# Byrd v. Acadia Healthcare Company, Inc.

> District Court, M.D. Louisiana · March 18, 2021

URL: https://www.frixlaw.com/law-library/cases/10191774

## Case

- **Court:** District Court, M.D. Louisiana
- **Decided:** March 18, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10191774

## How later opinions describe it (automated extraction)

- finding that relator waived argument as to how certain write-offs fell within a particular provision of the False Claims Act

## Opinion text

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

UNITED STATES ex rel. JEFFREY H.
BYRD
CIVIL ACTION
VERSUS
NO. 18-312-JWD-EWD
ACADIA HEALTHCARE COMPANY,
INC., ET AL.

RULING AND ORDER

This matter comes before the Court on Defendants’ Motion to Dismiss Relator’s First
Amended Complaint (Doc. 67) filed by Defendants Acadia Healthcare Company, Inc. (“Acadia”)
and Vermilion Hospital, LLC (“Vermilion”) (collectively, “Defendants”). Plaintiff-Relator
Jeffrey H. Byrd (“Relator” or “Byrd”) opposes the motion, (Doc. 70), and Defendants have filed a
reply, (Doc. 72). Oral argument is not necessary. The Court has carefully considered the law, the
well-pleaded allegations of the First Amended Complaint, (Doc. 57), and the arguments and
submissions of the parties and is prepared to rule. For the following reasons, Defendants’ motion
is granted in part and denied in part. Specifically, the motion is granted in that all claims are
dismissed except Relator’s claims for retaliation under state and federal law. However, Relator
will be given leave to amend to cure the deficiencies of the operative complaint.
I. Introduction
A. Relevant Laws and Summary of Fraudulent Actions
“The False Claims Act, 31 U.S.C. § 3729 et seq., ‘imposes significant penalties on those
who defraud the Government.’ ” United States ex rel. Porter v. Magnolia Health Plan, Inc., 810
F. App'x 237, 240 (5th Cir. 2020) (unpublished), cert. denied, No. 20-786, 2021 WL 161045 (U.S.
Jan. 19, 2021) (quoting Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct.
1989, 1995 (2016)). “The Act is remedial, first passed at the behest of President Lincoln in 1863
to stem widespread fraud by private Union Army suppliers in Civil War defense contracts.” United
States rel. Grubbs v. Kanneganti, 565 F.3d 180, 184 (5th Cir. 2009). “It is ‘intended to protect the
Treasury against the hungry and unscrupulous host that encompasses it on every side.’ ” Id.

(quoting S. Rep. No. 99–345, at 11 (1986), U.S. Code Cong. & Admin. News 1986, pp. 5266,
5276 (quoting United States v. Griswold, 24 F. 361, 366 (D. Or. 1885))). “To aid the rooting out
of fraud, the Act provides for civil suits brought by both the Attorney General and by private
persons, termed relators, who serve as a ‘posse of ad hoc deputies to uncover and prosecute frauds
against the government.’ ” Id. (quoting United States ex rel. Milam v. Univ. of Tex. M.D. Anderson
Cancer Ctr., 961 F.2d 46, 49 (4th Cir. 1992)). “In qui tam1 suits brought by private persons on
behalf of the Government the statute entitles the relator to between ten and thirty percent of any
recovery made on behalf of the Government, depending on the extent of the relator's contribution
to the action.” Id. (citing 31 U.S.C. § 3730(d)).
“There are four elements of a False Claims Act claim.” Porter, 810 F. App’x at 240.

“Plaintiffs suing under the statute must show that (1) ‘there was a false statement or fraudulent
course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and
(4) that caused the government to pay out money or to forfeit moneys due (i.e., that involved a
claim).’ ” Id. (quoting Abbott v. BP Expl. & Prod., Inc., 851 F.3d 384, 387 (5th Cir. 2017) (quoting
United States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009))).
Under the False Claims Act, a person is subject to liability if he, inter alia, (1) “knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or approval”; (2)

1 As the Fifth Circuit has explained, “ ‘Qui tam’ is an abbreviation for qui tam pro domino rege quam pro se ipso in
hac parte sequitur, which means ‘who as well for the king as for himself sues in this matter.’ ” Grubbs, 565 F.3d at
184 n.5 (quoting Black's Law Dictionary 1262 (7th ed. 1999)).
“knowingly makes, uses, or causes to be made or used, a false record or statement material to a
false or fraudulent claim” ; (3) “knowingly makes, uses, or causes to be made or used, a false
record or statement material to an obligation to pay or transmit money or property to the
Government”; and (4) “knowingly conceals or knowingly and improperly avoids or decreases an

obligation to pay or transmit money or property to the Government[.]” 31 U.S.C. § 3729(a)(1)(A),
(B), (G).
Here, Relator is a former Chief Financial Officer of Vermilion, which is a health system
and subsidiary of Acadia. (First Amend. Compl. ¶¶ 5–10, Doc. 57.) He brings claims against these
Defendants alleging that they violated the False Claims Act and that they terminated his
employment in violation of the anti-retaliation provisions of the False Claims Act (31 U.S.C. §
3730(h)) and the Louisiana Medical Assistance Programs Integrity Law (La. Rev. Stat. Ann. §
49:439.1(E)). (Id. ¶¶ 71–78.) More specifically, Relator alleges that Defendants violated the False
Claims Act under each of the above four provisions because they failed to comply with three health
care laws in five different ways. (Id. ¶¶ 27–68, 71–73.)

First, Defendants allegedly violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b)
(“AKS”). (See First Amend. Compl. ¶¶ 11–15, Doc. 57.) “The AKS is a criminal statute
prohibiting the knowing or willful offering to pay, or soliciting, any remuneration to induce the
referral of an individual for items or services that may be paid for by a federal health care program.”
United States v. Nunnally v. W. Calcasieu Cameron Hosp., 519 F. App'x 890, 893 (5th Cir. 2013)
(per curiam) (citing 42 U.S.C. § 1320a–7b(b)(1–2); United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997)).2

2 Specifically, the AKS law generally makes it unlawful: . . .
The AKS contains a number of exceptions, called “safe harbors.” 42 U.S.C. § 1320a-
7b(b)(3). For example, the AKS does not apply to “any amount paid by an employer to an
employee (who has a bona fide employment relationship with such employer) for employment in
the provision of covered items or services[.]” Id. § 1320a-7b(b)(3)(B). Some of these exceptions

involve written contracts between organizations and individuals. See id. § 1320a-7b(b)(3). Further,
fair market value is a key concept with the AKS, see Bingham v. HCA, Inc., 783 F. App'x 868, 873
(11th Cir. 2019) (unpublished), though the parties dispute whether Byrd must properly allege this
at the pleading stage, (Doc. 67-1 at 28–29; Doc. 70 at 18–20).
Second, Relator claims that Defendants violated the Stark Law, 42 U.S.C. § 1395nn, and
its regulations, 42 C.F.R. § 350 et seq. (First Amend. Compl. ¶ 16–20, Doc. 57.) The Stark Law
provides that, if a physician has a “financial relationship” with an entity (that is, an ownership or

[To] knowingly and willfully solicit[] or receive[] any remuneration (including
any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash
or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made in whole
or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service, or item for which
payment may be made in whole or in part under a Federal health care program,

42 U.S.C. § 1320a-7b(b)(1). The AKS also makes it unlawful:

[To] knowingly and willfully offer[] or pay[] any remuneration (including any
kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in
kind to any person to induce such person—

(A) to refer an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part under a Federal health care program, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or
ordering any good, facility, service, or item for which payment may be made in
whole or in part under a Federal health care program,

Id. § 1320a-7b(b)(2).
investment interest or a “compensation arrangement”), then that physician generally cannot make
a referral to the entity for the furnishing of “designated health services” for which payment may
be made, and “the entity may not present or cause to be presented a claim under [Medicare or
Medicaid] or bill to any individual, third party payor, or other entity for designated health services

furnished pursuant to a referral prohibited” by the Stark Law. 42 U.S.C. § 1395nn(a).
The Stark Law includes a number of defined terms. For example, a “ ‘compensation
arrangement’ [generally] means any arrangement involving any remuneration between a physician
. . . and an entity[,]” subject to certain exceptions. Id. § 1395nn(h)(1)(A). “ ‘Remuneration’
includes any remuneration, directly or indirectly, overtly or covertly, in cash or in kind.” Id. §
1395(h)(1)(B). “Designated health services” includes, inter alia, inpatient and outpatient hospital
services, clinical laboratory services, outpatient prescription drugs, and radiology services. Id. §
1395nn(h)(6).
The Stark Law also contains exceptions, one of which is for bona fide employment
relationships. Id. § 1395nn(e)(2). Specifically, the Stark Law excepts from the definition of

“compensation arrangement” “[a]ny amount paid by an employer to a physician . . . who has a
bona fide employment relationship with the employer for the provision of services if” certain
requirements are met. Id. Such requirements include that “(B) the amount of the remuneration
under the employment—(i) is consistent with the fair market value of the services, and (ii) is not
determined in a manner that takes into account (directly or indirectly) the volume or value of any
referrals by the referring physician,” and “(C) the remuneration is provided pursuant to an
agreement which would be commercially reasonable even if no referrals were made to the
employer[.]”3 Id.

3 The entire bona fide employment relationships exception provides:
Third, Relator claims that Defendants violated the False Claims Act by failing to comply
with Louisiana licensure law. (First Amend. Compl. ¶ 26, Doc. 57.) Byrd alleges that, “To be
payable under Medicare, Medicaid, or other government healthcare programs, services must be
furnished by a physician or other practitioner licensed to provide such services under applicable
state law,” (id. ¶ 21), though Defendants dispute whether this requirement is material to payment,
(Doc. 67-1 at 27–28).
In any event, under the Louisiana Nurse Practice Act, La. Rev. Stat. Ann. § 37:911 et seq.
(“LNPA”), an “ ‘Advanced practice registered nurse’ or ‘APRN’ means a licensed registered nurse
who is certified by a nationally recognized certifying body . . . as having an advanced nursing

The following shall not be considered to be a compensation arrangement
described in subsection (a)(2)(B) [(i.e., a prohibited one)]: . . .

(2) Bona fide employment relationships
Any amount paid by an employer to a physician (or an immediate family member
of such physician) who has a bona fide employment relationship with the
employer for the provision of services if—

(A) the employment is for identifiable services,

(B) the amount of the remuneration under the employment—

(i) is consistent with the fair market value of the services, and

(ii) is not determined in a manner that takes into account (directly or
indirectly) the volume or value of any referrals by the referring
physician,

(C) the remuneration is provided pursuant to an agreement which would be
commercially reasonable even if no referrals were made to the employer, and

(D) the employment meets such other requirements as the Secretary may impose
by regulation as needed to protect against program or patient abuse.

Subparagraph (B)(ii) shall not prohibit the payment of remuneration in the form
of a productivity bonus based on services performed personally by the physician
(or an immediate family member of such physician).

42 U.S.C. § 1395nn(e)(2).
specialty as described in [the LNPA] and who meets the criteria for an advanced practice registered
nurse as established by the [nursing] board.” La. Rev. Stat. Ann. § 37:913(1). The LNPA provides
that, as a general rule, “acts of medical diagnosis and prescription by an advanced practice
registered nurse shall be in accordance with a collaborative practice agreement.” Id. § 37:913(8).

The LNPA also contains a number of defined terms. For example, a “ ‘Collaborative
practice agreement’ means a formal written statement addressing the parameters of the
collaborative practice which are mutually agreed upon by the advanced practice registered nurse
and one or more licensed physicians . . . which shall include but not be limited to” certain described
provisions. Id. § 37:913(9).4 “ ‘Collaborative practice’ means the joint management of the health
care of a patient by an advanced practice registered nurse performing advanced practice registered
nursing and one or more consulting physicians[.]” Id. § 37:913(8).
Thus, Relator alleges, “under Louisiana law, an advanced practice nurse may only perform
acts of medical diagnosis and prescription pursuant to a collaborative practice agreement with a
licensed physician who is involved in the joint management of the patient’s treatment.” (First

Amend. Compl. ¶ 25, Doc. 57.)
Relator claims that Defendants violated the above three health care laws and thus submitted
false claims in five ways:

4 Specifically, the collaborative practice agreement’s formal written statement “shall include but not be limited to the
following provisions:

(a) Availability of the collaborating physician or dentist for consultation or
referral, or both.

(b) Methods of management of the collaborative practice which shall include
clinical practice guidelines.

(c) Coverage of the health care needs of a patient during any absence of the
advanced practice registered nurse, physician, or dentist.

La. Rev. Stat. Ann. § 37:913(9).
(1) by allowing Ms. Rhonda Kimball (“Kay”) Rodriguez, a psychiatric APRN, to perform
services without a valid and updated collaborative practice agreement, (id. ¶¶ 27–39);

(2) by providing free staff to psychiatrist Dr. Susan Uhrich in exchange for referrals (in
violation of the AKS) and in a financial relationship that was not fair market value or
commercially reasonable in the absence of referrals (in violation of the Stark Law), (id.
¶¶ 40–49);

(3) by paying Dr. Daniel Salmeron, a family practice doctor, a salary substantially higher
than fair market value, despite his not working forty hours a week at Vermilion, in
exchange for referrals (in violation of the AKS); and in a financial relationship that was
not fair market value or commercially reasonable in the absence of referrals (in
violation of the Stark Law), (id. ¶¶ 50–55);

(4) by engaging in patient brokering, or the paying of remuneration to induce patient
referrals or the paying of patients to induce them to purchase or use items or services,
(id. ¶¶ 56–60); and

(5) by receiving “disproportionate share payments” (or payments from the United States
for serving a large number of Medicaid and uninsured patients) to which Vermilion
was not entitled because, inter alia, it did not have at least two obstetricians with staff
privileges to provide such services, as required by federal law, (id. ¶¶ 61–68).

