a realtor must allege the actual submission of a false claim because the False Claims Act

does not create liability merely for a health care provider’s disregard of government

regulations or improper internal policies unless the provider asks the government to pay

amounts it does not owe.” Carrell v. AIDS Healthcare Found., Inc., 898 F.3d 1267, 1275

(11th Cir. 2018) (cleaned up). When reviewing a motion to dismiss, courts should limit

their “consideration to the well-pleaded factual allegations, documents central to or

referenced in the complaint, and matters judicially noticed.” La Grasta v. First Union Sec.,

Inc., 358 F.3d 840, 845 (11th Cir. 2004).°

ANALYSIS

The False Claims Act allows private persons to bring civil actions on the United

States’ behalf for fraudulent claims. United States ex rel. Clausen v. Lab’y Corp. of Am.,

290 F.3d 1301, 1307 (11th Cir. 2002). Most relevant to Zafirov’s allegations here, the False

Claims Act prohibits a person from (1) knowingly presenting a false or fraudulent claim to

the government for payment; (2) knowingly making a false record or statement material to

a false or fraudulent claim; and (3) knowingly making “a false record or statement material

to an obligation to pay or transmit money or property to the [g]overnment” or knowingly

concealing or improperly avoiding or decreasing “an obligation to pay or transmit money

or property to the [g]overnment.” 31 U.S.C. § 3729(a)(1)(A), (B), (G).

A. Zafirov’s Claims Fail for Lack of Particularity

The defendants argue that Zafirov’s allegations fail to satisfy Rule 9(b)’s particularity

> The Court granted the MA Defendants’ unopposed motion to take judicial notice of the following items:

the second amended complaint in Sewell, the Notice of Settlement in Sewell, the settlement agreement in

Sewell, the Sewell Corporate Integrity Agreement (CIA); the Department of Justice press release about the

settlement in Sewell; and various publicly available news articles discussing the settlement in Sewell. (See

Doc. 79.); see also United States ex rel. McFarland v. Fla. Pharmacy Sols., 358 F. Supp. 3d 1316, 1323 n.5

(M.D. Fla. 2017) (Merryday, J.) (taking judicial notice of documents to decide whether public-disclosure

bar applies).

requirement because she does not identify any claim that either the MA Defendants, the

Provider Defendants, or Pagidipati submitted to the federal government. The Court

agrees.

Even though Zafirov alleges that the MA Defendants submitted “hundreds of

thousands” of false diagnosis codes to CMS, (Doc. 1 4 48), she fails to provide the dates

these codes were submitted, the name of the individual or individuals that submitted the

codes, how these codes impacted the amount of money that the defendants received from

the federal government (materiality), or copies of a single bill or payment. In short, she

fails to provide any “indicia of reliability . . . to support the allegation of an actual false

claim for payment being made to the [g]overnment.” Clausen, 290 F.3d at 1311.

Viewing the complaint in the light most favorable to Zafirov, she provides a few

examples in her 44-page complaint, none of which are sufficient to satisfy Rule 9(b). In the

first example, she alleges that, after seeing a patient who she believed did not exhibit a pre-

existing condition and indicating as much on the patient’s chart, nevertheless Anion “billed

the code under [her] name, and the code is identified in the patient’s record as having been

paid.” (Doc. 1 4 70.) The second example is even more tepid: Zafirov examined a patient

with a chart indicating previously diagnosed conditions which she disagreed were

manifested in the patient. (Id. § 71.) But she does not allege that any Provider Defendant

submitted any particular code to an MA Defendant or that an MA Defendant submitted

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a claim to CMS. The next two examples are likewise lacking in specificity. Zafirov saw a

patient but did not believe that the patient had the conditions earlier noted in his chart;

nonetheless, Freedom paid the claim and “upon information and belief” submitted a false

diagnosis to CMS. (Doc. 1 4 72.) And again in the next example, she alleges the same sort

of reliance “upon information and belief” that Freedom submitted claims to CMS for a

patient without a formal diagnosis of leukemia. (Doc. 1 □ 73.) In the final example,

although she omits the phrase “upon information and belief,” she fails to provide any details

of the alleged submission, relying instead on a bare assertion that a false claim was, in fact,

submitted by Freedom to CMS. (Doc. 1 4 74). She did not provide specific allegations

regarding any other MA Defendant, nor does she allege that the Provider Defendants or

Pagidipati submitted any false claims directly to the government. These allegations plainly

fail to “allege the ‘who,’ ‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions,” as

required under Eleventh Circuit precedent for False Claims Act violations. Corsello v.

Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir. 2005).

While seemingly admitting that her complaint lacks important details regarding the

who, what, where, when, and how of a fraudulent submission, Zafirov nonetheless argues

that her allegations have sufficient “indicia of reliability’ because: (1) she personally

reviewed medical records showing that Freedom paid the Provider Defendants based on

false diagnoses; and (2) it is unlikely that Freedom would have paid those claims if it was

11

not being reimbursed by the federal government due to Freedom’s interest in its own

financial success. But even these allegations fail to allege “an actual false claim for

payment[.]” Clausen, 290 F.3d at 1311. A plaintiff may not point to “improper practices

of the defendant|s] to support the inference that fraudulent claims were submitted because

submission cannot be inferred from the circumstances.” Carrel, 898 F.3d at 1275 (cleaned

up).

For example, in Carrel, the Eleventh Circuit held that a “mosaic of circumstances”

that were “consistent with the[]| accusations” that false claims were submitted was

insufficient to allege fraud with particularity. [d. at 1277. In that case, the plaintiffs alleged

that the defendants frequently provided prohibited incentives to employees and patients

and frequently requested reimbursement from the federal government, such that there was

a “mathematical probability” that the defendants “must have submitted a false claim at

some point.” Id. Yet, even there, the Eleventh Circuit rejected the claim, noting that

“[s|peculation that false claims must have been submitted is insufficient” to satisfy Rule

9(b). Id. (cleaned up). And in United States ex rel. Atkins v. McInteer, the Eleventh

Circuit held that the claims of an insider doctor responsible for providing medical care were

insufficient to show that the defendants “actually submitted reimbursement claims,” where

the doctor was “not a billing and coding administrator responsible for filing and submitting

the . . . claims” and relied instead on “rumors from staff and observ[ations of] records of

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what he believed to be the shoddy medical and business practices of two” other doctors.

470 F.3d 1350, 1359 (11th Cir. 2006).

Here, Zafirov does not allege specifics demonstrating that any of the defendants

actually submitted a false claim to the government. At most, her allegations regarding the

specific conduct of the various defendants are consistent with the allegation that

Defendants submitted a false claim to the government. But Rule 9(b) requires more than

inferences, consistencies, and suppositions. It is not enough for a realtor to simply allege

that fraudulent claims “must have been submitted, were likely submitted|,] or should have

been submitted[.]” Clausen, 290 F.3d at 1311.

To be sure, the Eleventh Circuit has noted that courts should be “more tolerant

toward complaints that leave out some particularities of the submissions of a false claim if

the complaint also alleges personal knowledge or participation in the fraudulent conduct.”

United States ex rel. Matheny v. Medco Health Sols., Inc., 671 F.3d 1217, 1230 (11th Cir.

2012). While true that Zafirov alleges personal knowledge of the various improper acts by

the Provider Defendants in coding for patients, she does not allege personal knowledge of

any of the MA Defendants screening and filtering bills from the Provider Defendants or

personal knowledge of the MA Defendants’ submissions to CMS. And it seems awfully

difficult for her to do so successfully in an amended complaint as an outsider of those

entities. But these are the very kind of “specific details” about false claims that establish

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“the indicia of reliability’ necessary under Rule 9(b)[.]” United States ex rel. Sanchez v.

Lymphatx, Inc., 596 F.3d 1300, 1302 (11th Cir. 2010).

Here, Zafirov does not provide specific details of any false claims actually submitted

by the MA Defendants to the Government. And she fails to allege that her actual employer

or any of the other Provider Defendants submitted any false claims to the federal

government themselves. Finally, she fails to allege any personal knowledge of the billing

practices of the MA Defendants—the defendants responsible for submitting claims to the

federal government under the Medicare Advantage program. Zafirov’s personal knowledge

of the practices of the Provider Defendants is no substitute for necessary details regarding

claims submitted to the federal government.

Zafirov also claims that the Defendants committed a “Reverse False Claims Act”

violation. This claim, too, fails for lack of particularity. A reverse false claim results from

the defendant avoiding payment due to the government. United States ex rel. Matheny v.

Medco Health Sols., Inc., 671 F.3d at 1217, 1222 (11th Cir. 2012). Specifically, the False

Claims Act imposes liability on any person who “knowingly and improperly avoids or

decreases an obligation to pay or transmit money or property to the [g]overnment[.]” 31

US.C. § 3729(a)(1)(G). Zafirov explained her theory as follows: “When the MA

Defendants continuously submitted knowingly false claims accompanied by knowingly

false certifications of compliance, the result was a false record that concealed their

14

obligation to repay the enhanced capitation rate that was not based on their enrollees’ actual

medial [sic] needs.” (Doc. 57 at 16.) But as explained above, Zafirov fails to allege with

particularity any false statement or record actually submitted to the federal government.