Additionally, Byrd claims that Defendants retaliated against Relator by terminating him
after he raised concerns about Defendants’ actions and by interfering with his efforts to find
comparable employment after his termination. (Id. ¶¶ 69–70, 74–76.)
B. Relevant Factual Background
The following allegations are largely taken from the First Amended Complaint (Doc. 57.)
For purposes of this motion, the well-pleaded allegations are assumed to be true. See Thompson v.
City of Waco, 764 F.3d 500, 502–03 (5th Cir. 2014).
1. The Parties
Relator in this action is Jeffrey H. Byrd. (First Amend. Compl. ¶ 10, Doc. 57.) From July
2014 to January 2015, Relator was Vermilion’s Chief Financial Officer. (Id.) “Periodically he
would also serve as acting Chief Executive Officer (CEO) when the CEO was away.” (Id.) On
January 21, 2015, Relator was terminated. (Id.)
Defendants in this action are Acadia and Vermilion. “Acadia operates more than 75
behavior health facilities in at least 24 states as well as overseas, including Acadia Vermilion

Hospital in Lafayette, Louisiana.” (First Amend. Compl. ¶ 5, Doc. 57.) Vermilion is a “subsidiary
of Acadia[] and operates under the trade names Vermilion Behavioral Health Systems and Acadia
Vermilion Hospital.” (Id. ¶ 6.) “Vermilion operates Acadia Vermilion Hospital (‘AVH’), a 78-
bed psychiatric hospital in Lafayette, Louisiana.” (Id.) “AVH includes a 54-bed main facility and
a 24-bed facility previously known as Optima Specialty Hospital, but now known as Acadia
Vermilion Hospital South Campus” (“Optima”). (Id.) “ ‘AVH’ refers to both the main facility and
Optima.” (Id.) Historically, the two facilities have used different provider numbers, but
“Vermilion had plans to consolidate them under a single provider number.” (Id.)
During the times relevant to this action, “Acadia has exercised control over Vermilion and
participated in its operations.” (First Amend. Compl. ¶ 8, Doc. 8.) The operative complaint refers

to Acadia’s website, which “describes Acadia as ‘a provider of behavioral healthcare services,’
noting that ‘Acadia provides behavioral health and addiction services to its patients in a variety of
settings, including inpatient psychiatric hospitals, specialty treatment facilities, residential
treatment centers and outpatient clinics.’ ” (Id.) Further, as of “ ‘September 30, 2019, Acadia
operated a network of 589 behavioral healthcare facilities with approximately 18,000 beds in 40
states, the United Kingdom and Puerto Rico,’ including Vermilion.” (Id.)
Relator alleges that “Vermilion submits numerous claims to Medicare, Medicaid, and other
government payors for services provided at AVH.” (First Amend. Compl. ¶ 7, Doc. 57.) As Relator
understands from his experience, “the Medicare utilization rates are approximately 24% at the
main AVH facility and 50% at Optima, and the Medicaid utilization rates are approximately 32%
at the main AVH facility and 24% at Optima.” (Id.) According to Vermilion’s draft 2015 Strategic
Plan, “ in 2014, Medicare accounted for 28% of the total number of patient days at AVH, Medicaid
accounted for 32%, and Tricare accounted for 11%.” (Id.)5 “This plan projected that, in 2015,

Medicare and Medicaid would each account for 30% of total patient days, while Tricare would
remain at 11%.” (Id.)
2. Ms. Rodriguez and the Services She Performed as an APRN, Allegedly
Without a Valid Collaborative Practice Agreement

According to the operative complaint, a Vermilion APRN performed services at Vermilion
without a valid collaborative practice agreement. (See First Amend. Compl. ¶¶ 27–38, Doc. 57.)
Relator maintains that submission of claims for these services constitute false claims. (See id.)
Specifically, Rhonda Kimball “Kay” Rodriguez is a psychiatric APRN and wife of the
former CEO of Vermilion. (Id. ¶ 27.) 6 “For several years, Ms. Rodriguez has been paid a monthly
stipend by Vermilion, and has routinely seen and treated Vermilion patients without the
supervision of a physician. Vermilion submits claims for payment for such services to Medicare,
Medicaid, and other payors.” (Id.)
In late December 2014, while Relator was acting as CEO, “Relator was contacted by an
official with the Health Standards section of the Louisiana Department of Health and Hospitals.”
(Id. ¶ 28.) The official told Relator that a Vermilion patient had complained about the treatment
Ms. Rodriguez provided to him. (Id.) According to the official, “a state patient advocate would be

5 Though not mentioned in the operative complaint, the Court takes judicial notice of the fact that “TRICARE is the
health care program for uniformed service members, retirees, and their families around the world.” TRICARE,
https://www.tricare.mil/About (last visited Mar. 9, 2021).
6 The First Amended Complaint abbreviates Ms. Rodriguez’s job as “ARNP” rather than “APRN,” which is what the
statute uses. The Court notes this minor discrepancy and states that it will use the statutory language.
visiting the hospital the next day to investigate[] and would need to see a copy of Ms. Rodriquez’s
collaboration agreement.” (Id.)
Relator looked into Ms. Rodriguez’s file to see her collaboration agreement, but the
agreement, dated April 2011, identified two collaborating doctors—Dr. Sanders and Dr. Murphy—

whom Relator did not recognize. (First Amend. Compl. ¶ 29, Doc. 57.) Relator investigated
further and discovered that (1) “Dr. Sanders had resigned and left the area about a year earlier,
and” (2) “Dr. Murphy was a professor residing in New Orleans.” (Id. ¶ 30.) “Neither of these
physicians had collaborated with Ms. Rodriguez in the joint management of patients for a long
time, if ever.” (Id.)
Relator broached this issue with several people at Vermilion, including Luis Betances, the
CEO; Glynis DeRouche, the AVH clinical director; and Tony Miller, the program director of the
hospital’s FLAGS program. (Id. ¶ 31.) The CEO was on vacation, but he “told Relator that he
would take care of it when he returned.” (Id.) Byrd claims, “Relator was also informed that Kim
Leger, the AVH administrative assistant who helped Relator locate the collaboration agreement,

asked Ms. Rodriguez whether she had an updated agreement, and was told by Ms. Rodriguez that
Ms. Rodriguez would ‘get back’ with her.” (Id. ¶ 32.) Betances returned to the office the following
week, and, when Relator showed Betances the expired collaboration agreement, Betances said “he
was ‘sure’ Ms. Rodriguez had another collaboration agreement with Dr. Dickens, the AVH
medical director.” (Id. ¶ 33.) Relator requested to see a copy of this agreement, and Betances said
“ ‘we’ll see,’ or words to that effect.” (Id.) Relator also pleads, “Later that week, Relator was told
by Tony Miller that Ms. Rodriguez was ‘scrambling’ to find a physician to update her collaboration
agreement, and that Dr. Dickens told her ‘no way am I backdating an agreement for you.’ ” (Id. ¶
34.)
Relator was terminated on January 21, 2015, and, at that time, he had not seen a
collaboration agreement besides the expired one with Dr. Sanders and Dr. Murphy. (First Amend.
Compl. ¶ 35, Doc. 57.) The operative complaint asserts, “Notwithstanding the lack of a valid
collaboration agreement, Ms. Rodriquez independently saw and treated numerous patients at

AVH, in violation of Louisiana law, and Vermilion submitted numerous claims to Medicare,
Medicaid, and other payors for such services. All such claims constitute false claims.” (Id. ¶ 36.)
Byrd also alleges that, in December of 2019, the State of Louisiana entered into a settlement
with Defendants in which they agreed to pay the State $500,000 to resolve the claims asserted on
the State’s behalf in Relator’s original complaint. (Id. ¶ 37.) The operative complaint states:
The settlement agreement provided, among other things, as follows:

The State contends that it has certain civil and administrative causes
of action against Acadia [defined in the agreement to include Acadia
and Vermilion] for allegedly engaging in the following conduct in
connection with the services Acadia’s facilities in Lafayette,
Louisiana provided to Louisiana Medicaid beneficiaries (hereinafter
referred to as the “Alleged Conduct”):
. . .
3. Acadia submitted claims for payment to the Medicaid program
for services provided by advanced practice registered nurses that did
not have the required collaborative practice agreement with a
collaborating physician as required by Louisiana law.

(Id. ¶ 38.) The First Amended Complaint further says, “Medicaid is a joint federal-state program,
and claims submitted to the Louisiana Medicaid program are paid for, in part, out of federal funds.
Thus, false claims submitted to the Louisiana Medicaid program are false claims under the federal
False Claims Act.” (Id. ¶ 39.)
3. Dr. Uhrich and Vermilion’s Alleged Provision of Free Staffing to Her

Byrd also alleges that Defendants had an arrangement with Dr. Susan Uhrich, a psychiatrist
in Lafayette, Louisiana, that violated the Stark Law and AKS. (First Amend. Compl. ¶¶ 40–49,
Doc. 57.) Specifically, Relator claims that, “[f]or the last several years . . . Defendants provide[d]
free staff to Dr. Uhrich in return for referral of patients to AVH.” (Id. ¶ 40.) Byrd says that “[t]his
scheme was devised and implemented by former AVH CEO Joe Rodriguez and current AVH CEO
Luis Betances.” (Id.) Further, “Dr. Uhrich is a significant source of patient referrals for AVH,

principally to the Optima facility, and Vermilion routinely submits claims to Medicare, Medicaid,
Tricare, and other payors for services furnished pursuant to such referrals.” (Id.)
The operative complaint alleges, “A draft 2015 Strategic Plan prepared by Vermilion
identified Dr. Uhrich as its fifth-highest volume referral source, with a projected 60 acute
admissions for 2014.” (First Amend. Compl. ¶ 41, Doc. 57.) She was also the “only individual
physician on the list of the top 10 referral sources” and, the strategic plan “identified Dr. Uhrich’s
primary payor source as Medicare, followed by indigent and private insurance.” (Id.)
Byrd claims that, “[f]or each referral source, the strategic plan described a ‘channeling
mechanism,’ which it defined as ‘any gate-keeping process required to obtain
referrals/admissions.’ ” (Id. ¶ 42.) Dr. Uhrich’s channeling mechanism was described as follows:

“ ‘Currently a member of our Medical Staff. Has high volume private practice and nursing home
ties. Employs three NP’s who work the nursing homes and the IP units. Nurse liaison is a part of
our staff.’ ” (Id.) “The plan noted that ‘Dr. Uhrich is exclusively referring patients to VBHS with
the support of three mid-level practitioners.’ ” (Id.)
Relator next makes allegations related to Cheryl Smith and Donna Tally, who during this
period were “employed and paid by Vermilion.” (First Amend. Compl.¶ 43, Doc. 57.) Smith was
an “advanced practice nurse practitioner,” and Tally was a “licensed practical nurse.” (Id.)
Vermilion paid their salaries, but they “did not actually work at Vermilion[.]” (Id.) Rather, they
worked at Dr. Uhrich’s office. (Id.) Tally is listed on Dr. Uhrich’s webpage as staff, and Smith is
identified on Dr. Uhrich’s LinkedIn page as staff. (Id. ¶¶ 44–45.) Tally served as Dr. Uhrich’s
office manager. (Id. ¶ 44.) Smith “routinely perform[ed] patient rounds at local nursing homes on
behalf of Dr. Uhrich.” (Id. ¶ 45.) “Although her salary is paid by Vermilion, claims for payment
for Smith’s services are submitted by Dr. Uhrich’s office.” (Id.)

The operative complaint asserts, “Optima staff have frequently questioned the medical
appropriateness of the referrals by Uhrich/Smith. Many of these patients suffer from progressive
or degenerative neurological disorders for which acute psychiatric inpatient treatment is
unnecessary.” (First Amend. Compl.¶ 46, Doc. 57.)
Byrd alleges that Defendants’ providing Dr. Uhrich free staff constitutes “remuneration”
under the Stark Law and creates a “financial relationship” between her and Vermilion. (Id. ¶ 47.)
Further, no Stark Law exception applies because, inter alia, “the provision of free services by
definition is not fair market value, and the arrangement would not be commercially reasonable in
the absence of referrals.” (Id.) As a result, “Dr. Uhrich is prohibited from referring patients to
Vermilion for designated health services, including inpatient and outpatient hospital services, and

Vermilion is prohibited from submitting claims to Medicare or Medicaid for such services. All
such claims therefore constitute false claims.” (Id.)
Relator further asserts that Vermilion’s giving free staff to Dr. Uhrich violates the AKS
because it “was intended, at least in part, to induce the referral of patients by Dr. Uhrich to AVH,”
and, “[i]ndeed, the 2015 Strategic Plan expressly identified as a ‘channeling mechanism’ the fact
that Dr. Uhrich’s ‘[n]urse liaison is a part of our staff.’ ” (First Amend. Compl. ¶ 48, Doc. 57.)
Consequently, because this remuneration violates the AKS, “claims submitted pursuant to such
referrals constitute false claims.” (Id.)
Byrd closes this section of the First Amended Complaint by again referring to the
December 2019 settlement agreement between the State and Defendants. (Id. ¶ 49.) He states that
this agreement stated, inter alia:
The State contends that it has certain civil and administrative causes
of action against Acadia [defined in the agreement to include Acadia
and Vermilion] for allegedly Case engaging in the following
conduct in connection with the services Acadia’s facilities in
Lafayette, Louisiana provided to Louisiana Medicaid beneficiaries
(hereinafter referred to as the “Alleged Conduct”):
. . .
2. From March 1, 2013, through October 31, 2016, Acadia paid
improper remuneration via free staff; improper lease arrangements;
and inflated salaries to certain physicians in the Lafayette area for
the purpose of inducing referrals to Acadia facilities in Lafayette,
Louisiana[.]

(Id.)
4. Dr. Salmeron and the Allegedly Inflated Salary He Received from
Vermilion

Byrd next claims that Defendants violated the Stark Law and AKS with respect to Dr.
Daniel Salmeron. (First Amend. Compl. ¶¶ 50–55, Doc. 57.) Specifically, Relator alleges that Dr.
Salmeron was a family practice doctor in Lafayette, Louisiana, and friend of Luis Betances,
Vermilion’s CEO. (Id. ¶ 50.) Byrd alleges that, since January 2014, Vermilion paid Dr. Salmeron
about $350,000 per year, despite the fact that the doctor had “his own private practice and only
occasionally [saw] patients at AVH.” (Id.) The operative complaint asserts that, “This is
substantially higher than fair market value even for a full-time physician in the Lafayette area,
where the typical internal medicine physician salary is approximately $130,000.” (Id.)
Vermilion’s 2015 Strategic Plan identified Dr. Salmeron as a “key physician” and
“indicated that he worked 40 hours a week for a salary of $350,000.” (Id. ¶ 51.) But, in fact, the
doctor did not work 40 hours weekly at Vermilion. (Id.) Further, a “draft internal audit performed
in 2014 noted that physicians did not provide timesheets or invoices for payments, although this
was required by their contracts, but were instead paid based on scheduled hours.” (Id.)
Byrd alleges, “Division president Keith Furman had concerns over the amount of money
paid to Dr. Salmeron, and stated that Dr. Salmeron did not refer enough patients to Vermilion to

be paid that amount of money.” (Id. ¶ 52.)
As with Dr. Uhrich, Relator claims that the payments to Dr. Salmeron are “remuneration”
under the Stark Law and create a “financial relationship” between him and Vermilion. (First
Amend. Compl. ¶ 53, Doc. 57.) Further, no exception to the Stark Law applies because “the
remuneration exceeds fair market value, and the arrangement would not be commercially
reasonable in the absence of referrals.” (Id.) Byrd concludes, “Therefore, Dr. Salmeron is
prohibited from referring patients to Vermilion for designated health services, including inpatient
and outpatient hospital services, and Vermilion is prohibited from submitting claims to Medicare
or Medicaid for such services. All such claims therefore constitute false claims.” (Id.)
Relator also asserts that “the payments to Dr. Salmeron were intended, at least in part, to

induce the referral of patients by Dr. Salmeron to AVH. Accordingly, such remuneration violates
the AKS, and claims submitted pursuant to such referrals constitute false claims.” (Id. ¶ 54.)
Byrd closes this section by again referring to the December 2019 settlement agreement.
(Id. ¶ 55.) This document allegedly provides in part:
The State contends that it has certain civil and administrative causes
of action against Acadia [defined in the agreement to include Acadia
and Vermilion] for allegedly engaging in the following conduct in
connection with the services Acadia’s facilities in Lafayette,
Louisiana provided to Louisiana Medicaid beneficiaries (hereinafter
referred to as the “Alleged Conduct”):
…
2. From March 1, 2013, through October 31, 2016, Acadia paid
improper remuneration via free staff; improper lease arrangements;
and inflated salaries to certain physicians in the Lafayette area for
the purpose of inducing referrals to Acadia facilities in Lafayette,
Louisiana[.]

(Id.)
5. Patient Brokering
Byrd next alleges that, on January 5, 2015, he went to lunch with David Dempsey, his
corporate supervisor and an Acadia division CFO who worked from the corporate headquarters in
Tennessee. (First Amend. Compl.¶ 56, Doc. 57.) At that lunch, the two discussed how Vermilion’s
“average patient census (the number of patients per day) had fallen off.” (Id. ¶ 57) Relator alleges,
“Dempsey assured Relator that corporate ‘patient brokers’ paid by Defendants were working to
bring back Medicare, Medicaid, and TRICARE patients. Dempsey stated that ‘we don’t want to
call them patient brokers, but that’s what they are.’ ” (Id.)
The operative complaint alleges that Byrd “expressed concerns as to the legality of paying
for referrals.” (Id. ¶ 58.) He was later “summoned on short notice to a meeting a [sic] corporate
headquarters . . . on January 19, 2015,” and “was fired shortly thereafter, on January 21, 2015.”
(Id.)
Relator also claims to be aware of how, on “several occasions[,] . . . Tony Miller, a
Vermilion case manager, with the approval of Luis Betances, flew to California, Alaska and other
out of state locales to pick up and return with TRICARE beneficiaries for admission to AVH.”
(First Amend. Compl. ¶ 59, Doc. 57.) “In one case a TRICARE beneficiary was flown into

Lafayette from Japan for admission to AVH. All of these expenses are charged out on the hospital
credit card.” (Id.)
Byrd alleges, “Patient brokering violates the AKS, as it involves the payment of money to
induce referrals of patients for items or services paid by a federal healthcare program, or the
payment of remuneration to patients to induce them to purchase or use such items or services.”
(Id. ¶ 60.) Further, “[a]ll claims submitted pursuant to such referrals constitute false claims.” (Id.)
6. Disproportionate Share Payments
According to the operative complaint, the United States gives funds to the states to

compensate hospitals who serve a great number of Medicaid or uninsured patients. (First Amend
Compl. ¶ 61, Doc. 57.) Such payments are called “disproportionate share payments,” or “ ‘DSH’
” payments.” (Id.)
Relator alleges that, “[i]n 2010 and 2011, Vermilion received at least $150,136 in DSH
payments from the State of Louisiana, using funds provided in whole or in part by the United
States.” (Id. ¶ 62.) The First Amended Complaint states, “Vermilion was not entitled to such
payments because, among other things, it did not have at least two obstetricians with staff
privileges who agreed to provide obstetric services to individuals entitled to medical assistance for
such services, as required by 42 U.S.C. § 1396r-4(d).” (Id.)
Relator also claims that, around August 2014, the State of Louisiana entered into an

agreement with Myers & Stauffer to audit Vermilion’s cost reports regarding the DSH issue. (Id.
¶ 63.) This firm asked that Vermilion provide additional information to support the DSH payment.
(Id.) Byrd alleges, “Upon information and belief, Vermilion responded to the audit by preparing
reports falsely indicating that certain bad debts for patient care had been written off during the
2010-2011 period, when in fact they were not written off until the 2014 audit.” (Id.)
Vermilion consulted with a CPA in New Orleans named Byron Elsas to help in their
response to the audit. (First Amend. Compl. ¶ 64, Doc. 57.) Byrd claims, “Relator had several
discussions with Mr. Elsas, who told Relator that Vermilion should not have received the DSH
payments in the first place.” (Id.) The First Amended Complaint further alleges:
On December 29, 2014, Elsas sent Relator an email noting that, if
the state noticed the problems, Vermilion would have to repay
$150,136.00, but if it did not, Vermilion would be able to receive an
additional $135,833.00:

PLEASE SEE LAST PAGE OF 3RD & 4TH ATTACHMENT.
TITLED"MEDICAID DSH REPORT NOTES"
1. OB REQUIREMENT NOT MET
THERE EXISTS TWO OUTCOMES TO THESE AUDITS.
1. IF MEDICAID (STATE) DOES NOT SEE OR UNDERSTAND
THE REPORT NOTES YOU WILL RECEIVE ANOTHER
$135,833.00
2. IF MEDICAID (STATE) SEES & UNDERSTANDS THE
REPORT NOTES YOU WILL OWE $150,136.00
NEVER CAN TELL.
IT WILL BE ONE OR THE OTHER.
GOOD LUCK
BYRON ELSAS

(Id. ¶ 65.)
Byrd was fired on January 21, 2015, before the audit was complete. (Id. ¶ 66.) “Upon
information and belief, however, Vermilion has not returned the DSH payments it was aware it
was not entitled to receive.” (Id.) Additionally, “Vermilion also requested and received DSH
payments in other years, which it was not entitled to receive because it did not meet the
requirements for such payments.” (Id. ¶ 67.)
Relator finishes this section by again referring to the settlement agreement between the
State and Defendants. (Id. ¶ 68.) This agreement said in relevant part.
The State contends that it has certain civil and administrative causes
of action against Acadia [defined in the agreement to include Acadia
and Vermilion] for allegedly engaging in the following conduct in
connection with the services Acadia’s facilities in Lafayette,
Louisiana provided to Louisiana Medicaid beneficiaries (hereinafter
referred to as the “Alleged Conduct”):

1. From January 1, 2007, through December 31, 2015, Acadia
submitted applications to the State of Louisiana for a
disproportionate share (“DSH”) payments that misrepresented
Acadia’s qualification for DSH payments, thereby causing the State
to pay to Acadia DSH payments it was not entitled to[.]

(Id.)
7. Retaliation
Relator claims he was terminated on January 21, 2015. (First Amend. Compl. ¶ 69, Doc.
57.) He states that this happened after he “rais[ed] concerns about Defendants’ actions.” (Id.)
Byrd further alleges:
Upon information and belief, Defendants interfered with Relator’s
attempts to find comparable employment following his termination.
Relator received an offer of employment from another behavioral
health care provider, and was provided an employment agreement
and a start date, but the offer was suddenly withdrawn. Relator was
informed that the withdrawal was the result of information provided
by Defendants.

(Id. ¶ 70.)
Relator asserts that Vermilion unlawfully terminated him because of his lawful actions
done in furtherance of his federal False Claims Act case or for “other efforts to stop one or more
violations of the Federal False Claims Act.” (Id. ¶ 75.) Byrd asserts this claim under 31 U.S.C. §
3730(h).
Byrd also makes a substantially similar retaliation claim under state law. (First Amend.
Compl. ¶¶ 77–79, Doc. 57.) Specifically, he claims that he was unlawfully terminated by
Vermilion because of lawful actions in took under the Louisiana Medical Assistance Program
Integrity Law and because of efforts he took to stop violations of this state law. (Id.¶ 78.)
8. Prayer for Relief
Relator seeks a judgment against Defendants equal to three times the amount of damages
the United States sustained from Defendants’ actions, plus a civil penalty of between $5,500 and
$11,000 for each violation of the federal False Claims Act. (Id. at 22.) He also seeks an award that
is reasonable for collecting the civil penalty and damages, which will be 15–25% of the proceeds
of the action or settlement if the government intervenes or 25–30% of the proceeds or settlement
if the government does not intervene. (Id.) Byrd also asks for “all relief necessary to make him
whole for his unlawful termination, including reinstatement, two times the amount of back pay,

interest on the back pay, and compensation for any special damages.” (Id. at 23.) Lastly, Byrd
seeks costs, expenses (including reasonable attorneys’ fees), and “such other relief as is
appropriate.” (Id. at 23.)
C. Relevant Procedural Background
Relator originally filed his complaint on April 1, 2016, in the Middle District of Tennessee.
(Doc. 1.) The United States sought numerous extensions to decide whether to intervene which
were granted, (see Docs. 17, 19, 20, 22, 23, 25, 26, 28), and, on March 14, 2018, the United States
filed a notice declining to intervene, (See Doc. 29). On March 20, 2018, the case was transferred
to this district. (Doc. 33.)
On October 16, 2019, the State of Louisiana was allowed to intervene for the limited

purpose of settlement. (Doc. 44.) On December 6, 2019, the Louisiana Medical Assistance
Program Integrity Law, the State of Louisiana, and the Relator filed a joint dismissal of the claims
asserted on behalf of the State pursuant to a settlement agreement. (Doc. 45.) The claims on behalf
of the United States were reserved and not dismissed. (Id.) The Joint Dismissal only encompassed
the claims asserted on behalf of the State and Relator’s personal claims under state law. (Id. at 2.)
Following a status conference on December 12, 2019, the Court granted the joint stipulation as
unopposed. (Docs. 48–49.)
On January 30, 2020, Byrd filed the First Amended Complaint. (Doc. 57.) On May 13,
2020, Defendants filed the instant Motion to Dismiss Relator’s First Amended Complaint (Doc.
67.)
On August 20, 2020, Byrd filed Relators’ Motion for Leave to File Second Amended

Complaint. (Doc. 77.) Relator attached a proposed seventy-one-page Second Amended Complaint.
(Doc. 77-1.) The Magistrate Judge denied Relator’s motion by oral order on September 3, 2020,
and explained in her minute entry:
Although leave to amend should be freely granted, judicial
efficiency dictates denying leave to amend at this time. The Motion
to Dismiss is fully briefed and the outcome of the Motion to Dismiss
will dictate how the claims in this case proceed. Additionally,
Relator has already raised, as an alternative argument in opposition
to the Motion to Dismiss, that he should be given leave to amend the
operative complaint to cure any deficiencies. Accordingly, there is
no prejudice to denying Relator leave to amend at this time.

(Doc. 83 at 1–2.)
II. Relevant Standards
A. Rule 12(b)(6) Standard
“Federal pleading rules call for a ‘short and plain statement of the claim showing that the
pleader is entitled to relief,’ Fed. R. Civ. P. 8(a)(2); they do not countenance dismissal of a
complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v.
City of Shelby, 135 S. Ct. 346, 346 (2014).
Interpreting Rule 8(a) of the Federal Rules of Civil Procedure, the Fifth Circuit has
explained:
The complaint (1) on its face (2) must contain enough factual matter
(taken as true) (3) to raise a reasonable hope or expectation (4) that
discovery will reveal relevant evidence of each element of a claim.
“Asking for [such] plausible grounds to infer [the element of a
claim] does not impose a probability requirement at the pleading
stage; it simply calls for enough fact to raise a reasonable
expectation that discovery will reveal [that the elements of the claim
existed].”