Given that Zafirov’s Reverse False Claims Act claim rests on the defendants’ submission

of false records to the federal government, and given that she fails to allege with

particularity any false claim or record actually submitted to the federal government, her

Reverse False Claims Act claim necessarily fails.

Accordingly, the Court finds that Zafirov’s complaint fails to allege with specificity

that any of the defendants submitted a false claim to the federal government.®

B. Zafirov’s Claims Are Barred under the Public Disclosure Bar

Zafirov’s claims against the MA Defendants and Pagidipati must also be dismissed

for the independent reason that her claims are barred under the public disclosure bar. The

False Claims Act requires a court to dismiss an action or claim if substantially the same

allegations were publicly disclosed prior to the initiation of the qui tam action. See

§ 3730(e)(4)(A). An exception exists if the relator is an original source of the information.

See id. Courts typically employ a three-part inquiry to decide whether the public-disclosure

° Zafirov’s claims against Pagidipati, the sole individual defendant in the case, also fail because she has not

alleged with particularity any instances where Pagidipati personally submitted a false claim or caused a false

claim to be submitted to the government, as required by False Claims Act. See United States v. Pub.

Warehousing Co. KSC, 242 F. Supp. 1351, 1360-61 (N.D. Ga. 2017) (dismissing claims against an

individual identified as the “owner/director” of an entity whose personal involvement in any False Claims

Act violations was not alleged). Alleging that Pagidipati held a position of authority over the Provider

Defendants is insufficient.

15

bar applies: (1) before the filing of the qui tam complaint, had there been any public

disclosures alleging fraud or from which fraud might be inferred? (2) If so, are the

allegations in the complaint substantially the same as allegations or transactions described

in the public disclosure? (3) If yes, is the complaint nonetheless allowed because the relator

is an original source of the information? See United States ex rel. Osheroff v. Humana,

Inc., 776 F.3d 805, 812 (11th Cir. 2015).

The first prong looks at whether information has been disclosed in a federal court

proceeding; “in a congressional, Government Accountability Office, or other federal report,

hearing, audit, or investigation”; or the news media. § 3730(e)(4)(A); Osheroff, 776 F.3d

at 812. The “sources of public disclosure in § 3730(e)(4)(A) . . . suggest that the public

disclosure bar provides ‘a broa[d] sweep.” Schindler Elevator Corp. v. United States ex rel.

Kirk, 563 U.S. 401, 408 (2011) (quotation omitted). Further, “news media” includes

newspaper advertisements and publicly available websites. Osheroff, 776 F.3d at 813.

Here, the defendants argue that Zafirov’s claims are based on a publicly disclosed

False Claims Act case previously settled: the Sewell litigation. Specifically, the defendants

cite as public disclosures the settlement agreement in Sewell, the Corporate Integrity

Agreement (CIA) in that case, a Department of Justice press release about that case, and

various news articles discussing the fraud in that case. (See Doc. 74 at 5.)

The defendants are correct—and Zafirov does not dispute—that the Sewell

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settlement agreement, the CIA with the Office of the Inspector General of the Department

of Health and Human Services (which was publicly available on the Inspector General’s

website), the Department of Justice press release, and various new articles discussing the

alleged FCA violations by defendants Freedom Health, Optimum, and Pagidipati were

public documents under the statute. (Doc. 42, Exs. A-H.) Instead, Zafirov focuses on the

other two prongs: whether the allegations in the publicly disclosed documents are

substantially similar to her complaint and whether she is an original source of information.

The second step of the public-disclosure analysis asks whether the complaint’s

allegations are “substantially the same” as those publicly disclosed. Osheroff, 776 F.3d at

814. This prong is satisfied if the plaintiff bases her claim “in any part on . . . publicly

disclosed information|[.]” Id. (quoting Battle v. Bd. of Regents, 468 F.3d 755, 762 (11th

Cir. 2006)). This prong does not require a “complete identity” of allegations; rather, “[t]he

key inquiry is whether the disclosures could have put the government on notice of the fraud

alleged in the qui tam complaint.” United States ex rel. Maur v. Hage-Korban, 981 F.3d

516, 523 (6th Cir. 2020) (cleaned up). As a result, the Eleventh Circuit has described this

test as a “quick trigger” to get to the more exacting original-source inquiry. Cooper v. Blue

Cross & Blue Shield of Fla., Inc., 19 F.3d 562, 568 n.10 (11th Cir. 1994).