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965 (2007)).
Applying the above case law, the Western District of Louisiana has stated:
Therefore, while the court is not to give the “assumption of truth” to
conclusions, factual allegations remain so entitled. Once those
factual allegations are identified, drawing on the court's judicial
experience and common sense, the analysis is whether those facts,
which need not be detailed or specific, allow “the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged.” [Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937,
1949 (2009)]; Twombly, 55[0] U.S. at 556. This analysis is not
substantively different from that set forth in Lormand, supra, nor
does this jurisprudence foreclose the option that discovery must be
undertaken in order to raise relevant information to support an
element of the claim. The standard, under the specific language of
Fed. R. Civ. P. 8(a)(2), remains that the defendant be given adequate
notice of the claim and the grounds upon which it is based. The
standard is met by the “reasonable inference” the court must make
that, with or without discovery, the facts set forth a plausible claim
for relief under a particular theory of law provided that there is a
“reasonable expectation” that “discovery will reveal relevant
evidence of each element of the claim.” Lormand, 565 F.3d at 257;
Twombly, 55[0] U.S. at 556.

Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., No. 10-177, 2011 WL 938785, at *3 (W.D.
La. Feb. 9, 2011).
In deciding a Rule 12(b)(6) motion, all well-pleaded facts are taken as true and viewed in
the light most favorable to the plaintiff. Thompson v. City of Waco, 764 F.3d 500, 502 (5th Cir.
2014). The task of the Court is not to decide if the plaintiff will eventually be successful, but to
determine if a “legally cognizable claim” has been asserted.” Id. at 503.
B. The False Claims Act and Rule 9(b) Standard
“The False Claims Act is a potent remedial statute. As a counterweight to the statute's
power and as a shield against fishing expeditions, FCA suits are subject to the screening function
of Federal Rule of Civil Procedure 9(b).” United States ex rel. Gage v. Davis S.R. Aviation, L.L.C.,

623 F. App'x 622, 623 (5th Cir. 2015) (unpublished); see also id. at 625 (“An FCA complaint must
meet the heightened pleading standard of Rule 9(b).”). Under this Rule, “[t]o allege fraud, ‘a party
must state with particularity the circumstances constituting fraud.’ ” Id. (quoting Fed. R. Civ. P.
9(b)). “ ‘Rule 9(b) requires, at a minimum, that a plaintiff set forth the “who, what, when, where,
and how” of the alleged fraud.’ ” Id. at 625 (quoting United States ex rel. Steury v. Cardinal Health,
Inc., 625 F.3d 262, 266 (5th Cir. 2010)); see also United States ex rel. Doe v. Dow Chem. Co., 343
F.3d 325, 329 (5th Cir.2003) (“The time, place and contents of the false representations, as well
as the identity of the person making the misrepresentation and what [that person] obtained thereby
must be stated . . . in order to satisfy Rule 9(b).” (internal quotation marks and citation omitted)).
The Fifth Circuit “ ‘appl[ies] Rule 9(b) to fraud complaints with bite and without apology.’

” Porter, 810 F. App'x at 240 (quoting Grubbs, 565 F.3d at 185). But, as will explored below, “
‘to plead with particularity the circumstances constituting fraud for a False Claims Act §
3729(a)(1) claim, a relator's complaint, if it cannot allege the details of an actually submitted false
claim, may nevertheless survive by alleging particular details of a scheme to submit false claims
paired with reliable indicia that lead to a strong inference that claims were actually submitted.’ ”
Id. (quoting Grubbs, 565 F.3d at 190).
III. Discussion
A. Submission of False Claim
1. Parties’ Arguments
a. Defendants’ Original Memorandum (Doc. 67-1)

Defendants first argue that Relator fails to identify a single false claim and thus fails to
state a viable cause of action under Rule 9(b). (Doc. 67-1 at 13–19.) Defendants assert, “Nowhere
in the five categories of allegedly improper conduct identified by the FAC7 does it identify a single
claim with any kind of specificity, much less allege reliable indicia that lead to a strong inference
that [false] claims were actually submitted.” (Doc. 67-1 at 14 (cleaned up).)
For instance, concerning the allegations related to Ms. Rodriguez, Byrd “fail[s] to identify
a single specific claim, much less the government program that the claims were allegedly
submitted to, or the specific date (or even date range) on which the claims were allegedly
submitted.” (Id.) Byrd thus fails to provide a sufficient “reliable indicia” that could lead to the
conclusion that false claims were submitted. (Id.) “There are no particulars regarding the patients

Ms. Rodriguez treated, when she treated them, if claims for this treatment were submitted to
government payors, and if so, when the submissions occurred, are insufficient to meet 9(b).” [sic]
(Id.)
Similarly, with respect to Dr. Uhrich, the operative complaint “fails to identify any patients
referred to AVH by Dr. Uhrich, when she allegedly referred patients to AVH, what services were
provided to those patients, what payors those claims were allegedly submitted to among other
things.” (Id. at 15 (citing First Amend. Compl. ¶¶ 40, 46, Doc. 57).) Defendants also emphasize

7 Defendants refer to the First Amended Complaint (Doc. 57) as “FAC.” The Court has preserved that abbreviation
when quoting Defendants’ arguments.
that lack of specificity with respect to the dates, as Byrd alleges only that this fraud happened “for
the last several years.” (Id. at 15–16 (quoting First Amend. Compl. ¶ 40, Doc. 57).)
Defendants say that the claims about Dr. Salmeron “are even more deficient,” as
“[n]owhere in the six paragraphs covering Defendants’ alleged arrangement with Dr. Salmeron

does the FAC allege that Defendants even submitted a single false claim for a patient referred or
treated by Dr. Salmeron.” (Id. at 16 (First Amend. Compl. ¶¶ 50, 52, 54, Doc. 57).) Further:
[T]he FAC provides the opposite of “reliable indicia.” It describes
Dr. Salmeron as a “family practice doctor,” states he “occasionally
sees patients at [Vermilion],” and compares his alleged salary to that
of other “internal medicine physician[s].” See FAC ¶ 50. Yet
Vermilion is a “psychiatric hospital.” Id. ¶ 6. It is not difficult to
infer that an internal medicine doctor did not submit claims for any
services, or make any referrals to a psychiatric hospital. The FAC
does nothing to clarify this dissonance.

(Id. at 17.)
Defendants next attack the patient brokering allegations. The allegations describe “nothing
more than efforts to increase ‘Vermilion’s average patient census’ and ‘bring back Medicare,
Medicaid, and TRICARE patients.’ ” (Id. at 17 (quoting First Amend. Compl. ¶ 50, Doc. 57).)
Further, according to Defendants, “[a]dvertising efforts, even those targeted at government
healthcare program beneficiaries, do not violate the ASK or FCA.” Id. (citing United States v.
Crane, 781 F. App’x 331, 334–35 (5th Cir. 2019)).) While Byrd describes a base manager taking
a trip to unnamed locations in different states, “Relator fails to allege that the activities resulted in
a single admission or claim to any government healthcare program.” (Id. at 17–18 (First Amend.
Compl. ¶¶ 56–60, Doc. 57).) Further, he provides no details about these trips, such as a date range
or precise locations, despite saying he has personal knowledge of them. (Id. at 18.)
For the DSH payments, Defendants say, “Nowhere in these allegations does Relator allege
that Vermilion received DSH funds as the result of a ‘claim’ it submitted. While Relator may later
allege Vermilion made a ‘claim’ for DSH payments in ‘other years,’ those allegations are woefully
inadequate, and fail to identify the years at issue.” (Id. at 18–19.)
In closing, Defendants assert:
Presentment of an allegedly false claim is the “sine qua non” of a §
3729(a)(1)(A) claim. Grubbs, 565 F.3d at 188. The FAC fails to
identify a single submitted claim with the specificity demanded by
Rule 9(b). In the absence of such an allegation, Relator cannot
sustain a cause of action pursuant to § 3729(a)(1)(A), and any claims
brought pursuant to that sub-section in Count I of the FAC must be
dismissed.

(Id. at 19.)
b. Relator’s Opposition (Doc. 70)
After describing how Relator plausibly alleges how Vermilion violated the AKS and the
Stark Law with respect to Dr. Uhrich and Dr. Salmeron (Doc. 70 at 1–6), Byrd then addresses how
he adequately alleged that Defendants submitted claims for referrals for these doctors. (Id. at 7–
14.) Relator argues that he need not specifically identify claims, and he cites Grubbs for this
position. (Id. at 7.) Relator discusses the facts and result of Grubbs in detail and maintains that
Defendants misrepresent its holding. (Id. at 7–8.) Byrd states that, unlike Grubbs, Relator here
alleges that the above doctors violated the AKS and the Stark Law and Defendants were thus
barred from submitted claims to Medicaid or Medicare for any hospital services these doctors
referred. (Id. at 10.) Relator states:
Indeed, unless the arrangements satisfied a Stark Law exception or
AKS safe harbor (which are affirmative defenses that Defendants
must plead and prove), the only way there could be no false claims
would be if Defendants never submitted a single claim pursuant to
a referral from Dr. Uhrich or Dr. Salmeron.

(Id.)
But, contrary to Defendants’ position, “[t]he complaint contains more than sufficient
indicia of reliability to show that Defendants submitted claims pursuant to referrals from Drs.
Uhrich and Salmeron.” (Doc. 70 at 10.) Relator cites the allegations that Dr. Uhrich “is a
significant source of patient referrals for AVH, principally to the Optima facility, and Vermilion

routinely submits claims to Medicare, Medicaid, Tricare, and other payors for services furnished
pursuant to such referrals.” (Id.) Further, Byrd cites the 2015 Strategic Plan which highlights Dr.
Uhrich as a referral source and identifies his “primary payor source as Medicare, followed by
indigent and private insurance.” (Id. at 10–11.) Relator maintains:
As in Grubbs, “[i]t would stretch the imagination to infer” that
Defendants would “go through the charade” of providing staff to Dr.
Uhrich as a channeling mechanism in order to obtain referrals, “only
for the scheme to deviate from the regular billing track at the last
moment so that the … [referred] services never get billed.” Grubbs,
supra at 192. “That fraudulent bills were presented to the
Government is the logical conclusion of the particular allegations in
[Relator’s] complaint even though it does not include exact billing
numbers or amounts.” Id.

(Id. at 11.) The same goes for Dr. Salmeron:

As with Dr. Uhrich, the submission of claims for services referred
by Dr. Salmeron is the “logical conclusion” of Relator’s allegations.
Indeed, it would “stretch the imagination” for Defendants to
complain that Dr. Salmeron did not “refer enough patients to
Vermilion to be paid that amount of money,” if they were not
submitting claims for the patients that he did refer.

(Id. at 12.)
Byrd then closes by citing to the settlement agreement between Defendants and the State
as further “reliable indicia.” (Doc. 70 at 13.) Relator cites an Eleventh Circuit case of United
States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1360 n.17 (11th Cir. 2006), for the proposition
that governments do not intervene in qui tam actions for discovery, as they already possess the
relevant information. (Doc. 70 at 13.) Byrd states that “it is hard to imagine a defendant” paying
$500,000 to settle a claim “if it did not even submit any claims at all.” (Id. at 13.) Though the
state settlement involved only Medicaid claims, “Medicaid is a joint federal-state program funded
in part by the federal government. Thus, false claims submitted to the Louisiana Medicaid program
are also false claims under the federal False Claims Act, since the federal government pays a

portion of the claim.” (Id. at 14 (citing First Amend. Compl. ¶ 39, Doc. 57; 31 U.S.C. §
3729(b)(2)(A)).)
With respect to Ms. Rodriguez, Relator argues that he stated a viable cause of action.
Concerning the submission of claims, Byrd repeats earlier arguments:
As with Drs. Uhrich and Salmeron, the falsity of such claims does
not turn on anything specific to the individual claims; rather, every
claim for Ms. Rodriguez’s services was false because she did not
have a valid collaboration agreement and was not authorized to
perform such services under state law. As in Grubbs, “[i]t would
stretch the imagination to infer” that Defendants would “go through
the charade” of having Ms. Rodriguez see patients without
supervision, and then not bill for any such services. Grubbs, supra
at 192. “That fraudulent bills were presented to the Government is
the logical conclusion of the particular allegations in [Relator’s]
complaint even though it does not include exact billing numbers or
amounts.” Id.

(Doc. 70 at 22.) Byrd also relies on the settlement agreement between the State and Defendants.
(Id. at 23.)
As to the DSH payments, Relator largely recites the facts alleged in the operative
complaint. Byrd concludes, “Only by the most tendentious reading of the complaint could one
assert that it does not allege that Defendants received DSH payments as a result of a claim.” (Id.
at 24.)
c. Defendants’ Reply (Doc. 72)
Defendants reply that “Grubbs requires a qui tam relator to plead the necessary ‘details’ to
create a plausible inference that claims were submitted.” (Doc. 72 at 1 (citing Grubbs, 565 F.3d at
191).) Defendants say the First Amended Complaint fails to provide these details:

There is no list of claims, either specific or generalized. The FAC
does not indicate what time period it covers. Instead, it alleges that
the conduct occurred over the “last several years,” an undefined
period that could be from 2013 to 2016, or 2017 to 2020. Unlike
Grubbs, the FAC contains no alleged statements of Luis Betances
or Joe Rodriguez, the alleged architects of the scheme. And again,
unlike Grubbs, the FAC does not allege that Relator personally
participated in the scheme.

(Id. at 1–2.)
Defendants dispute that the “draft strategic plan” is controlling. (See id. at 2.) First, the
plain language of the “plan” does not support Byrd’s allegations. (Id.) For example, Dr. Uhrich
has Medicare has a primary payor source, but that does not mean Vermilion has the same source.
(Id.)
Next, Defendants attack Byrd’s reliance on “the simplistic argument that ‘[i]t would stretch
the imagination to infer’ that Defendants would ‘go through the charade’ of providing staff to Dr.
Uhrich as a channeling mechanism in order to obtain referrals, ‘only for the scheme to deviate
from the regular billing track at the last moment so that the . . . [referred] services never get billed.’
” (Id. at 2.) Defendants maintain that this is not enough under Rule 9(b). (Id. at 3.) Further, such
“deficiencies are particularly troubling since Relator later asserts that he could ‘easily’ provide
‘additional facts relating to the claims submission process.’ ” (Id. at 3.) Defendants say Rule 9(b)
does not allow a relator “to conceal information from defendants and the court while hiding behind
assertions that such information could ‘easily’ be provided.” (Id.).
Defendants next argue that Byrd fails to plead the submission of claims for Dr. Salmeron.
(Id.) Relator relies solely on a statement from “ ‘Division president Keith Furman’ that Dr.
Salmeron did not refer enough patients to Vermilion to be paid what Relator claimed he was paid.”
(Id.) But the operative complaint “does not explain how, to whom, or when this statement was

made.” (Id. (Doc. 70 at 3).) Moreover, “nothing in this alleged statement allows the Court to infer
that Dr. Salmeron referred patients to Vermilion, since ‘not . . . enough patients’ could easily mean
none at all, which was in fact the case.” (Id.)
For Ms. Rodriguez, Relator’s opposition “utterly fails to identify where or how the FAC
adequately alleges a claim submitted for services provided by [Ms.] Rodriguez.” (Id.) Byrd merely
incorporates the same arguments made with respect to Drs. Uhrich and Salmeron. (Id.) But the
First Amended Complaint does not identify a single claim Defendants allegedly submitted for Ms.
Rodriguez. (Id. at 3–4.)
Byrd’s reliance on the settlement agreement also fails. (Id. at 4.) “First, entities settle with
state regulators for a myriad of reasons, many of which have nothing to the merit of a particular

claim. Second, Relator cannot rely on the settlement agreement, because it offers no additional
specificity about his claims.” (Id.)
2. Applicable Law
As stated above, “§ 3729(a)(1) . . . makes liable any person who ‘knowingly presents, or
causes to be presented’ a false claim to the Government.” Grubbs, 565 F.3d at 188. “This provision
includes an express presentment requirement.” Id. “[T]he provision's sine qua non is the
presentment of a false claim.” Id.8

8 As also stated above, “[o]ther elements include that the claim was false or fraudulent and that the action was
undertaken knowingly.” Grubbs, 565 F.3d at 188. “Notably, stating a claim under § 3729(a)(1) does not require actual
or specific damages, as the statute imposes a liquidated civil penalty on violators.” Id.
Again, under Rule 9(b), “[t]o allege fraud, ‘a party must state with particularity the
circumstances constituting fraud.’ ” Gage, 623 F. App'x at 625 (quoting Fed. R. Civ. P. 9(b)). “
‘Rule 9(b) requires, at a minimum, that a plaintiff set forth the “who, what, when, where, and how”
of the alleged fraud.’ ” Id. (quoting Steury, 625 F.3d at 266); see also Doe, 343 F.3d at 329 (“The

time, place and contents of the false representations, as well as the identity of the person making
the misrepresentation and what [that person] obtained thereby must be stated . . . in order to satisfy
Rule 9(b).” (internal quotation marks and citation omitted)).
But “the ‘time, place, contents, and identity’ standard is not a straitjacket for Rule 9(b).
Rather, the rule is context specific and flexible and must remain so to achieve the remedial purpose
of the False Claim Act.” Grubbs, 565 F.3d at 190. Thus, “ ‘to plead with particularity the
circumstances constituting fraud for a False Claims Act § 3729(a)(1) claim, a relator's complaint,
if it cannot allege the details of an actually submitted false claim, may nevertheless survive by
alleging particular details of a scheme to submit false claims paired with reliable indicia that lead
to a strong inference that claims were actually submitted.’ ” Porter, 810 F. App’x at 240 (quoting

Grubbs, 565 F.3d at 190).
Grubbs gives guidance in determining what level of detail is necessary. For instance,
before laying out the above holding, the Fifth Circuit stated that “surely a procedural rule [such as
Rule 9(b)] ought not be read to insist that a plaintiff plead the level of detail required to prevail at
trial.” Grubbs, 565 F.3d at 189. As Grubbs stated:
Fraudulent presentment requires proof only of the claim's falsity, not
of its exact contents. If at trial a qui tam plaintiff proves the existence
of a billing scheme and offers particular and reliable indicia that
false bills were actually submitted as a result of the scheme—such
as dates that services were fraudulently provided or recorded, by
whom, and evidence of the department's standard billing
procedure—a reasonable jury could infer that more likely than not
the defendant presented a false bill to the government, this despite
no evidence of the particular contents of the misrepresentation. Of
course, the exact dollar amounts fraudulently billed will often
surface through discovery and will in most cases be necessary to
sufficiently prove actual damages above the Act's civil penalty.
Nevertheless, a plaintiff does not necessarily need the exact dollar
amounts, billing numbers, or dates to prove to a preponderance that
fraudulent bills were actually submitted. To require these details at
pleading is one small step shy of requiring production of actual
documentation with the complaint, a level of proof not demanded to
win at trial and significantly more than any federal pleading rule
contemplates.

Id. at 189–90 (internal citation omitted).
The Fifth Circuit next rejected the defendants’ argument that “because presentment is the
conduct that gives rise to § 3729(a)(1) liability, Rule 9(b) demands that it is the contents of the
presented bill itself that must be pled with particular detail and not inferred from the
circumstances.” Id. at 190. The appellate court stated:
We must disagree with the sweep of that assertion. Stating “with
particularity the circumstances constituting fraud” does not
necessarily and always mean stating the contents of a bill. The
particular circumstances constituting the fraudulent presentment are
often harbored in the scheme. A hand in the cookie jar does not itself
amount to fraud separate from the fib that the treat has been earned
when in fact the chores remain undone. Standing alone, raw bills—
even with numbers, dates, and amounts—are not fraud without an
underlying scheme to submit the bills for unperformed or
unnecessary work. It is the scheme in which particular
circumstances constituting fraud may be found that make it highly
likely the fraud was consummated through the presentment of false
bills.

Id.
The Grubbs court also discussed how the standard it established “comport[ed] with Rule
9(b)'s objectives of ensuring the complaint ‘provides defendants with fair notice of the plaintiffs'
claims, protects defendants from harm to their reputation and goodwill, reduces the number of
strike suits, and prevents plaintiffs from filing baseless claims then attempting to discover
unknown wrongs.’ ” Id. (quoting Melder v. Morris, 27 F.3d 1097, 1100 (5th Cir. 1994)). In doing
so, the Fifth Circuit said:
Confronting False Claims Act defendants with both an alleged
scheme to submit false claims and details leading to a strong
inference that those claims were submitted—such as dates and
descriptions of recorded, but unprovided, services and a description
of the billing system that the records were likely entered into—gives
defendants adequate notice of the claims. In many cases, the
defendants will be in possession of the most relevant records, such
as patients' charts, doctors' notes, and internal billing records, with
which to defend on the grounds that alleged falsely-recorded
services were not recorded, were not billed for, or were actually
provided.

Id. at 190–91.
Further, in explaining why the district court erred in concluding that the relator failed to
comply with Rule 9(b), the Grubbs court found:
The complaint sets out the particular workings of a scheme that was
communicated directly to the relator by those perpetrating the fraud.
Grubbs describes in detail, including the date, place, and
participants, the dinner meeting at which two doctors in his section
attempted to bring him into the fold of their on-going fraudulent
plot. He alleges his first-hand experience of the scheme unfolding
as it related to him, describing how the weekend on-call nursing staff
attempted to assist him in recording face-to-face physician visits that
had not occurred. Also alleged are specific dates that each doctor
falsely claimed to have provided services to patients and often the
type of medical service or its Current Procedural Terminology code
that would have been used in the bill.

Taking the allegations of the scheme and the relator's own alleged
experience as true, as we must on a motion to dismiss, and
considering the complaint's list of dates that specified, unprovided
services were recorded amounts to more than probable, nigh likely,
circumstantial evidence that the doctors' fraudulent records caused
the hospital's billing system in due course to present fraudulent
claims to the Government. It would stretch the imagination to infer
the inverse; that the defendant doctors go through the charade of
meeting with newly hired doctors to describe their fraudulent
practice and that they continually record unprovided services only
for the scheme to deviate from the regular billing track at the last
moment so that the recorded, but unprovided, services never get
billed. That fraudulent bills were presented to the Government is the
logical conclusion of the particular allegations in Grubbs' complaint
even though it does not include exact billing numbers or amounts.

Id. at 191–92.
Later, the Fifth Circuit rejected the argument that Grubbs absolved relators of Rule 9(b)’s
heightened pleading requirements. See Nunnally, 519 F. App'x at 893. The appellate court stated:
To the contrary, Grubbs reaffirms the importance of Rule 9(b) in
FCA claims, while explaining that a relator may demonstrate a
strong inference of fraud without necessitating that the relator detail
the particular bill. See 565 F.3d at 190. We established that a relator
could, in some circumstances, satisfy Rule 9(b) by providing factual
or statistical evidence to strengthen the inference of fraud beyond
mere possibility, without necessarily providing details as to each
false claim. Id. This standard nonetheless requires the relator to
provide other reliable indications of fraud and to plead a level of
detail that demonstrates that an alleged scheme likely resulted in
bills submitted for government payment. Id. Significantly, the
complaint in Grubbs rested on the relator's actual description of a
solicitation by two of the defendants to the relator to participate in
an elaborate scheme to defraud the government, the particulars of
which were there alleged.

Id. The Fifth Circuit then agreed with the district court that the relator failed to plead with
sufficient particularly under Rule 9(b) and Grubbs that the hospital submitted false claims in
violation of the FCA:
[Relator] Nunnally's wholly generalized allegations of false claims
presented to the Government do not “alleg[e] particular details of a
scheme” (emphasis added) and are not “paired with reliable indicia
that lead to a strong inference that [false] claims were actually
submitted.” See Grubbs, 565 F.3d at 190. We held in Grubbs that
the contents of a false claim need not always be presented under this
subsection because, given that the Government need not rely on or
be damaged by the false claim, “the contents of the bill are less
significant.” Id. at 189. This does not absolve Nunnally of the
burden of otherwise sufficiently pleading the time, place, or identity
details of the traditional standard, in order to effectuate Rule 9(b)'s
function of fair notice and protection from frivolous suits. See id. at
190. Nunnally's allegations of a scheme to submit fraudulent claims
are entirely conclusory, do not offer factual information with
sufficient indicia of reliability, and do not demonstrate a strong
inference that the claims were presented to the Government in
violation of § 3729(a)(1).

Id. at 895. The district court’s order dismissing the FCA claims was thus affirmed. Id.
3. Analysis
As Nunnally makes clear, to satisfy the presentment requirement Relator must “ ‘alleg[e]
particular details of a scheme’ ” that are “ ‘paired with reliable indicia that lead to a strong
inference that [false] claims were actually submitted.’ ” Nunnally, 519 F. App’x at 895 (quoting
Grubbs, 565 F.3d at 190). “[T]he contents of a false claim need not always be presented[,]” but
“[t]his does not absolve [Relator] of the burden of otherwise sufficiently pleading the time, place,
or identity details of the traditional standard, in order to effectuate Rule 9(b)'s function of fair
notice and protection from frivolous suits.” Id. (quoting Grubbs, 565 F.3d at 190).
Preliminarily, Relator overextends with his reliance on Grubbs. He is correct that, in that
case, the Fifth Circuit found that it was “more than probable, nigh likely,” from “circumstantial
evidence that the doctors’ fraudulent records caused the hospitals billing system in due course to
present fraudulent claims to the Government” and that
It would stretch the imagination to infer the inverse; that the
defendant doctors go through the charade of meeting with newly
hired doctors to describe their fraudulent practice and that they
continually record unprovided services only for the scheme to
deviate from the regular billing track at the last moment so that the
recorded, but unprovided, services never get billed.