Here, Zafirov’s claims against Freedom, Optimum, and Pagidipati are substantially

the same as those disclosed as part of the Sewell case. The Sewell case stems from a 2009

17

False Claims Act suit initiated by David Sewell against several defendants, including

Freedom Health, Optimum, and Pagidipati. See United States ex rel. Sewell v. Freedom

Health Inc., No. 8:09-cv-1625-MSS-AEP (M.D. Fla. Aug. 17, 2009). Sewell alleged that

Freedom Health, Optimum, and Pagidipati fraudulently submitted improper diagnosis

codes to CMS to increase their risk-adjustment payments, failed in their obligations to

CMS to correct erroneously submitted diagnosis codes, and used coding auditors to upcode

diagnoses so that risk-adjustment payments would increase. (Doc. 42-1 4108-85.) These

allegations are nearly identical to those made by Zafirov. (See Doc. 1 9947-49, 52, 92-93)

(alleging that Freedom, Optimum, and Pagidipati submitted “phony diagnoses” in order

to “increase risk scores,” knowingly failed to correct “erroneous risk-adjusting diagnoses

codes” submitted to CMS or to “return . . . any overpayments,” and used a “team of coders”

to suggest “phone additional diagnosis codes to physicians” and “upcode[] certain medical

conditions”). Indeed, in numerous paragraphs throughout her complaint, Zafirov copied

verbatim allegations directly from the Sewell compliant. (See Doc. 50 at 20-21; Doc. 75

at 4.) The substantial similarity between Zafirov’s allegations against Freedom Health,

Optimum, and Pagidipati and the documents disclosed as part of the Sewell case is

sufficient to satisfy the second prong’s “quick trigger.””

’ Zafirov argues that her allegations against the Provider Defendants are not barred because none of those

entities are named or specifically identified in the prior public disclosure. (Doc. 56 at 22 (citing Cooper, 19

F.3d at 566.) The Court is inclined to agree. Nonetheless, given the Court’s dismissal of the allegations

against the Provider Defendants on other grounds, the Court need not resolve this question at this time.

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Under the third step of the public-disclosure analysis, the court may nonetheless

allow a complaint that is substantially similar to a prior public disclosure to proceed if the

relator is an “original source” of the allegations. Osheroff, 776 F.3d at 814-15. Under the

False Claims Act, an “original source” means a person who: (1) prior to the relevant public

disclosure, voluntarily disclosed to the government the information on which her

allegations are based, or (2) has independent knowledge of and “materially adds” to the

publicly disclosed allegations and voluntarily provided that information to the government

before filing her action. § 3730(e)(4)(B). Information fails to “materially add[]” to the

publicly disclosed allegations if the prior disclosures were already sufficient to give rise to

an inference regarding the current fraud allegations. Osheroff, 776 F.3d at 815.

Additionally, mere background information that helps the public better understand or

contextualize a public disclosure is not enough to find that a relator qualifies as an original

source. Id. at 815.

As a threshold matter, Zafirov fails to make the necessary allegations to qualify as

an “original source” under the False Claims Act. Nowhere in her complaint does Zafirov

allege that she voluntarily disclosed her allegations to the government before the public

disclosures in Sewell. Nor does she allege in her complaint that she voluntarily disclosed

her allegations to the government before she initiated this action. In her opposition to the

MA Defendants’ motion to dismiss, Zafirov asserts that she provided her information to

19

the government before filing her complaint. (Doc. 57 at 20.) But the complaint itself lacks

this allegation. See Bruhl v. Price Waterhousecoopers Intl, No. 03-23044-CIV-MARRA,

2007 WL 997362, at *4 (S.D. Fla. Mar. 27, 2007) (Marra, J.) (“The Plaintiffs cannot

supplant the allegations of the [complaint] with new arguments set forth in their response

to a motion to dismiss.”). Zafirov’s failure to properly allege that she voluntarily disclosed

her allegations to the government disqualifies her as an original source.