Grubbs, 565 F.3d at 192. Thus, the “logical conclusion” of relator’s complaint was “[t]hat
fraudulent bills were presented to the Government.” Id. at 192.
But Relator ignores the specifics that the Grubbs relator provided. The Fifth Circuit based
its decision on “the allegations of the scheme[;] . . . the relator's own alleged experience[;] . . . and
. . . the complaint's list of dates that specified, unprovided services were recorded[.]” Id. at 192.
The Fifth Circuit also stated that the “complaint set[] out the particular workings of a scheme that
was communicated directly to the relator by those perpetrating the fraud”; “describe[d] in detail,
including the date, place, and participants, the dinner meeting at which two doctors in his section

attempted to bring him into the fold of their on-going fraudulent plot”; and “allege[d] his first-
hand experience of the scheme unfolding as it related to him, describing how the weekend on-call
nursing staff attempted to assist him in recording face-to-face physician visits that had not
occurred”; and pled “specific dates that each doctor falsely claimed to have provided services to
patients and often the type of medical service or its Current Procedural Terminology code that
would have been used in the bill.” Id. at 191–92. Thus, as Defendants argue and as Nunnally
recognized, the relator still satisfied Rule 9(b) by “pleading the time, place, or identity details of
the traditional standard[.]” Nunnally, 519 F. App’x at 895.
Relator also overlooks the examples that Grubbs provides. Again, Grubbs said that, to
give False Claims Act defendants adequate notice, relators should confront them “with both an

alleged scheme to submit false claims and details leading to a strong inference that those claims
were submitted—such as dates and descriptions of recorded, but unprovided, services and a
description of the billing system that the records were likely entered into[.]” Grubbs, 565 F.3d
190–91.
Having carefully considered the matter, the Court finds that the First Amended Complaint
falls short of this standard as to each of the alleged schemes. With respect to Ms. Rodriguez,
Relator fails to provide sufficient details about the relevant time period. The operative complaint
only vaguely alleges that Ms. Rodriguez was paid a monthly stipend “[f]or several years”; that
Relator discovered the issue with her collaboration agreement in December 2014; that the old
collaboration agreement was dated April 2011; and that Drs. Murphy and Sanders had not
collaborate with her “for a long time, if ever.” (First Amend. Compl. ¶¶ 27–30, Doc. 57.) Further,
Relator fails to provide any particularized details that Ms. Rodriguez provided services to patients
that ultimately lead to claims being submitted. Relator alleges only in a general and conclusory

way that “[n]otwithstanding the lack of a valid collaboration agreement, Ms. Rodriquez
independently saw and treated numerous patients at AVH, in violation of Louisiana law, and
Vermilion submitted numerous claims to Medicare, Medicaid, and other payors for such services.
All such claims constitute false claims.” (Id. ¶ 36.) Unlike Grubbs, there is no personal
involvement in the alleged scheme, and there are no “dates and descriptions of recorded, but
unprovided, services” or “specific dates that [Ms. Rodriguez] falsely claimed to have provided
services to patients and often the type of medical service or its Current Procedural Terminology
code that would have been used in the bill[.]” Grubbs, 565 F.3d at 190–92. Without more, Byrd
fails to satisfy Rule 9(b).
The same result is warranted for the patient brokering scheme. Relator’s allegations boil

down to (1) discussing with his corporate supervisor David Dempsey how Vermilion’s “average
patient census (the number of patients per day) had fallen off”; being “assured . . . that corporate
‘patient brokers” paid by Defendants were working to bring back Medicare, Medicaid, and
TRICARE patients; and Dempsey saying that “ ‘we don’t want to call them patient brokers, but
that’s what they are,’ ” (First Amend. Compl. ¶ 57, Doc. 57); (2) being fired after he “expressed
concerns” about the legality of “paying for referrals,” (id. ¶ 58.); and (3) being aware of how, on
“several occasions[,] . . . Tony Miller, a Vermilion case manager, with the approval of Luis
Betances, flew to California, Alaska and other out of state locales to pick up and return with
TRICARE beneficiaries for admission to AVH” and how “ [i]n one case a TRICARE beneficiary
was flow into Lafayette from Japan for admission to AVH,” with “these expenses” having been
“charged out on the hospital credit card,” (id. ¶ 59). Even accepting the first as true, Byrd fails to
allege that any patient brokers were in fact successful in “bring[ing] back Medicare, Medicaid, and
TRICARE patients” such that false claims were submitted, and he certainly does not provide the

time, place, and circumstances of treating such patients. (See id. ¶ 57.) As to the third, the Court
agrees with Defendants that Relator fails to provide the specifics of when these “several occasions”
occurred, the specific places visited, or details about the particular beneficiaries that were treated
or the billing system used.
Relator also fails to allege with particularity that Defendants submitted claims for DSH
payments. Byrd alleges only that, “[i]n 2010 and 2011, Vermilion received at least $150,136 in
DSH payments from the State of Louisiana, using funds provided in whole or in part by the United
States.” (Id. ¶ 62.) Byrd further alleges, “Upon information and belief, Vermilion responded to
the [Myers & Stauffer] audit by preparing reports falsely indicating that certain bad debts for
patient care had been written off during the 2010-2011 period, when in fact they were not written

off until the 2014 audit.” (Id. ¶ 63.) Relator claims, “Vermilion also requested and received DSH
payments in other years, which it was not entitled to receive because it did not meet the
requirements for such payments.” (Id. ¶ 67.) But, again, Relator fails to allege with particularity
the time, place, and circumstances, such as who was involved in the DSH payment process, how
the DSH payments were sought (akin to the billing process described in Grubbs), when the relevant
events occurred (i.e., with specific dates), etc.
The Court reaches the same result for the claims related to Dr. Uhrich. Though Relator
provides details about the nature of the scheme (First Amend. Compl. ¶¶ 41–45, Doc. 57), the
First Amended Complaint says only that Defendants provided her with free staff “[f]or the last
several years” and that the 2015 Strategic Plan listed her in 2014 as a “top 10 referral source[]”
with “primary payor source as Medicare, followed by indigent and private insurance.” (Id. ¶¶ 40–
41.) Thus, unlike Grubbs, Relator fails to provide “details leading to a strong inference that those
claims were submitted—such as dates and descriptions of recorded, but unprovided, services and

a description of the billing system that the records were likely entered into[.]” Grubbs, 565 F.3d
190–91. Further, unlike Grubbs, Byrd fails to allege any “first-hand experience of the scheme
unfolding as it related to him,” id. at 192, as Relator says only that “Optima staff have frequently
questioned the medical appropriateness of the referrals by Uhrich/Smith” and that “[m]any of these
patients suffer from progressive or degenerative neurological disorders for which acute psychiatric
inpatient treatment is unnecessary.” (First Amend. Compl.¶ 46, Doc. 57.)
The claims against Dr. Salmeron are equally unavailing. Relator essentially alleges that
Dr. Salmeron was overpaid and that “Division president Keith Furman had concerns over the
amount of money paid to Dr. Salmeron, and stated that Dr. Salmeron did not refer enough patients
to Vermilion to be paid that amount of money.” (Id. ¶ 52.) But, as Defendants argue, Byrd fails

to provide details about the time, place, and circumstances of Furman’s statements. Moreover,
Relator fails to plead in sufficient detail that Dr. Salmeron, a “family practice doctor” who dealt
in “typical internal medicine,” made referrals to Vermilion, a psychiatric health system, that would
ultimately be reimbursed by Medicare, Medicaid, or TRICARE. (Id. ¶ 50.) And, again, little is
said about the dates of service to such patients, the types of services provided, and the billing
system used, and Relator lacks any first-hand experience in this alleged scheme.
Again, this circuit “ ‘appl[ies] Rule 9(b) to fraud complaints with bite and without
apology.’ ” Porter, 810 F. App'x at 240 (quoting Grubbs, 565 F.3d at 185). Relator must “ ‘alleg[e]
particular details of a scheme’ ” that are “ ‘paired with reliable indicia that lead to a strong
inference that [false] claims were actually submitted.’ ” Nunnally, 519 F. App’x at 895 (quoting
Grubbs, 565 F.3d at 190). “[T]he contents of a false claim need not always be presented[,]” but
“[t]his does not absolve [Relator] of the burden of otherwise sufficiently pleading the time, place,
or identity details of the traditional standard, in order to effectuate Rule 9(b)'s function of fair

notice and protection from frivolous suits.” Id. (citing Grubbs, 565 F.3d at 190).
As demonstrated above, Relator has failed to satisfy this standard for each of the alleged
schemes. Consequently, these claims are dismissed, though, as will be explained below, Byrd will
be given leave to amend to cure the deficiencies.
B. False Certifications
1. Parties’ Arguments
a. Defendants’ Original Memorandum (Doc. 67-1)
Defendants next argue that Relator fails to state a false certification claim under the False
Claims Act. First, Defendants link their argument to their previous one, saying, “Without a single
claim or referral that allegedly occurred as the result of, or in connection with, a violation of AKS,

Stark, or the Louisiana Nurse Practice Act, Defendants could not have expressly or impliedly
falsely certified compliance with any of those regulations.” (Doc. 67-1 at 24.)
For instance, the operative complaint “fails to connect the alleged provision of free staff to
Dr. Uhrich’s referrals of patients to Defendants” and instead relies only on the draft 2015 Strategic
Plan. (Id.) But this document does not provide a basis for inferring that Defendants gave Dr.
Uhrich free staffing for referrals, and in any event, this is a mere draft.
Defendants next assert that the “allegations regarding Dr. Salmeron and ‘patient brokering’
are even flimsier.” (Id. at 25.) “The FAC fails to allege that Dr. Salmeron ever referred patients
to Vermilion, let alone that he did so in exchange for kickbacks, and fails to allege that Vermilion
submitted false claims for services provided to referred patients or for services provided by Dr.
Salmeron.” (Id.) Similarly, for the patient brokering, Relator fails to plead that any patients were
admitted to Vermilion for such efforts. “Absent sufficient facts alleging a link between purported
kickbacks and referrals, the FAC cannot sustain violations of the Anti-Kickback Statute and Stark

Law sufficient to serve as the basis for a claim under the FCA.” (Id.)
Defendants then argue that Relator fails to identify any certifications allegedly made by
them. According to Defendants, Byrd does not even attempt to satisfy this requirement, and that
is fatal to his claim.
Vermilion and Acadia next contend that Relator fails to plead that any violation of the
Louisiana Nurse Practices Act was material to payment. Defendants rely on Escobar and United
States ex rel. Porter v. Centene Corp., No. 16-75, 2018 WL 9866507 (S.D. Miss. Sept. 27, 2018),
for this issue. Defendants say, “What remains constant is that Relator has not identified any
statutory, regulatory, or contractual terms that make the existence of a valid collaborative practice
agreement material to the government’s decision to pay a claim. Without that, Relator’s allegations

of violations of the Louisiana Nurse Practices Act are meaningless.” (Doc. 67-1 at 28.)
Defendants then assert that Relator fails to sufficiently allege that payments were in excess
of fair market value or were otherwise improper. According to Defendants, Byrd must plead a
benchmark, and he fails to do so.
b. Relator’s Opposition (Doc. 70)
Byrd responds that Defendants’ arguments are misplaced because, “while falsely certifying
compliance with a material statutory requirement is one reason a claim may be considered to be
‘false,’ the Fifth Circuit has never held that it is the only reason.” (Doc. 70 at 14.) For example,
the AKS expressly states that a “ ‘a claim that includes items or services resulting from a violation
of this section constitutes a false or fraudulent claim for purposes of [the False Claims Act].’ ” Id.
(quoting 42 U.S.C. § 1320a-7b(g)). Thus, “there is no requirement that the claim be accompanied
by a false certification of compliance, whether express or implied.” (Id. at 15.) Similarly, the Stark
Law forbids the submission of the claim itself. (Id.) “An entity that submits a claim for payment

is thus not merely asking to be paid when it is not entitled to payment, but it is affirmatively
violating the law by the very act of submitting the claim, regardless of whether the claim is
accompanied by a false certification of compliance.” (Id.)
Relator then explains how “[t]he Fifth Circuit has never held that a claim for payment
submitted in violation of the Stark Law is only a ‘false claim’ if it is accompanied by a false
certification stating that the entity has complied with the statute.” (Id.) Relator relies on United
States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997),
which left open the question and remanded it to the district court for consideration. The district
court allegedly held that “ ‘the submission of Medicare claims in violation of the Stark laws’
express prohibition’ was an independent basis for False Claims Act liability, separate from any

false certification of compliance.” (Id. at 16 (quoting United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 20 F. Supp. 2d 1017, 1021 (S.D. Tex. 1998)).)
Further, according to Relator:

In any event, even if a “false certification” is required to make a
claim submitted in express violation of a statute a “false claim,” the
Supreme Court has held that it is an open question “whether all
claims for payment implicitly represent that the billing party is
legally entitled to payment.” Universal Health Servs. v. United
States ex rel. Escobar, 136 S. Ct. 1989, 2000 (2016). Given the Stark
Law’s unique prohibition on the submission of a claim (and not
simply on the payment of such claim), the Court should recognize
that the submission of a claim includes an implied representation
that the party is not violating the law by doing so. See, e.g., United
States ex rel. Urbanek v. Lab. Corp. of Am. Holdings, Inc., 2003
U.S. Dist. LEXIS 27469, at *24-25 (E.D. Pa. Aug. 14, 2003) (“a
party implicitly certifies compliance with the Stark law because the
statute expressly states that the provider must comply in order to be
paid”).

(Id. at 16–17.) Byrd closes this issue by noting that, “Should the Court hold that an express
allegation of an express or implied certification is required to state a claim, this is easily enough
accomplished in an amended complaint.” (Id. at 17 n.3.)
Relator also disputes Defendants’ position on fair market value. First, Byrd did allege a
bench mark with respect to Dr. Salmeron and what the appropriate salary for doctors in Lafayette
is. Further, the free services provided to Dr. Uhrich are, by definition, below fair market value. In
any event, “allegations of fair market value are not necessary to state a claim under the Stark Law
or the AKS,” as they play a role only in whether an exception or safe harbor applies. Again, “Stark
Law exceptions are affirmative defenses as to which Defendants have the burden of proof, and the
plaintiff need not prove, as an element of its case, that a defendant’s conduct does not fit within a
safe harbor or exception.” (Id. at 19 (cleaned up).) In any event, the “bona fide employment
relationship” contains a number of other requirements besides fair market value, so Defendants
can violate this law even if their arrangements were for fair market value.
As to the AKS, “even a fair market value payment will violate the statute if one purpose
is to induce referrals.” (Id. (citing United States ex rel. Bartlett v. Ashcroft, 39 F. Supp. 3d 656,
677 (W.D. Pa. 2014) (“‘Importantly, under the anti-kickback statute, neither a legitimate business
purpose for the arrangement, nor a fair market value payment, will legitimize a payment if there is
also an illegal purpose (i.e., inducing Federal health care program business).’”) (quoting 70 Fed.
Reg. 4858, 4864 (Jan. 31, 2005); U.S. ex rel. Armfield v. Gills, No. 07-2374, 2012 U.S. Dist.
LEXIS 197724, *13 (M.D. Fla. Oct. 17, 2012))).) Additionally, the AKS safe harbors are
affirmative defenses, so, for the same reasons given above, Byrd need not plead fair market value.
Lastly, the safe harbors contain other requirements aside from fair market value that must be met.
With respect to Ms. Rodriguez, Relator describes Defendants’ argument as “absurd.” (Id.
at 20.) According to Byrd, he specifically alleges that compliance with licensure law is material to

payment. (Id. at 21.) Byrd urges that Centene is “completely inapposite” because “[h]ere, Relator
alleges that the services were not payable because they were not provided in accordance with state
law, and identifies the relevant provisions of state law.” (Id. at 21 n. 55.)
c. Defendants’ Reply (Doc. 72)
Defendants first respond by stating that Courts routinely grant motions to dismiss on the
basis of exceptions and safe harbors. (Doc. 72 at 6.) Defendants cite a number of cases in the
context of the AKS and Stark Law as well as other statutes to support this. (See id. at 6–7.)
Relator’s reasoning would open the floodgates of discovery and eviscerate Rule 9(b)’s protections.
(Id. at 6.)
Defendants next urge that Relator fails to point to an “actual benchmark, not just his own

unsupported assertions that ‘the typical internal medicine physician salary [in Lafayette] is
approximately $130,000.’ ” (Doc. 72 at 7.) Relator’s allegation about a “typical” benchmark is
insufficient. (Id.)
As to Ms. Rodriguez, Defendants argue that Byrd ignores the materiality standard set forth
by the Supreme Court. (Doc. 72 at 8.) Relator also fails to address the Centene decision, as
“Relator must point to a Federal statute, rule or regulation that makes that state law violation
‘material’ to the Federal government’s payment decision.” (Id. at 8–9.) Further:
Relator must demonstrate that compliance with the Louisiana Nurse
Practice act was “material” to the Federal government’s decision to
pay claims, a hurdle he does not meet. Of course, Relator must also
specifically identify a claim submitted for services provided by Ms.
Rodriguez during the time she allegedly lacked a valid collaborative
practice arrangement. Since the FAC does neither, it must be
dismissed.

(Id. at 9.)
2. Analysis
“[W]hen ‘the government has conditioned payment of a claim upon a claimant's
certification of compliance with, for example, a statute or regulation, a claimant submits a false or
fraudulent claim when he or she falsely certifies compliance with that statute or regulation.’ ”
United States ex rel. Marcy v. Rowan Cos., 520 F.3d 384, 389 (5th Cir. 2008) (quoting Thompson,
125 F.3d at 902). “These ‘false certifications of compliance create liability under the FCA when
certification is a prerequisite to obtaining a government benefit.’ ” Id. (quoting Thompson, 125
F.3d at 902).
Having carefully considered the matter, the Court will grant Defendants’ motion on this
issue. First, in Nunnally, the Fifth Circuit strongly indicates that a relator must still allege
certification, even with a FCA claim rooted in the AKS. The Nunnally court directly stated that
“[a] violation of the AKS can serve as the basis for a FCA claim when the Government has
conditioned payment of a claim upon the claimant's certification of compliance with the statute,
and the claimant falsely certifies compliance.” Nunnally, 519 F. App’x at 893 (emphasis added)
(citing Thompson, 125 F.3d at 902). Thus, Nunnally reflects that a claimant must still “falsely
certify[y] compliance,” even for an AKS violation.
Additionally, Nunnally’s holding on the false certification issue also supports Defendants’
position. There, the Fifth Circuit found that the relator “fail[ed] to allege with particularity an
actual certification to the Government that was a prerequisite to obtaining the government benefit.”
Id. at 894 (citing Thompson, 125 F.3d at 902). Relator had alleged that the provider had “violated
the AKS by ‘periodically either certif[ying] in writing or impliedly certif[ying] to the Medicare
program that it complied with all of Medicare's program rules, regulations and laws applicable
thereto.’ ” Id. The Fifth Circuit found this insufficient:
Nunnally's complaint does not identify a single claim submitted by
WCCH for services rendered pursuant to an illegal referral, let alone
one for which WCCH expressly certified its compliance with federal
law. Thus, even if we assume that Nunnally's allegations of
remuneration are sufficient, Nunnally has pleaded no facts regarding
actual Medicare referrals or the billing and payment services
provided to any Medicare patient. There is no basis to infer from the
complaint that WCCH expressly certified compliance with the AKS
as a part of submitting claims to the Government. Nunnally's
pleadings of an AKS violation are deficient and cannot serve as a
basis for FCA liability.

Id. at 894–95. Thus, despite the fact that the relator made a general allegation that the provider
failed to certify, the Fifth Circuit still found that this was insufficient because there was “no basis
to infer from the complaint that WCCH expressly certified compliance with the AKS as a part of
submitting claims to the Government.” Id.
Second, Nunnally directly found that there is no false certification claim because the relator
had not “idenit[fied] a single claim submitted by [the provider] for services rendered pursuant to
an illegal referral[.]” Id. at 894. Because this Court already determined that Relator had failed to
sufficiently allege the submission of a false claim, his false certification claim also fails.
Third, even if Nunnally did not reach the above results, and even if that analysis did not
apply with equal force to a Stark Law violation claim, Relator has indicated that these alleged
deficiencies can be easily cured by an amendment. Specifically, Relator said, “Should the Court
hold that an express allegation of an express or implied certification is required to state a claim,
this is easily enough accomplished in an amended complaint.” (Doc. 70 at 17 n. 3.) Because
Relator will already have to amend his complaint to address the failure to allege a false claim, Byrd
can “easily cure[]” the false certification issue.
Fourth, one of the requirements of a FCA claim is that the false statement or certification
be “material,” Porter, 810 F App’x at 240, and here Relator fails to meet that standard with respect

to Ms. Rodriguez. “In 2016, the Supreme Court clarified how courts should interpret the
materiality requirement.” Id. “The Court noted that the False Claims Act itself defines ‘material’
as ‘having a natural tendency to influence, or be capable of influencing, the payment or receipt of
money or property.’ ” Id. (quoting Escobar, 136 S. Ct. at 1996 (citing 31 U.S.C. § 3729(b)(4))).
“Describing the materiality standard as ‘demanding’ and ‘rigorous,’ [Escobar, 136 S. Ct.] at 2002–
03, the Court explained:
The False Claims Act is not “an all-purpose antifraud statute” or
a vehicle for punishing garden-variety breaches of contract or
regulatory violations. A misrepresentation cannot be deemed
material merely because the Government designates compliance
with a particular statutory, regulatory, or contractual requirement as
a condition of payment. Nor is it sufficient for a finding of
materiality that the Government would have the option to decline to
pay if it knew of the defendant's noncompliance. Materiality, in
addition, cannot be found where noncompliance is minor or
insubstantial.

Id. (quoting Escobar, 136 S. Ct. at 2003 (citations omitted)). “The Court went on:

[W]hen evaluating materiality under the False Claims Act, the
Government's decision to expressly identify a provision as a
condition of payment is relevant, but not automatically dispositive.
Likewise, proof of materiality can include, but is not necessarily
limited to, evidence that the defendant knows that the Government
consistently refuses to pay claims in the mine run of cases based on
noncompliance with the particular statutory, regulatory, or
contractual requirement. Conversely, if the Government pays a
particular claim in full despite its actual knowledge that certain
requirements were violated, that is very strong evidence that those
requirements are not material. Or, if the Government regularly pays
a particular type of claim in full despite actual knowledge that
certain requirements were violated, and has signaled no change in
position, that is strong evidence that the requirements are not
material.

Id. at 240–41 (quoting Escobar, 136 S. Ct. at 2003–04).

In so holding, the Court expressly rejected the view of materiality
advanced by the federal government and the U.S. Court of Appeals
for the First Circuit: “that any statutory, regulatory, or contractual
violation is material so long as the defendant knows that the
Government would be entitled to refuse payment were it aware of
the violation.” [Escobar, 136 S. Ct.] at 2004.

Id. at 241.
Here, Relator’s allegations fall short of this standard. Byrd alleges, “To be payable under
Medicare, Medicaid, or other government healthcare programs, services must be furnished by a
physician or other practitioner licensed to provide such services under applicable state law.” (First
Amend. Compl. ¶ 21, Doc. 57.) After discussing the requirements of a collaborative practice
agreement, the operative complaint then states,
Thus, under Louisiana law, an advanced practice nurse may only
perform acts of medical diagnosis and prescription pursuant to a
collaborative practice agreement with a licensed physician who is
involved in the joint management of the patient’s treatment.

. . .

Claims for payment submitted for services performed by a nurse
practitioner outside the scope of her practice constitute false claims.

(Id. ¶¶ 25–26.) Later, after describing Ms. Rodriguez’ failure to have the required agreement, Byrd
alleges, “Notwithstanding the lack of a valid collaboration agreement, Ms. Rodriquez
independently saw and treated numerous patients at AVH, in violation of Louisiana law, and
Vermilion submitted numerous claims to Medicare, Medicaid, and other payors for such services.
All such claims constitute false claims.” (Id. ¶ 36.)
Each of Relator’s allegations, individually or combined, fail the Escobar materiality
standard. Again, “[a] misrepresentation cannot be deemed material merely because the
Government designates compliance with a particular statutory, regulatory, or contractual
requirement as a condition of payment.” Porter, 810 F App’x at 240 (quoting Escobar, 136 S. Ct.

at 2003 (citations omitted)). For the same reasons, relator’s efforts to distinguish Porter as being
about a contractual requirement rather than a statutory one miss the mark, as (1) in that case, the
Fifth Circuit agreed with the district court that relator failed to state a claim because the operative
complaint did not “identify any specific federal or state statute or regulation mandating that a
registered nurse provide those services,” id. at 241, and (2) in any event, the plain language Porter
quotes from Escobar applies to “statutory, regulatory, or contractual requirements,” id. at 240–42
(emphasis added) (quoting Escobar, 136 S. Ct. at 2003 (citations omitted)). In short, without more,
any false certification claim related to Ms. Rodriguez fails.
Finally, the Court also agrees with Defendants that their settlement agreement with and
payment of $500,000 to the State does not save Relator’s false certification claim. As Defendants

argue in their briefing, settlements occur for a number of reasons other than liability. But, even
more importantly, Relator fails to allege in the operative complaint that these payments were made
because Defendants were in fact liable to the State for the alleged violations.
For all of the above reasons, Defendants’ motion is granted on this issue, and Byrd’s false
certification claims are dismissed.9

9 The Court notes in closing that, while all false certification claims will be dismissed, the Court disagrees with
Defendants in at least one respect: Relator adequately pled that the arrangements with Dr. Uhrich and Dr. Salmeron
were not commercially reasonable or for fair market value. As with Dr. Uhrich, Relator specifically alleges that
“Defendant[s] provide[d] free staff to Dr. Uhrich in return for referral of patients to AVH.” (First Amend. Compl. ¶
40, Doc. 57.) Further, the draft 2015 Strategic Plan also describes the “channeling mechanism” for Dr. Uhrich:
“Currently a member of our Medical Staff. Has high volume private practice and nursing home ties. Employs three
NP’s who work the nursing homes and the IP units. Nurse liaison is a part of our staff.’ ” (Id. ¶ 42.) “The plan noted
that ‘Dr. Uhrich is exclusively referring patients to VBHS with the support of three mid-level practitioners.’ ” (Id.) A
C. Reverse False Claim
1. Parties’ Arguments
Defendants next argue that Relator failed to adequately plead a “reverse” false claim under
§ 3729(a)(1)(G), which penalizes a person who “(1) ‘knowingly makes, uses, or causes to be made

or used, a false record or statement material to an obligation to pay or transmit money or property
to the Government’, or (2) ‘knowingly conceals or knowingly and improperly avoids or decreases
an obligation to pay or transmit money or property to the Government.’ ” (Doc. 67-1 at 29–30
(quoting 31 U.S.C. § 3729(a)(1)(G)).) Defendants maintain that such claims must also satisfy Rule
9(b) and that general recitations of the statutory language are insufficient.
First, Relator cannot use allegations of direct false claims, like those concerning Ms.
Rodriguez, Dr. Uhrich, Dr. Salmeron, and patient brokering. These claims are redundant to a false
statement claim.
Second, “[e]ven if the FAC could identify an allegedly false claim with the required
specificity, it must also provide specific allegations about a known obligation to the Government

in order to make out a claim pursuant to subsection (a)(1)(G).” (Id. at 30–31.) The only allegation
that could potentially satisfy this requirement is Relator’s claim that “ ‘[u]pon information and
belief . . . Vermilion has not returned the DSH payments it was aware it was not entitled to receive.’
” (Id. at 31.) But “upon information and belief” statements fail to satisfy Rule 9(b)’s requirements

reasonable inference from this draft Strategic Plan allegations is that Defendants paid for Dr. Uhrich’s staff. The
Court agrees with Relator that providing a doctor free staff solely in exchange for referrals is necessarily a payment
below fair market value and one that is not commercially reasonable in the absence of referrals.
The Court reaches the same conclusion as to Dr. Salmeron. Defendants complain that Relator failed to provide a
proper benchmark, but Relator specifically alleges (1) that Vermilion paid Dr. Salmeron about $350,000 per year,
despite the fact that the doctor had “his own private practice and only occasionally [saw] patients at AVH,” (id. ¶ 50);
and (2) that, “This is substantially higher than fair market value even for a full-time physician in the Lafayette area,
where the typical internal medicine physician salary is approximately $130,000,” (id.). The Court finds these
allegations sufficient and non-conclusory.
unless the information is peculiarly within the perpetrator’s knowledge, and even then Relator
must still “plead a particular statement of facts upon which his belief is based.” (Id. (citations
omitted).)
Relator responds about the “reverse false claim” issue in a footnote only, and only with

respect to the DSH payments. (See Doc. 70 at 25 n.6.) Byrd asserts:
The complaint alleges that, during the audit performed by the State,
Defendants took action to conceal the fact that they had received
DSH funds to which they were not entitled. Complaint, ¶¶ 63-65.
Defendants’ only real argument on this point is that Relator’s
allegation that the money was not repaid is based on “information
and belief.” MTD Brief, p. 24. But the complaint provides sufficient
basis for such allegation, including (i) the fact that Defendants had
not repaid the money when they fired Relator, and (ii) the fact that
Defendants paid $500,000 to the State to settle the DSH claims.
Complaint, ¶¶ 66, 68.