More fundamentally, Zafirov also does not qualify as an original source because her

allegations fail to materially add to the public disclosures in Sewell. Her allegations about

the MA Defendants’ fraudulent scheme are largely addressed in the Sewell action. The

government investigated the allegations in Sewell, settled those claims, and entered into a

CIA with Freedom and Optimum. Given the similarity (and in many instances, overlap)

between Zafirov’s allegations and the allegations in Sewell, the public disclosures in Sewell

were enough to give rise to an inference of the same alleged fraud in this case. See Osheroff,

776 F.3d at 815. Indeed, a side-by-side review of Zafirov’s compliant and the allegations

publicly disclosed in Sewell reveals that Zafirov is not alleging a new scheme as much as

she is alleging a perpetuation of a previously disclosed scheme. In effect, Freedom,

Optimum, and Pagidipati are—according to Zafirov—up to their usual antics. (Doc. 1 947

(“Despite Freedom/Optimum and Pagidipati’s previous lawsuit and settlement, the

Defendants violated the FCA again.”).); (Doc. 57 at 21 (arguing that the previous fraud

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disclosed in Sewell “demonstrates potential proclivity”).) This dooms Zafirov’s claim to be

an original source. The CIA from Sewell remains in effect at the time of this order, which

means that the federal government is to this day still dealing with the fraud disclosed in

Sewell. (Doc. 42-4.) Alleging the perpetuation of a fraud that the government is aware of

and actively handling does not materially add to the prior public disclosures. See Maur,

981 F.3d at 528 (“[Bly merely providing additional instances of fraud during the oversight

period, Maur has failed to offer” sufficient information to qualify as an original source). As

a result, Zafirov does not qualify as an “original source,” and her claims against the MA

Defendants and Pagidipati are barred under the public disclosure bar.

C. Zafirovs Claims Against the Provider Defendants Constitute an

Impermissible Shotgun Pleading

Throughout her complaint, Zafirov impermissibly groups the Provider Defendants

together in her allegations. Specifically, Zafirov lumps together numerous corporate

entities (Florida Medical Associates, Physician Partners, Physician Partners Specialty

Services, Sun Labs, and Anion) and collectively alleges that they committed fraud.

However, “asserting multiple claims against multiple defendants without specifying which

of the defendants are responsible for which acts or omissions” is a form of a shotgun

pleading. Weiland v. Palm Beach Cnty. Sheriffs Off, 792 F.3d 1313, 1323 (11th Cir.

2015). Importantly, shotgun pleadings fail “to give the defendants adequate notice of the

claims against them and the grounds upon which each claim rests.” [d. Indeed, although

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she directs some allegations toward Physician Partners and VIPcare (Florida Medical

Associates), Zafirov’s complaint fails to clearly specify which Provider Defendant

(especially with respect to Physician Partners Specialty Services and Sun Labs USA)

committed whichever act that resulted in those false claims. This failure gives the individual

Provider Defendants no notice about which claims apply to them and the grounds for those

claims. Accordingly, the Court also concludes that Zafirov’s claims against the Provider

Defendants should be dismissed as an impermissible shotgun pleading.

As noted earlier, the entire complaint might also suffer from being a shotgun

pleading for failure to identify which factual allegations apply to which counts by realleging

all of the factual allegations in each count. In repleading (if Zafirov so elects), she must

specify more precisely which background and factual allegations relate to which False

Claims Act counts and which Defendants are responsible for what conduct.

IV. CONCLUSION

Zafirov’s complaint is dismissed without prejudice for failure to allege the False

Claims Act violations with sufficient particularity as required by Rule 9(b). Further, as

alleged, the public-disclosure bar prohibits Zafirov from bringing her claims against the

MA Defendants and Pagidipati because they are substantially the same as those in a

previous qui tam case and she fails to adequately allege that she qualifies as an original

source. Her complaint likewise constitutes an impermissible shotgun pleading, at least as

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it concerns the Provider Defendants. As this complaint was Zafirov’s first attempt at

pleading the False Claims Act violations and it is not necessarily futile to permit her to

replead (although the Court notes it might be difficult given her apparent lack of personal

knowledge), the Court must permit her one opportunity to amend her complaint.’ See

Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir. 2005) (“Ordinarily, a party must

be given at least one opportunity to amend before the district court dismisses the

complaint.”). Accordingly, the following is ORDERED:

1. The MA Defendants’ motion to dismiss (Doc. 41) is GRANTED.

2. The Provider Defendants’ motion to dismiss (Doc. 50) is GRANTED.

3. Pagidipati’s motion to dismiss (Doc. 51) is GRANTED.

4. By October 22, 2021, Zafirov may file an amended complaint.

ORDERED in Tampa, Florida, on September 28, 2021.

to i . J AL

Bpulall 7} deryehle

athryn’ Kimball Mizelle

United States District Judge

* Tn her opposition to the MA Defendants’ motion to dismiss, Zafirov concedes that certain of her claims

are barred by the statute of limitations. (Doc. 57 at 21). The Court expects that Zafirov will exclude these

claims in any amended complaint.

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