(Id. at 25–26 n.6)
Defendants reply in a footnote that, “Relator’s wholesale reliance on ‘information and
belief’ to allege that Defendants never ‘returned’ DSH funds completely unravels the Response’s
argument that the FAC sufficiently pleads a reverse false claim.” (Doc. 72 at 9 n.5)
2. Applicable Law
a. Reverse False Claims
“31 U.S.C. § 3729(a)(1)(G) provides for liability against any person who:

knowingly makes, uses, or causes to be made or used, a false record
or statement material to an obligation to pay or transmit money or
property to the Government, or knowingly conceals or knowingly
and improperly avoids or decreases an obligation to pay or transmit
money or property to the Government.

United States ex rel. Wuestenhoefer v. Jefferson, 105 F. Supp. 3d 641, 672 (N.D. Miss. 2015). “A
claim brought under the Act's subsection (G), also known as the “reverse” claims section, has four
elements:
(1) that the defendant made, used, or caused to be used a record or
statement to conceal, avoid, or decrease an obligation to the United
States; (2) that the statement or record was false; (3) that the
defendant knew that the statement or record was false; and (4) that
the United States suffered damages as a result.

Id. (quoting United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg'l Healthcare Sys., 274 F. Supp.
2d 824, 840 (S.D. Tex. 2003)). “Following a 1999 amendment to the Act, an obligation is defined
as ‘an established duty, whether or not fixed, arising from an express or implied contractual,
grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from
statute or regulation, or from the retention of any overpayment.’ ” Id. (quoting 31 U.S.C. §
3729(b)(3)).
b. Pleading Fraud “On Information and Belief”
“While fraud may be pled on information and belief when the facts relating to the alleged
fraud are peculiarly within the perpetrator's knowledge, the plaintiff must still set forth the factual
basis for his belief.” United States ex rel. Williams v. Bell Helicopter Textron Inc., 417 F.3d 450,
454 (5th Cir. 2005). But, even when this “relaxed standard” applies, “[p]leading on information
and belief does not otherwise relieve a qui tam plaintiff from the requirements of Rule 9(b).”
United States ex rel. Hebert v. Dizney, 295 F. App'x 717, 723 (5th Cir. 2008) (unreported) (citing
United States ex rel. Karvelas v. Melrose–Wakefield Hosp., 360 F.3d 220, 226 (1st Cir. 2004) (“
‘[I]nformation and belief’ allegations remain subject to the particularity requirements of Rule
9(b).”); Tuchman v. DSC Commc'ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994) (“If the facts
pleaded in a complaint are peculiarly within the opposing party's knowledge, fraud pleadings may
be based on information and belief. However, this luxury must not be mistaken for license to base
claims of fraud on speculation and conclusory allegations.”) (internal quotations and citation
omitted)).
c. Waiver
“The Fifth Circuit makes it clear that when a party does not address an issue in his brief to
the district court, that failure constitutes a waiver on appeal.” JMCB, LLC v. Bd. of Commerce &
Indus., 336 F. Supp. 3d 620, 634 (M.D. La. 2018) (deGravelles, J.) (quoting Magee v. Life Ins. Co.

of N. Am., 261 F. Supp. 2d 738, 748 n. 10 (S.D. Tex. 2003)); see also United States v. Dominguez–
Chavez, 300 F. App’x 312, 313 (5th Cir. 2008) (“Dominguez has failed to adequately raise or
develop his due process and equal protection arguments in his appellate brief, and, thus, they are
waived.”); United States v. Reagan, 596 F.3d 251, 254 (5th Cir. 2010) (defendant's failure to offer
any “arguments or explanation . . . is a failure to brief and constitutes waiver”).
“By analogy, failure to brief an argument in the district court waives that argument in that
court.” JMCB, 336 F. Supp. 3d at 634 (quoting Magee, 261 F. Supp. 2d at 748 n.10); see also
Wuestenhoefer, 105 F. Supp. 3d at 672 (citing Dominguez-Chavez, 300 F. App’x at 313; El–
Moussa v. Holder, 569 F.3d 250, 257 (6th Cir. 2009) (“Issues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed waived. It is not sufficient

for a party to mention a possible argument in [a] skeletal way, leaving the court to put flesh on its
bones.”)); Kellam v. Servs., No. 12-352, 2013 WL 12093753, at *3 (N.D. Tex. May 31, 2013),
aff'd sub nom. Kellam v. Metrocare Servs., 560 F. App'x 360 (5th Cir. 2014) (“Generally, the
failure to respond to arguments constitutes abandonment or waiver of the issue.” (citations
omitted)); Mayo v. Halliburton Co., No. 10-1951, 2010 WL 4366908, at *5 (S.D. Tex. Oct. 26,
2010) (granting motion to dismiss breach of contract claim because plaintiff failed to respond to
defendants' motion to dismiss on this issue and thus waived the argument).
3. Analysis
Preliminarily, the Court notes that Relator did not respond to Defendants’ argument about
the reverse false claim with respect to Ms. Rodriguez, Dr. Ulrich, Dr. Salmeron, and patient
brokering. Consequently, the Court will reject any “reverse-false-claims” cause of action on these

issues on the grounds of waiver. See JMCB, 336 F. Supp. 3d at 634 (finding that operative
complaint could be dismissed because plaintiff failed to respond to the substance of defendant's
arguments); Apollo Energy, LLC v. Certain Underwriters at Lloyd's, London, 387 F. Supp. 3d 663,
672 (M.D. La. 2019) (deGravelles, J.) (finding that policy exclusion could apply because plaintiff
failed to oppose insurer’s argument on the issue); see also Wuestenhoefer, 105 F. Supp. 3d at 672
(finding that relator waived argument as to how certain write-offs fell within a particular provision
of the False Claims Act).
Turning to the DSH payment, the Court agrees with Relator that the sole issue Defendants
raised is whether he adequately pled that Defendants have not repaid the DSH money to the
Government. But the Court agrees with Defendants that Relator failed to satisfy Rule 9(b) on this

issue.
Again, Relator was fired on January 21, 2015, before the audit was complete. (First Amend.
Compl. ¶ 66, Doc. 57.) Relator alleges, “Upon information and belief, however, Vermilion has
not returned the DSH payments it was aware it was not entitled to receive.” (Id.) Relator originally
filed his complaint on April 1, 2016. (Doc. 1.)
Relator is entitled to plead “upon information and belief” because the question of whether
Defendants repaid the DSH money after he was fired and after the audit was completed is
peculiarly within their knowledge. See Williams, 417 F.3d at 454. But, even when this “relaxed
standard” applies, “[p]leading on information and belief does not otherwise relieve a qui tam
plaintiff from the requirements of Rule 9(b).” Hebert, 295 F. App'x at 723. Thus, given the fact
that Relator left before the completion of the audit, and given the fact that over a year passed
between when he left Vermilion and when suit was filed, Relator has failed to provide a sufficient
factual basis from which the Court can conclude that Defendants in fact failed to repay its

obligation to the government. Without more, Relator fails to pass Rule 9(b) muster.
Consequently, Defendants’ motion on this issue is granted, all claims related to “reverse”
false claims are dismissed.
D. DSH Payments
1. Parties’ Arguments
Defendants next argue that any claim related to the DSH payments fail. Again, Relator
relies on 42 U.S.C.A. § 1396r-4(d), which provides in relevant part:
(d) Requirements to qualify as disproportionate share hospital

(1) Except as provided in paragraph (2), no hospital may be defined
or deemed as a disproportionate share hospital under a State plan
under this subchapter or under subsection (b) of this section unless
the hospital has at least 2 obstetricians who have staff privileges at
the hospital and who have agreed to provide obstetric services to
individuals who are entitled to medical assistance for such services
under such State plan.

Id.; see also First Amend. Compl. ¶ 62, Doc. 57. Defendants now argue that there is an exception
to this rule for “a hospital . . . which does not offer nonemergency obstetric services to the general
population as of December 22, 1987.” (Doc. 67-1 at 32 (quoting 42 U.S.C. § 1396r-4(d)(2)(A) –
(A)(ii)).) According to Defendants, Relator conveniently omits from the operative complaint the
fact that AVH satisfies this exception. Defendants maintain that Relator must plead that the
exception does not apply. In any event, Defendants submit a newspaper article to demonstrate that
AVH meets the exception.
Further, Relator “fails to allege why Mr. Elsas’ statements were accurate when he allegedly
told Relator that Vermilion should not have received the DSH payments.” (Id. at 32.) Moreover,
the email from Mr. Elsas “raises more questions than it answers,” as it does not explain the
significance of Vermilion’s alleged failure to meet the “OB REQUIREMENT” or the relevant

exception. (Id.) The email also does not say whether Defendants were “not entitled to such
payments” or even that the audit was not complete. (Id.)
In response, Relator first details the allegations of the operative complaint and argues that
he has submitted a claim. (Doc. 70 at 23.) After this, Relator focuses on the obstetrician exception,
saying that (1) the court cannot take judicial notice of the contents of any newspaper article for the
truth of those facts; (2) even if the Court did consider the contents of the newspaper article, it does
not demonstrate that the exemption applies; and (3) the settlement agreement is a further indication
that Relator stated a claim. (Id. at 24–25.)
In reply, Defendants assert that, even if the Court cannot take judicial notice of the
newspaper article, the fact of the article “demonstrates the glaring lack of specificity in the FAC.”

(Doc. 72 at 10.) Defendants urge that Relator’s pleading does not satisfy Rule 9(b).
2. Analysis
Given the Court’s finding that Relator has no FCA claim because he has failed to
adequately allege (1) the submission of a claim; (2) a false certification; and (3) a “reverse” false
claim, the Court passes on the issues raised in this part of Defendants’ motion.
The Court notes, however, that it agrees with Relator’s persuasive authority on the issue of
pleading that exceptions do not apply. As one Court said in the context of the Stark Law and AKS:
Relators correctly argue in response . . . the AKS and Stark
employment exemptions are affirmative defenses on which Citizens
has the burden of proof. See United States v. Robinson, 505 Fed.
Appx. 385, 387 (5th Cir. 2013) (per curiam) (stating that the AKS's
employment exception is an affirmative defense); United States v.
Vernon, 723 F.3d 1234, 1270–72 (11th Cir. 2013) (same); United
States ex rel. Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 95 (3d
Cir.2009) (“Once the plaintiff or the government has established
proof of each element of a violation under the [Stark] Act, the
burden shifts to the defendant to establish that the conduct was
protected by an exception.” (citing Rogan, 459 F. Supp. 2d at 716)).
“[A]ffirmative defenses are generally not appropriate grounds on
which to dismiss a complaint under a Rule 12(b)(6) motion,” unless
a successful defense is apparent from “the facts pleaded and
judicially noticed.” Johnson v. Deutsche Bank Nat. Trust Co., 2013
WL 3810715, at *8 (N.D. Tex. July 23, 2013) (quoting Hall v.
Hodgkins, 305 Fed. Appx. 224, 227–28 (5th Cir. 2008)).

United States ex rel. Parikh v. Citizens Med. Ctr., 977 F. Supp. 2d 654, 668–69 (S.D. Tex. 2013),
aff'd sub nom. United States ex rel. Parikh v. Brown, 762 F.3d 461 (5th Cir. 2014), opinion
withdrawn and superseded on reh'g, 587 F. App'x 123 (5th Cir. 2014), withdrawn from bound
volume (Oct. 1, 2014), and aff'd sub nom. United States ex rel. Parikh v. Brown, 587 F. App'x 123
(5th Cir. 2014). The same reasoning applies on this issue; Relator need not prove at the pleading
phase that the exception to the obstetrician requirement does not apply.
Further, even if the Court were to take judicial notice of the newspaper article Defendants
attach as Exhibit A, (Doc. 67-2), it would not establish as a matter of law that the exception to the
obstetrician requirement applies. This exception provides that the obstetrician requirement “shall
not apply to a hospital— . . . (ii) which does not offer nonemergency obstetric services to the
general population as of December 22, 1987.” 42 U.S.C.A. § 1396r-4(d)(2)(A)(ii). But the article
simply says that “CDU of Acadiana, which began serving the people of Lafayette and Acadiana
in 1961 with outpatient and later inpatient treatment services for chemical dependency, will change
its name to Vermilion Hospital for Psychiatric and Addictive Medicine on Aug. 1[,]” 1991. (Doc.
67-2.) The article goes on to say that “Vermilion Hospital . . .will provide inpatient and outpatient
services for adults and adolescents with physiatrist, alcohol or other drug abuse concerns. (Id.) As
Byrd argues:
Nothing in the newspaper article addresses whether the hospital
offered such [nonemergency obstetric] services as of December 22,
1987. Moreover, the article does not establish that CDU of Acadiana
in 1987 is the same hospital as Acadia Vermilion Hospital in 2007-
2015, which would be necessary to claim entitlement to the
exemption.

(Doc. 70 at 25.) Thus, Defendants, who have the burden of showing this affirmative defense, are
not entitled to dismissal on this ground at this time.
E. Retaliation
1. Parties’ Arguments
Defendants first acknowledge that Relator’s retaliation claims do not need to satisfy Rule
9(b). They need only meet Rule 8, but, even under this standard, Relator’s claims fail. For
example, Relator alleges “[u]pon information and belief” that Defendants interfered with Relator’s
attempts to obtain comparable employment. (Doc. 67-1 at 35.) Relator also alleges that an offer
was withdrawn and that he was told it was withdrawn because of information received from
Defendants. (Id. at 35–36.) But, according to Defendants, the operative complaint makes no
connection between these events and his termination, and the pleading does not describe who
terminated him. (Id. at 36.) Such information is not within the peculiar control of the Defendants,
so Relator’s failure to plead such information makes his retaliation claims implausible.
In response

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10191774. Public record. Not legal advice.